Headhunters: Are They Truly Worth Their Hefty Price Tag?
What are Headhunters?
Headhunters (they prefer to be called “executive search and selection”) can easily be confused as Recruitment Consultant, but the two biggest differences are that they tend to proactively approach passive applicants, and they normally charge up front for their service.
You’ll often find that Headhunters are either very large and well-known, covering a broad range of specialisms with different departments. On the other end of the spectrum are smaller headhunters run by an owner/manager who may only specialise in one sector.
The larger headhunters may have several people working on a job vacancy:
- Sales development representative (SDR). These are often junior staff making telesales calls to identify potential business opportunities which are passed on to someone more senior.
- Business development representative (BDR). They sell the headhunters service.
- Project/account manager. Coordinating resources and providing feedback to the employer.
- Senior researcher. Leads a team of researchers to identify potential applicants.
- Headhunter/consultant. Approach potential applicants to solicit interest, coordinate interviews and make a placement.
When would an employer use a Headhunter?
There are a limited number of situations where a Headhunter can help:
- For sensitive and confidential roles.
- When hiring for a senior or very specialise appointment, or when entering international markets.
Please note that headhunting takes time and they won’t necessarily have a fresh supply of applicants looking for a job. Consequently they are unlikely to be of assistance for urgent matters.
In addition, this isn’t the sort of responsibility you can delegate because you don’t have the time. Headhunting is time intensive and given the seniority of jobs being filled it must be taken extremely seriously.
What jobs do Headhunters fill?
Whilst headhunters often specialise in a particular sector, they will only work on senior level appointments.
Additionally, whilst recruitment agencies will often place temporary, contract and part-time roles, headhunters will often focus exclusively on full-time permanent jobs.
Because headhunters are for very specialist and senior roles, they are typically used by organisations in the Young Adult and Maturity phases of their business life cycle (more information about business life cycles and recruitment life cycles is available).
How much do Headhunters charge?
I hope you’re sitting down for this, because Headhunters can be very expensive. For example, and to keep numbers simple, if you recruit an employee on £100,000 they may charge £30% which is a £30,000 placement fee.
Not only do headhunters charge a lot, they may have to inflate salaries to tempt passive candidates to move. In contrast, active applicants applying for a job tend to have more modest salary ambitions. Overall this means you pay a higher salary and correspondingly pay a higher placement fee.
That’s not all, Headhunters may also charge fees for advertising the role. This used to be in business titles such as the Financial Times, which actually was more to develop the Headhunters brand than find good candidates. But at the appointments section of many newspapers and industry titles have withered away, most rely on job board advertising. From an outsiders perspective this may seem ridiculous – they charge a lot more, and they are meant to be contacting passive applicants who don’t use job sites – but that’s what they got away with for ages.
But the biggest difference is that they often charge up-front in thirds: one-third to start researching potential applicants; another third when interviews are arranged; and the final third when an applicant starts.
Naturally these high fees can be unaffordable and a drain on cashflow, so they typically only attract companies with significant investment or are mature enough to have sufficient cash in bank.
Fortunately the market is being shaken up. Quasi-recruitment agencies are adopting hybrid models by charging on a no-success-no-fee basis. They can do this because technology makes the job more efficient, it is much easier to identify applicants via LinkedIn (just as you can), and they aren’t blinded by tradition and what they can get away with.
What guarantees do Headhunters offer?
Fortunately Headhunters do offer a guarantee. Whilst they often won’t give a cash or credit refund, they should offer to refill a vacancy if a candidate leaves within one year. Whilst I’m not particularly fond of this method with recruitment agencies, I do believe Headhunters want to protect their reputation and this is sufficient motivation to find a replacement.
Surprisingly, candidates who have been headhunted do leave for a mixture of reasons:
- They are mis sold by the Headhunter. In order to solicit interest a Headhunter may make exciting promises that can’t be kept.
- They are mis sold by the Employer. Often senior appointments become available because a company is growing. This can seem exciting and many people only consider the potential benefits rather than threats. When reality sinks in candidates start to look elsewhere.
- The new employees partner/family has been mis sold. Sometimes senior appointments will have to relocate. They are sold on better schools, nicer locations and climates, an overall better quality of life. Again this is exciting for everyone, they think about sipping cocktails, meeting new people, experiencing new cultures, having a swimming pool for the kids. But then the reality sets in, learning a new language, leaving your friends and family behind, having the clean the swimming pool! And this is the biggest reason I see senior appointments move on.
How to choose a Headhunter
Four things to be careful of here:
- Employment agencies may offer to headhunt for you on a no-success-no-fee basis. Ensure they genuinely have the appropriate experience, otherwise they could do you a lot of reputational damage.
- Avoid “speculative headhunters” who cold call applicants and tell them they’re representing you, even though they’re not! They often do this to hook applicants and later use a bait-and-switch technique.
- Ensure they aren’t relying on job adverts or LinkedIn. Headhunting used to be very exclusive. It took real skill to identify a target list of applicants, then develop a relationship to persuade people to consider leaving a job they are perfectly happy at! Sadly I now see many ‘headhunters’ simply advertise jobs on job sites or crawl LinkedIn. Some ‘headhunters’ are even customers of my flat-fee recruitment company, where I charge £199 and they charge thousands. You could easily do the same for far less money, so ensure they are genuinely adding value.
- One final and often overlooked point is that you have to know which companies a headhunter is not allowed to poach staff from. Some established headhunters have significant non-solicitation clauses, which may limit their ability to do a thorough job (though likewise it should mean your staff are off limits).
But before you choose a Headhunter
Please ensure your exhausted all other methods. It will cost practically nothing to use a flat-fee recruiter or advertise on job sites in comparison to a headhunter. At the very least you’ll gain some useful insights about market conditions and you’ll be able to polish off your recruitment skills. Often you’ll fill your job for a fraction of the price.
The last thing I want is for you to interview a candidate, realise they found the job through a job advertised using a flat-fee recruiter, and that you’ve now got to pay thousands more for the privilege!
I’d also like you remind you that many headhunters will be exclusively using LinkedIn, a site you can also pay for access to. If you do find someone, simply start a conversation by saying <span class="is-speech">“Hi, I’m currently recruiting for a Sales Director at my company and saw your profile was closely aligned. I’d appreciate the chance to have a conversation and discuss your career objectives.”</span>