Using agencies or head-hunters – to search or not to search….?

When choosing a recruitment company, it is a good idea to consider carefully what you want from the relationship and choose a recruitment company to suit your circumstances.


Clients (companies seeking to hire) often tend to work with contingent agencies when filling mid- or low-level positions.  Agencies generally rely heavily on their ability to generically process in advance a large number of candidates and therefore concentrate on mainstream roles to template the processing effort.  They seldom work on an exclusive basis, therefore it is not rare for a client to work with a large number of contingent recruiters on the same assignment at the same time, in order to maximise the volume of candidates’ (job seekers’) CVs they receive.  Contingent agencies do not get paid until the placement is made, and thus the cost and risk of conducting the search is shifted almost entirely to the agency or agencies.  Moreover, contingent agencies often work with clients on a lower percentage fee basis relative to retained search firms, as they are mitigating their risk by swiftly filtering (often solely using their IT systems) a large number of pre-screened candidates.  Agencies typically have a scarcity of people to fill roles (which are often relatively high turnover) and therefore operate in a ‘candidate driven’ market and consequently try where possible to use an advertised or ‘Selection’ methodology to attract candidates and to increase their brand reputation and recognition.

Agencies or contingent search

A second option (a variation on the first) is to hire one firm and give them an ‘exclusive contingency’ arrangement so that the money is still paid at the end of the search, but there is only one firm working on the search.  This gives the firm the benefit of time to truly focus on quality and the hiring manager is not flooded with CVs.   For more senior non-confidential or mid level roles, a client may start with the contingent search firms for a low-risk look at who is available on the market.  With a role carrying a reputational risk or the need to quickly hire the best possible individuals available, this would often represent an unacceptable compromise on quality and speed.  While contingency search firms offer a service with no money up front, like agencies they will often only work on those assignments that can be executed quickly and do not have the time to focus on high-quality candidates.  This is simply an economic reality.

Executive search

A third option is to pay a firm an engagement fee or commit to a retained assignment.  Retained executive search firms are firms paid on a retainer structure and tend to recruit at a very senior level or where skills are very rarefied.  Almost invariably these firms are exclusive as well and therefore have more resources available to them and also bring a level of professionalism sought by many upper level candidates.  Their corporate brands are less extensively promoted than agencies, as their reputation management is more private and directly with clients, not with potential applicants; this means that they are less eager to advertise roles unless the circumstances require it.  At the retained level, a client would pay an increment to start the search, a payment when candidates are submitted and final payment when the candidate starts.  These are success based milestones and are normally a third of the overall fee in each case.  Fees typically vary from 25% to 50% of the first year’s remuneration package.

Executive search is typically used for filling purely senior roles (it is important that the target audience has some kind of reputation, otherwise the referral mechanism does not work; they also need to be senior enough to be inclined to network internally and externally, for the same reason).  The roles are sometimes confidential by nature, or where there is a difficulty identifying high quality talent in a market crowded by mediocrity, or where there is a scarcity of talent generally.

Search and Selection

Some clients may choose to request a combination of candidate acquisition techniques to include advertising in addition to executive search.  This is most likely when the rationale for applying one method or another is not conclusive, therefore it becomes important to increase the available of candidates using a variety of methods.  ‘Selection’ is another term for advertising roles and sifting the responses into the same talent pool as the search process.  Using both methods increases the workload drastically for the recruitment business, therefore it often carries a financial premium.

Executive search firms

An executive search firm, or head-hunter, is a type of employment company that specialises in recruiting executive (senior) personnel for companies.  True executive search consultants typically have a wide range of personal contacts within the area in question, a detailed specific knowledge of that area, and typically operate at the most senior level.  Executive search professionals are also involved throughout all of the hiring process and beyond, conducting detailed interviews as well as only presenting candidates to clients where they feel the candidate in question will fit into the employment culture of the client.  Retained recruiters work for the organisations who are their clients, not for job candidates seeking employment.  Clients often prefer to work with head-hunter s who have performed in the past for them and by working exclusively and on a committed (retained) basis, the client generally develops a much deeper relationship with the recruiter, and receives a much higher level of service.

Types of executive search firms

There are broadly two different types of retained executive search firms in operation.  Global firms tend to cover numerous different sectors.  Such executive search companies will have many offices all over the world and the consultants will typically be split by which sector they are expert in.  These firms are often publicly listed and may have dozens of offices in major generic business hubs.  Boutique firms tend to be more sector specific.  That is to say that they will cover only one sector and within this sector, they may only look at certain aspects and may have a single office (or very few) whose location is relevant to that sector.


Off limits and exclusivity

Search firms generally commit to off-limits agreements.  These agreements prevent a firm from approaching employees of their current clients as candidates for other clients.  Since they act as management consultants working in the best interests of the clients for whom they conduct searches, it would be a conflict of interest to simultaneously remove talented executives from those client companies.  Search firms may decline assignments from certain companies in order to preserve their ability to poach candidates from those companies.  Some large search firms may insist on guarantees of a certain number or monetary value of searches before they will put an entire large company ‘off-limits’.


Executive search methodology

Because the client is paying a retainer, the search is highly customised to the client organisation’s needs, with the search professional providing a consultative service throughout the process.  It also recognises that the client also has a responsibility to cooperate closely with the search firm to protect the retainer and ensure that the search firm has a reasonable chance of success.  Executive search firms typically have long-lasting relationships with clients spanning many years, and in such cases the suitability of candidates is paramount.  It is also important that such companies operate with a high level of professionalism.  Retained searches serve client employers rather than job-seeking executives.

Executive search firms often also provide clients not just resumes, with legal market intelligence gleaned from contacts within their clients’ competitors and insightful, consultative information about the market in general.


Targeting methodology

Quality oriented search firms work hard at cultivating and continually updating their network of contacts (or ‘sources’).   Some of the best candidate referrals come from people who could be candidates for the job themselves but for any number of reasons are not interested at that particular time.  When a search assignment is awarded the search firm will be ready to start recruiting potential candidates based upon fit with a written or verbal job specification developed in conjunction with the client.   The sources are contacted by a ‘researcher’ and potential job candidates are identified as a result of a recommendation, or a source may put themselves forward as a candidate.  This process establishes an evolving ‘long list’ of perhaps dozens of people.

Another way to identify potential candidates involves search firm ‘research’, which is contacting targeted people in specific companies who appear to fit the job profile in some logical manner.  The better the firm’s network of sources, the smaller the need for more speculative research, which is a hallmark of less specialised search firms.

The job seekers are then qualified and presented in a one off or rolling ‘short list’ (normally four to six people), as previously agreed, to the client by the consultant.  Assessing degree of potential fit of the candidate with the job specification is a key activity for the search firm, since the most common reason a search consultant is engaged by a client company is to save time and effort involved with identifying, qualifying and reviewing potential candidates for specific leadership positions.  Like any specialist, (in comparison to the fees they charge) a good search firm is simply too well connected, staffed and practised to make internal non-specialised recruiters economic.

Job seekers

Job seekers who qualify for senior executive level searches often mistake head-hunters for career transition or outplacement specialists.  They do not actively place out-of-work individuals as, at the top of the pyramid, there are relatively speaking many more quality people than roles (i.e. it is a ‘client driven’ specialism) and therefore economically it would be a show-stopper to spend too much time on individual career consultancy – the client is the company paying the recruiting firm.  It may be worthwhile to contact executive search firms if you qualify, but they are driven by their specific assignments for their clients: they find people for roles, not roles for people.  Executive search consultants can be ‘career makers’ for some individuals, but for most, this will not be the way they will find their next role.

Managing reputations

However, managing a client’s reputation is a critical role for an executive search firm to play and following through on reasonable commitments made to job seekers from long list onwards is important to maintain goodwill for the search firm and for the client.  It is therefore critical that clients consider whether the search firm will enhance or detract from their corporate reputation as they conduct the assignment.  Very aggressive companies will naturally side with search firms and methods with similar hallmarks and so on.