Next time a headhunter calls with a tantalizing opportunity at an unnamed bank with plans for business domination, you might want to listen. New research suggests that if you use a headhunter you're more likely to achieve instant career progress than if you don't.
The research, involving scrutiny of an executive search firm's database of 14,000 mostly U.S.-based financial services professionals by academics at IE University in Spain, found there are very good reasons to use a headhunter to find a new job in banking. However, there are also ways in which using a headhunter will hold your career back.
If you swap jobs using a headhunter, the academics found that you're statistically more likely to achieve a promotion than if you don't.
The academics posited that this is because hiring companies have greater trust in the information supplied by search firms than in information provided by candidates themselves. Companies are therefore more prepared to place candidates into bigger roles. They pointed to previous studies showing that headhunters are also skillful negotiators and therefore better able to negotiate increases in salary than individuals alone.
If you want to move to a big bank, go through a headhunter: the data showed a positive correlation between moving to a big company and moving via a search firm. The academics didn't give a reason for this, but our own conversations suggest that smaller banks like Jefferies tend to make most of their hires directly (although big banks like UBS are also cutting recruiters out of their hiring process.)
If you want a job at a big company with a good 'corporate reputation', try a headhunter. The academics found that candidates who move via headhunters are more likely to move into prestigious firms than those who don't. This seems a little counterintuitive to the extent that lesser-known banks often employ headhunters to tempt high profile bankers with big packages. But the relationship between prestige and headhunter-moves was found to be statistically significant.
The academics found that you won't get many benefits from using a headhunter if you want to switch to a job in a different industry - say from banking to consulting. On the other hand, however, they found that you have as much chance of switching industries using a headhunter as you do of moving on your own, so there's nothing wrong in trying a headhunter for help.
Similarly, a headhunter can't increase your chances of switching from equity research into M&A. This is more likely to happen if you stick with a current employer.
Interestingly, the academics also pointed to research showing that headhunters aren't good at working with candidates whose skills they don't understand. This is particularly the case in IT where skillsets are often complex. "In such a case, search ﬁrms minimize the risk of a poor match by presenting well-rounded, experienced candidates with general skills and screening out less rounded candidates whose particular skills would otherwise qualify them for a particular job," they said. In other words, if you're in a complex role make sure you include things on your CV that headhunters will understand (or that you restrict yourself to headhunters specializing in your area).
While it may be a great idea to use headhunters in the middle years of your career (the people contacted by the executive search firm studied were typically aged 38-40), too many headhunter-facilitated job moves could be detrimental to your progress.
The academics found that headhunters end up constraining executives' options because they constantly match candidates existing skills to new jobs. After a while, this damages opportunities for advancement. They pointed to data showing that only 9% of chief executives at the 100 largest U.S. companies have spent their entire careers in one function - most have moved between roles instead. Switching roles is easiest achieved by swapping jobs internally and building a career within a single firm. Take Lloyd Blankfein, who's worked in various roles at Goldman Sachs (initially as J. Aaron & Co.) since 1981.