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What is the value of using a recruiter in this market?

Hiring, as we have variously pointed out, appears to be making a slight comeback. But given the scale of recent redundancies, it’s still a buyers market. And in a buyer’s market, why use an intermediary?

“A lot of banks are hiring directly,” says one headhunter. “It’s a cheaper option for them. At the end of the day, we charge 30% of total guaranteed compensation and they’re trying to cut costs.”

“The business is now a lot more sensitive to cost and is being a lot smarter,” says the head of recruitment at one large US bank. “Spending on recruitment had got out of control. We’re now trying to use headhunters and agencies only where there’s a valid business reason for doing so.”

He says junior roles are particularly likely to be filled without the aid of recruiters.

Needless to say, headhunters and recruiters argue their corner. Although RBS is said to have hired Antonio Polverino directly, the big hirers of the day (Barclays Capital), are using headhunters. Senior and strategically sensitive roles are often still intermediated.

There are also definite advantages to using headhunters/recruiters as a candidate. As we suggested a few weeks ago, the good ones prepare candidates for interviews, which can be useful.

If you’re offered the job, they may also help you negotiate higher pay.

“A good headhunter can act as a buffer with the bank during negotiations on the package,” says one. “This avoids causing stress to the relationship with your future boss.”

From banks’ perspective, headhunters argue that they can help ‘stabilize’ wayward candidates who are being tempted not to leave by buybacks during their notice period.

“Banks that are hiring directly are finding it difficult to close deals,” says one headhunter. “They make the offers, but can’t get people to sign and accept.”

Comments (31)

Comments
  1. Is the point in using a recruiter in this market the new Goldman Sachs?

  2. are recruiters the new Goldman Sachs?

  3. Is everyone who still finds that ‘joke’ funny slightly retarded?

  4. Is being slightly retarded the new Goldman Sachs?

    Another Recruiter Reply
     
  5. Are retards the new Goldman Sachs?

  6. I’ll be back…..

  7. I’m an inhouse recruiter and we no longer use agencies. We are under pressure to reduce costs and there is no need to in the current market – we are inundated with advertising response. In addition we can use the extra time we have as we are recruiting fewer roles to use tools such as Linked In to approach candidates who are not actively looking.

    Inhouse Recruiter Reply
     
  8. We are no longer posting ‘Is X the new Goldman Sachs?’ comments on this thread. There are too many of them and some people are not amused.

    Sarah, Editor, eFinancialCareers Reply
     
  9. inhouse recruiter…. question, do you get paid commission directly for finding candidates for your bank, or just hope you get a bit extra in your end of year bonus for doing so?

    v interested to know

    outsidethehouse Reply
     
  10. Sarah will you please marry me!!! I love that authorititive streak you’ve got.

  11. Dear Inhouse Recruiter,

    I certainly understand your perspective on things, and in the current market this is certainly a viable strategy.

    I have now worked for 7 years for an Executive search firm and have found that if you have a loyal customer and give loyalty back and are not only running after the next big fee but build a relationship a recruiter can provide services that an in house recruiter will value as well. And if the relationship is sound then the fees are low and value is added in other ways.

    This is a two way street, what will happen when the markets recover and candidates are scarce? To build a totally new relationship with recruiters at that time will be more expensive and carrier grater risk. It needs to be a balanced relationship.

    external recruiter Reply
     
  12. @outsidethehouse

    Most major Banks and Asset Managers will also have RPO agreements with a recruiter . The agency will then employ direct / in house recruiters and charge the bank a much lower fee for recruiting.

    This option is usually preferred for low to mid level recruitment as it is really focused on producing volume at a low cost without adding fixed overhead straight onto the bank’s payroll.

    For senior / high comp hires there are usually in house teams using search methodology to attract talent. These guys will be on base plus annual performance related bonus.

  13. Hi Sarah, are you single? You and I could make beautiful music together.

    Kind regards,

    AG

  14. I ran a large study of recruits into my organisation over the last 6 years, and found that of all the sourcing channels we used to recruit, agency hires turned out to be the worst in terms of performance levels, retention and comitment to the firm. Boomerang hires and referrals worked out the best. Headhunts (either outsourced or done in house) performed well but didnt stay as long or engage with the organisation.

    It is more cost effective to not use agencies, but there is also wider benefit in hiring people who take the time to identify an employer, use their network, make a direct contact; Rather than someone who fires their CV off to an agency and says ‘find me a job’. There will alway be a time and a place for targeted use of headhunters who know their markets and have the strength to pull out the top people, but the days of spikey haired, loafer wearing school leavers bowling around the square mile/wharf trying to pass themselves off as bankers are well and truly over.

  15. People who use the word retarded in an inappropriate context are a bunch of Sachs!

  16. The simple answer to this is yes. As hiring manager that has hired 40+ prop traders in the past 12 months I value the service that the Headies give me. They know my requirements and thus pre-screen my candidates, which is something the job ads i have out there don’t do. It’s great to have a direct fill of a role, but in reality many of the quality candidates dont want to apply directly into a “black hole” with their CV. I can honestly say that i have read 3000+ CVs in the past 12 months, my best hit rate is with candidates I have been shown via recruiters. I may pay more..but i get more. End of discussion.

  17. Sarah, more than a few of us are unamused at the tireless drivel ‘Henry who mans the phones at Welbeck’ has to offer. Will your new found zeal for censorship be extended to that pillock as well?

  18. Candidates will never be scarce for iv banking jobs because of the potential rewards. Finding good candidates is easy too; finding one’s that will make the hirer money is the hard part.

    Headhunters/agencies try and pretend that finding talented people is a difficult task – but London is full of talented people – it is a balance between risk versus reward.

    Hiring managers use agencies because they bypass HR and they do all the leg work. There is little chance that this will change.

  19. As a Headhunter with over 16 years experience at the middle to senior level I can say with complete condifence that in-house recruiters are a very poor lot mattched in their process-driven, uncommercial approach only by the HR bods who supervise them. It is high time that business managers took back the power over recruitment and allowed the talent machine to work more efficiently again, putting the commercial benefit to the business as the top priority.

  20. Outside the house – no, inhouse recruiters who work directly for the firm they are recruiting for do not get commission but get a discretionary performance related bonus at the end of the year.

    External recruiters – you are absolutely right – I will need to use agencies again in the future when volumes pick up and the resources of the inhouse team can not support all of the roles we are recruiting for. For that reason I am making an effort to maintain my agency / search relationships through regular updates on what is going on in our firm etc.

    Inhouse Recruiter Reply
     
  21. Can we perhaps set up a separate article for prospective suitors for Sarah’s heart?

  22. Bottom line is recruiters will always be required to assist in finding good talent. In house recruiters are often recruiters who have not necessarily made a success in their previous role or those who have no real idea of recruitment process/technical ability, so soon enough when the markets pick up, they will realise it is actually a difficult job to source good people, so will all come running back.

    Look what happened with Lehmans. “We don’t want to see Lehman candidates as we are sourcing them directly ourselves.” So when it came to offer stage and these candidates were counter offered or took offers elsewhere, these in house recruiters were left standing with no one to help claw the candidates back.

    Thanks. I’m now off to save the world. Long live recruitment.

  23. The most visable candidates are not always the best ones. A recruiter can earn their fee by finding the best people and being persistant with tracking down the talent. Recruiting the best best people available will always give a firm the competative advantage. The question is whether paying the fee is worth giving you the advantage.

    It is no coincidence that the most succesful and advanced global financial centre over the past ten years has also had the most advanced and competative human capital brokerage model.

    The decision to go in house as a recruiter is usually as a result of lack of appetite and / or delivery in a commercial recruiter role. Bottom line is that the inhouse have a smaller universe of candidates to access if they are not using agencies. The inhouse also are unable to tell you what the competition are doing.

    If you are a hiring manager you need to ask yourself if the inhouse recruiter will get the BEST people availabel at the time you are looking.

    Recently I have interviewed more candidates than ever before who were recruited directly only to find the job they went to did not do what it said on the tin.

  24. Hear hear Superman. I was about to add something along the same lines about these HR folk being failed recruitment consultants…

  25. Recruiters are absolute crap. Don’t ever use them. They will take a cut of your salary if they ever place you. At last firms are waking up to the fact that they are absolutely pointless entities staffed by retards.

  26. Recruiters do not “take a cut of your salary”, we base our fees on what your salary is, which means that the more we get the bank to pay you, the more we get. So everyone is a winner! The recruiters that you have dealt with may have been crap, plenty are, but often this a reflection of the candidate that is being worked with…you can’t make a silk purse out of a sows ear!!

  27. Recruiters do not

  28. Man, anyone who believes the inane rubbish you wrote is a complete moron. You must be a student or a contract worker without experience of ever using a headhunter.
    No headhunter takes a cut of their candidate’s salary – they work for the client and are paid by the client. To give you a basic lesson, headhunters add value to the client by finding the very best candidates on a discreet basis and add value to the candidate by negotiating on their behalf. A decent headhunter who knows his stuff will be able to increase your salary without causing tension between you and your new employer.
    Please don’t post such unsubstantiated nonsense on here again.

  29. “a decent headhunter” …mmmmmmm really ?

  30. ” Linked In to approach candidates ” LMFAO – use linked in at your peril – you can see more metrics and confidential information relating to your org than if you had a “spy” sat in it – it takes years and years to make contacts and yet 10 seconds to see them all at a glance. Data Protection my arse

    Richard Deckard Reply
     
  31. I think that line management often recognises the advantages of using external sources far more than HR or Resourcing teams. This is partly due to that fact that HR and especially resourcing teams are cost centres where the staff are invariably trying (often without success) to justify their existence. Far too often HR and/or resourcing teams are deal breakers and not deal makers as they do not understand what they are actually trying to hire. There are some very notable exceptions but they are few and far between. A bank that forms a strong relationship with a headhunter formed on mutual respect and trust will always do better than the bank that has not.

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