Headhunting: An Industry In Transition

by Nelson Abreu

Before recruiting took to the Internet individuals found out about job openings through research, job advertisements or at career fairs, then applied directly to the companies they were interested in. The executive search industry was the only alternate staffing channel available. The value that executive search brings to the recruitment mix is targeted networking and the ability to produce quality talent which companies can't reach through the media.

With the advent of the Internet the recruitment model has witnessed the introduction of a new middle channel, the data warehouse. The benefit of centralizing information into databases allows for broader access to and quicker liquidation of talent. Beyond resume databases, the Internet itself is now viewed as a database of talent. Progressive e-cruiters have the ability to comb the Internet with savvy tools and processes that provide a model which reaches beyond the active job-seeking market. The e-cruiting model is most attractive because of its relatively inexpensive nature and effectiveness when compared to traditional methods. Although it still falls short in producing an executive search caliber product it offers quite a popular alternative. Now as a mainstream recruitment channel, one wonders how much of a threat e-Cruiting poses to a more expensive channel like executive search.

In Interbiznet's 24 Electronic Recruiting Trends 2001 report, John Sumser points out the emergence of Internet based talent markets as a serious challenge to the executive search industry. The implication here is that over time specialized talent markets will begin to attract more executive search caliber talent. He identifies firms that make both long-term commitments to their clients' organizational development and to their candidates' career development as benefactors. Mr. Sumser states that "Staffing firms need to look at Hollywood and figure out how to be better agents." The drastic change that executive recruiters will need to overcome in Mr. Sumser's model is the dedication to servicing the long-term career interests of the candidate. Since companies are paying the bills recruiters naturally follow their corporate whip. On the other hand it's not uncommon for candidates to be placed "on the back burner" until they fit another job opening or until they can provide a referral.

Similarly, in today's high demand and short supply labor market it's almost unthinkable that the client-focused business model continues to prevail. With most executive recruiters having at least a few short-list caliber candidates on file from past searches, it's hard to understand that they don't key in on the marketability of these people and seek career alternatives on their behalf. Most will claim to be too busy filling job orders to profit from the people they have on file. A candidate- conscious executive search model would not pass over the opportunity to profit from inventory in which search time has already been invested.

This type of model has proven quite successful in the real estate industry. The real estate agent realizes that it is in his/her best interest to attend to buyers and sellers equally. Real estate agents don't view themselves as limited by the size of their agency or the size of their databases but rather by the total number of buyers and sellers in the market. They constantly network with other agents in order to extend their options. The better networked they are, the better chance they have of increasing their revenue potential. Furthermore, the real estate community reports approximately 70-80% of the revenue generated in the industry is through splits. On the other hand, the typical executive recruiter earns 10-20% of his/her revenue from splits.

A talent market in short supply and more effective electronic recruiting solutions will challenge demand in the executive search industry. In the new economy look for executive search to thrive from a new commitment to providing an unmatched full service consulting solution to both clients and candidates alike with split placements claiming a greater percentage of supply.

Nelson Abreu