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Beyond the Dollar — the Real ROI of Internal Headhunting

by May 1, 2012, 7:55 am ET

The recruitment marketplace has experienced a number of seismic shifts over the course of the last 15 years or so. Fifteen years ago, email was barely being used; Twitter, Facebook, LinkedIn, and even Google didn’t exist (Mark Zuckerberg was 12 years old!), and advertising for roles was done in print, not online; CVs were still largely being faxed or posted, and the only way to get good candidates in the market was to advertise, use an agency, or through internal referrals.

Now with the Internet, social media, and applicant tracking systems, organizations are no longer entirely reliant on recruitment firms to provide candidates and market intelligence. Of course there has been a shift toward corporate internal recruiters and RPO models in the past 10 years, but internal headhunters (which I differentiate from internal “recruiters”),  and real market-mapping and cold-call headhunting is still very rare. Why? Well, mapping out competitors and building market intelligence takes time and time are of course expensive. Whereas an internal recruiter may work on upward of 100 vacancies per year (the numbers hugely fluctuate from company to company influenced by seniority of role, etc.), an internal headhunter doing the full lifecycle process may work on as few as 15 to 20 searches per year.

There’s also the issue of the skillset required to do both roles. It’s very different asking a recruiter to sift through 100 resumes received in an inbox from a job posting than it is to ask a headhunter to start with a blank sheet of paper and map out the firm’s top six competitors and cold-headhunt call everyone at those firms who may have a relevant skillset. In my time spent heading up an executive search function at J.P Morgan, I never once posted a job advertisement. My role was purely to headhunt top talent in the market.

An internal headhunter is of course a role that should be used only for particular vacancies. It may be the most senior roles, or for niche roles, where typical channels to market aren’t satisfying the requirement.

So how do you convince the budget holders to invest in an internal headhunter who costs more than a typical internal recruiter, but who works on far fewer roles? The easy answer is that it’s cheaper than an external headhunter, but that’s not where the true value lies. It all comes down to how important it is for a company to find the best candidates in the market, not just those on the market, and there is a big difference.

The real true ROI of internal headhunters though is your connection to the market … both from an information gathering point of view, but also from a rapport building long-term strategic hiring point of view. This is someone in your organization who has time to meet with people for a coffee and spread the good news about what you’re doing. When these meetings happen at the right level, good news travels fast. You’ve also got more chance of receiving referrals to good candidates from good people you’ve built up a rapport with over time.  High-volume internal recruiters simply don’t have the time to add this kind of value to your business.

In recent years too much faith has been put into the power of using social media to passively engage “new” candidate audiences like it’s the new solution to our recruiting challenges. The engagement is still too passive. Audience implies participation and while social media makes it easier for us to connect with people, recruiters aren’t really fully exploiting these new channels to the best of their ability (usually through no fault of their own — they aren’t afforded the time).

Sure, if someone is looking for work, social media channels have opened up vast new lines of direct communication to job hunters. However, those who are not looking, but who may be open to a discussion for something relevant, are blind to the passive carrots being dangled in front of them on their mobile devices.

It’s wrong to assume that pumping out ads and setting up social groups means the best candidates in the market are all of a sudden sitting in the “available for work” audience. That’s not to say these aren’t highly effective candidate attraction methods, but energy needs to be put back into the connections we made before email: calling people.

Where there isn’t an audience (having a LinkedIn or Twitter account doesn’t constitute audience) you have to make the connection, on the phone. We have to reach out to these people who aren’t actively looking or bothering to respond LinkedIn emails and talk to them. Establish over the phone the circumstances which would lead them to consider a career move and go from there. The mechanics of that call and how it works with 99.9% effectiveness will be discussed in the breakout session at the ERE conference on September 7.

One thing is clear. If an organization relies only on job board advertising including social media campaigns for all levels of hiring, they will only access the 5% to 20% of the working population who are actively considering a career move. Mapping out competitors and directly headhunting brings you as close as you can be to ensuring you have identified the best candidates in the market, and not just those on the market.

In the ERE conference session on September 7, “Beyond the dollar — the real ROI of internal headhunting” I will outline a model that graphically illustrates to the internal budget holders why they should be investing in real internal headhunters, along with a step-by-step guide to planning an internal headhunt strategy.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  • http://www.fasttrackrecruitment.com Mitch Sullivan

    Your argument presupposes that “the best candidates” are working for a competitor. That isn’t true anything like as often as some hiring managers and headhunters seem to think it is.

    This comment…

    “One thing is clear. If an organization relies only on job board advertising including social media campaigns for all levels of hiring, they will only access the 5% to 20% of the working population who are actively considering a career move.”

    …kind of suggests that you don’t really yet understand what social media is best used for.

    But for jobs where only a candidate from a competitor can do the job, I agree that having a genuine headhunter doing it will produce better results. But if they were going to do it long term, they’d need to start using social media properly.

  • http://www.purerecruitmenttraining.com Fraser Hill

    Mitch,

    Thanks for taking the time to read the article and comment.

    I wasn’t implying that the best candidates are working for a competitor. It’s a given that if an internal headhunter is working on a role, it’s because the internal candidate campaign was unsuccessful. In my experience doing this role for J.P. Morgan, I wouldn’t be asked to take the time to map out the competitors until it was established that no internal candidates were suitable. I agree with your comment entirely – very often the right candidate is already working in that organization. That’s another article on succession planning though, not external market recruiting.

    In terms of my understanding of social media, I’m sorry if that’s the conclusion you reached after reading the article. I use social media every day to aid my searches (building lists on linked in for people to call for example). I tried to give a balanced view, promoting the use of social media (for example, “social media channels have opened up vast new lines of direct communication to job hunters”).

    The part you refer to in isolation is referring to the use of social media as an advertising only candidate attraction tool, and how that will reach a limited audience. My point is, using any medium to only advertise limits your talent pool to get candidates from. Full market mapping wins every time for me if organizations will commit budget to allowing people to do this for them internally.

  • Mike Ramer

    I spoke about this topic in my keynote to a national network of third party recruiters last week.

    There are things third party recruiters can do that corporate recruiters (even internal headhunters) can’t do, including:
    - Focus on select hard-to-fill positions (limited time)
    - Call into competitor firms (political/image/non-compete)
    - Know where else candidates are interviewing (hiring risk)
    - Give valuable third party feedback throughout the interview process (managing candidate expectations)
    - Know whether candidates will accept an offer before it is made (closing on the offer)
    - Counsel on counter-offers and assist with on-boarding.

    A real issue for companies is how to pay internal headhunters. A relatively low base salary plus bonus and/or percentage of base salary for every position filled makes sense (like third party headhunters).

  • http://www.fasttrackrecruitment.com Mitch Sullivan

    Hi Fraser

    Firstly, thanks for not taking my comment the wrong way. On reflection it looked a little blunt.

    I think certain sectors rely on competitor headhunting/talent-pooling more than others – Banking clearly being one of them.

    But there are industries where the talent-mapping/direct approach doesn’t work as well, simply because there are too many potential candidates that don’t work for a competitor. Sometimes those companies are urged to recruit from the competition (often by headhunters strangely enough :)) which ultimately doesn’t serve them well, for a variety of reasons.

    As is often the case with recruitment, much of the wisdom that people offer can vary depending on what types of disciplines and sectors involved.

    All the best.

  • http://www.fasttrackrecruitment.com Mitch Sullivan

    Mike, decent internal recruiters will be doing most of the things you mention.

    In the same way that all bar the really good agency recruiters won’t be doing them – or at least won’t be doing them well.

  • Andrea Marston

    I think that when Mitch wrote that the best candidates are not always working for a competitor, he didn’t mean that they are internal – more that they could be in a number of companies which are not necessarily seen as a direct competitor. (Sorry if I’ve misunderstood Mitch!)

    Many companies and headhunters have restricted themselves to only considering only their direct competitors – and then the same people are circled round the same companies, and although they might have in depth knowledge of the industry and each other, they are not benefiting from fresh ideas to take the industry forward.

    I agree with you Frazer, that social media shouldn’t be used just as an advertising medium – it’s not a glorified job board where you post and pray!

    But social media has given the potential to look outside that. Traditional headhunting techniques work brilliantly on things like LinkedIn to map out companies, but also to go a bit left-field and find those slightly quirky fits.

    Also, just like you wouldn’t call 10 people with the same pitch, but would do your research on them first and engage them in conversation – apply the same techniques to inmails, and you get a great response. Too many times you see emails or inmails that read like spam, the equivalent of a scripted cold call – that’s just lazy or bad headhunting. I’m just saying phone calls are good, but not the only answer.

  • http://www.purerecruitmenttraining.com Fraser Hill

    Mitch. I totally agree with you. There will be many industries where the approach is not as appropriate. I was spoiled at J.P. Morgan because there were a finite number of competitors to headhunt from.

    As with any recruiting campaign, a balanced approach based on the industry, market, niche of role and so on, is key.

  • http://www.techtrak.com Maureen Sharib

    Fraser, you said; “mapping out competitors and building market intelligence takes time and time is of course expensive.”

    It’s not only expensive but it’s the only thing in this world you can never get more of.

    You’re not going to convince the social media enthusiasts of the fact that they have to move closer to their target with a phone call because – many of them are loathe to make phone calls in the first place.

    This is the dirty recruiting truth nobody wants to admit to and anything that offers an alternative – no matter the strength of the alternative – will be seized upon as the latest and greatest solution to no-touch recruiting.

    There just isn’t such a thing.

    In the meantime, until they wake up and come to their senses, I’m stickin’ to my knittin’.

    I’m busier than I’ve ever been.

    Maureen Sharib
    Phone Sourcer
    513 899 9628

  • http://www.purerecruitmenttraining.com Fraser Hill

    Mike, I’m afraid I respectfully disagree with you on the six bullet points you make, only based on the experience I’ve had doing this very role at J.P. Morgan.

    I agree with your comments on pay though – it is still very much open for debate.

    In response to each of the points you made in your keynote speech:

    1. Focus on select positions – I only focused on hard to fill roles and worked on only one fifth or less of the volume than the internal recruiters – perhaps you were referring to internal recruiters rather than headhunters?
    2. Call into competitor firms – If I didnt call competitor firms, I wouldn’t have any candidates – all my candidates came from competitor firms.
    3. Know where else candidates are recruiting – the interview process is no different. I’d meet candidates for a coffee and find out as much as possible about their background and what other roles they were looking at. Managing candidate risk is no different doing the role internally.
    4. Give valuable third party feedback – Okay so the feedback isn’t third party but surely direct feedback is more valuable to a candidate than third party feedback?
    5. Know whether the candidate will accept before the offer is made – You can only ever know a candidates intentions before an offer is made – you can’t know the exact outcome. With the best counter offer management in the world, candidates do still take counter offers. The counter offer management process is no different internally – it’s about staying close to the candidate at every stage of the process and eliminating as many potential threats as possible. This is no different internally.
    6- Counsel on counter offers and assist with on-boarding – Believe me, nobody is more keen than the hiring company to make sure the counter offer doesn’t happen so that is absolutely a part of the internal headhunt process. On-boarding – nobody can assist with this as well as the internal recruitment or on-boarding teams.

    I hope my response doesn’t come across as being confrontational – these are all simply facts based on my experiences which clearly differ from yours. Thanks for taking the time to comment though – healthy debate is good!

  • http://www.purerecruitmenttraining.com Fraser Hill

    Andrea – great point well made. That’s so true – outside of banking candidate sources aren’t always obvious.

    On the subject of calls not being the only answer – I totally accept that. It’s often difficult trying to generalise for all recruitment everywhere in every company and of course a balanced approach is vital. I’d just like more readers to communicate more on the phone as it’s really very rewarding and so much can be gained from it that you don’t get from emails. Don’t get me wrong though – significant enough chunks of my work is done via emai.

    Thanks for your comments – good debate!

  • http://www.purerecruitmenttraining.com Fraser Hill

    Maureen,

    The world needs more Maureens! That is why you’re busy – there’s not enough Maureens in the world so you’re in demand!Keep up the good knitting!

    Thanks for sharing your comments – delightful reading..

  • Keith Halperin

    Thanks, Fraser. Having an internal executive recruiter seems like a good idea. A friend was working in that capacity recently- however, he was swamped with high-level positions having to fill far more than the 15-20 annually- he seemed to have almost that many at any given time…

    “5% to 20% of the working population who are actively considering a career move.” Where did you get that statistic? It seems extremely low to me.

    “Establish over the phone the circumstances which would lead them to consider a career move and go from there. The mechanics of that call and how it works with 99.9% effectiveness.” That’s seems an extremely high level of confidence. What’s that based on?

    @ Mike R. Well said.

    @ Mighty Mo: Most of what Fraser says need to be done on the front end can be done by world-class sourcers like you.

    Cheers,

    Keith

  • Keith Halperin

    Thanks Fraser. having an internal executive recruiter seems like a good idea.

    “The mechanics of that call and how it works with 99.9% effectiveness.” This seems like an extremely high level of confidence. What’s it based on?

    “..they will only access the 5% to 20% of the working population who are actively considering a career move.” From what I have seen, this looks like a *rather low figure. Where did you get it, and what’s it based on?

    @ Mike R: Well said.

    @ Mighty Mo: Most of what Fraser says is needed in an Internal Headhunter can be provided by world-class sourcers like you…

    Cheers,

    Keith

    *press release

    April 17, 2012, 10:44 a.m. EDT
    http://www.marketwatch.com/story/more-than-half-of-global-workforce-considering-job-change-according-to-annual-survey-by-kelly-servicesr-2012-04-17
    More Than Half of Global Workforce Considering Job Change According to Annual Survey by Kelly Services(R)
    Latest Findings From Kelly Global Workforce Index(TM)

    TROY, MI, Apr 17, 2012 (MARKETWIRE via COMTEX) — Employees across the globe have experienced unprecedented economic turmoil, and, as a result, are restless regarding future career goals. Many are unhappy in their jobs and are actively searching for new opportunities. Others are content with their current employment position but are seeking greater engagement and meaning from their positions.

    These findings are part of the latest survey results from the Kelly Global Workforce Index (KGWI), an annual survey conducted by Kelly Services
    Survey participants revealed the workforce issues that are important to them, the influences that affect their employer choices, and the particular corporate attributes attractive to them. Nearly 170,000 people across all generations in 30 countries, including the Americas, APAC and EMEA regions, participated in the current survey.

    Overall, less than half (44 percent) of the global workforce feels valued by their employer and two-thirds (66 percent) intend to look for a new job with another organization in the next year.

    The survey finds that among the main workforce generations, Gen X (aged 31-48) are more likely to be thinking about resigning their current jobs than either Gen Y (19-30) or Baby Boomers (49-66).

    The survey results also found when evaluating potential employers, the number one factor job seekers regard or consider is corporate brand/reputation (58 percent) followed by location (52 percent). In essence, the corporate brand is becoming the employment brand, and resonates strongly with candidates as they weigh their employment options, especially for skilled professional and technical employees.

  • http://www.purerecruitmenttraining.com Fraser Hill

    Hi Keith,

    Thanks for your comments and the additional reference point. Clearly you’re passionate about this and without opinions, there’d be no balance, so thanks again for taking the time to give the readers a different angle on this.

    “The mechanics of that call and how it works with 99.9% effectiveness.” This seems like an extremely high level of confidence. What’s it based on?” – The talk I’ll be giving at the conference is purely based on my own experiences working at J.P. Morgan doing cold head hunt calls. As per the article, this is to do with the mechanics of the call to establish if they’re open to a discussion about a career move. I’m not referring to the success rate of then getting candidates in for interview. As you’ll know, 85%+ of candidates you headhunt call don’t make the shortlist anyway (based on an long list of 40 and a shortlist of 3 to 5). In my experience, I can count on one hand the amount of candidates I called who said at the start of the call “I’m not open to a discussion”. At worst their response would be “I’m not looking right now but I’m always open to hearing what’s going on in the market.” The talk I will give outlines the script for this call.

    To your second point I’m really surprised you think this is high. The research you quoted refers to people who, when asked, agreed that they would consider looking for a career move in the next year. A year is a long time in today’s work environment. Of course a high proportion of people would admit to considering looking in the next year. “Looking in the next year” however isn’t the same to me as actively looking for work right now and that’s what I was referring to – people who are serious about moving now and taking proactive steps to find new work – looking with intent.

    The data you provide from a sample of less than 0.05% of the working population (170,000 versus 3 billion) conveniently backs up the point you make but equally if you look at a macro level,according to the International Labour Organisation, the global working population is 3 billion with around 200 million being unemployed. According to Monster, the worlds largest jobsite, it has 60 million registered users and gets 25 million unique hits per month. So as a statistic, 0.8 of the worlds working (and unemployed) population are using the world’s largest recruiting job site (I accept Monster doesn’t represent the whole active working population but equally I can’t accept that more than 600,000,000 million (20%) are currently actively looking for work). Now that in itself isn’t conclusive empirical evidence of my point, but weighing up statistics based on actual numbers (real current job seekers) versus data where people have been asked to respond to hypothetical questions about their intentions in the next year, I would tend to favour the real time current data.

    Having said that, you can find statistics to back up almost any point of view. The real current “micro” evidence I have is that whilst working at J.P. Morgan (which is what the article and presentation are about) not one of the candidates I headhunted had previously responded to the job ads my colleagues would have run for a month before me getting involved in the project. I was called upon when other sourcing methods had failed. So from my experience the percentage of the working population actively looking for work in the areas I focussed on was extremely low – less than 5%. So back to the only point I was trying to make in this statement – from my experience, if you rely only on advertising mediums to find candidates, you are reaching on a very small portion of the active working population in that particular demographic.

    I’m conscious that the banking sector will be different from other working demographics, be it industry or geography, however this article was only intended to share my experiences, not give an opinion on overall working population.

    Best wishes,

    Fraser

  • http://www.activesolutionsrecruitment.co.uk Darren Ledger

    What an absolutely excellent post and follow on discussion. I love Maureen’s comments and viewpoint and indeed share here almost apathy towards these people who think social media is and will be the ultimate and final resource solution.

    The only slight question I would raise is about the point where Fraser claims that mapping out competitors and establishing and developing business and market intelligence is time consuming and therefore expensive. This is precisely why you would use a 3rd Party Recruiter. They do this all day, every day as part of their job.

    Imagine if you will a Head Hunter who specialises in Know Your Customer / Card Not Present Technolgy for the banking sector. Every single day he is communicating with people within that sector, he is reading about developments, listening to growth strategy and understanding the challenges, shortages and new and emerging market opportunities.

    If it then transpires that Barclays need to appoint a Fraud Prevention officer for a role heading up their Customer Identity Protection unit with KYC / CNP experience, this guy will know who, what, where and when. Your internal headhunter may very well know who the leading Country Managers are, he may well have a black book (spreadsheet) with the names and phone numbers of every Global Head of Treasury in Europe. But if he hasn’t dealt with a Identity Theft, Card Payment, Fraud Prevention, AML or similar type role, he knows absolutely nothing!

    This in itself is one specific reason why 3rd Party will always be there.

    I myself specialise on recruiting into emerging markets, a lot of which is in banking or analytical research / data. How many of my US, UK, European clients have internal headhunters who udnerstand what it is like to live in Saudi Arabia? How many know what the quality of life for an expat and his family is in Uganda or Rwanda? How many know what the actual business environment is and what the cultural nuances are in Indonesia?

    None is my guess, or very few.

    One thing I keep leaning towards is can we charge differently for what we do? Why don’t headhunters charge on billable hours or a daily, weekly rate, just like Chartered Accountancy Firms for example?

  • http://www.purerecruitmenttraining.com Fraser Hill

    Darren,

    Thanks for you comments. To your question, this article and indeed the conference is for corporate recruiters so when I was referring to it as being time consuming and expensive, I meant in relation to internal recruiters (those who work on larger volumes and who may not be paid as well as internal headhunters). Compared to external recruiters it’s far less expensive of course.

    I absolutely agree with you – external recruiters are here to stay, and for many good reasons -that’s another topic entirely. The actual number of real internal headhunters (different from internal recruiters) in the market today is very small,but growing. It will never exist in all companies because it’s not relevant to all companies.

    “But if he hasn’t dealt with a Identity Theft, Card Payment, Fraud Prevention, AML or similar type role, he knows absolutely nothing!”. I’m afraid I have to disagree on this point Darren. Maybe 15 or 20 years ago that was more relevant (when there was no way of getting a headstart on half of your long list. Now the internet gives you a head start and the rest you can fill in by calling and networking).

    My experience has been that if you sit down with the internal client, understand the brief and are good at grass roots headhunting, you can still map out a particular market segment. This may not be true for every industry but anyone who tells you that you can’t do a full market map in an industry you haven’t yet worked in either hasn’t tried it, or tried it and failed and reached that conclusion.

    It’s great you recruit into emerging markets. You’re definitely in the hottest market geographically then and are no doubt enjoying what you do. Specialising as a niche in any geography or industry is always going to bring you a relative degree of competitive advantage. If a large organisation was looking at setting up in a country they’d never been before, it would absolutely make sense to get a local specialist. If it’s a country where the business is already established then there is no better reference point than the internal employees and their networks where an internal head hunter could then be effective.

    Good luck with your emerging markets focus – it’s great to be able to learn about the world and its cultural nuances at the same time as doing the job you enjoy.

    Best wishes

    Fraser

  • Keith Halperin

    @Fraser. Thank you. If I understand your statements properly, ISTM that you may be making your specific experience general.

    K: “The mechanics of that call and how it works with 99.9% effectiveness.” This seems like an extremely high level of confidence. What’s it based on?”

    F: The talk I’ll be giving at the conference is purely based on my own experiences working at J.P. Morgan doing cold head hunt calls.

    K: That makes sense. You didn’t include that qualifier in your original or something like “Based on approximately 5,000 calls: in my experience, I can count on one hand the amount of candidates I called who said at the start of the call “I’m not open to a discussion”. At worst their response would be “I’m not looking right now but I’m always open to hearing what’s going on in the market.” The talk I will give outlines the script for this call. YOUR RESULTS MAY VARY.”

    Also, If you had initially said: “only access the 5% to 20% of the potential candidates I speak with are actively considering a career move” (as you subsequently said: “So from my experience the percentage of the working population actively looking for work in the areas I focussed on was extremely low – less than 5%.”) that would be appropriate, but you said “only access the 5% to 20% of the working population who are actively considering a career move” and that seems far too low, particularly if you expand the size of the sample to the *entire world as you did. Also, what about someone who would like more and better work, but there is nothing suitable for him/her? Finally, how do you define “actively looking for work”? As previously mentioned, I think the concept of active/passive is misleading, and should be replaced with a spectrum going from completely uninterested in changing what they’re doing/not doing, to completely interested and committed to changing what they’re doing/not doing. I’ll call it the “Work-Change Scale” and it goes from 0-100.

    @ Everybody BOTTOM LINE:
    Don’t generalize your particular experiences to everyone without qualifying it, and don’t throw out numbers without your source.

    Cheers,

    Keith

    * guardian.co.uk, Monday 30 April 2012 08.03 EDT
    Global unemployment outlook gloomy, warns ILO
    Long-term unemployed at risk of exclusion from jobs market, says International Labour Organisation

    Article
    The ILO said the global employment rate in 2011 stood at 60.3% – 0.9 percentage points lower than before the synchronised global downturn began four years ago. It added that youth unemployment had risen in 80% of advanced economies and in two-thirds of emerging market economies. Long-term unemployment was also on the rise, with one third of the jobless in the west out of work for more than a year.

  • http://www.ecscpi.com Jerry Miller

    Another added benefit of having an internal headhunter is the ability, through the recruiting process, to capture and retain market and competitor intelligence. This type of information is lost to a company when using a third party search firm.

  • Ty Chartwell

    Good article Fraser.

  • Ty Chartwell

    Good article.