The quick-fire hiring and firing of Andrew Flanagan by Myer casts the role of recruitment experts into the spotlight. And that’s not a place they want to be.

Recruitment consultants are one of many “helpers” that large companies use — along with consultants, lawyers, accountants and remuneration experts. These highly paid experts essentially act to assist highly paid executives to do their jobs. And when it comes to recruiting, these experts certainly don’t come cheap.

Traditionally, recruiters (who are also known as headhunters when it comes to more senior appointments) will handle all the legwork in an appointment, gather a collection of candidates, interview and check the candidates’ references, then provide a list of the best candidates to the board or executives for assessment. For their trouble, recruiters will demand a fee of upwards of 30% of the first year’s salary of a successful candidate (usually inclusive of bonus). When it comes to a senior executive earning more than $2 million, that can be a fee of more than $600,000. (In many cases, recruiters will have a selection of possible candidates on their books already and will offer up the most suitable).

Big-name headhunters, which include multinational goliaths like Egon Zehnder, Korn Ferry, Spencer Stuart and Heidrick & Struggles, are the world’s most expensive matchmakers. Fortunately for the recruiters, in the event that they get an appointment wrong, there are no ramifications, as fees are almost always non-refundable (Egon Zehnder suffered no ill effects after suggesting Sol Trujillo for the Telstra top job). Then there have been the calamities — like Myer’s now infamous recruitment of Flanagan, or Yahoo’s hiring and subsequent termination of former CEO Scott Thompson. Thompson was dismissed after five months in the top job after it was discovered he lied on his CV, claiming that he had a degree in computer science (he didn’t). The fraud only came to light after hedge fund manager Dan Loeb informed Yahoo’s board. Thompson was recruited to his former employer, PayPal, by Heidrick & Struggles. In 2006, RadioShack’s then-CEO David Edmondson quit after it was revealed he fabricated receiving a college degree.

That said, top-level headhunters will provide a genuine service and usually, have access to a strong list of candidates.

Last week, Myer attracted headlines after it recruited Flanagan as group general manager of strategy and business development (a role that would involve a salary of upwards of $500,000). All was going swimmingly until it was discovered that Flanagan fabricated his CV, claiming to have been a managing director and vice-president of Inditex Group (owner of the Zara fashion chain). It appears that neither Myer nor its outsourced recruiter bothered to closely check Flanagan’s references (the fraud only became apparent when Zara let Myer know that Flanagan had never worked at Zara).

The recruiter in question was a firm known as Quest, which claims to have been established in 1987 and based in Geelong (although reports have suggested that part of the business is run from CEO Lorraine Tribe’s home). It appears that Myer did as little due diligence on Quest as it did on Flanagan, with the recruiters “Employer Services” page not providing a wealth of information as to what they provide clients:


Like almost all the businesses that consult and assist boards, recruiters are highly paid and completely unaccountable. But like consultants, remuneration advisers and a host of experts, don’t expect that to change any time soon.