Recruitment versus Headhunting

Last week, I visited the Sydney Small Business Expo, organised by the NSW Government. The day consisted of various presentations on the current economy and clinics to improve marketing, sales and general business skills.

I talked to many business owners with various types of backgrounds: graphic design, telecom, ICT, travel, copyright, finance, marketing etc. During the day, whilst talking to people and exchanging information about our businesses and ambitions, I was asked on several occasions what the difference between recruitment and headhunting is.

Recruiters (Recruitment Consultants) and Headhunters (Executive Search Consultants) basically strive for the same thing: finding a qualified, interested candidate that fits their client’s job criteria. Although most recruiters claim they sometimes do headhunting and although headhunters will probably have done some recruitment throughout their career, there are some fundamental differences.

PASSIVE VERSUS ACTIVE
The most important difference in my opinion is the passive versus active element. Whilst recruiters will place an advert most of the time and “passively” wait for CV’s to come in, headhunters will go out in the market and “actively” approach people. Recruiters will come across people that are looking for a job (whether employed at the moment or not), headhunters will chase people that are currently employed with their client’s competitor.

LEVEL
Another difference is the level of the potential candidate. Whilst recruitment will be effective across a wide range of levels, headhunting will only be used to attract “Executives” (hence the term Executive Search”), middle management up to board level.

FEE STRUCTURE & EXCLUSIVITY
Both Recruiter and Headhunter will be hired by a client to look for candidates for a specific vacancy and their fee will be in proportion with the candidate’s earnings. Fees can range from anywhere between 10% to 15% up to 35% of the candidate’s first year’s salary.
A typical Global Executive Search firm will split the fee in 3 equal instalments:
• The first one being a retainer upon the start of the project (hence the term retained search)
• The second one upon presentation of the shortlist or 30 days after the start of the project
• And the last one upon placement of the candidate

Some Recruitment companies will also apply a “retainer” but most companies work on a “contingent” or “no cure no pay” basis, meaning the client only pays when a candidate is hired. In the latter case, a client often outsources the same vacancy to more than 1 agency, creating competition between the various agencies and forcing the recruiters to act quickly and supply the best CV’s before the competition does. An Executive Search company will almost always work on an exclusive basis, giving them time to screen the market thoroughly, assess all relevant candidates one by one and present a “shortlist” i.e. the 3-5 best candidates.

METHODOLOGY
Recruiters will often consult a database and screen through incoming CV’s, either in response to a vacancy or through their own website. A headhunter will “map” the market by making a “target list”, an overview of the client’s competitors, identify potential candidates within these companies and approach them to present them with the role.

TIME FRAME
Whilst a recruitment agency can have CV’s ready within days, a headhunting process usually takes 4 to 6 weeks.