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Agency Headhunters

What they do

Traditionally, Agency Headhunters are the type of headhunters who actively try to find candidates jobs.  They are also sometimes known as Recruiters or Contingency firms.  They get the name ‘contingency’ because they are paid only if a candidate whom they have introduced has been hired; so their fees are contingent on a successful hire; whereas, Executive Search firms and Selection Firms tend to get paid an initial fee (or retainer), irrespective of the outcome.

In a sense, agency headhunters are brokers of people, not dissimilar to estate agents or stockbrokers. These both take a commodity (a nice house or a good stock) and try to sell it to a potential buyer.   It’s important to remember that, in a recruitment context, the candidate (you) is the product that is being sold.  Although it may feel like they are working for you, you are not the headhunter’ s client.  But they are the only type of headhunter that actively markets candidates to the market, so they can be useful if you are actively looking for a job, particularly if they are an experienced sector specialist.

Before the arrival of LinkedIn, Agencies relied heavily on marketing and branding to attract job seekers whom they could represent; or else they sourced them through advertising, or selection, using job adverts to hoover up candidates to sell.   LinkedIn means that they are now able to offer a more proactive search service, and so the boundaries between Search and Agency has blurred.

Historically, Agency recruiters tended to work on less senior roles.  So people started out their careers working with Agencies and then moved on to Executive Search firms as they got more senior.  But these days, they are increasingly working at more senior levels, given their ability to identify potential candidates through LinkedIn.

With Agencies offering a slimmed-down Search service, it’s sometimes hard to tell if a company is an Executive Search firm or an Agency – particularly from the job seeker’s perspective – and particularly when many Agencies include the word ‘search’ in their company names, even though they are agencies.

Even so, there are some clear markers about how Agencies operate which can help you to work out if the recruiter you are talking to is an Agency or Executive Search headhunter.

1. Research and Sector Expertise

How well do they know the market?

Agencies are essentially sales-driven.  Hence, they do not usually maintain systematic knowledge bases on the market, and so will likely have less detailed market intelligence than Search firms.  Having said that, there are some Agency headhunters I know who have worked their patch for many years and have become sector experts, though they are usually the more experienced consultants.   So this is only a weak indicator.

2. Structures

What is their organisation structure?

Agencies tend not to have Researchers: they are all called Consultants – even the new graduate trainees.    Agency recruiter also tend to have many more people than Search firms: it’s quite common to find firms with 50 or 60 consultants.  Whereas, outside of the big globals, most Search firms has smaller teams working on higher value projects.

3. Experience Levels

How many years’ experience do the Consultants have?

Agency Consultants tend to be much younger than Search consultants.  Since they don’t really have researchers, you become a Consultant as soon as you complete training.  If the Consultant you are speaking to has less than 10 years’ experience, they are almost certainly an Agency recruiter. And since it is quite a high-pressure, stressful job, they tend to have quite a high burn-out rate.  I would guess that the average Search Consultant has around 20 years’ more experience than an Agency Consultant.

4. Number of Clients

How many clients do they have?

This is probably the biggest marker of an Agency: like brokers, the better the agency, the broader the client list.  So they will often work for up to 50 to 60 firms, listing them on their web sites (whereas Search firms rarely name clients on theirs).

Their relationships with these firms tend to be shallower and more transactional than Executive Search firms.  They are given little commitment by the hiring firms (no retainers, no exclusivity, little or no insider briefing, etc)  and, in return, they do not need to offer ‘off limits’.  This means they do not have the same natural cap on clients as Executive Search firms.

They also tend to be more candidate-driven: I know agency headhunters, particularly on the sell side, who have moved the same candidate four or five times over the years, .

5. Retained Mandates

Are they working on a retainer?

Agencies usually work on a contingent basis.  Because they are not retained, they have a shorter-term mindset than Executive Search firms.  For good economic reasons, they need to focus on the candidates whom they can place easily.  They have rapidly diminishing returns on the time they spend on any one candidate,  so will  tend to lose interest and move on to the next candidate if the initial introductions they make are not successful.   To be fair, this is perfectly rational behaviour: since job seekers give them no exclusivity, the agency could diligently represent a candidate for weeks and months, only for them to get a job through another agency, and then they don’t get paid anything for all their work.

6. Exclusivity

Are they the sole gatekeeper for this role?

Agencies do not usually have exclusivity.  It’s common for firms to mandate several agencies on a role – after all, there is no up-front fee to pay, so it makes sense to spread the net  widely.  Hiring companies typically hold an ‘agency briefing’ of three or four agencies  at the same time, where the requirement is set out, and then it’s a ‘first past the post’ system: whichever firm lands the candidate gets paid, the others get nothing.   There is a recent variant called ‘Retingent Search’ or ‘Contingent Search’ which means that the firm is given exclusivity for a set period – retained for three months, say, during which period they have the sole mandate for the role – but there is no up-front retainer, and so their fee is still contingent.

Because they do not usually have exclusivity, it is important that Agencies register your details with the client before you or anyone else does.  Hence, they are often reluctant to name the client as there is a concern that, if the client name gets out, candidates may simply approach the client directly, or else other agency headhunters might try also to introduce candidates, ramping up the competition still further.  So, another marker that the firm is an agency is they are reluctant to name their client.  Whereas Search firms are more relaxed about naming their clients – unless there is a good reason not to do so (ie. the Search is explicitly confidential).

 

How to Manage Agency Recruitment Firms:

Once you are sure the firm you are talking to is an Agency Recruiter, how should you manage them?  Because of their short term perspective and active sales methodology, it is best to talk to Agency headhunters only when you are actively looking for a job.  They tend to work on less senior roles, so are more helpful to people at the start and mid-point of careers.  It’s unlikely that they will be helpful for more senior roles (Head of Department or C-Suite): these tends either to be mandated to Search firms, or direct hires.

In my view, they are a useful channel if you are in active job hunting mode – otherwise, do not engage.

So, the way to manage them depends on your level of motivation to find a new role:

1. Level One:

I love my job and have no intention of moving.

Don’t speak to them.

2. Level Two:

My job is OK, but there are some frustrations which have arisen, which I think I am unlikely to be able to resolve.  So, if I could find another job which addressed  these, then I would be happy to consider it.  But there is no immediate pressure for me to move: I can afford to take my time to find an additive role.

In this situation, you might speak to a couple of experienced Agency headhunters.  Make clear to them that you want them to seek permission before they introduce your CV to anyone.  If they ignore this and fire your CV out without your permission, you can do have recourse:  by making a compliant them to the Information Commissioner’s office, you will bring all sort of fire and brimstone upon them, under the GDPR legislation.  So I would be surprised if anyone dared to send out unsolicited CVs these days.

Keep a spreadsheet tracking which Agency has introduced you to which companies, and which contacts within those firms, and track the outcomes.  Because their relationships are quite shallow, just because one agency has failed to get traction within Company A doesn’t necessarily rule that company out.  You might find that another Agency or Search firm has better contacts, leading to a meeting.

Keep in mind they are salespeople, wanting to transact, so get a second opinion on any opportunities they put you forward for.

3. Level Three:

For whatever reason, I’ve had enough of my current job – it’s time to move on; or I’ve been given notice of redundancy, or told my job is at risk; or I’m unemployed, and actively looking for a job.

In this situation, I recommend you talk to a couple of experienced Agency headhunters.  Give them a couple of weeks to come back with suggested introductions. If they have not come up with anything interesting within a month, they are probably not going to.  Given the diminishing returns on their time, they have probably drawn a blank and moved on to other candidates.  So select another couple of Agencies and repeat, etc.

There is more information on how to identify Agency Recruiters firms here.

Last edited 7th December 2020

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