An astonishingly rotten way of hiring anyone

Some time ago I sat on a committee that had the job of hiring a headhunter. For the best part of a day we shut ourselves into a room in the City of London with quantities of coffee and superior biscuits and listened to one presentation after another from rival firms.

Four teams turned up to pitch. One had just two members, another as many as four. All were easy on the eye. All were smartly tailored, and friendly in that professional way that is slightly chilling. Each team had a PowerPoint presentation, which they ground their way through, assuring us of their “unprecedented global network” and “deep industry expertise”. By the end of the day I had acquired four fat presentation packs with printouts of slides on the heaviest, glossiest paper – all of which went straight into the shredder.

There was no good reason for choosing any one of these headhunters over any other, but a choice had to be made nevertheless. So I found myself disqualifying one firm simply because its lead man said “grow the talent pool”, thus combining three of my least favourite words in a single phrase, and slightly preferring another firm because its presentation was marginally shorter.

This pantomime is an astonishingly rotten way of hiring anyone. But it is how lawyers, consultants, advertising agencies, PR firms, banks, brokers and auditors routinely scramble over each other to get work.

Wasted day

The first thing wrong with it is cost. Three people on my committee each wasted a day. Each firm wasted several days preparing and then travelling to the presentation. The cost itself wouldn’t matter if a good decision resulted. The reason companies go through with this charade is that they pay so much money to their advisers, it seems important to know they are spending it wisely. However, this daft process merely adds to the cost base, and must make fees higher still. A “fair” process had been adhered to with a result that everyone lost out.

From such a system, the decision will always be poor. The winner is inevitably the one that pitches best, but being good at pitching is not necessarily related to being good at headhunting, the law, banking, advertising, or any of the skills you are trying to buy.

When the contest is between the big firms it is especially pointless. There is nothing to choose between EY or KMPG. Nor between JPMorgan and Goldman Sachs, or Linklaters and Freshfields. All hire exactly the same sort of people. They do exactly the same sort of work for the same sorts of clients and charge exactly the same fees for it. If all clients picked the firms they employed with a pin, the world would be a more efficient place.

The only excuse for a beauty contest is that you meet the individual people involved and get a tiny taste of whether you’d like to work with them. But this is a feeble argument as you can’t tell what someone is like from watching a presentation, and the people doing the pitching are seldom the grunts who will be doing the legwork.

Beauty parade

Last week I took part in a beauty parade of a different sort. We were deciding which charity the FT will be supporting this Christmas. On three consecutive days we heard presentations from NGOs on how they prevent people getting blown up by landmines, help women and children in conflict zones and show hungry people how to get more food from their land.

Unlike most business pitches, this was a life and death matter. The problem here was the reverse of the one with the headhunters – the NGO teams were so different it was impossible to know how to choose. Once again, I found myself swayed by style over substance. Two of the charities launched impressively orchestrated campaigns with armies of people handing out cupcakes on sticks and plastic whistles. The third fielded one man who stood in reception giving out single sheets of paper. I know this does not make his charity the best and yet the simplicity spoke loudly to me. “Trust me,” it said. I do love an underdog.

There could be a lesson here for professional firms. How refreshing it would have been to have a lone headhunter turn up with a tatty sheet of A4. But would we have dared hire him? Would we not have worried that his global network was insufficiently unprecedented? The sad truth is that hiring a professional services firm is all about back-covering – no one will ever blame you for hiring, say, Slaughter and May or Egon Zehnder. For a charity, being an underdog may be an advantage. But would you choose an underdog as your auditor? I’m not sure that I’d have the guts.

Copyright The Financial Times Limited 2014