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Do Headhunters Work for Employers?

by Steve McDonnell, studioD

Headhunters work for companies, not for individual job seekers. Organizations hire headhunters to find qualified and interested people to fill job vacancies. Headhunting is a $10 billion industry, "BusinessWeek" says. Companies usually pay headhunters between a quarter and a third of a hire's first year total compensation, including bonuses and commissions.

Limited Pool of Candidates

Companies often hire headhunters when the pool of potential candidates is limited. For example, an organization might hire a headhunter when trying to fill an executive job such as the chief executive officer, which might require experience in a specific industry or with a process such as taking a company public. Other organizations use headhunters to recruit for vacancies requiring highly specialized or "hot" skills that relatively few people have or that may be in high demand.

Retained Searches

When searching for a higher-level position such as an executive job, a company usually pays to retain, or hire, a single headhunter or recruiting firm to perform the search. The company typically estimates a hire's first year compensation and pays the corresponding search fee in three monthly installments. Retained searches are rarely used for jobs that pay less than $100,000. Headhunters who work on a retained basis provide personal attention to clients throughout the process. They meet with clients to fully understand the requirements of a position and keep clients updated throughout the search.

Contingency Searches

Some headhunters work on a contingency basis, which means a company only pays the headhunter when it hires one of her candidates, even if she presents several qualified candidates for interviews. Contingency searches are most commonly used with lower-level employees, and organizations often place contingency searches with multiple headhunters simultaneously. A company doesn't get the same level of personal attention for a contingency search as it receives for a retained search.

Candidate Sources

The headhunting industry is based on developing and maintaining relationships. Headhunters develop personal networks of candidates who might be interested in a certain position or who might know someone else who would be interested in the position. Many headhunters create a network that's focused on a specific industry or function such as marketing. Headhunters often use advertising to supplement their sources for candidates when they conduct a search.

About the Author

Steve McDonnell's experience running businesses and launching companies complements his technical expertise in information, technology and human resources. He earned a degree in computer science from Dartmouth College, served on the WorldatWork editorial board, blogged for the Spotfire Business Intelligence blog and has published books and book chapters for International Human Resource Information Management and Westlaw.

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