Placement Fees Are Cheap When You Look At Them This Way

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Employers seldom complain about the services of headhunters, it’s the headhunters’ fee that has become their pain point.

A few months ago I was a presenting at a seminar to about 35 business owners and HR professionals.  The topic of the presentation was “How to Recruit like a Headhunter” and during the presentation I made the statement “If you are not using headhunters as your primary recruitment weapon, then you are not hiring the best talent in-the-market”

One individual took offense to that particular statement and became very irate. He stood up, pointed his finger directly at me and said, “You don’t know what you’re talking about because we hired some pretty good people, and they are working out just fine. And we didn’t use headhunters.”

Without any hesitation, here’s how I responded:

Sir, you are absolutely correct. You really don’t need headhunters to hire the best talent on-the-market.  However, what would you say was the difference between the best talent in-the-market and the best talent on-the-market?

I watched his eyes roll as he struggled to find a good money and bulleseyeanswer. Without waiting for his response, I asked if anyone in the audience knew the difference. What I heard wer a number of resume related answers such as: the ones with the best resumes; or, the ones presently work for the big brand name organizations; or, the ones that were educated at the most prestigious universities.

My reply was that they were all very good answers, but they were not the number one answer. The number one answer is the best talent in-the-market are most likely those individuals who are not actively searching for a job.

Passive v. Active

Why?

It has been my experience that to be wooed by a competitor is the expectation of top talent. They don’t get excited just because a job matching their skills and experience was advertised; they have to be strategically motivated, and sold on that particular job opportunity.

So, if you are not using headhunters, then you are hiring the best talent from among only the individuals actively looking for a new job. And, there is a significant difference in the caliber of talent when you compare those actively looking to those not actively looking for a new job.

To prove my point, I tried to get the audience emotionally involved in the debate. I took a quick survey by asking four simple questions:

  1. How many of you know of someone actively searching for a job? Almost everyone raised their hands.
  2. How many of you are actively searching for a new job? Three individuals raised their hands.
  3. How many of you are not actively looking, but would listen to details about another job opportunity if you believed that it could be of some interest to you? Half the individuals in the room raised their hands.
  4. How many of you are not actively looking, but would seriously consider another job opportunity if you were convinced the job would not only improve your standard of living, it would also advance you career to the next level? Almost everyone raised their hands.

Big Pool v. Puddle

I pointed out that the result of that survey was similar to recruitment activities in a niche market.  The best talent most likely will be from the group of individuals that are not actively looking. So, if you are not using headhunters, you are not hiring the best talent from the entire talent pool; you are hiring the best talent from a puddle.

With all the new recruitment apps that are available, the big job boards, and the growing appeal of social media, are you trying to convince us that headhunting is the most effective recruitment method available, was the question asked by the same individual.

I said yes it is and I will tell you why.

Recruiting Ahead of Need

The reason headhunting remains the most effective recruitment method is because as headhunters we recruit ahead of the need!

Recruit ahead of the need; I’ve never heard of that, he said.

I explained it means we don’t wait for a job to become open to start recruiting individuals; we recruit for a job before it becomes open. And the only way that is possible is if you are committed to building relationships from a recruitment perspective.

But, you also have to be passionate about recruiting to be committed to it; and when you are committed you will live and breathe recruiting 24 hrs a day, 7 days a week and 365 days a year. A good headhunter will know who the most talented individuals are; they can identify the hardest workers from the slackers;  they know the ones who operate below the radar screen; and they also know the ones with the most potential. They do the hardest part of recruiting for you, which is developing relationships.

About that Fee

Apologetically, he said, “I didn’t mean to imply that headhunters were not effective, but what are your options if you don’t have the budget to pay headhunter fees?”

Therein lies the problem, the headhunter fee. But it is also a tremendous opportunity for headhunters to make more placements. How? They just need to do a better job of selling the economic value of using professional headhunters, or demonstrate creative ingenuity in the pricing of headhunting services.

The economic value is more profits, because employers who hire the best talent often win and retain more customers. Also, why not allow your competitors to do the hiring and the training?  You simply rely on headhunters to recruit the best talent from your competitors after they are trained. Paying headhunter fees will be a drop in the bucket compared to the savings realized in salaries paid to average performers and from the profits generated by superior performances of the headhunted talent.

By re-pricing, I‘m not suggesting simply to reduce your placement fees, but in addition, offer a variety of recruitment services that can be tailored as a solution to the unique needs and budget of your clients.

If all headhunters charge the same placement fee, does it mean that they all provide the same level of service? No, but that is the perception. Nothing will change until we change something and that perception is a good place to start.