Why Traditional Recruiting Firms Fail Family Businesses

The traditional recruiting model is outdated and focuses on speed, not fit – Stranberg takes a more modern and strategic approach

In the 1980s, Stranberg’s founder, Jim, was the “tax guy” in Chicago. When an organization needed to hire a tax professional, they called Jim. He had a stack of resumes, a database of qualified candidates, and a robust professional network. He knew who was downsizing, who was hiring, and who was looking for new opportunities.  

This who’s who approach to recruitment was established back in the 1950s when the recruitment industry was first professionalized. Before the dawn of the internet, businesses kept running into the same problem: they knew the right candidates were out there – but struggled to find them. They knew their city was brimming with talent – but found that talent to be elusive.   

Getting the right people in the door required a Jim: someone who made it their business to know the market and its players. It required a professional with deep, specialized roots who could source and vet candidates. It required a Rolodex, a little black book, or a big black filing cabinet full of names.

Then, in 2003, LinkedIn was launched and that strategy… mostly remained the same. The traditional approach can work – but when it comes to family business hiring, the results can be ruinous.

The Limitations of Traditional Recruiting

The “2 of 3 Formula”: A Vestigial Reminder of a Bygone Era

Here’s the reality: everyone is online—and recruiters know it. They invest in licenses for databases packed with industry- and location-specific contact information. While their tools have modernized, their client approach remains stuck in the past.

Most search firms still operate using what’s known as the “2 of 3 formula,” where recruiters claim deep expertise in any two of three categories: geography, industry and function. For instance, a recruiter might focus on the real estate sector in Chicago, or financial executives in New York.

Under this model, firms market the illusion of a proprietary candidate network—then “sell” access to it. Despite using up-to-date tools, the underlying philosophy is outdated: transactional, narrow, and built on scarcity, not strategy.

The “Proprietary Network” Myth

Many recruiting firms claim to hold the keys to a secret stash of candidates that no one else can access. This notion is false: proprietary networks don’t exist. Everyone is online, everyone is connected, and everyone’s contact information is for sale.  

Individual recruiters and firms actively network with their “two of three” community and often have deep knowledge of their niche. However, those relationships and expertise do not mean recruiters have special algorithms or tools that allow them to unearth hidden troves of purple squirrel candidates.  

Why the Traditional Recruiting Model Doesn’t Serve Family Businesses

The traditional recruitment model is built on speed. It’s treated as a transaction process where the company buys access to a list of candidates. This approach is most effective for companies that need to hire quickly and know the exact qualities and qualifications they are looking for in a candidate.

Many companies—particularly family-owned and founder-led businesses—aren’t looking to rush into the wrong hire. They may be exploring a new sector or only occasionally make executive-level hires. In these cases, businesses often lack clarity on the ideal candidate, the true requirements of the role, or the potential impact a new leader may have on their operating culture. Because leadership transitions are infrequent, few have a well-defined position description or candidate profile prepared. Most need support to get it right.

For the most part, traditional recruiters cannot provide that support. Instead, they sell the “community” they’ve cultivated to their clients, hope a suggested hire works out, collect their commission and move on. This approach rarely serves the needs of family businesses – here’s a deeper look at why.    

Candidates as Commodities

Recruiting is a transactional process for most firms. A candidate’s value lies solely in how closely their functional skillset hews to a position description. Recruiters rarely look beyond on-paper qualifications, which means their values and temperament are often disregarded.   

That oversight can cripple a family business – particularly at the executive level, where cultural fit is as important as experience and credentials.

Contingent Search

Most recruiters work on a contingent model, which means they are only paid once the company makes a hire. This approach appeals to many: why pay for a service before a candidate is placed?

As it turns out, there is a very strong argument against contingency. There is no guarantee a recruiter will be paid, so their focus is on closing requisitions as quickly as possible. Because they are incentivized by speed and short-term gains, they generally pitch any “qualified” candidates in their pool to clients – regardless of whether those individuals are actually the right fit for the position. If a project is too complex or takes too long, it’s common for contingent recruiters to cut their losses and disappear.

For family business executive hiring, this model can be disastrous. Placing the right leader takes time and requires a thoughtful, holistic approach.

Contingent Non-Exclusivity

Some businesses choose to work with multiple contingent recruiters simultaneously. The firm that presents the candidate who gets hired is the only one that gets paid. Some think the contingent non-exclusive model fosters healthy competition. In reality, it only incentivizes recruiters not to prioritize their non-exclusive clients – and throw spaghetti at the wall to see if something sticks.  

Blackouts

Recruiting firms sell themselves on their ability to bring their clients the most qualified individuals in their field and/or function. But recruiters may not always have access to top talent because of blackouts – which are blacklisted companies or individuals. Blackout lists can come from the recruiting firm, itself, or clients.  

• Internal blackouts: Large executive search firms that operate in multiple cities sometimes compete internally for candidates; generally, whoever contacts a candidate first has an exclusive claim on them

• Client blackouts: Some clients have lists of businesses they cannot poach candidates from (subsidiary or partner companies, for example); in these situations, recruiters often have to work around both their client’s blackout list and their own company’s blackout list   

What Family Businesses Need to Hire Executives that Last

Traditional recruiters focus exclusively on who: who they know, who they can add to their candidate pool, who they can present to clients. Absent from their purview is any thought of what their clients truly need from candidates.

For family businesses to find an executive who will be a long-term steward for their business, on-paper qualifications aren’t enough. Equal attention must be paid to the organization’s goals – and finding a leader with the traits, values and temperament necessary to achieve those goals. That’s the philosophy Stranberg was founded on.

Instead of throwing candidates at our clients, we work with families to define their values and goals, craft clear-eyed position descriptions, and find the candidates that are best-qualified for the position.  

How We Work

Stranberg works on an exclusive, retained model. Unlike the contingent model, clients pay for our process, which is focused on fit and alignment. The only candidates we present to clients are ones who have been custom vetted and have the credentials, experience, values and mindset needed to thrive in the role they’re being considered for.

How We Source Candidates

Stranberg uses a two-pronged approach to find candidates:

• Technology: we take a technology-forward approach to recruiting and leverage LinkedIn and other industry databases to find qualified candidates

• Referral network: over our 40 years in business, we’ve developed deep relationships with business owners, independent directors and management consultants who can make informed recommendations

Once the process starts, we continuously build our candidate pool to provide clients with a steady stream of qualified individuals.

How We Vet Candidates

We begin by comparing candidates’ resumes against the job description we worked with clients to create. From there we conduct a series of interviews to weed out candidates that don’t align with the family’s needs:

• Phone screen, to identify the most promising candidates

• Career history interview, to build a holistic portrait of the candidate and his or her professional experience

• Behavioral interview, to assess how candidates behave in real-life scenarios

A short-list of candidates is then presented to the family to interview. Throughout the process, Stranberg conducts regular check-ins with the family – including candidate benchmarking – and adjusts the strategy if needed. The same process is applied to both external and internal candidates.  

Your Partner for Executive Succession, Search & Selection

Stranberg supports clients throughout the executive succession planning lifecycle: from leadership consulting to executive search to integration. Once a candidate is selected, our team assists in contract negotiations and facilitates the inboarding/onboarding process. By focusing on fit, our approach results in executive hires who help family businesses thrive for generations to come.  

To learn more, contact us or read about our approach and how Stranberg differs from traditional recruiters.

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