Headhunters: Dealing with products that have a mind of their own

 
headhunter-doodle.jpg
 

Author's note

Let me get this clear—and it's the request of my source too—that headhunters are salespeople. They do sales. In fact, about three quarters of the industry do what is known as full-cycle sales, meaning they do the whole process of prospecting, meeting clients, getting a job brief, meeting candidates, preparing a shortlist, defending the shortlist, preparing candidates for interviews, managing candidates' doubts, getting client management buy-in to closing the candidate. Whew.

And they are not Human Resource (HR) people.

This distinction is important because unless we recognise that it's primarily a sales job, many of the things headhunters do or go through won't make sense. Having said that, due to the nature of your—for lack of a better word—product being traded (read: humans*), it's not your typical sales job.

* I'm being deliberately provocative here, but honestly, it's the best word I can think of.

A typical week as a headhunter

Because it's a full-cycle sales occupation, there's quite a bit of work to do every week. For about a quarter of the industry, the firms will split the business development work and the candidate sourcing work so it's a bit easier and focused, but not much as we shall see soon.

Monday starts with a mapping out of the activities for the week, which is dependent on answering one fundamental question: do I get more jobs or do I close the ones I have?

The job sheet

The job sheet is a self-generated list stating the roles to be filled—it's quite literally a to-do list for headhunters. For example, the list might include the likes of two Chief Financial Officer (CFO) roles, three audit roles and ten other random roles to be filled for multiple clients from different companies. For these fifteen roles, you'd need to find the candidates for these positions and send their curricula vitae (CVs) to your clients.

The typical range of concurrent roles on the job sheet is about 10–25 and if you have 25 roles to fill, you probably will work till very late (say 10pm every night). The amount of work to be done also increases proportional to the seniority of the role to be filled.

What you do in the week is half dependent on the state of your job sheet

With the job sheet as a starting point, your activities for the rest of the week depends largely on the state of your job sheet. If most of the roles are in the early stages, then most of your activities will be spent looking for suitable candidates and interviewing them. If most are in the late closing stage, then it means it's time to prospect for new clients otherwise there's no work. And no work means no commission.

Apart from the job sheet, there's also administrative work and data analysis to do.

There's quite a bit of administrative work to be done and it takes up 10-15% of your time. After meeting candidates, you'd need to key in notes and ratings. These ratings are self-generated, and cover aspects like presentation (grooming), communication (how well you speak, clarity of thought) and potential (professional career potential). An example of great potential candidate for a finance role would be 4 years in a big 4 audit firm and 6 years in a billon-dollar multinational company (MNC).

As an aside, frequent job-hoppers will do poorly in the potential rating.

You will also be managing a lot of information and data, with every candidate you have being one data source—their ratings, profile and quirks—and every client request another, so it's necessary to be able to use the data effectively in order to match the candidates to the right company. In general, there's no bad companies or bad candidates; just the right candidate for the right company. An example could be a candidate who has good qualities not quite articulate, so he may not be a right fit to a MNC but could fit what a small and medium enterprise (SME) is looking for.

Getting leads

There's two ways you can get your leads.

The most obvious would be what is known as the advertisement chase, which is to look through job advertisements companies put up on job-search sites, newspapers and even LinkedIn. From the advertisements, you'd be able to get a good idea of what these companies are looking for.

The more interesting way is through people themselves, and they can be anybody. Let's say you met up with your friend yesterday and he told you that he had just finished an interview with company A. Interestingly, company B called him up and offered another role. So from this conversation, you'd have learnt about the openings at companies A and B. With this information, you'd then call the companies to find out more, pay a visit to learn about the vacancies and present a shortlist of available candidates after. And sometimes it's not so simple because you can't reveal who told you about the vacancy (it might be confidential or you don't want to implicate your lead), so instead of being outright about intending to fill their vacancy, you can innocently tell the company that you just happened to come across a very good candidate in a relevant field...

Sometimes, the lead may come from the companies themselves. For example, they might share with you or have a press release about expansion plans overseas: any growth means more hires and more hires means more opportunities for you.

Getting paid as a headhunter

There's two fees we need understand, and two models of payment to look at: retainer or contingency.

Placement fees and commission

Placement fees are paid from the client to the firm, and commission is what is paid from the firm to the headhunter.

The average placement fee in Singapore is 20-25% of the filled role's annual salary. For example, if you manage to find a good candidate for a managerial role and he gets hired, and his annual salary is one hundred thousand, your firm gets $20k-$25k. Comparing to other countries, we are looking at an estimate rate of 15% in India/UK and 30% in japan since it's difficult to find bilingual speakers there. Do note that these are just rough figures, and actual numbers differ between firms.

But it's not a fixed rate, and it can change over time.

As time passes and your clients' businesses grow, they'd realise that they are spending a lot of money on placements, or in other words, you and the firm you work in. For example they might have recruited three managers (from the earlier example) in one year and hence forked out $60k-$75k in fees to your firm. Scale that up to senior positions, and you could be looking at $200k for a single placement. So negotiations come in, and it's up to you to convince your clients that they still need you.

With that as the background, let's talk about your part of the renumeration: the commission bit.

Headhunters get anywhere between 10-20% of the placement fee, and using the example of the hundred thousand manager, your commission amounts to $2k-$5k. And that's just for one placement. No wonder it's common for headhunters to go on a holiday in South America for a few weeks after a good month. Note though that you get less in bigger recruitment firms because of the higher operational costs and possibly because they are large and hence have a better leverage in deciding your commission. In boutique firms, a headhunter can possibly get up to 30% of the placement fee.

Retainer model of payment

Some companies pay an retainer fee to a headhunting firm whether or not there are roles to source but once they have a role to fill, they expect the firm to make it a priority to fill. For other companies, they could offer a three months retainer fee to a headhunting firm and exclusivity of the job, meaning no other firms can fill the roles except them. This, is not the usual way to get paid in Singapore; in fact, it's as low as under 10%. Many recruitment firms actually try pitching it but it's a tougher sell compared to the contingency model below.

Contingency model of payment

Imagine you are looking for a house and you've contacted several property agents with your required specifications. The one who returns with the ideal house first is the one you'd pay, while the rest get nothing for their work. That is the contingency model of payment, and it's the primary model of payment for more than 90% of the placements in Singapore. If you don't fill the job, you don't get the money.

Challenges and to-dos as a headhunter

Sure the money is good, but it's also one of the most challenging and stressful sales job in the world, by virtue of the fact that your—again, for lack of a better word—product has a mind of its own.

Let me say it again: your product has a mind of its own, and sometimes, it doesn't align to yours.

For example, if you’re selling a house, the house won’t disappear; it won't uproot itself and walk away. Not so with humans. You can have a candidate pull out at the eleventh hour just before accepting the job offer, and that's after all the interviews and what-not. To be fair, there’s many reasons why candidates reject the offer at a late stage: for example their spouse is going overseas or maybe their current boss counter-offered a better deal to retain them in their current job. And it's not all that uncommon so it becomes challenging.

You see, in a typical sales role you only need to manage the buyer. In headhunting, you'd have to manage both the buyer and the product. What this means is that as a headhunter, your primary job is to align expectations on both sides (client and candidate) instead of just one party. If both sides trust you, it's a walk in the park but if the candidate resists your management or has a passive/cavalier attitude, it's as bad as it gets.

Building rapport and credibility with candidates

When dealing with candidates, one thing quickly becomes apparent: rapport and credibility is paramount. To put things in perspective, let's say you have to fill a CFO role earning half a million. He's been in the industry for years and probably have a family with two kids just a few years shy of your age. And he's supposed to trust his career to you, a young punk who probably haven't even moved out of his parent's house or studied finance.

I won't go into detail on how to build rapport and credibility; it's not the intent of this article and there's tons of good resources out there but it's suffice to say that good active and empathetic listening is a non-neogotiable.

But that's not the only reason why it's important to build rapport and credibility. Remember, your products have a mind of their own. Headhunters are not yes-men bowing to both sides. Instead, there's a quiet pride in the industry that view their roles as a consultant instead of a mere salesperson. It's understandable: headhunters have to consult candidates on what's a reasonable pay increment to expect when switching jobs; you'd also have to consult clients who request for candidates with profiles they don't really need. For example, your client might request for a Japanese, but they don’t actually need a a native but someone who can speak Japanese proficiently.

Dealing with difficult candidates

Let's say you've found the perfect candidate for a niche role. The candidate knows that he’s needed and decides to play punk: they don't pick up your calls and they don't give feedback after interviews; he choose to appear disinterested. Your job then is to bring them down back to earth. Bust their ego. You’ve to manage candidates up front very early, and have them think of you as a partner. Understand them very well and understand how they’re motivated.

Another tricky situation is when candidates lie: you meet an accountant who says that his salary is a certain amount. After the job offer, your client then asks for his salary slip and you realise that the actual salary is five hundred short. So you'd have to get an explanation; the candidate could say he'll be getting that pay in 3 months time as he's due for promotion blah blah. So now you will have to explain to the client the discrepancy in a way that goes down well. Managing expectations 101.

Culture in the headhunting industry

It's probably ironic that the culture in the industry reflects the literal headhunting tradition.

Brutal.

In many of the big firms, it is pretty hardcore. You’ve got to want to go for the kill, be very assertive but in a way that doesn’t piss off your clients or candidates. It's important because sometimes you'd have clients breathing down your neck every day chasing you for updates, or as we have seen above, difficult candidates.

It's also highly numbers-driven, and a quarter or two of not hitting the targets means bye-bye. It will be very obvious in the company who's the top performers and the bottom feeders. And if you are at the top, you'd be rewarded in a way that might even alienate the averagely good performers.

And work-life balance only applies to boutique firms. In fact, it's generally pretty good and there's a family vibe to them; culture is good and everyone knows each other, just like a family. In mid to large sized firms, what you see in The Wolf of Wall Street (yeah, that movie by Leonardo DiCaprio) is pretty reflective.

Drinking is a commonplace and many events revolve around drinking sessions and visiting bars.

Last, it's a small industry where you can know your competitors by name. It's small to the point that when you visit a client and upon signing the guestbook notice a competitor firm's name, you'd have a good chance of identifying the person who visited your client.

A dose of reality about being a headhunter: both the bad and the good

High attrition rate

We have already established that it's difficult being a headhunter, but still the numbers are sobering.

Attrition is usually high in sales functions and even so, it's still slightly higher in headhunting. One reason is due to the brutal culture, and another due to the low barrier to entry into the industry.

You see, technically anyone can be a headhunter and the only assets in headhunting is personal relationships and your own tenacity to succeed. Add that to the fact that the money is good and competition stiff, and you'd understand why the attrition rate is so high.

High paying

It's undoubtedly a high paying sales role, and a well-performing fresh graduate can easily earn two to four times their peers. The industry is facing a lot of pressure now, with competitions from other firms and RPOs (recruitment process outsourcing companies), and also from your clients themselves as they develop their own internal talent acquisition teams. It's difficult, but the potential for high earnings is still there.

High social impact

It might not be obvious but as a headhunter, you are directly impacting someone’s career. As a case in point, my source shared with me that he once helped an unemployed single mother find a job. Upon a successful hire, she cried and thanked him for the opportunity. Despite the brutal environment and apart from the monetary benefits, you'd definitely experience a satisfaction unlike any other.

And the social impact does not end there. Imagine recruiting for the vice-president of the market leader in consumer electronics; in some sense you would have been the kingmaker for the technology industry. Furthermore, after placement you can advise him on how to create a good team structure, and whether he should hire from within or without. It's a powerful influence, and it grows with the reputation and track record you have.

High exposure to every industry imaginable and senior leaders

Because you can't really be picky about your clients, you'd get exposure to pretty much every industry imaginable. And because companies won't go to headhunters to fill junior positions, you'd be sure to meet your share of senior leaders as candidates.

And this relationship you have gives you privy to their inside stories: their life journeys, career paths, regrets and mistakes; things you'd never learn in a typical professional context. Besides benefiting from their stories and learning things you'd never learn elsewhere, pragmatically you'd also amass a large database of contacts should you ever need anything, or require to network with anyone.

Career progression and advice for would-be headhunters

General management career progression

Progression follows a general management career path. When you first enter, you might join a unit and focus on leads in a particular industry. As you progress, you'd manage people (including hiring and firing, with approval from the firm) and answer for the profit and loss of your team. Business development comes into play too.

It takes about two years to rise to a senior consultant, and another two to three years to become a manager. Eventually it's the usual progression to senior manager, director, country managing director etc. The size of the team you manage scales up as you progress.

Most recruiters spend their first few years in bigger companies where there's more opportunities in terms of progression and better training. It's only when they have better experience then movement into boutique companies happen.

It's a sales role

The advice is go in with your eyes wide open. As we have mentioned, this is a sales role, and you must want to be in a sales role. And you must be very resilient because rejection is common both from the client side and the candidate side. You could make 10 cold calls to have only one person pick up, and he might not even want to entertain you. If you’re easily affected by rejection, it will be a very depressing job to be in.

Much self-discipline is also required because nobody is going to push you; remember, it's a brutal environment.

Last, creativity and flexibility is crucial because you'd need to reposition your words (not your stand) often to be heard by both your clients and candidates, and manage expectations so you are all aligned.

Concluding thoughts

By dealing with people on both sides (buyer and product), headhunters have it difficult but the returns are immense, both in the monetary sense and in the intangibles such as large networks and high satisfaction.

And it's compounded by the fact that it's a full-cycle sales role with no one to push you, meaning that self-discipline on top of creativity and flexibility is highly required.

If brutal, numbers-driven environments don't faze you, or maybe you're looking to make your mark without the necessity of technical qualifications and are willing to push yourself, and you relish the challenge of working with products that have a mind of their own, headhunting might just be the place for you.