If you are as avid a Boston sports fan as I am, you may be aware of Scott Boras. He’s the guy who tends to get the highest priced contracts for star players. These players tend to become mercenaries – moving to the team who will pay the highest price and considering little else. Boras has represented athletes who have left the Red Sox for the Yankees (Johnny Damon, Jacoby Ellsbury, Stephen Drew), teased the Red Sox with star players who signed with the Yankees (Alex Rodriguez, Mark Teixeira), and pushed up the price on catcher Jason Varitek. He currently represents Red Sox Xander Bogaerts and Jackie Bradley, Jr. I believe these two talented young players will leave the team or will want a huge salary. In a typical agreement, the agent gets 5%, so it is in his best interest to get the highest price. If you were a team owner, would you want Scott Boras to represent your players? I don’t think so.
My point is that headhunters (aka independent recruiters) are a lot like Scott Boras: they are incentivized to get the highest salary possible when placing a candidate, and poach that person soon after to place him in another company. If the employee doesn’t leave, he may ask for more money. This leads to a mercenary mentality rather than one of a loyal, long-term employee. Why would a company allow this? Why would a company want to pay 20-35% of a year’s salary for a mercenary unless it was a desperate situation?
There are three acceptable reasons to use headhunters:
- You need the person immediately (zero schedule flexibility), your recruiting engine is not currently running, and you are OK potentially sacrificing long-term retention.
- You’re looking for a needle-in-the-haystack skill set – truly rare to find.
- Unemployment (i.e. available talent) is at historical lows. For example: 50 year lowest unemployment rate in the US was 3.4%.
- (Any combination of these make hiring harder and are also are acceptable.)
Professional sports teams experience these reasons, but for a small business, using a headhunter rarely makes sense. Other than the reasons above, headhunters are used because of ignorance, laziness or very short term thinking. I’m sure that some people will disagree with me, but if you have a solid hiring process, you don’t need to use headhunters. Posting a job listing in the right places will find a talent pool. When a business hires from this pool, it negotiates directly with the candidate, and works to develop and retain the employee thereafter. I’d be hard pressed to invest heavily in a candidate that came through a headhunter.
If you can’t do it all in house, get help with the time consuming tasks, such as crafting an effective job posting, culling resumes, and filtering candidates. Once a candidate comes in for an interview, the company needs to own the process and have the direct relationship. This reduces the amount of leverage for the candidate, allowing the company to steer to a favorable result.
A successful hiring process such as the one we use at mPower Advisors can be executed by a company of any size to find A-players. Yes, finding the right person takes time, energy, passion and coordination, but the ROI is worth it. Your work team can go from good to great by getting the right players on the bus.
While a Major League Baseball team will always have to worry about annual, seasonal turnover of top talent on a fixed 25-person team, companies do not live in such extreme conditions to warrant paying an agent for a mercenary with the desired skills.
For more on this topic, visit perfecthireblueprint.com