Standing up for ethics and integrity

On the surface, the rise in the number of executive search and recruitment firms over the years, which is estimated to be more than 70, is something that companies and high-caliber executives that rely on their services should be happy about. Having many options is almost always a good thing.

The problem is that not all of those firms can be fully trusted. It is estimated, in fact, that less than 20% of search firms are registered with the Securities and Exchange Commission (SEC), a disappointing and worrisome proportion. This is probably where most of the malpractices and unethical ways come from.

In 2009, four like-minded executive search professionals banded together to stand up to the search firms whose malpractices were giving the industry a negative reputation. They were Jun I. Gil, chairman of Amrop Philippines; Patty Gallardo, managing director of Amrop Philippines; Stella Guilatco, managing director of George Garrett Guilford & Associates; and Babes Guevara, managing director of High Integrity for Recruiting Executives or H.I.R.E. Inc.

“We should do something about this,” Ms. Gallardo, PAESPI secretary, recalled telling themselves. “What about if we put together an association that will be dedicated to extolling ethics and integrity in the business?” she said. And so they did. In 2009, PAESPI or Philippine Association of Executive Search Professionals, Inc. was born and registered with the SEC the following year.

The founding members were later joined by Mario A. Biscocho, senior vice president and managing director of John Clements Consultants, Inc.; Rubi Benitez, managing director of RGF Executive Search Philippines; and Cesar Ginete, country manager of The People at Work.

PAESPI’s overarching goals are to professionalize the executive search business and curb malpractices. The means to achieving these goals is the spirited promotion of the Executive Search Code of Ethics that emphasizes the virtues of integrity, loyalty, competence and tried-and-tested search process, and of the bills of rights of the clients and candidates.

Among the malpractices that the six-member association deplores is charging fees without any value-add. Passing on curricula vitae without screening does not deserve any fee, PAESPI claims.

“It may be fast and cheap but the real grunt work of screening, interviewing, and assessment plus due diligence are all off loaded to the client. Besides, it is a shot gun approach without knowing what to target,” added Mr. Ginete, PAESPI board member.

Mr. Gil, PAESPI president, described how an ethical search firm adds value. “An ethical search firm ensures it has a thorough understanding of a client company’s requirement as a first step to a series of steps that leads to successful searches.”

Among the malpractices that the six-member association deplores is charging fees without any value-add. Passing on curricula vitae without screening does not deserve any fee, PAESPI claims.

The ethical firm, after understanding the client’s requirements, conducts a thorough research on executive talents from its data bank as well as from the market. Through in-depth interviews, the possible candidates are carefully screened, compared and evaluated.

This process ensures that the candidates match the specifications of the client who is given a choice from the best three to five recommended by the search firm. Together with the recommendation are written assessments of the candidates’ professional and personal suitability, fit to the organization’s culture and career motivation. Reference checks are conducted to ensure that all the claims of the candidates are true.

“Many times, we have these so-called agencies that don’t even know the specifications of the clients,” Ms. Guevara, PAESPI vice-president, said. The common tactic of these agencies is to send out loads of resumes, without bothering to talk to the candidates. “It’s the client that does all the screening,” she said. “That’s not our value proposition. It’s a shortcut. It’s a fast-buck approach.”

The indiscriminate distribution of resumes by agencies in the hope that one of the owners of those resumes will end up being employed is not only a terrible shortcut but extremely unethical. “But worst of all, this practice is a violation of the Data Privacy Act,” said Ms. Benitez, PAESPI board member.

Taking the shortcut has unpleasant implications for the talents. “For all you know, you find yourself landing a job which is not for you. The talent may ultimately decide to leave,” Ms. Guevara said.

The other malpractice that PAESPI finds unacceptable is the betrayal of client trust. This happens when a firm places a candidate with Client A, then enticing the same candidate to transfer to Client B after one year or so.

“Closely related to this is ‘biting the hand that feeds you’ or placing a candidate with Client A while recruiting another executive from the same client,” Mr. Biscocho, a PAESPI board member, said. “When we sign up with a client, that client is a ‘no-touch.’ We cannot tap their people.”

There is also the breach of confidentiality that a firm commits by divulging the identity of a client in search of a candidate. This indiscretion has led to many embarrassing situations when executives learn through the grapevine that they may be replaced. Similarly, an executive whose resume has been indiscriminately distributed can find himself exposed and vulnerable.

PAESPI embarks on different information campaigns, such as the regular breakfast forums, which are often attended by executives who actually make hiring decisions, to promote the code of ethics and rights of candidates and clients. These campaigns are all the more crucial because even though the executive search industry is fairly well known, “it does not necessarily mean all the companies know exactly how it operates. It also does not mean all executives know how we must operate,” Ms. Benitez said.

PAESPI understands that it is not possible that their efforts will completely eliminate malpractices in the expanding executive search industry. “I think the important thing is that we’re able to show the right way of doing things,” Mr. Ginete said.

When asked what are the plans of PAESPI in the long term, Mr. Gil said that they aim to stay the course and continue their educational campaign so that many more clients and candidates will be aware of their respective rights and know of the existence of the code of ethics of PAESPI. “As the younger practitioners come into the business, the need for continuing educational drives is all the more imperative,” he said.

Ms. Guilatco, PAESPI treasurer, concurred. “Awareness is there, but people change. People who head corporations change,” she said. “Our information campaign will be continuous.”

“We don’t want to lower the standards we have set up at the very outset. We have been true to our advocacies for the past seven years and when we hand over PAESPI to the next generation, we willl leave a legacy that we all can be proud of.”

In the long term, PAESPI hopes to entice more members to join. “The goal is to make sure we continue to be vibrant by getting more firms to join us,” Mr. Gil said. Being a member of the association has become sort of a badge of honor in the executive search industry. Ms. Benitez noted that clients look up to PAESPI member firms because of their advocacies and regard for ethics.

Currently, PAESPI requires that firms interested in joining must embrace the association’s Code of Ethics. “After all, this is to the interest of both clients and candidates, especially since we likewise promote the Bill of Rights of both clients and candidates,” Ms. Gallardo said.

Some may find this criterion somewhat intimidating. But, Ms. Guilatco insisted, “We don’t want to lower the standards we have set up at the very outset. We have been true to our advocacies for the past seven years and when we hand over PAESPI to the next generation, we will leave a legacy that we all can be proud of.”