Working with Headhunters
In the financial community, 95% of employers want the top 20% of candidates in terms of abilities, personal qualities, intelligence, interpersonal skills, background and education, motivation, etc. This creates a tremendously competitive demand for high quality candidates. Yet these are not generally the candidates that are going to be walking the streets or scouring the help wanted advertisements. These people are almost always employed and tend to be well-treated and well-compensated in their current situation. When they do make a change it tends to happen in one of two ways--either they choose to look for a new opportunity through networking, word of mouth and direct application or they are proactively recruited. In either case, they tend to be very selective and want to know a great deal about any new opportunity: the size of the department, reputation of the company, compensation, quality of work, long term prospects, etc. Generally, their problem is not finding a position, but choosing the right one!
Deciding to work with a recruiter is essentially the same as deciding to work with an accountant or any other professional adviser-sure you can do some or all of it yourself, but you almost always get a better and quicker result when you use an expert who practices in the area every day.
If you are considering hiring a headhunter to assist you with your recruitment, some of the key issues you should address include:
- What they can do for you
- Communication needs
- How to select a headhunter
- Fees and costs
- Terms of agreement
- Ongoing relationships
What they can do for you
Like any professional with special expertise, finance recruiters bring certain assets to the table which can greatly assist you in locating and identifying candidates, particularly where your needs are for candidates who are senior, specialized or in demand. Because they are in the job market every day, finance recruiters can provide you with invaluable intelligence about the availability of certain types of candidates, what might be happening in certain companies and how you are perceived as a potential employer. Generally, a finance recruiter can assist you by:
- Saving time in pre-screening candidates - even where an advertisement attracts a number of applications, many of these may bear no resemblance to your particular criteria and of those that do, you must still allocate a great deal of time to interview as a resume will not give you an indication of the candidate's personality or potential fit. A finance recruiter who knows you and your organization can save you many hours of time by pre-screening candidates and only presenting those applicants who match your criteria and are compatible with the firm.
- Providing access to candidates who otherwise might not have contacted or applied to you - as stated earlier, the top candidates generally do not respond to ads or may not be actively networking and consequently are not likely to contact the employer in response to these initiatives. Because the finance recruiter is in the market all the time and becomes known as a confidential broker, good candidates will often call them first, even before they have decided to actually make a move. Often they will simply be seeking feedback or to find out what might be generally available in the job market. If the finance recruiter has been retained and has an ongoing relationship with you and knows your needs, he or she can very effectively introduce the candidate to your opportunity.
- Promoting your company to prospective candidates and defusing any incorrect or negative information about your company which might be circulating - For whatever reason, and particularly in times of high merger and takeover activity, some companies will develop a reputation for "risk" in the marketplace. These reputations can circulate quickly and due to the nature of rumor and word of mouth, sometimes take on significance unwarranted by the facts or positive changes to the company. Employers find it valuable to have a recruiter who can educate potential candidates about their real risk level and, where necessary, correct inaccurate or outdated perceptions. Many employers see finance recruiters as an ingredient essential to their regular recruiting efforts.
- Serve as a facilitator during the interview and negotiation process - the recruiter is a professional intermediary and can help guide both parties through the process. Given the recruiters relationship with both parties, the recruiter can often answer questions, from both sides, obtain information which either side might be reluctant to obtain on their own, seek clarification or debunk rumors.
COMMUNICATION NEEDS
As in all professional relationships, communications are critical to success. With a recruiter, you need to communicate not only your hiring needs and criteria, but also what is happening internally and any issues that a new hire might reasonably face. While it is difficult at the start of a relationship with a recruiter to expose your "dirty laundry" it is absolutely vital to the process and success of the assignment. Candidates come to reputable recruiters for honest answers and put a great deal of faith in their judgment and opinions. They expect a recruiter to have a well-rounded sense of the company and to be able to discuss the potential negatives as well as the positives. If there is any sense that the recruiter does not have the whole story or is unaware of certain issues involving the position, the recruiter's credibility will be lost as well as a potential candidate. Once you decide to hire a recruiter, it is important to treat them as a true professional adviser and discuss with them all relevant facts or issues. Surprisingly, the recruiter may be able to put a positive gloss on an otherwise negative situation or may be able to advise you how to deal with the matter so it does not adversely impact your recruiting efforts.
HOW TO SELECT A HEADHUNTER
Select a headhunter as you would select any other professional adviser, talk to colleagues, do your own research as to who is out there and what their general reputation is in the marketplace. Once you have identified one or more agencies who emerge as the clear leaders, conduct telephone interviews with the firms to both gather more information and assess their response and telephone presence. Obtain brochures. Narrow the list down to one or two firms and then invite the firms in for short meetings. From the meeting you will want answers to the following questions:
- How they identify and screen candidates
- How they generally operate
- Have they conducted similar searches
- What types of information do they provide
- Do they interview candidates in person or on the phone
- How much do they learn about candidates
- Will they call prior to sending a resume
- Will they send a resume with their card or will they include a full candidate submission setting out:
- education
- professional experience
- goals
- reasons for wanting to move
- career achievements
- compensation
- How are fees and costs calculated and billed
The answers to these questions should allow you to make a reasonably informed choice. Of course, above all, you will be influenced by the person you are dealing with and his or her personal credibility and personality. Is the person honest and will they deal with you candidly?
FEES AND COSTS
There are very broad industry standards on fees and guarantees. Usually the fees range from 20-30% of a candidate’s first year compensation with a three to six month guarantee. Generally, if the candidate leaves the position for certain reasons during the guarantee period the guarantee will offer to remit the fee, or a prorated portion, replace the individual or offer a credit toward replacement up to a maximum time.
With respect to costs, generally you can expect to pay most disbursements associated with the recruitment, including long distance, fax, advertising, hotel and travel, etc. Prior to commencing the search it is best to find out from the recruiter how and what they charge for costs.
TERMS OF AGREEMENT
Most good search firms will have a recruiting contract for you to sign prior to commencing the search. Generally the agreement should cover the following items:
- a description of the services to be provided
- whether the search is retained or contingent
- the length of the assignment
- the recruiter compensation
- length and terms of any guarantee
- use of confidential data
- commencement and termination
- exclusive or non exclusive
ONGOING RELATIONSHIPS
Most of the time and effort with a recruiter is put in at the beginning of the relationship when the recruiter is gathering information about the company and getting to know the employment culture and personality. While you may have hired the recruiter to conduct one specific search, think of the relationship as long term and ongoing. In this way both parties will put more time and effort into the relationship and the recruiter, in particular, will tend to take extra steps to bring high quality candidates to your attention on an ongoing basis. This relationship will also give you an ongoing source of information about the market, perceptions of your firm and so on. In short, the investment you make at the outset can develop into a positive long-term relationship offering sometimes unexpected but welcome benefits.