Why Headhunters Aren’t Needed (As Much) Anymore

I’m about to make some headhunters angry, and how angry they become when they read this will indicate just how right I am. I was a headhunter for the first six years of my career, moving then to a client of headhunters, and now I’m a part of the economic disruptor movement in recruiting, so I know what I’m talking about.??

Years ago, the value a headhunter provided came from the filing cabinets filled with resumes and the network developed over time. They possessed broad databases of prospective candidates in ways most firms could not match. Things have changed. The advent of resources like LinkedIn, Zip Recruiter, Indeed, and a host of other career sites, has created a formidable lane for all employers to leverage. Candidate profiles are there for the taking (and viewing). And today’s job seeker will now take a call or respond to a message from anyone offering a potential job, not just a headhunter.??

What does this all mean?? In short, given the cost, I think it’s time to rethink how and when to use a headhunter.??

Don’t get me wrong – there’s no reason to delete every headhunter contact you have and disconnect yourself from those relationships. You just need to start thinking in a more strategic and targeted way when paying the premium a headhunter demands. It’s time for companies to rethink when and how to utilize headhunters.?

The History of Headhunters?

First came fire, then the wheel, and in the case of job searching, first came classified ads in the local newspapers, then job boards, and so on.??

To delve deeper into the evolving role of headhunters, we need to analyze historical trends and the current state of the job market. For the past 40 years, the demand for headhunters has been intricately tied to the fluctuations in unemployment levels.??

During periods of higher unemployment, the demand for headhunting services decreases, which results in many unemployed headhunters and closed firms. However, the landscape has changed since 2010, with a prolonged peak level of hiring activity.?

In today’s labor market, with an unemployment rate below 4%, headhunters enjoy the ability to charge full fees, and any discounts they are asked to offer are increasingly rejected. Think about it: why would a headhunter provide discounted rates when the demand for their services is at an all-time sustained high and the talent pool they supply is so shallow???

The standard fees of 25-33% of annual compensation charged by most recruiting firms pose a significant financial burden on companies seeking top talent, driving the cost per hire through the roof, causing HR departments agita as they fight for more budget so they can provide the pipeline of needed candidates for their internal clients. In fact, the costs associated with headhunters have made a significant dent in the budgets of many firms.?

Reflecting on the history of recruitment, from classified ads to the advent of job board giants like Monster, Career Builder, and Hot Jobs, it's evident that the industry has undergone significant transformations. Recruiters, internal and external, used to practice the “post-and-pray” method, referring to the act of posting your opening and praying for a good candidate flow. Today we see nearly all successful efforts starting with a virtual tap on the shoulder by a recruiter to pitch someone who may or may not be looking for a new job. The current job market requires a nuanced understanding of candidate behavior. Simply posting a job and expecting quality responses is no longer a viable strategy.?

In 2010, when unemployment was high and candidate flow was overwhelming, the primary concern when posting a position was the need to sift through the abundance of resumes to find the right candidates. In 2024, the challenge has shifted to simply getting responses in the first place and creating a quality talent pool to present to hiring managers. However, the process of seeking out the right people, networking, and tapping on shoulders takes longer, requiring a strategic plan that finds the needed talent without breaking the budget.?

Many candidates today are already gainfully employed and not actively seeking jobs but are curious about opportunities that come their way. They want to keep their options open for today and the future. Your organization needs to stand out and attract their attention, otherwise you’ll miss out on today’s best talent.??

What does all this mean for today’s employer looking to hire? In short, it means that you have far more economical means to source talent for most open positions.??

Strategic Use of Headhunters?

If my firm can essentially access the same candidate pool, or close to it, that a headhunter can provide, and can do so for a net cost per hire (well) below the 25-33% of annual compensation a headhunter would charge, why do I need headhunters at all? The answer is when a headhunter makes sense today, like when the right candidates are still tough to find despite these new tools.??

For example, there are populations of professionals who are not inclined to “show themselves” online, reticent to either maintain an active and current profile, and even more reticent to post an updated resume on other sites. There are also populations who pay little attention to the InMail messages on LinkedIn, making their accessibility more limited.?

Headhunters should be reserved for situations where the sought-after individuals are difficult for the average business to find, either due to their low visibility or the scarcity of qualified candidates. In essence, headhunters should be viewed as strategic partners, not just recruiters.??

Another angle where a headhunter is going to be worth their expense is when there is angst while trying to find someone you know will be a fit. A headhunter will understand intimately how fit is defined. Then there is the time when your efforts to source candidates have failed, and when failure is mostly defined by an inability to identify candidates who meet your job requirements. NOTE – If you identified good candidates that were just too expensive for your budget, headhunters often won’t help you much.??

When measuring the success or failure of recruiting efforts, companies often focus on time to hire, cost per hire, and the stickiness of the hire (retention). These metrics are more influenced by factors beyond the recruiter's control, such as managerial effectiveness and company culture. It's also essential to differentiate between a sprint, focused on filling one position, and a marathon, aimed at building a robust and sustainable team.?

Marathon vs. Sprint: Building Long-Term Success?

If you need to hire a new product manager and you’re focused solely on that position and outsourcing it to an agency, you’ll get the position filled. However, the bad news is that you’ve built nothing regarding a foundation or progress toward longer-term goals, such as hiring more people who are similar or complementary to that person. This is a sprint type of recruitment and is focused on finding one-off hires that check off all the boxes for a specific role.???

The marathon approach involves viewing recruitment as a long-term strategic exercise. It emphasizes filling the entire organization with strong talent rather than just a single role, expanding your network, and creating conduits to connect with other qualified candidates. For example, you may find a great candidate that isn’t quite right for your current open position but might be perfect for another role down the road. Building this network gives you a stronger pool of talent to draw from in the future when new needs arise. In fact, each month you take this approach you will deepen the talent pool and shorten your time to hire.???

If you use a headhunter, all the sourcing and reviewing of candidates is in their hands so you are unable to build this high-quality network of talent.??

Although marathon methods are good for the company overall, if your HR staff is tasked with the hiring it can put a strain on them. Companies often hesitate to rely solely on internal HR teams due to the unpredictable nature of recruiting. The ebbs and flows of recruitment may leave internal teams inactive for extended periods and overwhelmed at other times taking attention away from their regular duties.??

On the other side, it could leave an external recruiter doing nothing for weeks at a time, and most companies can’t afford that. The solution lies in finding a middle ground.?

The Future of Recruiting?

If you are going to take the recruiting previously done by headhunters in-house, you need to make some solid investments in your shop. It starts with a savvy recruiter who is adept and experienced at using the tools of the trade. Then you need access to those tools, which likely will include a subscription to LinkedIn Recruiter.??

There are various packages that need to be explored to ensure you have enough opportunities via InMail to connect with people on the site. Leveraging other sites like Indeed may also be worth considering, specifically for their resume databases. Then you need to track all those you source for today’s roles and for the database to tap later for the next open positions.??

Employers who have been meeting the curve or even ahead of it have come to realize that the best strategy for long-term growth is to build your own internal recruiting practice that mirrors what a specialty headhunter has been doing for years. You hire the best candidates you source. You also database those you don’t hire. That database builds, becoming both your talent pool for future hires and your network to further build on your database.??

Over time, you will create a pool of potential hires that translates to shorter times to hire and lower costs per hire, leaving your internal clients ecstatic at the results. Your finance department will also cheer, and if you play your HR cards right you can convert some of the cost savings into dollars to be spent on other HR-related priorities like professional development, which when properly executed helps create stickiness with those hired, leading to less hiring. Win-Win-Win-Win!?

As we move forward, the recruitment landscape is unlikely to be solely handled by internal HR teams or generalists. However, the assumption that generalists can juggle all HR tasks while also investing time in building a candidate pool is unrealistic. Companies need to adapt to the changing dynamics, recognizing that recruiting requires time and specialization.?

This is where a fractional recruiting model, like the one offered by OperationsInc, can provide a solution. By combining the benefits of internal teams and external expertise, this model allows companies to have their cake and eat it, too. It offers the flexibility to dial up or down the level of recruiting activity without compromising on the quality of candidates, time to hire, or cost.?

We've successfully filled positions across all compensation levels, demonstrating our ability to provide comprehensive recruiting services. Whether it's a Senior Director of Legal M&A with a $475,000 base salary or even a more entry level role paying $65,000, we've proven that a recruiting service can offer everything you need at a fraction of the cost.??

In conclusion, the role of headhunters in today's job market requires a strategic reevaluation. In the past, we may have looked at these partners as the go-to option for most open roles for those who could afford it. Today, we can and should look at them as the option for only targeted and specific needs. The paradigm has shifted, and it's time for businesses to adapt and thrive in the competitive war for top talent. Embrace the future of talent acquisition and say goodbye to outdated recruiting practices for now.?