Horses for Courses

Monday March 14th, 2016 · by Murray Clarke

The biggest complaint I hear from hiring managers is usually that agents are sending them loads of resumes that are off spec. It is wasting their time and patience.

Or in fact, the opposite scenario where the clients is waits and waits for resumes from their agent and gradually loses patience – even though when they get the introduction it is a high quality one. It is extremely tough to get the perfect mix of high volume and high quality. This is the equivalent of the Holy Grail for any client.

Hiring managers and talent acquisition themselves tend to differentiate between “retainer” and “contingency” but lump all contingency services into the one heap and this is why they get frustrated: they might have the right recruiter on the wrong job.

Due to the overlaps between each model it took a while to work it out. As a simple guideline for defining market participants I`ve used the following breakdown for a number of years and it has served as a fairly useful reference and perhaps I can bring it out again here:

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The pyramid shape is a reflection of the candidate pool seniority, size and availability, as much as it is a reflection of the market size or frequency of searches. There are far fewer CxO`s out there than Sales Reps or Engineers, for example, and far less searches. The layers serve as an indicator of the “value” of each search, being function-critical, business-critical or mission-critical.

Executive Search Firms

We all know what Executive Search is. That would be the category most commonly known for retained searches at top executive level, roughly from $250K and up. A good deal of process, profiling and reporting goes into this kind of search because it is absolutely mission critical. For readers new to recruitment these firms are defined by the traditional long and short list retainer paid to the agency in thirds.

I won`t dwell on the Executive Search category further as it is usually well understood. It is Contingency Search where the confusion usually lies.

Contingency Search Firms

In the “success based” contingency search market, not all firms are equal – or more accurately, not all firms provide the same service. The difference between what we call “Specialist Search” firms and “Generalist Selection” firms is where is the confusion sets in because the overlap between them is much larger.

Search: “the headhunter”

Starting with the search itself, Specialist searches tend to be of a business critical nature, such as senior specialists or management; important enough to commit a primary agent or perhaps even to provide an engagement fee by way of a “container” (contingent retainer) but not so critical as to require a traditional “retainer”.

Typically such searches could be from around $100K up to $250K or higher and the candidate pool is relatively small in most cases. Perhaps not as limited as a search for an executive but the final short list of truly viable candidates will still come down to just a handful people.

These candidates are usually sourced by “push” methods such as pure form “headhunting” techniques. Cold calling, mailing and referrals to access passive candidates are probably the most common approaches and many Search firms have in-house research teams gathering data to identify the available passive candidate market.

Selection: “the recruiter”

By contrast a Selection search would be more of a functional search. The skills and experience required to fill the function in the company are fairly transferable and readily available so the candidate pool is naturally much larger. Selection searches tend to be less than $100K and typically the candidates can be sourced from “pull” methods such as job boards and online databases with registered or active candidates.

The functional specialist recruiters in Selection tend to be bright, young and motivated, managed by various KPI`s to ensure they meet their numbers, whereas recruiters in Search tend to be industry specialists, veterans less need for detailed KPI control.

Client vs Candidate-driven

One of the major differences between the two contingency models is where the loyalties lie. A “pure” Search firm would be “client-driven” and may not place a lot of people they meet, it is more about closing the deal for the client because those searches come exclusively or semi-exclusively.

Being “candidate-driven”, a 100% Selection firm is more inclined to shop candidates around to multiple clients in order to win the fee, which is fair enough given that the client usually has them competing in the open contingency market on a success-basis.

Passive vs, Active Candidates

There is a fairly large overlap here but the generalisation is still valid. Search firms proactively “hunt” down and “sell” to candidates whether they are on the move or not. A major key to success is being credible, trustworthy and armed with the right information to convert a cool or cold lead into a warm candidate. Selection firms on the other hand tend to work off publicly available candidate data  where at some point, perhaps very recently, the candidate actively registered.

Quality vs, Quantity

Another important difference essentially boils down to one premise: quality versus quantity. Search comes down to finding “the” candidate, whereas Selection is more about matching up “a” candidate to fill the role. Search tends to be exclusive, affording the agent time to get the job done accurately, with a high introduction-to-placement ratio and an expectation from the client of low volume, high quality. Selection is all-in competition among agents to get resumes in and fill the role(s) as fast as possible – speed and volume are expected.

Industry vs Function

Finally it is not always the case but usually the recruiting teams within Search firms are broken down by Industry (Finance, Technology, Industrial, Consumer, etc), whereas the teams in a Selection firm are usually by Function (Sales & Marketing, Technical, Back Office, etc).

Expectation setting

Search firms may be in contact with Selection candidates and vice versa, with Search firms introducing Selection level candidates on an ad hoc basis or Selection recruiters accessing searches where they punch above their weight successfully, but generally speaking if things don`t go well when the client expects it to, there may be no second chance.

Certainly I think this overlap is where a lot of confusion comes from with clients and I hope talent acquisition folks can consider this when choosing suitable agencies for the range of searches they have available.

Improving Service Levels

As a general rule clients should be positioning agents as Search or Selection – they are both important services and it is a case of using the right horse on the right track. If the expectation is for high quality introductions prioritised over volume of resumes, then choose Search. If many resumes are what it usually takes and is what is expected, choose Selection.

I would advocate this tiered approach to agencies and while it may be controversial, I think doing the same with fees is a good idea: the fee should be related more to the “value” of the role to the company. I`d rather pay more for an agent that delivers quality on my “high value”, hard to fill roles than to an agent that delivers volume on the comparatively easy searches that I open to the whole market (or could do myself if I had the time).

Our industry is often plagued by complaints and a low view of recruiters in general, but I am confident that a better understanding of the different needs of each search can lead to better service levels all round. That has to be a good thing.

I`m interested to hear where people agree or disagree with the above breakdown. As I said, there are overlaps and it can be confusing. 

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Murray Clarke

Murray has recruited exclusively for global technology companies building their businesses in Japan placing numerous Country Manager, startup teams and specialist resources since 2003. His…

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