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Headhunters: Help or Hindrance?


At first glance, “a savage who cuts off and preserves the heads of enemies as trophies” doesn’t sound like a promising job search resource.  “A recruiter of personnel” sounds a little more promising!

The role of a recruiter is to find the best fit person for a role as effectively, efficiently and economically as possible.  While technical skills are important, “chemistry” with the corporate culture is equally critical.  The estimated cost of recruiting a new employee is one and a half to two and a half times annual salary;  that’s 25% in actual costs and 75% in opportunity costs (i.e. the impact on  staff morale, client satisfaction and organizational profitability or sustainability while the role is vacant).  So recruitment is an art and science:  get it wrong and every subsequent dollar committed to an employee will not yield the maximum return on investment. 

So how do Recruiters work?  They can work both internally and externally.

Internally:  the HR department of larger organizations may have a team of people who are specifically trained as Recruiters who use techniques like:  an Employee Referral Program, the Careers tab on the organization’s web site, job fairs, etc.

Externally:  there are basically two types of “third party” recruiters which differ in terms of:  target candidates, how they search and how they’re paid.  Both can be individual freelancers or a company.  An employer may go third party when they don’t have the internal resources to recruit, when they have a large initiative to recruit highly specialized skills, when they need to find someone quickly and confidentially, e.g. in the case of an impending termination.

Placement Agencies

  • Target candidates: The agency’s main focus is junior to intermediate subject matter experts and management.
  • How they search:  Agencies are not retained exclusively; the employer may accept applications from a number of third parties.  Agencies tend to be more transactional, accepting unsolicited resumes, building a database, then presenting a long list of candidates to the employer and hoping one will be chosen.
  • How they’re paid: Agencies are paid “contingent”, i.e. when they place the successful candidate, they are typically paid 20-30% of first year’s salary.

 Search Firms

  • Target candidates: The firm’s main focus is senior subject matter experts and management.
  • How they search:  The Firm is in an exclusive relationship with the employer and is the only third party presenting candidates.  The Firm becomes a consultant, taking the time to really understand what specific skill sets the employer needs and wants for the role and the corporate culture.  Then the Firm presents a short list of candidates.
  • How they’re paid: The Firm is paid a “retainer” or flat fee (which may be more than 20-30% of first year’s salary) for the process regardless of whether it places someone or not.  Again, candidates should never be asked to pay the third party;  that fee is always paid by the employer.

With labour markets shifting and seemingly more candidates than opportunities, both candidates and employers want to consider every available resource.   You’ve probably heard the stats:

  • 20% of opportunities are published, i.e. in print (being used less often),  on-line (the number of general and specific job boards can be confusing) and third parties (placement agencies and search firms)
  • 80% of opportunities are unpublished, i.e. it’s all about who you know and who knows you;  we’ll talk more about networking and social media next time 

While a third party’s commitment is to the employer, they are only as good as the candidates they present.  Candidates may find they can access opportunities through a third party that they couldn’t on their own.