Latest / Recruiting Evolution / Industry Spotlight | Navigating Growth: Overcoming Barriers to Scale in Search Firms with Jeff Kaye, Co-Sr. Managing Director, Sanford Rose Associates
Transcript
- Jeff Kaye [00:00:00]: It's interesting. Old dogs need to learn the new tricks, but the new dogs need to learn the old tricks. And once you learn that piece of it, once you understand, it's not an either or, it's both, it's the skills, the communication skills, the people skills, relationship empathy, all of those characteristics. Improve and sharpen your skills as a person, as a human being, as an individual. The things that you can control that have nothing to do with technology. It's all about you and what can you do to get better? What can I do to get better every day? And then secondly, what are all the new techniques and new approaches and new technologies and new methodologies? How can I incorporate these things to make me and my team and my organization more efficient, more effective, more productive and more profitable and then make my life more enjoyable? Kortney Harmon [00:00:49]: Hi, I'm Kortney Harmon, director of industry relations at Crelate. This is the Industry Spotlight, a series of the Full desk experience, a Crelate original podcast. In this series, we will talk with top leaders and influencers who are shaping the talent industry, shining a light on popular trends, the latest news, and the stories that laid the groundwork for their success. Welcome back to another episode of the Full Desk Experience. Industry Spotlight. Welcome to another episode of the Full Desk Experience. I your host, Kortney Harmon. And today we're deep diving into the world of executive search, where we're talking about growing and scaling with one of the industry's most respected leaders, Jeff K. Kortney Harmon [00:01:35]: Jeff, you are a part of so many things from Kay Bassman, Next Level Exchange, Sanford Rose, and under your leadership, I have personally got to see so many of your organizations scale and be a benefit to so many other people in this industry and companies looking to grow. So today I'm excited to talk about challenges, opportunities, and scaling search firms. And I am so excited that you've dedicated some time to spend here with me today. So thank you so much for joining me today. Jeff Kaye [00:02:05]: Yeah, it's a pleasure, Kortney. Kortney Harmon [00:02:07]: Thank you. Okay, so I know obviously about your story from our paths crossing in previous lives, but do me a favor, and for anybody who doesn't know you, which I'm sure that's probably very rare, do me a favor and tell me about how you got into this industry, a little bit more about your journey and how you got to where you are today. Jeff Kaye [00:02:24]: I'll give it to you quick because most people usually don't like too long of a backstory. So the quick version is I graduated University of Texas in 1989. I went straight into the recruiting industry. I just fell into it with luck, how am I going to be a young kid and compete against all these now quote me old guys that are doing this thing. And so I decided that the way that I would do it was by specializing in a very specific niche in a way that everyone said, don't do, it's too small. And my mindset was I can learn small, I can become a master of small, and then I can become an expert in that area and separate myself. And that was the concept of market mastery. Working in a very specific niche in the pharmaceutical industry. Jeff Kaye [00:03:02]: Over time I realized that the idea of outsourcing and focusing on what you do best and finding a team of people that could handle those kinds of activities that maybe excel better than you did in those areas and let you focus on what you excelled in. That idea of outsourcing and building a team came in industry that was really just get a job, get a candidate, put them together, make a match, get paid some percentage and do that for the rest of your life until you're old and great. And then bam, someone will take over your market, get a candidate, make a match, put them together, et cetera, wash, rinse, repeat, this hamster on a wheel. And so I said, that doesn't seem logical to me. So this idea of building a team came around, grew a team, ultimately transitioned off of a desk into a full time role. FYI, the people that run that desk are still there to this day, 35, 34, 30 years, et cetera. And began this process of building a division and a team. Went to the owner at the time and said, I know what it's like to want to start your own search firm. Jeff Kaye [00:03:58]: To quit and go be the house. I said, that's the model of this industry. Get a job to learn how to be a recruiter, work as a recruiter, get, learn how to do it and then leave. Go start your own firm and you get to be the house. And then you'll hire people and then you'll pay them and they'll teach them and then they'll quit and leave you. And this is insane in terms of this market. It doesn't have to be this way. If we can fix me, I think we can fix our company at the time. Jeff Kaye [00:04:23]: And so we set about the process of changing things structurally and focusing on the recruiter is the internal client. So instead of serving the client externally to fill positions, my mindset was we're going to fill the serve the internal client, which was to help them build the business, the team, the air, what they wanted within our walls and provide them with the opportunity to do that. And that's how our organization at the time, which was management careers at Plano that ultimately left became the number one office in mri, blah blah, blah, best place to in Texas, yada yada. And all this stuff led us to build Cave Asman in 2006. 7 I had this vision of elevating the competencies of recruiters around the globe. And as a result, our industry and reputation. And that's how Next Level Exchange was born. Started off as recruiting training, then it was help and hiring, then it was help and coaching, then it was helping marcom, then it was comp plans and career paths and retention strategies and equity programs. Jeff Kaye [00:05:12]: And the next thing we know, we got hired by this network called Sanford Rose Associates. Train them for two days. Well, the short version of that is we acquired the network, grew that network from, oh I think it was 10 or 12 million top line to close to 200 million in a decade. Brought in 160. We now have 180 search firms with over a thousand recruiters in that network and just about every industry you can check a stick at. And so Kay Bassman, the search firm continued for many, many, many years. Ultimately, a few years ago, merged with a company called Direct Recruiters and we created an entity called Starfish Partners, for which we've acquired several other search firms. So we one entity called Starfish Partners, that is a collection of search firms. Jeff Kaye [00:05:52]: Another entity, Next Level Exchange, that is a outsourced professional services provider to the recruiting industry and does it through Next Level Exchange Recruiter University, led by Mike Gianta. Dimensional Search, which is a startup for new search firms led by John Bartos and Stanford Rose Associates, a network for existing search firms run by Karen Schmidt. But besides that, not much. Kortney Harmon [00:06:13]: Just a couple things in the fire here. I love it. And obviously I've gotten a chance to be at your conferences through SRA and the wonderful events that you put on and understand the value of your network. So I'm happy that we're going to be able to talk about that too at some point in time during this session here. But I got to sit in. I think it was two years ago. That's essentially what started. My idea for wanting you on here was about growth. Kortney Harmon [00:06:38]: And that's really the conversation. In 2025, a lot of firms may have had the best year that they possibly could have in 2024, regardless, may they may not have. But it's really the idea, how am I growing? How am I going to catch up? How am I going to get back to what good looks like or excel beyond good. So that's kind of our theme for the month and I'm so excited because you and I have chatted before and I think one of the comments you made, you said out of 25,000 search firms being at 10 million puts you in the top.05%. Did I get that right? Is that what the conversation we had? Jeff Kaye [00:07:12]: I think it's even higher than that. But sure, yeah, absolutely amazing. Kortney Harmon [00:07:16]: Talk to me about what you think the primary or barriers are preventing most search firm from scaling beyond that boutique level. Jeff Kaye [00:07:24]: That's a great question. So some of it is based on desire. So when you really look at the recruiting industry and search businesses, you're going to really find three distinctive types of businesses. You're going to find a lifestyle business. Lifestyle business says, hey, I'm going to do this business anywhere I want in the world, live the life I want anywhere on the one in the world. And recruiting for me is a way of generating the income necessary to fund the lifestyle that I want. And so goes my efforts, so goes my business. I'm a solo operator, solopreneur, a small proprietorship. Jeff Kaye [00:07:52]: And again, there's no judgment. None of these models are better than the next. They're just different. And they have strengths and weaknesses obviously in each one. The second one is where someone says, you know, I can do this really well. But again, back to my earlier point of outsourcing, what if I hired someone to help me recruit, hired someone to help me add, do my admin, and maybe even someone to lead, generate and business development. Someone could help account manage and prep candidates. And I built this world class team of people. Jeff Kaye [00:08:16]: Like a surgeon says I'm going to hire a nurse, a nurse practitioner, physician assistant, schedule coordinator. All of these individuals whose responsibility is to do what allow the individual who has that level of competency to invest his or her time specifically in the highest dollar value per hour activity. We're going to call that a rainmaking model, a great business model. The issue obviously in this particular one, like the first one is so goes the rainmaker, so goes the business. If you go on vacation for a month, the business goes on vacation for a month and probably a lot longer than that. And then the third one is the multiple rainmaking model, which is where you see multiple full life cycle search consultants. Now those individuals in a multiple rainmaking model, each one in and of itself becomes what that person says. I'm going to be a lifestyle recruiter, a rainmaking recruiter, or that person wants to build something. Jeff Kaye [00:09:08]: Now therefore the multiple rainmaking model system has to allow for what each individual to build what he or she wants within their walls. And if they fail to do that, guess what's going to happen? They're going to quit and leave and go start their own company. And then they're going to go figure out how to go do this. And so what you've had is an industry where unfortunately the model has been, let me hire someone, teach them the business, and then I'm going to use guilt and fear as a retention strategies. Guilt. How could you leave? You were a waiter, you know, at a restaurant when I met you doing nothing. You're now making $300,000 a year. How could you possibly think about leaving me or fear? Well, you know, non competes are still enforceable in my state. Jeff Kaye [00:09:46]: And I'll sue your ass. So I'm going to sue you. How could you leave me? So I always tell owners, you think you've got a great value proposition. Great. Tell everyone you'll download their database tomorrow and walk out the door the next day to start their own search firm. Do you sleep well at night? If you sleep well, great. If you don't, you're using a strategy. Put it this way, it doesn't work in any other professional services firm, doesn't work in consulting firms. Jeff Kaye [00:10:08]: It doesn't work in law firms. It doesn't work and retained search firms. You know why? Because people in those marketplaces don't have those kinds of restrictions. So as a result, they have to rely on creating structures, systems, models, economic plans, resources, culture that allow people to say, I'm going to build my business in these walls. And the final point that I make to that, I think the real issue and the challenge has been I think that we haven't recognized we're not a staffing business. We're not companies that go out and say, let us go get 80 contractors out. And if the employee quits, guess what? The 80 contractors are still working at that company. And odds are some big fortune thousand companies not going to leave and go to Jeff's jobs because I got all these contractors. Jeff Kaye [00:10:50]: So therefore it is more of an employee centric culture. Nothing wrong with that. It just is what it is. And you've compartmentalized the functions. Usually you don't have one recruiter getting a job, getting a can of putting down and make a match and doing everything usually have separated that function. And the issue in our model is it's a professional services model. So if you were to go Study our business. You would literally be studying management consulting companies. Jeff Kaye [00:11:12]: You would be studying law firms, CPA firms. So I'll just ask this question of any viewer. Ernst and Young, Korn, Ferry, McKinsey, Jones Day. Those are big professional services firms in the CPA legal retained search. Okay. How many of those have one owner? Mr. And Mrs. Corn and Mr. Jeff Kaye [00:11:31]: Ferry, how many of them have one owner? You know, the answer is none, Zero. Because you wouldn't know their names if they did, because they operate on a partnership professional services model where the assets are producers who are building their practice, their business within the organizational framework of that bigger entity. And ultimately, that's the model that allows a firm to build, scale, and grow. And if people put that model in place, they will. There are other ways of doing it. It's not the only one. I want to be clear. You could just simply have a war of attrition. Jeff Kaye [00:12:04]: We hire 300 people every year. We keep 15. And after 30 years, with a 50% retention of that, we now have 300 recruiters. But we've hired 12,000 people to get there. That might sound insane to you, but that literally is the model of some companies. You can shrink that back. There are some companies today that you look at and like, well, they got 20 recruiters. Sure. Jeff Kaye [00:12:24]: They've been in business 30 years. I heard 10 people a year, maybe 12. That's 360 people. And there's 20 people there. Five were hired in the last year. That's 15 out of 360. So of the 360, maybe 50 made it, and they've kept 15, and 35 are now running their own search firms. Yeah, but that's not a model that you can teach, and that's not a model that I would want to attempt to replicate. Jeff Kaye [00:12:45]: So there are some. Definitely some challenges in the industry, but there's amazing opportunities because there's plenty of businesses out there that we can study who have the kind of models that we can look to, to just figure out how we can go build those kind of businesses. And that's the kind of thing that. That's what we operate under. That's what we train under. It's what we teach, is what we coach. Kortney Harmon [00:13:03]: I love that because, honestly, you. You hear a lot of people say, I want to do these things. However, their actions speak differently. And I'm sure you see that as you dive in and you understand and you help train them. So whenever people are like, well, what are the common mistakes? What do I avoid? What. What I heard you just say is, number One, your desire, what and who do you want to be? But number two, what's your model? And I think sometimes I don't know about you. Do you feel that people take that internal reflection to say how I have things is not probably how it should be or could be to scale. Do you see that internal reflection happen often? Jeff Kaye [00:13:35]: Sometimes I think this is not a static environment. People who have a mindset one day have a very different mindset the next day. And I don't think recruiters are unique to other people in this particular regard. You can look at these. I want to build a firm. I don't want to build a firm. 2021. I don't need any jobs. Jeff Kaye [00:13:53]: I have so many jobs I can't fill them. Are you kidding me? Who cares about sequencing and email messaging to go get searches? I have so much work I can handle. I need to hire people to recruit. Bam. One year later, oh my God, I don't have enough work. I need to go get people who has needs recruiters. All I need is business development people. I need to learn all this lead gen stuff to go get more searches. Jeff Kaye [00:14:13]: Because if I don't get more searches, it's instead of recognizing this is an ebb and flow, the economy will ebb and flow. Hiring will ebb and flow. You'll be in a candidate driven market, a client driven market. This is going to go on has gone on for decades and I assume will continue to go on. And instead of seeing these are just simply patterns, sometimes what you see is, you know, things go really well. And do you, the owner sees those opportunities to grow, do they in the challenging times, choose to fortify their bench? So the irony is human behavior says what things are more expensive? And put it this way, everyone was buying cars post Covid. Everyone was buying houses post Covid. Right? Then things get less expensive and then people go, well, now things aren't as good, I can't buy them. Jeff Kaye [00:15:03]: So 2008 was the greatest time in the entire world to invest in financial services stocks. But it was the time that most people were selling them, right? There are time periods when the real estate market tanks. That's the time to buy. But that's just not human nature. Well, how does that correlate to our business? Well, in challenging times, there's no better time to hire recruiters and build your search firm because now you can hire people at a level and a rate that you weren't able to hire them before. Before you can train them in a market that is a little more challenging. So you know that their behaviors, their skill sets are going to be better because they're learned in a more challenging and tough mindset time period. And you were able to attract people in this market that you might not have been able to. Jeff Kaye [00:15:40]: But then people go, I don't have enough work to support them. So you'll wait until the market's hot. Everyone will hire. You'll hire someone that could fog a mirror. That person will make placements for a while until the market gets lousy. You'll let them go, and you'll be right back to where you are again. So I would challenge everyone's paradigm and say, consider to zig when everyone zags do the opposite. Right now we've been in a more challenging market. Jeff Kaye [00:16:04]: I would say we're just unstable. Not bad, not great. Kind of that Goldilocks for the last three years, probably middle through 2022, is when we kind of saw the market adjust itself. Inflation went high, interest rates went up, et cetera, et cetera. And all those things kind of took a hot, roaring job market and cooled it off. But I think this is an opportunity for firms to look at introspectively and say, what do I really want? And what do I want? Not because of the market conditions, not because what happened in the stock market yesterday, but what do I really want? Like 10 years from now, what do I want? And then ask yourself, am I doing the things today that's going to produce that result? And if you think through that lens of how do I get from where I am to where I want to be, well, that journey, that is closing the gap between your achievement and your potential. And as people have heard me say before, that is literally the definition of next level. Constantly closing the gap between where you are and where you want to be and seeing this as a journey, not as a destination. Jeff Kaye [00:17:00]: Final point to that is because many times owners have this mindset. Not all, but some of I'm going to be a recruiter, I'm going to hire other people. Then I won't have to work. They'll work for me. I'll be able to travel the world and have make money by this business. That will be worth something because I'll sell it to somebody who will pay it to basically hire my employees that work, because I don't anymore. Well, if you can tell me the successful owner that sticks their feet on the desk every day and then counts the register as the recruiters out there seemingly just make placements and do it, I'd love to know what that looks Like I've never seen it before. Because ultimately all you're doing is shifting the work and responsibility that you do. Jeff Kaye [00:17:41]: From saying, I'm going to be a recruiter, so I'm going to lead and develop other recruiters, to I'm going to lead search firm and do whatever it is that you choose to do. But the work doesn't stop. The type of work changes and the things that you do change and your priorities change. But this idea that I want to get off a desk so I don't have to work anymore, it's not, in my opinion, a very reasonable outcome. It's possible. It's just not one that I think is reasonable versus saying, why do you really want to do these things? What is it you're trying to achieve? And then ask yourself, am I doing the things behaviorally every given day that's going to lend itself towards me getting to what it is that I want. But the starting place, what do you want and what do you want in the best of times and what do you want in the worst of times? And your answer, If I asked you that question about your family, I hope you'd give me the same answer. In a recession or in a booming economy, I would hope that you would give me that same answer about your professional life, because it shouldn't change based on the whims of the market, nor should your family life. Jeff Kaye [00:18:41]: And that same mindset should exist. You might have more challenges, you might have more opportunities, but what you want should not necessarily change because of outside circumstances, should change because you decide something different. My thoughts, I love it. Kortney Harmon [00:18:53]: I love that perspective and I think it's very insightful. Let's say that person wants to change. They want to see the light at the tunnel differently in 10 years. So whenever you said to look at that, and maybe they are that lifestyle business today, let's use that analogy because I know they want to be lifestyle to rainmaker and obviously scale beyond that. But I mean, what are the first critical steps that someone can say, all right, the first step is admitting where they want to be. Yes, in any good program. But talk to me about what are some actionable first steps to make that lifestyle to rainmaker model change. Jeff Kaye [00:19:24]: So there's a lot of different steps that people can take. And these are not by definition. These are the ones you have to. But if you study a lot of recruiters, you're going to see one thing, you're going to see and I'm going to say just to you, in your personal life, in anyone's if you were to go get your shoulder replaced, who do you want to do that? A general orthopedic surgeon or an orthopedic surgeon that specializes in shoulders? I'm going to guess you're going to go find and say who's the best shoulder person? Why? Why not just an orthopedic person? That person can handle knees and backs. And you're going to say no, no, no, because I want that person. You can apply this to anything, right? Law, any, just keep going. But recruiters for some reason think, oh, I can do it. Finance and accounting, engineering, hr. Jeff Kaye [00:20:04]: My clients need me for anything. Great. You're like the small town doctor that can go do anything and work for anybody. There's nothing wrong with that. But who do you think is financially ultimately doing the best? My answer is it's always the specialist. So the first thing advice that I would give someone is be a specialist. Because then you create a niche and a name for yourself, you become synonymous with that marketplace and you differentiate yourself by the knowledge that you have in the market. Not just because I know how to identify, attract, evaluate and land the best possible talent for clients most urgent and critical need. Jeff Kaye [00:20:35]: Said every recruiter ever. I only work with the best possible talent. I'm really an expert in what I do. I pride myself on thoroughly vetting candidates. I have high integrity. We only work with our proprietary 13 step process of doing the same that everybody does on every single presentation is the same. When you look at building a house, aren't the steps in building a house the exact same? What makes the difference is the home builder products and the quality that they utilize. So ultimately it's the same thing. Jeff Kaye [00:21:03]: If you specialize, in my opinion, that is the gateway towards getting more quantity of quality searches. When you get more quantity quality searches because you're trusted as entrusted advisor in the market, because you bring insight, you bring value, you bring perspective into that industry, into that market, that people trust you. That way they're going to give you more business and clients and candidates are going to work with you more. Because of that, you're going to have to do what? Well, I can handle it all. I got to build a team. Now that I got to build a team, I got to outsource. Now that I have to outsource, I have to be able to figure out what my core competencies are and hire people to do the rest. I might be able to do more financially committed search. Jeff Kaye [00:21:37]: I can start dictating the terms of that kinds of things. I can then start outsourcing more to develop other individuals that have that level of expertise and give them the opportunities to excel at the rate that they can absorb, at the rate they want to absorb. And this is ultimately becomes the gateway towards now I can build something different. And then ultimately, and I'll just add this, how do I differentiate myself in today's market? Because the whole world is out there, right? Just like at one point the Internet. What is this thing called the Internet? How is this thing called the Internet going to affect us right today? If I started talking about what impact do you think the World Wide Web will have on our business, you would just laugh. Okay, well, today that's AI. And eight years ago it was LinkedIn and before that it was job boards. And I've just seen it all. Jeff Kaye [00:22:17]: There is something different this time, and there's something different is the ability to do a lot of our job is happening. You're going to hear more about agentic AI. It's happening. And so ultimately, my belief is the same way that we came in one day and created a manufacturing plant, literally in an industrial economy and said we can build stuff in a manufacturing plant with a system and setup. The conveyor belt will let us be more effective, but we still need the individuals to be able to oversee that. So I believe that all of these technologies, innovations, of which AI is the latest one, is going to allow us to be more effective and efficient. But I go back to the center's full statement. That subject matter expert, that market master, is the individual that's going to be deploying these kinds of things. Jeff Kaye [00:23:01]: So if you're a trusted advisor to your client and a high level of relationship to that person, you're going to be able to be in a position to work the way you want, developing the relationship you want, building the firm that you want. If instead you're the one that's just been chasing the next placement. We've all watched the big bad wolf. You built the straw house. You know what happens when the big bad wolf, which in this case might be something like AI, comes along and people go, I can't believe I'm being outsourced. My clients want me to work at lower fees. And my answer is going to be not everybody. Some people go on right now, you go book your airfare. Jeff Kaye [00:23:31]: You know what some people do, most people do when they want to book a hotel room? They're going on the Internet and they're going to hotels.com and kayak and all these other ones. You know what other people do? They call their Travel agent, they still exist. They just only deal with high net worth people that are traveling on expensive travels and they still make a bloody fortune. The relationship oriented ones do those with the transactional people. Yeah, they don't exist anymore and so something like that could happen our market. So my advice to everyone, develop high level deep relationships as a market master in your area and then develop a team of people who have that same mindset. Find the opportunities for them and then build an environment that allows each and every one of those individuals to be able to excel to the best of their ability by you as an owner, providing them the culture, the resources and the economic models that want them to ultimately build that business within the organizational framework that you have. Recruiting is complex. Jeff Kaye [00:24:32]: Sometimes you just need a hand, someone beside you to give you that nudge to keep you on course. Introducing the new crelate copilot. Copilot is creelate's AI assistant. But it's more than just artificial intelligence. Copilot brings you recruiter intelligence. Need a quick reminder to reply to a candidate's email? Or maybe you're stuck writing up that new job description. Need a nudge to send a follow up to that client who hasn't gotten back to you? Copilot pilot is there to help you craft it effortlessly. With over 30 skills at your fingertips, Creelate copilot doesn't just keep you organized, it keeps you ahead of the game. Jeff Kaye [00:25:14]: Because recruiting isn't just about filling roles, it's about building relationships. And crelate copilot is the partner you've been waiting for. Check us out and create the future of recruiting. Kortney Harmon [00:25:34]: You talked about expansion right there in some capacity. How should firms really approach the geographic expansion versus deepening their presence in existing markets? Because it's obviously a pretty more in depth conversation, but I just want you to hit on it slightly. Jeff Kaye [00:25:49]: Yeah, sure. So quick version is geography was one of those things. So I'm going to give you this and everyone can think about this. When you think of firms that specialize in it, finance and accounting engineering, you know what you're going to see a lot of geographic firms. Oh, we do finance in accounting. Atlanta, we do it in Dallas, we do finance, you know, engineering in Chicago. But then you're going to find firms that specialize in pharmaceutical or construction or medical device or transportation or insurance or any of these other markets. You know you're going to see. Jeff Kaye [00:26:20]: That's weird. All the industry markets, it doesn't matter where you're located. They can be anywhere, right? Anywhere. But wow, if I place these functional players. Somehow that's a geographic market. Why? Well, the answer is because it was started by staffing businesses that wanted to control what happened in a given marketplace so they could build giant businesses. So you couldn't have an office in Dallas, working in Atlanta. And by the way, long distance phone calls were really expensive, so you couldn't do that. Jeff Kaye [00:26:45]: So they built this branch model that was built on the times, but today's market, why do I have to be in Dallas to place accounting and finance people in Dallas, yet somehow I can place pharmaceutical people in Connecticut, San Francisco, Boston, Chicago, that doesn't matter. But God knows, if I place a cfo, I have to be located in the city. It's illogical. So my answer is geography, completely irrelevant. And absolutely every market, unless you are in a staffing business where you are expected to physically meet your candidates, that every single one you place, if you are expected to physically meet them, then a geographical presence is necessary. If you are not meeting your candidates at that regular nature or your clients that you have to at that level, then ultimately that paradigm that you've been operating under, in my opinion, is a false one. It doesn't exist anymore. It's not real, it's not there. Jeff Kaye [00:27:36]: And so therefore, my answer is, you got to figure out the right combination, every firm does, of what I call fill function, industry, location, and level. Meaning you tell me the function you're in, let's say back to the example of accounting and finance. My answer is, okay, are you going to work accounting and finance by geography? That's fair. Okay, maybe you're going to work county finance by geography. Maybe you're going to work in a tiny niche. Maybe you're going to work by geography only in healthcare. So I'm gonna do only healthcare, finance, and accounting only in Texas. And that starts to become, maybe it's only in hospitals, maybe it's only a certain type of finance and accounting professional in the hospital. Jeff Kaye [00:28:09]: The more down the rabbit hole you go, the smaller the market, the more percentage you need to have. So a lot of people think, start big and work your way small. I would actually tell you to reverse that. Start tiny, develop a reputation. And as that market is not big enough to provide you what you want, you then start expanding your skill set and allowing that market to increase both geographically and in terms of maybe the functions you operate in or the industries you operate in, or the level that you operate. So start small and widen your way out. If I said to look at geography as one of the factors in growth My geographic answer would actually be about hiring recruiters. Meaning that is a do I want to hire them only physically in the location that I'm at, or am I okay in hiring recruiters in other places in the country and going to meet the talent where the talent is? And so that is a another Rubicon that people have to consider crossing. Jeff Kaye [00:29:01]: And I believe if you want to hire a world class team of people, you go find the people where they are. If they happen to be located where you are, fantastic. If they're not located where you are, that's okay too. And guess what? If they're located overseas and off in the Philippines and they're part of your team, fantastic. You meet talent where the talent is and you hire the best possible talent to build the kind of organization that you're trying to build. And let geography be something that is only related to the talent you hire, not as related, in my opinion, to the market that you serve. Kortney Harmon [00:29:31]: I love that there's a lot of very strong opinions about whether to hire remote. I mean, obviously Covid put us into a whirlwind of what that looks like, but I love that perspective because as you work with people, you figure things out, you're like, well, maybe it makes sense. I can't find anyone here. You also talked about very niche. I'm going to ask you an off the cuff question here. What is the most specific niche industry that you've heard of? Somebody. Because working with MRI offices and hearing SRA offices, I have heard some very, very niche. I'm like, that's even a thing for how niche it has gotten. Kortney Harmon [00:30:04]: So what is the most unique individual niche that you have heard? Jeff Kaye [00:30:08]: The irony is there's so many, right? Kortney Harmon [00:30:10]: There is. Jeff Kaye [00:30:11]: So I'll give you a really bore the entire audience when I tell you my first niche. Remember, I got a degree from University of Texas. I got my degree in marketing, which basically meant you drank a lot of beer. That was that, that degree back in that day there. And so I came out, started placing brand managers that led me into pharmaceutical brand managers. That led me into this thing called clinical research. That led me to this thing called PhD research scientist. And that led me into placing you ready drug metabolism pharmacokinetic scientists. Jeff Kaye [00:30:36]: I remember saying to people, I need someone that can isolate and identify unknown xenobiotics and a variety of biological matrices. Someone that can do pharmacokinetic, nonmem population pharmacokinetic modeling. And I would just rattle this, by the way. I haven't said that in 35 years I would rattle this stuff off. And my mindset was that level of specialization. So it would be the same. Back to my analogy today of saying like, I place surgeons. Nope, I only place orthopedic surgeons. Jeff Kaye [00:30:58]: Nope. I only play shoulder surgeons. Nope, I only place shoulder surgeons that do rotator cuff surgery only in the Southeast. And you might say, gosh, there's just not that many of them. Right. Well, if you had to pick a number, you tell me the fee number. $30,000. Great. Jeff Kaye [00:31:13]: I guess if you place 50 human beings, you'd only bill $1.5 million. If you place 20, you would only bill $600,000. Now you tell me, how many thousands of people do you need to have in the industry to go place 10 or 20 of them? Do you need 14,000 people? You know, go take a market for 4,000 people. What do they change jobs every four years? Go to thousand of them will change jobs this year. Thousand out of a 4,000 person market. 10% market share is 110% of the 10% market share. 1% is 10 fees, they're $40,000, $400,000 a year. You just don't need. Jeff Kaye [00:31:50]: You know, this idea that more is better is. It's counterintuitive in my opinion. And I think the other piece of this is it's not just that you know the market more. It's that clients will trust you, that you know the market more and candidates will trust you. Because you bring insight. You don't just bring your competencies as a search professional, you bring your insight and awareness of what's happening in that marketplace. And as a result of your subject matter expertise, your trust level increases with people. You're a trusted advisor. Jeff Kaye [00:32:18]: And what do you think trust your advisors do? Well, they get to be paid up front a lot of time, so they start selling more financially committed search. And that is a gateway towards ultimately doing what? Being able to work at a higher level or being able to work on a deeper level with hiring managers that have a vested interest in choosing to you and not just seeing you as a flesh peddler? Well, we got to use these recruiters. People ask me sons, what do I do when everyone's directing me? You know, I got to only work through this department. I have to work under this agreement, I have to work with these people. I don't have access to line management. My answer is always. In any marketplace, there is a product or a service that has to cater to the worst, and there's a product or a service that gets to cater to the best. Tell me what your issues are and I'll tell you what provider you are. Jeff Kaye [00:33:02]: Not in your head, not how you see yourself, how the market sees you. And you can think of any environment, think of any environment, hotel chains, restaurants or service providers, anything. And you and I could both think about individuals. You're like, well, these are just commodities and I don't really care and I'll pay what I'm going to pay. And that's it. It's a commodity. And then there's other times you say, no, I'm not just paying for the commodity. I'm paying for the experience of the service of the people, the rest of it. Jeff Kaye [00:33:30]: Where you are in that no judgment, you can be anywhere you want to be. The issue that a lot of times people have is they perceive themselves here and they're complaining they're getting treated like this. And my answer is, well, that's because they don't perceive you that way. Well, what can I do to change that? Well, probably stop doing what you're doing now, the way you're doing it, because that's producing a result that's not getting what you want. So you got to start doing something differently. Now, I'm not here to say exactly the same prescription for everybody, but ultimately each person needs to examine what they're achieving, what they want to achieve, and then look at that gap analysis and be able to determine what are the things that I need to do differently. And one of them is absolutely, in my opinion, learning. And I grew up in a culture where people learned every day, where there was you would not go a week without some form of training, meaning listening to somebody or watching a tape of somebody speaking. Jeff Kaye [00:34:18]: And in today's world, I think that's some. One of the things that's changed quite a bit is I think every really awesome recruiter is a world class learner. And if you were to look at some more junior people, looked at more veteran people and said, how do these veteran people get veteran people? The answer is probably they really, really, really spent their early days in their career spending hundreds and hundreds and hundreds of hours. And I do mean that number of learning best practices from the best people that were out there. And then now they sound like naturals, of course, because they practice several thousand hours to get to the place that they can do what they're doing. Kortney Harmon [00:34:53]: Now you mentioned how you're getting money, which is funny because this is one of my next questions. Obviously, as you grow and you scale and you look at things differently and the value that you're providing. How do you advise firms to structure their service offerings, moving beyond pure contingency to retain search? Is that something you advise? And what structure do you advise? Whenever they're doing that, yeah. Jeff Kaye [00:35:17]: So I'll start with this. Can anyone tell me an industry that defines themselves by their payment terms? Is there such thing as a retained consulting firm? Oh, no, no. We use a contingent law firm. Really? A contingent law firm? I've never heard of that. I've heard of contingent lawsuit. Kortney Harmon [00:35:34]: There you go. Jeff Kaye [00:35:34]: But I've never heard of a contingent law firm. In other words, they work in the way that is reflective of the specific situation. They then make a professional recommendation or they advise how they'll work given that specific set of circumstances. And then ultimately they're behaving in a manner that's reflective of the client's need. So my answer is, you think about what the client's challenges, and then a client focused solution says, what's the challenge? And now I'm going to put forth a professional recommendation. Could you see a situation where the answer is, well, we lost someone. They're coming back in a year because they did a sabbatical, but we're dying if we don't have someone in this role. Do you really think you should hire a person full time and then fire them in a year? I would think that's an interim solution. Jeff Kaye [00:36:21]: Do you have an interim capability? Right. And a lot of firms go, well, we don't have an interim capability. That's just not what we do. Well, guess what? We use a firm called Signature Back office, and boom, pick up the phone, hey, this one's going to earn this much money, they'll do it all. There's other firms that act as employer of record. So you have the capacity, Every firm has a capacity to offer this kind of next individual says, you know, we're always looking to hire great salespeople. We don't really have a need right now, but man, if you get a great sales rep for us, we'll hire them. Well, that sounds an awful lot like it should be a contingent solution. Jeff Kaye [00:36:50]: It's not an urgent and critical need they're not looking to fill, but they want to keep their eyes open. So shouldn't you, in that case, offer a contingent offering to that client? Now what if that same client goes, we just lost a key person in our company that provides a service or whatever it is, and if we don't have this position filled the next 60 days, we're going to miss some deadlines and we're going to be in trouble. That is an urgent and critical need. I would say that should be a financially committed search where you want someone accountable and responsible to identifying, evaluating, and helping them land the best possible talent. They want someone who's at stake. There's a consequence associated with not that. So a financially committed solution is there. There might other times where they just want to pay a certain amount of money for a market research survey and it's a consulting project. Jeff Kaye [00:37:30]: My perspective is if we are in the human capital business, our responsibility should be we serve the client and we meet them where they need us. So we're offering solutions that are reflective of the client's need. Now we might offer something. The client might say, well, I don't want to work that way. Here's what I want. I want you to be accountable and responsible. I want you to dedicate 100 hours of your life guaranteed to miss search. I want to know that you're doing everything that needs to be done, but I want to pay you reflective, as if you could do all that Excel, be perfect, deliver everything perfectly. Jeff Kaye [00:38:01]: Find five great candidates. I'm having such a difficult time figuring out which ones to hire. I'm trying to hire both. I come in with a hiring phrase and I can hire none, and you're paid zero. But I still hold you accountable to working this way. Great. That's an unrealistic expectation. So I can still educate and I can still make a decision not to work with that organization if what their expectations are comparative to what they're doing. Jeff Kaye [00:38:24]: If I walk into a Ferrari dealership, I say, well, my expectation is to buy it for $1,000. They're probably not going to sell it to me. So I was willing to buy it, just not at the price they wanted. That happens all the time. So people are, well, the client won't work this way. Oh, my God. You mean you won't pay that much for the house? You won't pay that much for the steak. You chose not to order a certain something on the menu because it was too expensive. Jeff Kaye [00:38:46]: Right. That's a decision that we all make all the time. And that is totally okay. The greater the value you offer, the greater you're able to articulate what your value proposition is and what makes you different and why you're unique. The greater the opportunity that you'll have to be able to work in the way that's reflective of the value that you think that you provide. So you have to have the value, and then you have to be able to communicate what that value is effectively. And when you do that, you can increase your market share. And until such time that you're in that position, you have to do what you have to ultimately probably work at a lower fee under different terms, under not the right structure. Jeff Kaye [00:39:22]: And people like, well, how do I get there? Deliver more value, have more track record of success, expand your marketplace. The people that are the busiest, individuals that have the greatest amount of needs are the individuals who have the greatest amount of strength and how to negotiate. You ever heard the expression don't go grocery store shopping when you're, when you're hungry? Well, that's the same thing of great recruiters. Great recruiters try to do their best not to be hungry. And therefore they're not having to recruit and market being hungry. They get to market and recruit full. And that comes across in the way that they operate and ultimately are able to work in manners that are more reflective of what they want. But to be clear, the fact that recruiters might have to adjust what we do or how we work based on market conditions, and my opinion is very reasonable. Jeff Kaye [00:40:05]: So we have to adjust based on what the market conditions are. Housing prices go up or down based on market conditions. Why are we immune from the laws of economics? We're not. So ultimately we can do what we can do. Focus on what you can control would be my answer for everybody. And all the stuff you don't control, don't worry about it because it's not going to change anyway. Kortney Harmon [00:40:25]: Nope. I love it. Great piece of advice. I'm going to ask two more questions and then I'll leave. You go. Jeff Kaye [00:40:30]: You got it. Kortney Harmon [00:40:31]: Looking ahead, what changes do you. I know you don't have a crystal ball, but what changes do you anticipate? How search firms need to structure themselves to achieve scale. You mentioned AI. That may be a part of your answer. But what do you think needs to happen? How do you think people prepare? Because the unknown scares people. Jeff Kaye [00:40:49]: Yeah, it's a great question. So if you look back over the last few decades of search, I will tell you, here are the things that people thought, Internet job boards, right? So Internet monster as an example. We're going to change the way that we do things. Job matching services on the Internet, e cruing, corporate recruiting, LinkedIn, now AI. All of these things are the things that are going to come in and hurt, affect, replace recruiters. Can anyone tell me today, as a good search professional, if the Internet has hurt you or you made more placements because of it? Did you make more placements from using Job boards or more from other firms using. Do you do business today where a lot of your clients are corporate recruiters? The people that were going to replace you and now they're using you. Do you use LinkedIn to find people and do that? Are you using data sources and other things? Do you use an ats? Right. Jeff Kaye [00:41:40]: Did the ATS hurt you or did the ATS make you more money and make you more business? So isn't it funny that every single innovation that comes along as one that's allowed recruiters to be more effective? Yeah. So now I'll give you the dark side. We had a thing called 9 11. Not good. Financial crisis, not good. Covid, not good. How many people predicted those three Translation. The things that actually got us, no one saw coming. Jeff Kaye [00:42:06]: The things that everyone said is going to hurt us. So the one thing I can tell you pretty much certainly is AI will actually only help us expand what our opportunities are in the future. And why do I say that? Because we have 35 years of data that every other time someone predicted something was going to quote 1998, the company called Cruel World stick a fork in recruiters, they're done. That was 1997 and of course that company went bankrupt. Okay. Because you're going to find candidates and job openings here, candidates online and they're going to find each other. In this E Recruiting thing, recruiters are done like Sample Meyer. So yes, recruiters will be replaced that are commodity based people. Jeff Kaye [00:42:46]: Yes. AI will allow you to go build a legal contract but not replace lawyers. But yeah, the lawyers who aren't very good that rely on things that can be found on the Internet. Yeah. So it will ultimately, in my opinion, place the words of it. So if you said to me, what can people do to prepare, stop worrying, focus only on the things that you can control and say what can I do that's going to control the next day? I can come in and plan, I can learn, I can figure out how to make improve my game. I can utilize technology. Right. Jeff Kaye [00:43:21]: In your case, I can use greenlight more efficiently. I can learn how to do more things I can do, I can excel, hone my craft. I can work harder, I can be more efficient, I can be more productive. All those things are things that you One can take an ownership in everything else. What do you think's going to happen here? Talking. That's not going to change you. So if I had to give the. After you watch this podcast, what should I do? My answer go. Jeff Kaye [00:43:45]: Think about what you can do immediately that you need to do that's going to help you produce the day that you want. If this was the learning component, now go execute, go call. And when you call, what are you going to say? How are you going to say it? What words are you going to use? What are you going to do when they have resistance? How are you going to handle that? What are you going to put forth? If they ask you to send something, what email are you going to send? What's it going to look like? What kind of content are you going to put in there? How are you going to differentiate yourself? Is your fee agreement the right kind of a fee agreement? If you're going to recruit a candidate, how are you going to articulate this position? How are you going to bring the happy with her out best possible candidate across the finish line and try to get them to consider the possibility of change? If there's 100 people that are open to change and there's only two that could be recruited by the best person, what's going to allow you to recruit one of those two people? How are you going to separate yourself and what skills are you going to put in place? So my answer is worry about the things that can you can control and then go and implement and put a plan in place to do the things that impact you. Talking about all the other stuff isn't going to. If you want to know about what should I do about AI, start learning it, start using it or hire people that learn and use it. I'm a big believer in outsourcing and so you asked a question about talent earlier. I think you go meet the talent where it is and I think if you want to hire experienced search people, you should hire them wherever they are because they're important. If you want to hire more junior individuals, I think a more junior individuals in today's environment, for a lot of reasons I won't get into that are just the diligence, the work ethic, the willingness to do whatever it takes, the apprenticeship mindset. Jeff Kaye [00:45:21]: I think that is out there, it still exists. But I think the world has shown us that talent doesn't need to come only from your backyard and talent can come from other states and talent can come from other countries. So if I said, you know, there's 250 people at Starfish and 10% of that population is in the Philippines working through high connects, that's not an exaggeration meaning like and that is a integral part of of the way that our organization works because that's just part of the dynamic of it. So be Open to these changes that are happening, figure out how to embrace them, but at the same time bring to present day, take the old school best practices that have ever existed. So take the old dogs who learned all those old tricks and then think of all the new tricks. So it's interesting, old dogs need to learn the new tricks, but the new dogs need to learn the old tricks. And once you learn that piece of it, once you understand, it's not an either or, it's both. It's the skills, the communication skills, the people skills, relationship empathy, all of those characteristics, communication, persuasion, that allow you to be a great understanding, empathetic consultant to your market and someone who has the latest and greatest. Jeff Kaye [00:46:38]: Back to my original statement when you asked me the question about market mastery, I want a surgeon that has the best possible skills. I want that surgeon and I want them to use robotics, if that's a thing, or laser or whatever the great new technologies are. I kind of want both. And I think that's what the market craves right now. So my answer to everybody would be improve and sharpen your skills as a person, as a human being, as an individual. The things that you can control that have nothing to do with technology. It's all about you and what can you do to get better? What can I do to get better every day? And then secondly, what are all the new techniques and new approaches and new technologies and new methodologies? How can I incorporate these things to make me and my team and my organization more efficient, more effective, more productive and more profitable and then make my life more enjoyable? Kortney Harmon [00:47:29]: That is a perfect way to end that. That sums it up perfectly. Thank you. Now, I can't let anybody go because you've said a lot of wonderful things and a lot of people may be curious about all the titles and companies and things that you said. So if anybody is interested in learning more about nle, sra, all the things, where do they go? What do they look for and how do they say, maybe I want to be a part of this? Jeff Kaye [00:47:54]: So NL exchange.com is the next level site. The search firm stuff is starfish partners.com that'll take you to the different search sites. Join SRA Network is Sanford Rose Associates. And for the new startup firms, join. Dimensional Search is the beginning search and Recruiter University is where you will find the coaching that, that we do. So again, we try to do the same thing as our clients. Meet the clients where they are, figure out what it is that they need, and then try to give them the right solution. And if we can handle it, great. Jeff Kaye [00:48:25]: If we can't and direct them to someone else, we're happy to do that, too. So it's a pleasure, Kortney. I've enjoyed getting to know you, and thanks for having me. Kortney Harmon [00:48:34]: Thank you. And we'll make sure we put all of those in the show notes. And if you talk to anybody over there, make sure you heard it from the podcast, just to wrap it up nicely from Jeff himself. So thank you so much for spending the time with me today, and I greatly appreciate your time. I'm Kortney Harmon with Crelate. Thanks for joining us for this episode of Industry Spotlight, a new series from the Full Desk Experience. New episodes will be dropping monthly. Be sure you're subscribed to our podcast so you can catch the next Industry Spotlight episode and all episodes of the Full Desk Experience here or wherever you listen.