Recently, I was discussing SEO keywords with the head of the firm that handles my digital marketing. Gabriel mentioned that along with the keyword recruiter, the keyword headhunter was also very common in internet searches and asked me if there was any difference between a recruiter and a headhunter.
My knee-jerk response was that there really isn’t any difference between a recruiter and a headhunter. This is true insofar as most of the business community tend to use the terms interchangeably. However, in fact there can be a very big difference between a recruiter and a headhunter and it’s very important that someone engaging a recruitment firm understand what that difference is.
The Terms Recruiter and Headhunter are not Interchangeable
The word recruiter is a catch-all term and applies to anyone involved in recruitment. A recruiter could be an internal, human resources professional, someone working for a placement agency, or someone working for an executive search firm. But recruiter and headhunter are not synonyms. Using the two interchangeably is like using poultry interchangeably with turkey.
Someone who works for a placement agency can be called a recruiter, as can someone who works for an executive search firm. However, the inverse is not true.
Someone who works for an executive search firm can be called a headhunter but someone who works for a placement agency is not a headhunter, they are a recruiter.
This is a distinction that can be lost on anyone who is not a regular user of recruitment services. And it’s important to understand that distinction because it will have a direct impact on what results the hiring authority can expect from the recruiter they engage.
Headhunters Hunt Heads
To state the obvious, headhunters hunt heads. In a nutshell, the contract between the hiring authority and the executive search firm is that the headhunter will research the entire market of potential candidates and proactively reach out to those candidates on the client’s behalf. Furthermore, the executive search firm will use sophisticated assessment techniques to ensure that potential candidates are properly screened. In theory (if not in practice), the headhunter should deliver a short list of excellent candidates and the client should make an excellent hire every time.
In return, the client commits to paying in full for this service, typically 30% to 35% of the successful candidate’s total compensation, often billed as a third up front, a third upon presentation of the short list, and the final third upon successful completion of the search. This is the business model of executive search firms.
The Placement Agency Business Model
The recruiter working at the placement agency works on an entirely different business model. The placement agency model is to have a large, constantly updated stock of readily available candidates, technically specialized (accounting, I.T., administrative, sales, etc.) and relatively junior, on hand. They very aggressively solicit business from prospective clients with the promise that they’ll have the right candidate on the client’s doorstep in matter of days.
In return, the client commits to paying a contingency fee, typically 20% to 25% of the successful candidate’s salary, if — and only if — they hire someone from that placement agency. In this space, it is not uncommon for a client to work with two, three, or even four competing placement agencies on the same assignment.
Unsurprisingly, since recruiters at placement agencies work on a contingency basis, sometimes with only a 25% chance of getting paid, they limit their efforts to presenting candidates they happen to have readily available. They are definitely not incented to go to the extra effort of hunting heads.
And You’re Telling Me This Because…?
So, why should you care?
Because almost all placement agencies will tell you that they’ll work their hearts out to find you the right fit. And if you happen to be looking for someone crucial to the organization, like a CFO for example, you need to know that the firm you engage has the tools, techniques and expertise to guarantee that they’ll produce the right fit. And that will involve hunting heads.
You may like the idea of working on a contingency fee basis, but that’s false economy. After all, whether you end up hiring someone through an executive search firm or a placement agency, you’re still on the hook for a fee. And although the traditional executive search firms are very expensive, there are a number of retained headhunters in the mid-market space who are far more reasonable in terms of fees (me, for example).
Placement agencies are great if you want to fill a relatively junior, plug-and-play type job. But if you really want to hire the best candidate for a mission critical position, you need to hire a headhunter.