Can Internal Recruiters Replace Executive Headhunters?

Executive headhunters may well be under threat from the well documented rise in the numbers, and I would add sophistication, of internal recruiters now employed directly within organisations over the last decade.

When I encountered my first internal recruiter it was about twelve years ago and it was quite clear that they provided little threat to me and my business as an external third-party recruitment agent as their sole purpose seemed to be to turn the handle on the PSL job alert machine, manage the CVs as they came through the door from their preferred agents and lighten the administrative load of  the hiring managers.

However, over the last few years the role of the internal recruiter has developed for many beyond the administrative into a more defined business partner model that seeks to reduce and replace external agency usage by taking charge of the entire hiring process themselves. Can the rise of the Internal Recruiter sound the death knell of the external executive headhunter?

Here are some thoughts on the subject:

One great obvious advantage for an internal recruiter is that they are necessarily going to understand the hiring company’s culture way better than an external recruitment consultant.

I also suspect that they have a better hit rate when approaching talent than external headhunters. Gut feeling is that a target is more likely to listen to an out of the blue approach made directly by a company than by their agent (who may or may divulge the client name).

Internal recruiters can also potentially have greater access to decision makers and influencers within the company and therefore have a more rounded understanding of the job description and person specification; indeed they might play a key role in shaping it.

In addition the third-party agency sector has a reputation for high turn-over of staff and clients that have built a strong relationship and understanding with an agent may find they are suddenly dealing someone completely new and the previous contact is now else where under a restrictive covenant not to solicit work from them.

There is also the matter of how external recruitment consultants are measured and incentivised. An executive headhunter will be rewarded for the fee income they generate and not time or cost to hire, how long the appointed stays with the company, or what impact the new employee makes. One might argue that internal recruiters have a greater focus on getting the hire right, whereas the external is more focused on making a sale.

OK, so a lot to be said in favour of the internal versus the external. Let’s look at some of the arguments on the flip side.

An external executive headhunter can be a specialist in certain a discipline or industry sector and therefore build up a deep but narrow network that pays dividend in the so-called “war for talent”. In contrast internal recruiters often need to be generalists to be able to handle all the various recruiting needs thrown at them and can have networks which are shallower and wider than a specialist external recruiter. This might cause a problem if they are tasked with a resourcing need that is particularly specialist or competitive.

When companies use an external firm of recruitment consultants they are buying a flexible resource that they can turn on or off at any moment. This can be very useful if there are peaks and troughs in their recruitment activity. Employing an internal recruiter means a company has to be pretty sure they are going to have a consistent need to recruit in order to justify the salary and on-costs.

I’ve also known some company executives to be more in favour of using an executive headhunter when hiring in a business sensitive area; e.g. lining up a replacement for existing employee who will be shortly asked to leave the business. In these circumstances it is felt that using someone outside of the business is a better way to retain confidentiality and some distance between the firing and hiring process.

Above I made a point about how the two different types of recruiters are incentivised. Flipping this around we might also want to look how they are penalised too. I believe the commercial pressure placed on an external recruitment consultant to get their product to the table (often whilst in competition with other agents) is in sharp contrast to the environment some internal recruiter operates in. If the external consultant doesn’t consistently beat their competition and bring good results to their clients quickly they don’t make fees, don’t get paid and ultimately don’t last long in their industry. Are the internal recruiters under as much pressure? Are their penalties for non-performance as high and as swift? Perhaps in some companies they are but in quite a few I’m pretty sure they’re not. A poor external recruitment consultant gets found out much quicker than an internal one; I’m sure of that.

The last point I will make about the difference between executive headhunters and internal recruiters is around workload and focus. An internal recruiter can often not say “no” to their customers whereas an external recruiter can turn down work if they are already maxed or if they know the job is likely to very tricky or even unfillable. Internal recruiters I know have told me stories of being pulled from pillar to post as hiring managers compete to prioritise their recruiting needs over the needs of others. Being drawn into office politics or servicing the need of the director who shouts loudest but in reality has the less critical requirement is not an environment conducive to an effective hiring process. An external recruiter will give you a straight answer as to whether they want or need the work and if it can be completed.

In summary there are compelling arguments for and against both types of recruiting method. To my mind I believe the big companies that have consistent and continual hiring needs will seek to use an internal recruitment team; it gives them greater control over the process, can help build brands, can be more strategic. They may choose to supplement with occasional use of executive headhunters when there are particular specialist requirements or circumstances. In contrast I think those companies which are little smaller and/or experience peaks and troughs in their recruiting needs will continue to buy-in recruiting services as and when required but will demand a much higher level of service and focus on long-term partnering from these external providers.

Photo credit: cartoon by Nick Maher. Any resemblance to real persons, living or dead, is purely coincidental.