Confused by the difference between executive search and recruitment? You’re not alone. The terms are frequently used interchangeably, even by those working within the staffing industry. However, while executive search firms and recruiters share the same objective – finding the right person for the right role at the right time – there are subtle differences in their business model and methodology. In this FAQ article, we explore those differences.
Executive Search Vs Headhunters
Let’s clear this up from the outset. Executive search and headhunting are one and the same. A headhunter may be an independent consultant or work for an executive search firm. Here at Fraser Dove International, a specialist executive search firm operating exclusively in the life science industry, our headhunters go by the title of Global Executive Search Consultant. For simplicity, we’ll refer to headhunting as executive search in this article.
Executive Search Vs Recruitment
An organisation may seek to appoint an executive search firm or a recruiter when they are looking to make a new hire or series of hires, but lack the resources or know-how necessary to find, qualify and shortlist high-impact talent for interview. This may be because they lack Human Resource (HR) expertise, their HR and/or Talent Acquisition (TA) function doesn’t have the capacity to complete the search, or they simply struggled to identify or engage high-calibre candidates with technical and cultural fit. In either of these scenarios, the organisation may decide to reach out to an executive search firm or recruiter to source the very best individual for the role. However, which they choose to appoint will likely depend on these criteria:
Recruiters typically focus on sourcing junior positions up-to and including lower-level management. Within this broad remit, some choose to differentiate themselves by specialising by experience level, for example, entry level or graduate jobs, or intermediate or experienced non-managers. Senior, Executive or Top-Level Management roles are a high-risk proposition for recruiters due to their preference for contingent-based business model (explored later in this articles). The type or roles filled vary with industry and organisational size, but if the role involves supervising employees, or the role itself reports into an individual with no direct reports, then consider appointing a recruitment agency who serves your local area.
Executive search firms, as their name implies, focus on attracting highly skilled and experienced senior managers and executives to fill strategically important roles within an organisation. Typical titles includes C-suite, President, General Manager, Vice President (all guises) Director (all guises) and Senior Management. If the role has strategic oversight, either for the entirety of the organisation (top-level management) or for a division or department (middle-level management), consider appointing an executive search firm specialising in your industry or business function.
Recruiters traditionally target active job seekers – candidates who are either unemployed or are actively searching for a new role – through conventional channels – job boards, online ads and social media. Active job seekers account for approximately 30% of the talent pool, limiting the scope of the search. Furthermore, they may be registered with several recruitment agencies and interviewing for multiple roles, meaning there is direct competition for these candidates. Recruiters seek to mitigate these drawbacks to some extent by reaching out to candidates on their database and LinkedIn network. However, as we’ll discuss later this FAQ article, their contingent business model makes time spent on proactive searches prohibitive.
Executive search firms, in contrast, employ proactive search methodologies targeting both passive talent – candidates who are either employed or not seeking a role change – and “tiptoers” – candidates who are not yet applying for roles but are networking. Passive candidates and tiptoers comprise approximately 60% of the talent pool and are not actively interviewing. They might even work for a direct competitor! This makes passive candidates and tiptoers a desirable talent pool. However, in recent years, pioneering firms have extended their coverage to active job seekers, using job adverts and other traditional channels to complement the search (providing the search is non-confidential). This ensures they reach out to the best candidates irrespective of their circumstances. As the industry continues to evolve, some executive search firms have expanded beyond tradition search and selection to provide their clients with leadership advisory services.
3) Business Models
Recruiters by and large operate a contingent business model whereby they only receive a fee on the successful placement of a candidate. Rarely are these exclusive, meaning they are in direct competition with other recruitment agencies to fill the role. While the prospect of no upfront costs, low risk (the recruiter effectively shoulders the risk for conducting the search) and direct competition (nothing focuses the mind like a little ‘friendly’ rivalry) might sound attractive to prospective clients looking to work with a recruiter for the first time, it comes at a cost:
- ‘Low hanging fruit’ prioritised: Placement rates for contingent-based recruiters are typically lower than those operating a retained model. As they will only place a proportion of the roles they take on, recruitment agencies operating a contingent business model will seek to prioritise those roles which are less demanding of resources (time, money, energy). Difficult-to-fill roles may be indefinably postponed in favour of ‘quick wins’, delivery of shortlisted candidates might be sporadic, and the quality of shortlisted candidates might be inconsistent.
- Quantity over quality: While client discovery is no less critical, recruiters operating contingent business models cannot afford to invest the resources (time, money, energy) needed to gain a full understanding of the client’s market offering (products, services, mission, values and culture). When it comes to accessing candidates for cultural fit for an organisation, this insights can be the difference between an average and exceptional candidate. Of course, this knowledge can be acquired over time, but only if they win repeat work from their client.
- Opportunity cost: While there is no upfront cost, the same cannot be said for time. If you’ve recently lost a vital member of the team, every day the role remains vacant has repercussion for your business. Then there is time researching and engaging recruiters to see which would be a good fit. Time spent discussing the role requirements. Time spent assessing shortlisted candidates and interviewing, providing the shortlisted candidates were of a sound technical and cultural fit. If they aren’t, you will have to start the whole process afresh.
It should be noted that not all recruiters operate solely on a contingent business model. Some will offer a retainer, explored in more detail below, in situations where multiple hires are sought, where the hire is niche or confidential (relatively high-risk for a contingent-based business model), or for repeat clients who have an established relationship with the recruiter.
Executive search firms, on the other hand, operate on a retained business model. This means they charge an upfront fee which typically equates to 33% of the fee total. This initial investment reflects the rigour of the search process and the resources required to deliver it. Your executive search partner should take the time to understand your market offering – your mission, values, culture – as well as establishing the skills, experience and competencies essential for success in the role. Together with a signed-off performance job description, the consultant can take your role to market. The remaining fee will be payable on placement (a success-focused fee) or paid as instalments during key milestones in the search, for example, after submitting a shortlist of candidates.
On the rare occasion that a search is unsuccessful, a reputable executive search firms will provide a shortlist free-of-charge. Likewise, executive search firms offer a guarantee period whereby they will redeliver a search should an individual they place leave their role prematurely. This guarantee period typically lasts three to twelve months after offer acceptance and is often negotiable.
RELATED: Increase quality-of-hire by partnering with a reputable boutique executive search firm
Recruiters tend to be industry agnostic, working across multiple sectors and functions. In recent years, some have sought to narrow their remit and focus on particular industries – e.g. automotive, construction or IT – functions – e.g. audit, HR, or marketing – or levelling – e.g. graduates – to provide a better service. Though specialisation has brought recruiters closer to the customers, their contingent-based business model still inhibits their ability to reach tiptoers and passive candidates (with the exception of those on their database and wider LinkedIn network).
Executive search firms frequently specialise in a particular industry (e.g. life science) or, if they are industry agnostic, a business function (e.g. product supply). Within that industry, they may employ specialists teams who serve a specific function. For example, a life science executive search firm might appoint specialist headhunters with Engineering & Technical Service expertise. This ensures they have a deep understanding of the industry they serve. What’s more, this focus provides a robust, relevant and immediately available talent pool of outstanding candidates.
Recruiters typically serve local markets. This is especially the case for independent recruiters, though large firms with multiple branches offer national and even international coverage. The term ‘local’ is subjective; it could relate to an area as small as a district or as large as a county or region. However, for the most part, people will only commute so far for work, 26 minutes in the US and 54 minutes in the UK. That being said, people are increasingly willing to relocate for work, especially among professionals ages 18-34, a core target market for many recruiters.
Executive search firms are more likely to operate internationally. This reflects the needs of their clients who, when looking for their next a-player, are prepared to look beyond geographical boarders to engage the very best talent, whether they reside. They may or may not have a physical presence in the country, but they will have established networks in these territories.
Recruiters rely heavily upon candidates who are active in the job market; individuals who apply to job adverts, those who have registered with their agency or respond to social media posts or email broadcasts. Though they seek to shortlist candidates quickly and efficiently (if they don’t, their contingent-based business model risks them not making a fee), this is dependent upon the reach and engagement of their job ads, the number of active candidates in their network and other factors impacting the search (e.g. location, salary, job market etc.). What’s more, recruiters are often in direct competition to find the best talent, and because they tend to recruit across industries, their talent pool is rarely industry-specialised. As such, recruiters have a limited influence on search duration. With multiple search assignments competing for their attention, searches can drag on or force the recruiter to submit shortlisted candidates on an ad-hoc basis.
Executive search firms, in comparison, aren’t reliant upon conventional channels – job boards, online ads and social media. While some may utilise job adverts as part of a proactive search methodology for non-confidential roles (after all, active candidates comprise 30% of job seekers and engaging these candidates gives complete coverage of the job market), they complement rather than dictate the search. It’s their established industry networks that are their indispensable asset. What’s more, executive search firms have honed robust, proven search methodologies, while their industry specialisation ensures a close correlation between searches. This means candidates identified for one position who were not successful previously could be the perfect fit for another opportunity. They are continuously networking with high-achievers, resulting in extensive knowledge of and access to senior managers and executives.
Recruiters work across multiple roles simultaneously to be sure of achieving a placement. This means they are juggling multiple searches at any one time. While many recruiters do an admirable job, if incorrectly managed, this can translate into a poor experience for client and candidate alike. Candidates can be kept waiting, put forward for roles they are not a good technical or cultural fit for, don’t always receive proper interview preparation or interview feedback and in the worst-case scenarios, are ghosted altogether. This can reflect negatively on your employer brand.
Executive search firms trade on their reputation. Because they deal with a comparatively small volume of roles, they spend time getting to know candidates; their personalities, working style and drivers. Likewise, because they are predominantly dealing with passive candidates, executive search consultants must persuade a candidate that a role is a career-enhancing move. This translates into a better experience for candidates, with the added benefit that executive search firms can deliver a more tailored search, presenting shortlisted candidates who better match the job description.
Complete Talent Solutions
Forward-thinking executive search firms and recruiters are pioneering the use of active and passive search methodologies deployed in unison. In doing so, they offer their clients the best of both worlds; highly motivated active candidates seeking new opportunities and their passive counterparts; content in their role but open to career-enhancing opportunities. They aren’t reliant on active channels – job boards, online ads and social media – but these are deployed in unison with more traditional search techniques like referrals and networking. This ensures the best possible talent pool from which to shortlist high-impact talent. What’s more, it serves to increase efficiency and reduce lead times, which benefits both candidates and clients alike.
Such services are typically offered on a retained bases, further blurring the lines between executive search and recruitment. However, executive search firms and recruiters offering such services tend to stay true to their roots in terms of levelling; junior through to lower-level management for recruitment agencies and senior managers and executives for executive search firms.
Recruiters are the backbone of the staffing industry. They do a fantastic job of finding and placing thousands of candidates in a variety of roles every year. Recruiters are best placed for filling :
- Entry-level to mid-management level roles.
- Positions that don’t require specialised skills.
- Multiple hires that meet the above criteria.
In comparison, executive search firms are specialist who find, engage and place thousands of senior to executive level; business-critical hires the world over. They are best placed at filling:
- Senior management and executive roles.
- Difficult to fill roles.
- Confidential roles.
- Niche or specialist hires.
- Multiple hires that meet the above criteria
* This blog was first published on 01/02/2019 but was updated on 09/01/2020 to reflect changes in the industry.
For more hiring advice tailored to hiring managers in the life science industry…
- Read Retained Vs Contingent Recruitment: What’s The Difference?
- View our executive search solutions to see how we can help you grow your team and your business.
* Fraser Dove International is a specialist executive search firm operating exclusively in the Life Science industry. Passionate about people, we take pride in helping exceptional life science organisations source the talent they need to design, manufacture and distribute life-changing drugs, treatments and devices which transform and save patient lives.
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Our FAQs (Frequently Asked Questions) contain answers to the most common questions our clients and candidates ask our consultants about executive search. Should you have any specific questions that we have not yet answered, please contact us using the form below or call us on +44 (0)203 355 7050. We endeavour to respond to all enquiries within 1 business day.