High Tech and High Touch: Headhunting, Technology, and Economic Transformation 9781501713996, 9781501714009, 9781501702808, 9781501702815

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High Tech and High Touch

High Tech and High Touch

Headhunting, Technology, and Economic Transformation

James E. Coverdill and William Finlay

ILR Press an imprint of Cornell University Press Ithaca and London

Copyright © 2017 by Cornell University All rights reserved. Except for brief quotations in a review, this book, or parts thereof, must not be reproduced in any form without permission in writing from the publisher. For information, address Cornell University Press, Sage House, 512 East State Street, Ithaca, New York 14850. First published 2017 by Cornell University Press Printed in the United States of America Library of Congress Cataloging-in-Publication Data Names: Coverdill, James E., author. | Finlay, William, 1955– author. Title: High tech and high touch : headhunting, technology, and economic transformation / James E. Coverdill and William Finlay. Description: Ithaca : ILR Press, an imprint of Cornell University Press, 2017. | Includes bibliographical references and index. Identifiers: LCCN 2017015924 (print) | LCCN 2017020594 (ebook) | ISBN 9781501713996 (pdf) | ISBN 9781501714009 (epub/mobi) | ISBN 9781501702808 (cloth : alk. paper) | ISBN 9781501702815 (pbk. : alk. paper) Subjects: LCSH: Employees—Recruiting—United States. | Executives— Recruiting—United States. | Information technology—Economic aspects—United States. | Social media—Economic aspects—United States. Classification: LCC HF5549.5.R44 (ebook) | LCC HF5549.5.R44 C635 2017 (print) | DDC 658.3/1110973—dc23 LC record available at https://lccn.loc.gov/2017015924 Cornell University Press strives to use environmentally responsible suppliers and materials to the fullest extent possible in the publishing of its books. Such materials include vegetable-based, low-VOC inks and acid-free papers that are recycled, totally chlorine-free, or partly composed of nonwood fibers. For further information, visit our website at cornellpress.cornell.edu.

To my amazing six-year-old son and my equally amazing but slightly older wife (from Jim)

To my mother and to the memory of my father (from William)

Contents

Acknowledgments

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Introduction: Headhunting in an Era of Digital and Economic Transformation

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1. Getting Clients and Job Orders: Selling Search and Securing Business

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2. Qualifying Clients and Job Orders: Seeking Information, Assessing Risk, and Allocating Effort

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3. Constructing Candidates and Securing Placements: Sourcing, Qualifying, and Brokering Deals

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4. Evolution or Revolution? Information Technology and Social Media

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5. Booms, Busts, and Changing Labor Markets: Why the Great Recession Did Not Produce Good Job Candidates

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6. Being a Headhunter: The Evolution of an Accidental Occupation

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Conclusion: What We Can Learn from Headhunters

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References

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Index

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Acknowledgments

Those who conduct social research witness the extraordinary and heartwarming kindness of strangers. Many of the headhunters we interviewed for this book did not know us. Nonetheless, they were generous with their time and insights, never once recoiling when we asked for examples or more information on work activities that for them seem more routine than revealing. Another group of headhunters encountered us for a second time as we conducted this project. They had helped us with our first book, nearly twenty years ago, by offering interviews, opportunities to conduct fieldwork in their offices and at their conferences, and by providing introductions to other headhunters. When we contacted them by phone and e-mail about our interest in updating and expanding what we knew about the business, every single one of them offered words of encouragement and made time for us. Years had passed, but these helpful strangers were—yet again—not just willing but also eager to describe, illustrate, and explain their work practices to us. We are indebted to all of those who gave us so much, either once or now twice, so that we could write about their industry.

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One headhunter, however, consistently stood out. Expressions like “key informant” or “point of entrée” are appropriate but wholly inadequate given his sustained encouragement and facilitation of our research. When we met him for the first time to talk about the industry and to share lunch, he was president of the Georgia Association of Personnel Services, a network hub for the contingency headhunters we aimed to study. No doubt he conducted an exam as we talked and ate, and we apparently passed muster: from that point on he did virtually everything he could for us in facilitating introductions, providing access to his employees and firm for fieldwork, springing our way into training sessions and conferences that otherwise required registration fees that exceeded our shoestring budget, and making time for a multitude of highly informative conversations that were the stuff of a qualitative researcher’s dreams. In short, he was the guy that helped turn the research wheels. Qualitative researchers often fret about people of this sort, as their seemingly well-intended, altruistic efforts to facilitate research can also, intentionally or not, direct or distort it in countless ways. We did too, making sure to branch out and seek independent contacts and corroboration. But we never uncovered even a shred of evidence to suggest he was trying to lead us down the proverbial primrose path. He passed away in October, thus bringing our collaboration—and the need to cloak his identity—to an end. We thank you, Conrad Taylor, and will miss you, as will the industry for which you had so much passion. We also wish to thank the Office of the Provost at the University of Georgia for its financial support. Like so many qualitative studies, our project did not require large-scale funding, but some support during an otherwise lean budget era was a ray of sunshine that helped launch the project. Finally, we are extremely grateful to Fran Benson, at Cornell University Press, for her sage advice, support, and deft management of the manuscript and the review process. Fran and the reviewers provided thoughtful feedback quickly and raised the quality of our work. A hearty thanks to them all.

High Tech and High Touch

Introduction Headhunting in an Era of Digital and Economic Transformation

“Well, I think you know I wasn’t out looking,” Tom said. “Their headhunter came to me, and, what can I say? It’s an offer I couldn’t refuse. . . . I’ve been very happy here,” he said. “The people are great. I’m not running away from anything. It’s just that a fantastic opportunity came along at a good time.” —stylized conversation presented as a case study in Lawler et al., “Why Are We Losing All Our Good People?”

“Didn’t LinkedIn kill ’em off? What about the Great Recession? My friend was a headhunter, but he’s now with an insurance agency—says his entire firm was flattened in 2009 because nobody, but nobody, was hiring.” Questions and comments of this sort become easy conversation starters after you write a book about headhunters. In 2002, we published a book on headhunting, which was, and remains, a largely overlooked occupation. Headhunters identify and present job candidates to firms that pay a fee if a candidate is hired. It is an unusual sales job, one in which they sell a person on considering a job change, on a job and company, on the offer the company extends, and then on the wisdom of turning down a counteroffer. All the while, they sell the company on the need to be attractive to the candidate, on how the candidate will meet its needs, and on sweetening the offer so that the candidate jumps ship and joins the company. In short, they accomplish a double sale—the candidate is sold on

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the client, the client on the candidate (Finlay and Coverdill 2007, 26–30). As students of labor markets, organizations, frontline service work, and economic sociology, we found the work of headhunters brimming with grounded insights into those areas of scholarship. Time passed, and attention turned to other topics. But we could not shake our growing curiosity about how the economy and social media affected headhunting. Was LinkedIn an existential threat? What about the Great Recession? Two of the industry’s leading lights suggested choppy if not perilous waters. In February 2009, L. Kevin Kelly, then CEO of Heidrick & Struggles, claimed that the search industry’s business model had been “broken” by the rise of free online networking services like LinkedIn (McConnon 2009, 80). Gary Burnison, CEO of Korn Ferry International, likewise argued in 2013 that social media was a threat: “Unquestionably, some companies have taken their recruiting in-house by having HR people troll for candidates on LinkedIn” (Burnison 2013, 47). Each CEO described building consulting capability and diminishing previous reliance on headhunting. Our book drew on evidence from 1993 to 1996, a period with a buoyant economy and a society still untouched by the explosion of technology to come. Landline telephones and fax machines still reigned supreme. Had things changed? Historians believe that the dead talk, but sociologists do not. Our first step was to phone a few of the headhunters we had done fieldwork with and interviewed two decades ago. We heard voices and concluded, as empirical sociologists, that some headhunters had survived. Further evidence of the industry’s vitality was that its longtime newsletter, the Fordyce Letter, was still being published. No host industry, no newsletter. Estimates of the number of headhunters, firms, placements, and use by client companies have always been in short supply and flimsy, as solid sources like the Bureau of Labor Statistics pay no attention to headhunting. Industryproduced materials suggest that about 90 percent of large firms make use of headhunters and that they are used for 7 to 10 percent of external hires (BountyJobs 2016e; CareerXroads 2016). Since headhunters usually focus on a small segment of labor—highly skilled and specialty jobs critical to company success, where talent is in short supply, where there is a need to fill the job quickly, and where base salaries average $104,214 (BountyJobs 2016e)—those figures are sizable.

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Several potentially countervailing forces (Hafferty and Light 1995) had also surfaced over the past few decades. A first is the rise of the external labor market. Waves of corporate downsizings, reengineering, and mergers have left employment less stable and predictable than in the past. Internal labor markets, where workers enter a firm as raw talent at the bottom of a job ladder and climb the rungs, have waned, taking many training and development opportunities with them. Gaps between ladder rungs are now so large that internal transitions require leaps, not steps, as “job requirements for the next level could be dramatically, rather than incrementally, greater” (Cappelli 2008, 61). About two-thirds of all job vacancies are now filled by outside hires, up from about one in ten in the 1950s, the heyday of internal labor markets (Barbulescu 2015, 1040; Cappelli 2013, 26; Cappelli 2015, 57). Outside hiring has become a strategic way to buy expertise (Cappelli 2000, 104–5), even though external markets pose vexing information problems: Who’s available to fill the job? Are they capable? Will they join us? Two demographic patterns increase market challenges. A first is that baby boomers have begun to retire, taking with them general skills along with firm-specific or legacy skills that are difficult to find on the external market (Cappelli 2008, 7). A second is that fewer Americans are working or even looking for work (Aaronson et al. 2014; Executive Office of the President of the United States 2016). In 2016, about one in eight men and one in four women between twenty-five and fifty-four years of age are not working or looking for work. The causes of this fall-off, and whether it will continue, are complex. But it clearly compounds shortages of experienced hands in many labor markets. The rise of the market also heightens concerns about employability. If employers cannot be trusted to provide continuous employment, training and development, and promotions, then responsibility for career development falls to workers in what amounts to a free-agency model (Cappelli et al. 1997, 15). Careers unfold across organizations in a “boundaryless” fashion as workers strive to nurture their employability (Arthur and Rousseau 1996). But how are workers supposed to know whether and when to enter and navigate the external labor market? What new job and company might be reasonable? When should a jump be made? As Cappelli (1999, 229) noted, “Once career planning starts encompassing movements across employers, most employees are completely at sea.”

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These changes might well bolster the business prospects of headhunting. For employers, diminished investments in worker training and the erosion of internal labor markets increase the need to hire at a time when most human resource departments are not exactly flush with staff and resources (Cappelli 2015). For workers, concerns about employability and pressure to personally manage one’s career increase the need to stay abreast of alternative opportunities and employment trends. Is it possible, we wondered, that the dire warnings of the CEOs of Heidrick & Struggles and Korn Ferry International were wrong? Labor market intermediaries—who aim to facilitate the matching of workers and jobs—have drawn the attention of researchers (Autor 2009; Benner, Leetz, and Pastor 2007; Bonet, Cappelli, and Hamori 2013). There have been studies of headhunting industry characteristics and growth (Beaverstock, Faulconbridge, and Hall 2010; Britton and Ball 1994; Feldman, Sapienza, and Bolino 1997), how headhunters assume some of the search and screening responsibilities of clients (Britton and Ball 1999; Khurana 2002), how headhunters might perpetuate patterns of inequality (Judge et al. 1995; Dreher, Lee, and Clerkin 2011), who is hunted by headhunters (Hamori 2010; Cappelli and Hamori 2014), and the pay, performance, and career patterns of candidates placed through headhunters (Bidwell 2011; Hamori and Kakarika 2009; Hamori 2014). Those studies, however, focus overwhelmingly on high-level retained search, and thereby overlook the larger domain of contingency headhunting. They also tend to treat contingency headhunters, when they are considered at all, in a rather wooden way. For example, the otherwise excellent overview of labor market intermediaries by Bonet, Cappelli, and Hamori (2013) conceptualizes headhunters and “information providers” (e.g., social media and online job boards) as distinct labor market intermediaries. That conceptualization fails to recognize that headhunters make extensive use of information providers, thereby blending the categories, or how that use might shed light on the promise and limitations of technology for solving information problems in labor markets. In light of these gaps, we once again dove into the data and the issues, and we tell the tale here. We begin by presenting a few contemporary portraits of headhunting firms to illustrate the industry’s distinctive combination of breadth and specialization. All were featured in the Fordyce Letter,

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rode out the Great Recession, and are doing business today. Importantly, none of these firms contributed interviews drawn upon in subsequent chapters, which means that in this introduction we present only public information from the Fordyce Letter and firm websites. There is thus no need to engage in the normal subterfuge of masking firm names or omitting details. We then describe our evidence and present an overview of a few of the ways a study of headhunters informs issues that are important to scholars, employees, and employers.

Contingency Headhunting Firms: Aggregate Breadth and Individual Specialization To say that headhunting firms vary is an understatement. Some are solo operators, working a local or national market from a home office with a telephone and a laptop. Others are part of international, multi-office, and in some cases franchised operations that employ hundreds if not thousands. Larger firms typically employ recruiters, researchers, support staff, and managers. Firms of all stripes tend to specialize, which can be by occupation, industry, corporate function, region, or any number of other dimensions. We focus on those who work primarily on contingency as opposed to a retainer. Contingency firms outnumber retained firms, and dominate the market for positions below the top rungs of the corporate ladder, where the prestige of retainer firms like Korn Ferry International remains alluring. Smaller, less known retainer firms such as CarterBaldwin (2016) also compete eagerly and successfully to fill top corporate positions. Traditionally, those who work on contingency earn a placement fee from a client company only if a candidate they present is subsequently made an offer that is accepted and honored. Impressive second-place candidates generate no revenue unless they are hired for other openings the headhunter is trying to fill. In contrast, a headhunter working on a retainer receives the placement fee whether or not a suitable candidate is identified, presented, and hired. With a retained search there is thus less risk of making an investment in a search that produces no revenue. However, contingency headhunters do not universally yearn for retained arrangements, using expressions like “retained—or chained?” to suggest

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that retainers can be fool’s gold. Retainers assure payment, but they also bind headhunters to clients who may waffle, seek a “purple squirrel”—a candidate with exceptionally rare qualities—or otherwise consume too much time. As we describe in chapter 2, contingency headhunters often abandon searches when a placement seems, or becomes, overly difficult or unlikely. Although the two forms of headhunting have begun to meld, with cash-in-hand options becoming more common for contingency firms (a development we discuss in chapter 6), they remain distinct and warrant separate consideration. Four examples illustrate the aggregate breadth and specialization of contingency headhunting firms that were doing business as of the summer of 2016. We include a few “in their own words” extracts from their web pages to provide a feel for how they market themselves.

Bayside Search Group Bayside Search Group places candidates nationally in the retail, e-commerce, and consumer-products industries. Clients include widely recognized companies such as Dick’s Sporting Goods, Macy’s, Staples, Home Depot, Meijer, and Amazon.com. Positions include, for example, product development, brand management, merchandising, buying, planning and allocation, supply chain management, distribution, marketing, digital and loyalty marketing, human resources, and all levels of corporate and field operations. Whether you are top-grading your current staff or building a new team, we will listen and offer solutions that will meet your unique business needs. Not only have we worked in the industry, our retail recruiters are backed by outstanding research capabilities, technological support, and resources. . . . Our firm specializes specifically in the retail industry, so we can assure you access to the best available candidates in your market niche. We recognize that no two clients are alike therefore we tailor our search to meet your specific goals, corporate culture, and technical requirements. (Bayside Search Group 2016)

Founded in 1997, the firm has seven recruiters and is located in Tampa, Florida.

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Ag 1 Source This firm works with agricultural businesses and makes placements domestically and in Canada, Latin America, Asia, and Europe. The range of businesses it services is wide, including agronomy and seed, agricultural equipment, grain and biofuels, animal health and nutrition, food and produce, and livestock production. Within each broad area, the firm targets specific subsectors. For example, within “agronomy and seed” (the firm’s top placement area), its work covers retail agronomy and seed, fertilizer and crop protection, manufacturing, crop and food production, biotechnology, credit and finance, and crop insurance. Positions span the vertical range, and for “agronomy and seed” include the following: CEO; general and division management; sales and operations management; technical agronomy and research; agronomy sales support; farm management and production; and marketing and training. Our recruiters truly are industry experts, which is an essential point of differentiation between Ag 1 Source and other search firms. Our true industry experts have worked within the industry in many of the very same roles being recruited for and with some of the very same reputable manufacturers, dealers, and distributors. Our experience, reputation, and industry contacts are unmatched. (Ag 1 Source 2016)

Headquartered in Hesston, Kansas, the firm was founded in 2002 and has eighteen recruiters in various domestic locations.

Smith & Associates Located in Savannah, Georgia, Smith & Associates has been staffed most often by one recruiter who worked a health care market in other firms before going out on his own in 1996. It is characteristic of many firms in that it focuses on a very narrow specialty—in this case, nurse practitioners (NPs) and physician assistants (PAs). It works with many practice settings, including family practice, urgent care, and hospitals, and covers the full range of specialty practices. Candidates are placed nationally. Smith & Associates is distinctive in charging employers a low and flat placement fee, as fees are typically calculated as a percentage of the candidate’s

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first year salary, while offering the conventional “replacement guarantee” should the new hire leave within 90 days. Filling out your current staff with some of the most qualified candidates in the country just got a whole lot easier. With our contingency fee system, you only pay for our service if we successfully fill your physician assistant or nurse practitioner jobs. Should you hire a candidate we present to you, our fee is $12,000, payable 30 days after the employment start date. With all our candidates, we provide a 90-day replacement guarantee. (Smith & Associates 2016)

Like most firms, Smith & Associates notes that it has established an impressive contact network, with a database of forty thousand NP and PA candidates, along with fourteen thousand employers.

Barr Associates Established in 1987, Barr Associates concentrates on the electronics industry, targeting areas such as power management integrated circuits, laser and optical devices, light-emitting diodes (LEDs), and renewable energy technologies. The firm works vertically within those areas, placing a wide range of candidates into the following positions: corporate and business unit management; operations management; engineering management; sales and marketing management; all types of engineering; and equipment-maintenance technicians. Like many contingency firms, it also does some retained searches and provides in-house support for clients, such as outplacement workshops, staffing consultation, and recruiting programs. With over 20 years dedicated to sourcing the highest caliber of professionals, we have built an extensive in-house database, allowing us to network directly with candidates across a broad spectrum of skills and experience. Beyond our proprietary in-house resources, we subscribe to online professional and social networks, we partner with other recruiting firms and we belong to several professional, industry specific organizations. We pride ourselves on identifying the best available talent for our client companies. Our successful metrics and long term clients support our claim to excellence. (Barr Associates 2016)

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The firm is located in Slatington, Pennsylvania, and is staffed by two recruiters with over sixty years of combined electronics industry experience who draw on an in-house candidate database containing more than eleven thousand active records.

Evidence and Analysis Our evidence takes two main forms: articles by headhunters and semistructured interviews with practicing headhunters. The articles were published in the Fordyce Letter, long the main industry publication for contingency headhunters. Articles were written by and for headhunters; some also included reader comments. We identified and examined 1,106 relevant articles that span the years from January 2003 through September 2015. Although we have subscribed to the printed edition of the Fordyce Letter on and off for twenty years, we made primary use of articles on their web page, as they could be copied and imported into MAXQDA (software for the analysis of text) to read, code, and analyze. Some articles are short, offering a few paragraphs of observations about topics such as working with clients and candidates, managing a headhunting firm, and the promise and problems of the industry more broadly. Others are more akin to academic articles, where a topic, such as “how to qualify (assess) a client’s job order,” is explored in a largely didactic way at some length. We found these articles insightful. They also help ensure that the practices and patterns we cull from interviews are not idiosyncratic local variations that do not speak to headhunting more generally. Interviews, conducted between 2013 and 2016, are the second main source of data. Since we had an interest in exploring changes in headhunting due to economic turbulence and the rise of technology, we re-contacted headhunters we got to know while crafting our earlier book. Those headhunters, we surmised, would offer an unusually good window onto change, as we could review our interviews and field notes gathered with them and use that as a springboard for questions and comparisons. Many had retired or were otherwise unreachable, but we were able to interview seven of those original participants. Importantly, all continued to work in what we call Southern City, a large metropolis in the southeastern United States. In addition, we reached out to headhunters we did not know. Of

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those, most (eighteen) were located in the Southern City area, like our original participants, while a few (eight) were scattered across the country. The “new” Southern City headhunters were identified through the membership roster of the Georgia Association of Personnel Services (GAPS), an industry association for contingency headhunters. Those located elsewhere were recommended to us by headhunters we interviewed or identified from their contributions to the Fordyce Letter. A slight majority were male (61 percent), with firms ranging from several solo practitioners to one with a roster of thirty-eight. The thirty-three interviews were conducted over the telephone and were recorded (with permission) and transcribed verbatim. The typical interview lasted from forty-five minutes to an hour. Most interviews explored whether and how the three traditional pillars of headhunting— establishing business relationships with client companies, identifying and presenting candidates for positions, and facilitating encounters between clients and candidates—had been altered or upended by economic shifts, the rise of social media, or other changes. In a few cases, when the headhunter was relatively new to the business and would thus lack insight into historical change, the interviews omitted some questions, such as how economic or technological changes might bear on headhunting. In a few others, the interviews were designed to flesh out our understanding of a piece that the participant had contributed to the Fordyce Letter. In a supplementary way, we collected and analyzed training materials produced by and for headhunters and engaged in some fieldwork. With respect to training materials, one example is a five-hour CD series on how to deal with a slow market by Steve Finkel, a widely respected practitioner and industry trainer. The series, titled “Turbulent Times! A Manager’s Guide to Navigating Difficult Markets,” is based on interviews with managers who experienced economic downturns (Finkel, n.d.). No doubt, the series is produced with an eye toward practical matters, but Finkel—like several others who offer training material for the industry—has the mind of an accomplished academic. Other material was drawn from the websites of headhunters, such as Mike Gionta’s (2016) “The Recruiter U,” that offer observations and advice. Practicing headhunters told us that they used and learned from these sources. We also attended a few headhunter events, one of which offered tips for using social media. We typed

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up field notes for those events, but they were largely occasions to meet new headhunters, rekindle relationships, and talk about the business. Our analysis rests primarily on the articles from the Fordyce Letter and interviews. The articles corroborate our interviews. What differed was that the interviews offered a chance to ask our pet questions—“Could you describe an example of that?” and “Could you say more about that?”— that encouraged headhunters to articulate details and action sequences. When headhunters write for other headhunters, they have a tendency—as we all do when addressing fellow insiders—to breeze by what they see as mundane aspects of their work that everybody would know. The pages to follow offer a mix of extracts from interviews and articles, where we drew upon what best conveyed the understandings and practices of headhunters in a general way. Two final points about the data and analysis merit attention. First, the overview of headhunting firms presented earlier underscores our claim that firms vary substantially. Headhunters with backgrounds in agriculture and retail, who now place candidates in those areas, are often different. The way they talk about some of their recruiting strategies differs too. What we listened and looked for, however, were common threads in their work practices that we could portray more generally without overly homogenizing their words and deeds. The portrait we provide is akin to an ideal type, much like a study of bureaucracy based on organizations that more or less resemble bureaucracies. We note important junctures where headhunters diverge, but we do not clutter the analysis by noting minor variations. Second, we often present quotations without noting the headhunter’s specialization. We provide that information only when we believe it is important to understand a particular issue. Our main motivation for that practice is that details increase the likelihood that participants could be identified, at least by peers. We aimed to provide, and to honor, confidentiality for the headhunters we interviewed.

Headhunting as a Strategic Research Site Our consideration of headhunting follows a venerable tradition in the sociology of work—the occupational case study. Much has been learned from studies of lawyers and paralegals (Epstein et al. 1999; Pierce 1995),

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wildland firefighters (Desmond 2007), managers (Blair-Loy 2005; Jackall 2009), and physicians and surgeons in training and practice (Bosk 2003; Freidson 1988; Haas and Shaffir 1987), to name just a few. Explorations of single lines of work permit grounded insights into work practices, challenges, and opportunities. What is grasped and conveyed is not an average or composite based on different types of work, but rather something much more specific and detailed. While valuable as portraits of work, occupational case studies hold out the promise of doing more— of shedding light on substantive and theoretical issues that transcend the occupation itself. In this section, we highlight a few of the ways an analysis of headhunters has broader value and relevance for academics, employees, and employers. We argue that the analysis sheds light on hiring processes, information challenges in labor markets, technology, and economic shifts. In addition, headhunters, and the analysis we offer, continue to be an extraordinary case of third-party impression management. Simmel’s (1950) notion of tertius gardens (the “rejoicing third”), where one party (headhunters) benefits from a tension-filled relationship between two others (employers and candidates), is a cornerstone of the industry (Finlay and Coverdill 2007).

Cultural Matching and Emotions in the Hiring Process The prevailing view of hiring emphasizes skills matching, where organizational characteristics and needs, job requirements, and applicant capabilities combine to determine who gets the nod (e.g., Tilly and Tilly 1998). Residual variance in hiring is commonly thought to stem from assessment errors and discrimination by characteristics like sex, race, ethnicity, and age (Pager and Shepherd 2008). We join those who argue that hiring—as a fundamentally interpersonal process—also involves the cultural matching of candidates, the managers who hire and supervise them (normally referred to as the hiring managers), and the companies that employ them (e.g., Neckerman and Kirschenman 1991; Lamont 1992; Bills 1999; Rivera 2012, 2015). Cultural matching involves things like shared tastes, experiences, and leisure pursuits. Recent research suggests that cultural matching influences perceived fit with future coworkers and the company, the merits of a candidate’s qualifications, and the excitement and

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enthusiasm (“emotional energy”) that turns interviewers into advocates and candidates into new hires (Rivera 2012, 2015). We add to this stream of research in two ways, methodologically and substantively. With respect to methods, previous studies have explored the lower end of the labor market (Bills 1999; Neckerman and Kirschenman 1991) or entry-level hires for elite professional service firms (Rivera 2012, 2015). Evidence on cultural matching for the large middling segment of labor, and especially for positions with substantial skill and experience requirements (i.e., not entry level), is scant. We fill that gap. In addition, we view the hiring process through the eyes of third parties who have access to the impressions and behavior of both employers and candidates. Employers can speak for their own understandings and behavior, but must often guess, or remain silent, about candidates. They can also be guarded or vague because of the many legal minefields that surround hiring. As third parties, headhunters are well positioned to grasp these processes and are forthcoming when speaking about them. They also profit from successful placements, which makes them highly incentivized students of hiring processes. We make three substantive contributions to the cultural-matching literature. First, we temper recent results (Rivera 2012) by suggesting that both fit and skill play substantial roles in hiring. Skill has not been dismissed in previous research, but it appears less important than we find, quite possibly because pools of candidates for entry-level and low-skill jobs are more homogeneous than is the case for those that require both skill and experience. Importantly, cultural matching plays a substantial role in this middle section of the labor market. Second, cultural matching has thus far been described mostly as a static, ascriptive process, where candidates either have or lack the qualities in question. We find that headhunters learn about hiring managers, companies, and candidates in order to engage in cultural matching. But they also attempt to manipulate the process by sharing inside information that allows both candidates and clients to establish commonalities and generate the enthusiasm and excitement that Rivera (2015) describes as key to selection. Headhunters thus suggest that cultural matching is in part an interactional accomplishment. And third, our results suggest that cultural matching and emotion in the hiring process play critical roles past the hiring decision itself. For headhunters, a candidate and client that fall in love is just the start of the

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journey—details need to be worked out, offers extended, and negotiations and counteroffers managed. Prized passive candidates often respond badly to delays and a lack of wooing on the part of the hiring company. These issues point to the continued significance of cultural matching and emotion past the hiring decision itself. We probe these issues in chapter 3.

Headhunters versus DIY Search How can headhunters flourish in a world in which any employer with access to LinkedIn can easily identity potential job candidates? Potential candidates also have ready access to information about job opportunities, as company websites and job boards like Monster are a click away, and unsolicited news about “jobs recommended for you” via social media and e-mail is commonplace. One answer to this question was foreshadowed by Rees (1966) and his insightful distinction between “extensive” and “intensive” search. Extensive search identifies large numbers of potential employers (for job seekers) or job candidates (for employers). Intensive search, in contrast, involves learning more about particular buyers or sellers of labor. Barbulescu (2015, 1042) describes this as “in-depth information” that is “sensitive and difficult to formalize.” Technological intermediaries like LinkedIn and job boards increase dramatically the ease, speed, and breadth of extensive search. In seconds, not weeks or months, headhunters, employers, and job candidates can learn about who is hiring and who may be available. In chapter 4, we describe extensive searches that are, in a word, astonishing. Undoubtedly, technological intermediaries have unveiled much of the formerly “hidden” job market. Intensive search, in striking contrast, continues to be a challenge, as much of the information about people and employers available through information intermediaries is limited. People and companies can and do posture, stretching the truth if not dodging it entirely, and information is often incomplete or out of date. Old-fashioned conversations, in which headhunters speak directly to prospective candidates and clients, are needed to entice a passive candidate to consider an opportunity or to excite an employer about a candidate (see also Rivera 2015). Talk still matters in a high-tech era. A second answer to the “why headhunters?” question is that they alleviate the problems of information asymmetry and adverse selection that

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bedevil the labor market. Information asymmetry means that one party— a worker interested in changing employers, for example—has more information about her track record and promise than do employers who might want to hire her (Autor 2009). Employers also know more about themselves, their economic prospects, and the characteristics of the job, boss, and working environment than any job candidate possibly could. Adverse selection centers on unobserved characteristics of job seekers (Autor 2009; Cappelli 2008). Someone who is actively searching may be doing so because he or she is poorly regarded by a current employer owing to any number of undesirable yet difficult-to-discern traits. In contrast, those who are not seeking new jobs may be highly regarded and valued by their current employer. These notions involve tendencies: an active job seeker is on average thought to have a greater risk of negative unobservable traits than a candidate drawn into the labor market through persuasion. Headhunters interpose themselves between workers and the market, becoming in some ways like a “career counselor” or “coach” who identifies and recommends opportunities and prepares candidates to compete for them successfully. While no headhunter mentioned Barbulescu’s (2015, 1054) five-item “knowledge of selection criteria” scale, they routinely prepare candidates so that they can answer affirmatively and confidently its constituent items: “What recruiters for this job are looking for is very clear to me,” “I know how to present myself in interviews for this job to make the right impression,” “I know what specific skills and experiences I should highlight in my CV for this job,” “I know what to expect in interviews for this job,” and “I have a compelling story for why a company should hire me for this job.” Barbulescu shows that knowledge of selection criteria generates job offers and fully mediates the effect of informal contacts on job offers. In short, contacts matter because they provide inside information. As we describe in chapter 3, headhunters do the same thing as a market-based alternative to informal contacts, thus overcoming some of the information asymmetries candidates face.

Have New Hiring Procedures Corralled Headhunters? In our earlier book we examined at length how headhunters got job orders, developed relationships with hiring managers, found candidates, and made matches between clients and candidates. We noted the tactics that

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headhunters used to get around the human resources (HR) department in order to gain direct access to hiring managers. Those issues remain pertinent, but have shifted because most companies have embraced various electronic human resource management (e-HRM) technologies designed to formalize and rationalize hiring processes (Marler and Fisher 2013; Robb 2013; Stone et al. 2013; Stone et al. 2015). One prominent e-HRM tool is an electronic portal to which all applications must be submitted. It is an organizational system for tracking, directing, and to some degree evaluating applications. Portals, as we describe in chapter 4, often become formidable buffers between headhunters and hiring managers, amplifying noise and creating challenges that counter, if not outweigh, their alleged efficiencies. Another innovation is the electronic marketplace, which brings together headhunters and companies who wish to engage them to fill positions. Marketplaces are created and administered by third parties, with the stated objective of rationalizing encounters between headhunters and clients. We introduce the marketplaces in chapter 1 and revisit them more fully in chapter 4. Like portals, marketplaces constrain if not thwart the best efforts of headhunters. They hamper a headhunter’s ability to grasp what a client truly seeks and to then identify, present, and secure exceptional candidates. From an employer’s perspective, marketplaces might seem efficient and rational, but they undermine the effectiveness of headhunters because of a lack of information and feedback. They illustrate well how rational systems “inevitably spawn irrationalities that limit, eventually compromise, and perhaps even undermine their rationality” (Ritzer 2013, 123). In this case, the marketplaces prompt inefficiencies and a lack of control (Ritzer 2010). What headhunters need in the way of information and access to hiring managers—and why—is developed in chapters 2 and 3, which lay the foundation for understanding the technological challenges presented in chapter 4.

Why Hire—and Use a Headhunter—instead of Promoting? Bidwell and Keller (2014) argue that firms make staffing decisions at the level of the job. Promotions are more likely when performance depends on firm-specific skills, when information about the capabilities of

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outsiders is especially difficult to obtain (called “information impactedness”), and when a firm has employees poised to move up a promotion ladder. The argument twists the logic of transaction-cost economics because it directs attention to ex ante rather than ex post evaluations, as the chief difficulty lies in evaluating workers before they are hired, not after. The theoretical picture is similar to that offered by Williamson (1981, 1985): decision making takes job attributes into account, weighs costs and benefits, and renders a make (promote or transfer from within) or buy (hire) decision. Hiring or promotion routines are invoked, and the process begins. We argue that hire-or-promote decision making is but one moment in a hiring routine that is unstable and subject to change. As we argue in chapter 1, headhunters are in a perpetual sales mode, with the aim of wresting positions away from internal processes and from other external approaches (e.g., job boards and a company’s own recruitment efforts). Headhunters probe and question the effectiveness of those approaches, create doubt, and encourage companies to consider additional candidates, often with the claim that “you owe nothing” if the headhunter-provided candidates are not hired. Headhunters do not stop there, as they also entice firms to make an opportunistic hire, where an attractive and available candidate is hired even though there is no obvious vacancy (see also Bidwell 2011, 373; Bidwell and Keller 2014, 1037), or to “top-grade” their workforces (Smart 2005)—the practice of replacing lesser performers. These practices, reviewed in chapter 1, induce demand for labor and derail deliberations as to whether there is a real need for a new hire, a problem with existing employees, and so forth. As an industry, headhunting devotes itself to upending the hiring routines companies attempt to enact. Evidence on those issues should help advance our understanding of multiple, interdependent routines, what Feldman and her colleagues (2016, 509) called “an exciting new direction for research” in their introduction to a special issue of Organization Science. Most research on routines has been inward, exploring so-called “endogenous” stability and change in a single routine (e.g., Dionysiou and Tsoukas 2013; Feldman 2016). We instead look outward, exploring how organizational hiring routines are situated within an “ecology of routines” (Howard-Grenville et al. 2016, 12; Spee, Jarzabkowski, and Smets 2016, 762) that lack

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coordination and generate tension because headhunters and companies have different agendas.

Have New Technologies Changed Headhunting? Much of our analysis probes how the work practices of headhunters might have changed with the explosive growth and diffusion of technology. Those who study technology have gone through several transformations, with pioneers such as Woodward (1958) and Perrow (1967) casting technology as an independent variable that changes work practices and organizational structures. Deterministic relationships were disavowed with the rise of the technology-in-practice approach (Orlikowski 2000), but a soft form of determinism has reemerged (e.g., Leonardi 2007, 2013; Volkoff, Strong, and Elmes 2007; Svahn, Henfridsson, and Yoo 2009). This approach focuses on how technology itself can allow users to do “old things in new ways” and “things they could not do before” (Leonardi and Barley 2008, 161). We offer both descriptive and theoretical contributions. On a descriptive level, we explore the loss of conversations and the rise of e-mail, the widespread use of software that manages and analyzes records about job candidates, the use of social media like LinkedIn, the need to interface with e-HRM, and the rise of online marketplaces where headhunters and clients do business. In sum, we explore how technology has entered and shaped the work practices of headhunters, and thereby provide support for Pinch’s (2008, 468) argument that “technology is something nobody can afford to ignore.” We also pursue several theoretical issues. A first dovetails with Barley’s (1986) important study, which showed that new technologies were “occasions” that could change work roles, practices, and organization. Importantly, the same technology, introduced in different workplaces, could induce similar social dynamics yet lead to different outcomes. In chapter 6, we explore how the introduction of search technologies into headhunting has been an occasion in which some firms refined their division of labor, splitting “research” and “recruiter” roles, while others did not. The role of researcher is not new, but it has become more common and very high tech, the province of those who hunt via electronic technologies, not by

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voice or meeting. Like Barley’s (1986) results, change is occasioned, but not determined, by new technologies. A related issue involves variation in the use of technologies. It quickly became apparent to us that the same technology was used in different ways within and across headhunting firms. While Orlikowski argued that the recurrent use of a technology “is not infinitely malleable” (2000, 409), her analysis of the use of development software showed two distinct forms, thus demonstrating that “people enact different technologies-in-practice with the same type of technology across various contexts” (2000, 430). In a very different work and technological context, we show something similar: with every technology we encountered, patterns of use varied, and were often quite different from what was intended. A final issue involves the character of the technology. Leonardi and Bailey (2008) noted that some technologies create efficiencies in accomplishing workplace tasks, whereas others provide what amounts to novel information that cannot be acquired in other ways. An example of the latter is from finite element analysis (FEA), a technology that allows automotive engineers to simulate automobile crashes. The information provided by FEA is, practically, novel, as “an army of engineers with unlimited time and money might be able to produce a comparable dataset, but doing so would take years” (Leonardi and Barley 2008, 164). They argue that technologies that produce novel forms of information will have broader implications for the nature and organization of work than those that create efficiencies (166). We address that prediction. LinkedIn is a clear example of a technology producing novel information (i.e., change “engineers” to “headhunters” in the quoted phrase about FEA and the situation is identical), whereas the online marketplaces are focused on efficiency. Our results do not support the prediction. We argue that the online marketplaces may well have a more profound, long-term effect on headhunting; LinkedIn has changed some work practices but has left the essence of headhunting intact. Online marketplaces, on the other hand, make headhunting more transactional and less likely to produce good matches of candidates and job openings. In chapter 4, we argue that the marketplaces produce a dumbed-down form of headhunting, much like what Orlikowski (1992) found among those using tools in application development.

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Why Recessions Hurt Everyone: Clients, Candidates, and Headhunters One of the motivations for this book was to understand how the two post2000 recessions, in particular the Great Recession of 2007–2009, had affected the recruiting industry. Headhunters who survived the bursting of the dot-com bubble and the Great Recession spoke like survivors of a wartime battle: relieved that they had lived to talk about it and still stunned by the carnage they had witnessed. In particular, the Great Recession had— and continues to have—a profound effect on the labor market, which is reflected in concern over issues such as labor force participation and longterm unemployment. Our analysis of how headhunters coped with the Great Recession informs two areas of social-science research: the effect of economic downturns on hiring and turnover and why businesses seek “star” performers from the external labor market. These two areas are connected because, as we will show in chapter 5, during the recession clients assumed that stars were more available than ever and expected headhunters to be able to find and secure them. Employers assumed that the best candidates would be plentiful and eager to take new jobs; headhunters encountered a very different reality, however. There has been considerable debate among economists as to the nature of the relationship between recessions, on the one hand, and wages and employment, on the other. The debate has focused on why wages do not fall during recessions, even though unemployment rises. Neoclassical economists have argued that this is because unemployment is voluntary; workers select leisure—that is, not working—over lower wages (e.g., Lucas and Rapping 1969). Consequently, downward wage rigidity—the failure of wages to fall during a recession—is actually an illusion. The rise in unemployment is actually caused by workers quitting to look for new jobs. Keynesian economists have challenged this argument, asserting that downward rigidity is real during recessions and that unemployment is largely involuntary, although Keynesians have offered widely varying explanations for these phenomena. We find Bewley’s (1999) explanation, based on interviews at more than two hundred companies in the wake of the 1990–1991 recession, to be particularly helpful. He invokes morale, a concept seldom seen in

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economic analyses, to account for wage rigidity: “What restrains employers from cutting pay is the belief that doing so hurts morale and increases labor turnover. . . . Pay cuts damage morale, because of an insult effect and a standard of living effect” (1999, 432). Bewley also examined hiring and quitting. He found that the recession had increased the number and quality of job applicants, reduced the stigma of unemployment, and made employees reluctant to quit in case the new job proved to be insecure (1999, 277–307). We do not address the issue of wage rigidity, but hiring and quitting are central components of our study. Chapter 5 examines why employees are reluctant to quit their jobs during a recession and whether the recession produced more and better candidates. We show that employers expected to have higher-quality candidates as a consequence of the Great Recession and raised their thresholds of acceptability for external hires; the result was that they often rejected the candidates that headhunters produced on the grounds that the candidates fell short of their expectations. Employers believed that they should reap the benefits of what they believed to be a buyer’s market, which was how the recession-era labor market was often described. Employer expectations were not met, however, because the best candidates were reluctant to leave their current employers. The Great Recession thus produced a stalemate in the double sale: employers became picky buyers, candidates reluctant sellers. Employers’ belief in a buyer’s market was buttressed by another questionable assumption: that the key to corporate success is buying individual talent—stars—on the external labor market. Groysberg (2010, 3) has noted that “the so-called war for talent . . . is the cornerstone of many companies’ people-management strategies.” Other research has confirmed that employers, faced with deciding whether to hire an external candidate or to promote an internal one, tend to underestimate the value of firmspecific skills and overestimate the value of outside talent (e.g., Bidwell and Keller 2014). During the recession employers became even more convinced that they could lure stars from other firms, and they expected headhunters “to find the perfect peg for the perfect hole,” as one headhunter aptly put it. But perfect pegs, when found, were usually content to remain in their current holes. In these and other ways, we believe that our case study of headhunters bears on a number of theoretical and substantive scholarly preoccupations.

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But it should also have value for those in the working world, employers and employees alike, who navigate the choppy and often uncharted waters of the labor market. In the next chapter, we begin our exploration of the work of headhunters, focusing on how they sell search to client companies and secure job orders.

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Getting Clients and Job Orders Selling Search and Securing Business

I think that we are great at learning all about the hiring manager and their company and their culture. We’re very fast. We make few mistakes. We can typically find talent that our client cannot find on their own. What we’re offering our clients is a very efficient service with a very strong track record. —a Southern City headhunter

Headhunters need clients and job orders. A client is a company that agrees to pay a headhunter a fee when a job candidate identified and presented by the headhunter is hired. A job order is a request for a headhunter to identify and present a particular type of employee to a client. No clients and job orders means no placement fees, the financial sustenance of headhunting. Cultivating clients and securing job orders are thus core activities for headhunters. Those activities can be analytically split into the two parts we explore in this chapter. We begin by exploring how headhunters pitch the value of their services to potential clients, most of whom have at least some capacity to find new employees on their own. Why use a headhunter instead of running ads on a company website, making use of one or another online job board, or in general having in-house HR staff recruit candidates? How do headhunters try to persuade potential clients to pay for the services of an external third party? In short, how do headhunters sell search?

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A second section of our analysis takes us past the general pitching of search to where the rubber meets the road: How do headhunters identify prospective client companies and solicit business? The process of creating a roster of prospective clients involves researching companies, gathering insights from candidates, and quite frankly a good bit of guesswork. Once a roster of prospective clients is in hand, headhunters approach them for business in several ways. One classic approach is to simply contact clients, by phone or e-mail, to ask if they have any current hiring needs or an interest in learning about the types of candidates the headhunter routinely places. Another involves showing one’s headhunting wares by describing a “most placeable candidate,” or MPC. An MPC is an exceptional candidate in a high-demand field. Headhunters view MPCs as enticing examples of the sorts of candidates they can offer and believe they spur interest in a headhunter’s services even if there is no interest in a particular MPC. A final traditional approach is to contact a prospective client in order to ostensibly conduct a reference check on a candidate under consideration. The goal here is to display a thoughtful and thorough process that can then be turned into an effort to solicit business. It is a reference check, but it is also a calculated display that precedes a sales effort. A recent and potentially game-changing approach to securing clients and job orders involves the use of online marketplaces that bring together headhunters and clients. In these marketplaces, a company posts a job order, and headhunters on the marketplace can vie to fill that order. Getting a client and a job order, in this case, means going online and clicking a few buttons, not making repeated marketing calls, taking an MPC to the market, or turning reference checks into solicitations for business. These marketplaces, introduced here but explored more thoroughly in chapter 4, have the potential to upend many traditional headhunting practices because they radically streamline and depersonalize the process whereby headhunters secure job orders and interact with clients. They are, in a word, disruptive, but it is not yet clear that they will edge out traditional ways that headhunters and clients form relationships and do business. We conclude by noting that many headhunters form tight business relationships with clients, who then use them repeatedly. In this case, the work of selling search fades into the background, as the headhunter has already established a reputation and value in the eyes of the client. The

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work involved in securing job orders also wanes, as orders flow from the client on a regular basis. For many headhunters, this is the ideal situation, and some are much less active than others when it comes to seeking out new clients and securing job orders from them once they have a few who offer repeat business. There is risk, however, in that approach, as it is well understood that business can dry up instantly if key contacts leave a company, policies shift, or the economy tanks, an issue we take up again in chapter 5. Our analysis bears most directly on two conceptual issues in the study of organizations and labor markets. First, the analysis sheds light on the dynamic character of at least some make-or-buy decisions, where organizations opt to either make or do something themselves or have another person or organization make or do it for them (e.g., Bidwell and Keller 2014; Cappelli 2008; Williamson 1981, 1985). Recruitment can be done in-house, through a third-party headhunter, or some mix of the two. The prevailing conceptualization in the literature is of a rational, largely centralized, and deliberative process, whereby pros and cons are assessed with care prior to a make-or-buy decision. Our evidence suggests a far more decentralized, ongoing, and much less deliberative process. Headhunters relentlessly call and e-mail hiring managers to describe their services, the availability of a dream candidate, and to cast doubt on the prospects of ongoing, internal efforts to promote or recruit. They aim to get the attention of, as one headhunter we quote later puts it, “decision makers with clout,” who then upend a “make” decision and secure authorization to “buy” from a headhunter. Our evidence shows that make-or-buy decisions can be highly dynamic, constituted more through interaction, persuasion, and relationships than internal deliberation. Our analysis also highlights how decisions are less tethered to the organization, as an abstract entity, than to particular people and relationships (see also Gouldner 1954 and Jackall 2009). For example, a headhunter’s success in securing business often has less to do with Georgia Pacific as a “client company” than it does with his tie to Bob in a particular unit. Scholars think and write about abstractions, but it is organizations at the level of flesh-and-blood people where decisions and action unfold, where headhunters concentrate their efforts, and where they secure business. A second overarching conceptual issue involves the notion of a company “having an opening” or a “demand for labor.” Traditionally, labor

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markets are thought to spring into motion when a company has an opening to fill through a departure or an expansion (Cappelli 2008). As we will describe it, headhunters cover that demand for labor, but they also strive to generate demand, even when current or prospective clients say—often repeatedly—that they have no openings. Headhunters do that by bringing top candidates to the attention of hiring managers and by suggesting the merits of top-grading (Smart 2005), of replacing employees who are not top performers. Offering to be a “talent scout,” or enticing a hiring manager with a top candidate willing to make a move, can create turnover in the labor market. Our analysis makes clear that headhunters are in the turnover business: they respond to turnover, but they also create it.

Selling Search Headhunters routinely and confidently tout the value of their services. In part, that effort is tailored to the individual headhunter’s experience in an industry, or to his or her track record placing successful new hires. That is a way of proclaiming, “I bring value.” But the mainstays of the sales pitch are more general, focusing on the purportedly special capabilities of headhunters as an occupational category. This is a way of saying, “We bring value.” Three points in this more general argument are common: that headhunters cast an unusually wide net when they search for potential job candidates; that they are specialists who know the labor market, are fast, and can devote themselves to a particular search; and that their third-party status confers advantages with respect to confidentiality, information, and negotiations.

Casting a Wide Net—and Knowing Where to Cast It Headhunters have long disparaged the typical approach companies take to hiring—waiting for an opening to arise and then advertising or scouring job boards—as a sure-fire way to attract ordinary if not mediocre candidates. In some cases, an applicant pool of that sort will suffice, as the job in question may not need or really benefit from a top performer. But if an exceptional candidate is sought—and who, after all, wants to say they

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aim for less?—headhunters claim to offer access to those who would otherwise be tough to find and attract. Fact is, many jobs require nothing more than a warm body, and a lot of secondrate companies do just fine with ordinary people who can be attracted by an ad. But it takes exceptional people to produce extraordinary results, and these people are somebody else’s happy, productive employees with better things to do than waste time reading want ads or surfing the job boards. They can only be surfaced by a professional recruiter. (Hawkinson 2004)

The presumption here is a difference between what headhunters call the “qualified talent pool” and those who are currently “on the market.” Without question, the number of people in the qualified pool dramatically exceeds those who are on the market, so at the very least there will be fewer to choose from if attention is restricted to the latter. One prominent practitioner and industry trainer, Terry Petra, estimates that “with only 30% of the qualified talent pool in an active or semi-active job changing mode, employers who do not utilize the services of third-party recruiters shut themselves out from approximately 70% of the qualified talent pool” (Petra 2006). There is also the implication, often mentioned by headhunters, that top talent increasingly expects to be pursued and wooed. Consider a comment that combines these arguments: It has been my experience that to be wooed by a competitor is the expectation of top talent. They don’t get excited just because a job matching their skills and experience was advertised; they have to be strategically motivated, and sold on that particular job opportunity. So, if you are not using headhunters, then you are hiring the best talent from among only the individuals actively looking for a new job. . . . The best talent most likely will be from the group of individuals that are not actively looking. (Forrester 2013)

A final form of the wider-net argument blends somewhat with a point we will make in the next section. Because they specialize, headhunters become deeply familiar with particular labor markets, dealing with more candidates more often than companies who seek a particular type of employee episodically. Consider the following claims, made by Paul Hawkinson

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(2005b), a renowned headhunter and longtime editor of the Fordyce Letter, in an article justifying the fees charged by headhunters: A professional fisherman will always have more to show than a weekend angler. Recruiters are in the marketplace day in and day out. They know the unfished coves, reefs and inlets that are unknown to others. The jobhunter bookshelves are filled with lore about the “hidden job market.” The same holds true for professional recruiters who have a detailed roadmap to the hidden talent sources which will never be accessed by newspaper ads, alumni associations, applicant databases, job boards or any of the other more familiar sources of people. . . . Want to catch what you’re fishing for? Hire a guide!

Headhunters’ presence in specialized labor markets is thought to develop a familiarity with sources of candidates that translates into what headhunters believe—and argue—amounts to special access. They cast a wide net, but they also know where to cast it.

Fast and Devoted Labor-Market Specialists By specializing in a particular labor market, headhunters have daily contact with relevant candidates and the companies that employ them. The sheer frequency of these encounters leads headhunters to claim an unusual vantage point from which to view the labor market and facilitate hiring processes as third-party experts. One headhunter we interviewed highlighted his capabilities in the following way: I think that we are great at learning all about the hiring manager and their company and their culture. We’re very fast. We make few mistakes. We can typically find talent that our client cannot find on their own. What we’re offering our clients is a very efficient service with a very strong track record. A lot of the companies that come to us or that we encounter, they’re almost always, “The barn is on fire—we need help immediately!” They don’t have time for a leisurely six-month search. . . . We can produce results quickly.

The speed advantage claimed by headhunters is enhanced by what they describe as their devotion to the task of securing a new hire. This goes

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beyond market familiarity to suggest at least the possibility of a singleminded, relentless approach to solving a staffing problem. We don’t code and we don’t write MRDs/PRDs [market-requirement documents / product-requirement documents]. We ONLY recruit. We spend 100% of our day—all day, every day—recruiting. A good headhunter specializes in targeting the top 5% of talent for their clients, something that clients don’t have time to do for themselves. The bottom line is that a headhunter can spend more time recruiting for their clients in one week than the clients can spend recruiting in one month. (Bear 2013)

Unstated here is that headhunters are not distracted by the many nonrecruiting tasks that slow the efforts of hiring managers and HR staff to fill positions. Purported speed advantages are routinely coupled to other desirable outcomes, such as not having a valuable position remain unfilled. The claims headhunters make regarding speed and expertise are echoed in survey data on company hiring practices and motivations. For example, a 2015 survey conducted by the Society for Human Resource Management of a diverse mix of companies and industries found that the “need to hire quickly” was the leading rationale for the use of headhunters. The next most common rationale was to gain access to a headhunter’s “talent and recruiting expertise” (Zappe 2015c). Headhunters also emphasize a time-and-effort argument that focuses on costs, but not on speed per se. Rather, they highlight costs incurred when a company tries to recruit for a small number of specialized positions. The problem, they claim, is that costs mount in ways that can be reduced and made more predictable by using a headhunter. This idea was expressed well by Mike Hard, who at the time of his comment was CEO of BountyJobs, one of the main online marketplaces that bring together headhunters and client companies (to be discussed later in the chapter). The business model of BountyJobs hinges on the continued viability of headhunters as independent, third parties to the hiring process. Corporate recruiters are better than ever, but they will always make independent recruiters a part of their recruiting strategy. Why? To fill a small number of jobs in a highly specialized space, an internal recruiter needs to maintain a huge database of specialized sources to start the hunt, scour hundreds of leads, and suffer dozens of dead-ends before finding the right

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C h apte r 1 candidate. With contingent search, that same employer only ends up paying for fruitful efforts (instead of paying for everything it took to get to that fruit). Third-party recruiters are a brilliant combination of old-fashioned skill armed with new technology and tools. (Hard 2014)

Headhunters often highlight their pay-for-performance fees when persuading companies to let them handle hiring needs. A final way in which headhunters tout their specialization in the labor market centers on interactions with candidates. They claim to know, for example, the range of opportunities a candidate is likely to face, and are likely to have direct experience with companies and hiring managers in that local or national marketplace. These insights allow them to do things that staffers in any given company’s HR department—and even the hiring manager—cannot. Recruiters are skilled in engaging with talent. Identifying qualified candidates is one thing. Attracting and then engaging with that talent requires the skill of a recruiter who specializes in your sector. You may be innovative when it comes to IT development [the focus of the headhunter who authored this piece], but selling your job offer to a candidate who probably has three more on the table requires an in-depth understanding of the market, your competition, and the candidate. Most employers don’t have either the time or resources to achieve that understanding and even those with a dedicated HR department may lack the skills to actively engage with passive talent. (Rakos 2015)

Skill to engage passive talent comes, they say, through specialization and repeated encounters with candidates and companies in a marketplace. That skill is further augmented by special capabilities that headhunters believe stem from their status as a third party.

The Advantage of Third-Party Status Headhunters claim that being a third party to the hiring process offers advantages. A first way they argue this suggests that their third-party status allows them to assume a “middleman” or “buffer” role in hearing and addressing the concerns of candidates and clients. In some cases, these concerns might indicate a poor match and the need to look elsewhere; in

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other cases, a promising match might be salvaged through discussion and negotiation. Recruiters can ask questions that may be tough for a company to ask of candidates, and often provide alternative solutions to impasses. Also, candidates tend to be more open with their recruiter, often times because they do not want to offend or insult their prospective employer either by asking them for more money or telling them they are interviewing elsewhere. Having a middleman is also beneficial at the negotiation stage because it helps the prospective employee get what they want and deserve, without asking for too much. Recruiters serve as an expert for both sides of the relationship so they are able to provide insight to candidates and employers. (Bradley 2013)

Practitioner and industry trainer Terry Petra quantified some of these middleman activities and promotes them as a reason companies should use headhunters. He argues that during the screening and interviewing process, headhunters can substantially reduce the roughly 40 percent of qualified and interested candidates who withdraw themselves from consideration. At the offer stage, Petra argues that headhunters can reduce the nearly 50 percent rejection rate some companies face after extending offers. And once the offer is accepted, headhunters can minimize the chances that a counteroffer will derail the hire, an outcome he claims is often 20 percent or higher (Petra 2006). We review how headhunters buffer candidates and clients in chapter 3. Our goal here is to note that headhunters highlight those activities to sell their services. Another way headhunters promote the advantage of their third-party status is by suggesting that it allows them to do things that might be seen as “dirty work” if done by companies themselves. Some clients, for example, have a prospective candidate in mind but believe it would be improper, imprudent, and potentially illegal for them to poach a competitor’s employee (Gardner, Stansbury, and Hart 2010). Consider the following comment that summarizes these concerns: Just ask any of your associates why employers use contingency-fee recruiters. The Pavlovian response is, “They don’t owe a fee unless they hire one of our candidates.” It’s true, but any hiring authority will reply, “They present candidates we can’t find through other sources.” Even with the same

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C h apte r 1 market information, the hiring authority doesn’t have the guts to cold-call into competitors, rout out their best employees, and wrench them into the chair across from his desk. Whether you call it “business ethics,” “fear of prosecution” or “the third-party role of the recruiter,” they pay you fivefigure fees because they can’t do it themselves. (Allen 2011)

Headhunters claim that even when company recruiters “have the guts” and opt to cross that vague line of propriety and legality, they rarely have the skill to pull it off. That skill, they say, is honed through daily practice and driven by the conviction that headhunters as third parties are better positioned than corporate recruiters to hunt heads.

Headhunting as a Contact Sport and Numbers Game: Securing Clients and Job Orders We now shift from a somewhat abstract level—how headhunters pitch their value to companies—to a more concrete level wherein headhunters make contact with potential clients and secure business. How do they do that? How do they direct or target their efforts? And what do their practices tell us about headhunting as an occupation, about labor markets, organizations, and hiring processes? We begin with a discussion of how headhunters research prospective clients and develop rosters of target companies and names of hiring managers within those companies. We then turn to the three main ways contacts with prospective clients unfold: direct, business-seeking telephone calls and e-mails; the marketing of “most placeable candidates” or MPCs, and reference checks on current candidates; and online marketplaces. We conclude by noting the rewards and risk associated with cultivating long-term relationships with clients and securing repeat business.

Research, Rosters, and Relentlessness While nearly all headhunters we have spoken with or observed argue that a skilled headhunter can recruit in any area, current advice and practice point to the increasing dominance of specialization. In many instances, headhunters have prior work experience in an industry like wireless

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communications or an occupation like accounting. Some can and do draw upon well-established networks of industry contacts. But every headhunter we spoke with argued that research can overcome a deficit of direct industry or occupational experience. The following advice is typical: What’s the best way to go about cold calling for business? The same way you would if you were looking for a candidate. Research! Every well-laid plan begins with research. Start by reading local press releases, business journals, trade publications, etc. Reading these publications will allow you to identify opportunities where a cold call might be good timing. News of expanding or new businesses opening up, promotions, projects—these are all prime opportunities to introduce yourself to a hiring manager. Company names identified in the news give you a starting point; from there you can research them on LinkedIn, Spoke, ZoomInfo, Manta, etc. . . . Learn details that will help you prove to the hiring manager that you’ve done your footwork. Google and Yahoo both have strong group discussion forums on a wide variety of topics, as does LinkedIn. There are a plethora of discussion forums and blogs to be found out there if you just take the time to search. (Eads 2010)

Two aspects of this advice are especially notable. First, headhunters believe it is critical that they come across as “in the know” with prospective clients. Knowing the language of an industry or occupation, the main players, and both recent events and long-term trends boosts credibility. What they call a warm (informed) version of a cold contact—e-mail or phone—has greater appeal and increases the likelihood that a prospect will become a client. Expertise, in short, is essential. Second, headhunters make use of a wide range of technologies and social media to learn about prospective clients. In addition to what is mentioned above, another headhunter stresses the value of knowing everything possible about prospective clients: Why has your client experienced so much success hiring or, conversely, has your client had challenges? There is only one way to find out and that is to become their biggest fan! I am talking not only about Google alerts, but about shadowing them in every way possible. Follow your client on Twitter and LinkedIn, “like” them on Facebook, subscribe to their YouTube videos, read every entry on Glassdoor. You need to understand how they are

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C h apte r 1 projecting their image. . . . The bottom line is that the more you know, the more value you add to your client. (Ziemelis 2015)

The goal of research is to assemble a roster of prospective clients and contact information for the hiring managers within those companies. In practice, there appears to be wide variation in the size and scope of these rosters, and in how fully assembled they are before first contacts are made. Most recommend large rosters and a sustained approach to contacting prospects that is best described as relentless. What this speaks to most clearly is that headhunting is a contact sport and a numbers game. Since few on a roster will represent business for a headhunter at any given moment, massive numbers of contacts need to be made on a regular basis. In the parlance of sales, many believe “it’s just a matter of time until you get a yes.” What this logic produces, when combined with many competing headhunters in a market, is a veritable deluge of calls and e-mails into prospective clients.

Direct Sales Contacts In a direct sales contact, a headhunter contacts a prospective client to ask if the client has any hiring needs with which the headhunter could assist. These contacts are typically guided by recent research, the roster of prospective clients, or past business conducted by a particular headhunter or her firm. The goal of these calls—and, increasingly, e-mails—is to first identify if there are any immediate hiring needs the headhunter could address. A second goal is to begin to develop a relationship that leads to future business. While figures vary across specialties, one headhunter we interviewed in the accounting field noted that in 2014 it took about fifteen phone calls to secure one job order, a drop from 123 at the nadir of the Great Recession in 2009. Unlike e-mails, phone calls offer at least the possibility of an immediate conversation and are widely seen as good opportunities to sell the merits of search and to obtain a job order. Most often, prospective clients try to fill positions on their own and use headhunters more as a last resort than a first choice. As one headhunter put it, “Clients really only hire recruiting firms when they come to the realization, ‘Hey—it’s not happening for

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some reason.’” He went on to describe how he tries to encourage that realization through questions and by offering to intervene: If we reach out to a hiring executive, and they say, “You know what— we’ve actually got our internal recruiting group working on that.” Here are the questions I would ask. “Really? Tell me, how long has the search been open? Are you seeing the volume of candidates and the quality of candidates that you had hoped for?” What I usually get to those two questions is, “It’s been open for a while, and no, I’m not.” . . . Now all I have to do is say, “Would you be interested if I was able to go into your competitors and find the best talent available—are those the types of candidates you’re looking for?” What do they say? “Absolutely!” . . . We work with companies all the time that have large recruiting groups, but they’re not capable of doing what we do.

E-mail solicitations are increasingly common, especially among younger headhunters. One young headhunter, who places candidates in food production facilities, often studies postings on industry-specific job boards and uses them to “to get a foot in the door.” He composes an e-mail that offers a brief introduction, evidence that he is aware of the company’s hiring need, and an offer to help. He read an example e-mail off his computer screen during our interview: Hi [X]. I hope you’re doing well. I’m with [X]. I specialize in searches in the food and beverage industry. I noticed on Careers in Food that you’re currently looking for some production people. I wanted to reach out to you because we’ve recently filled some similar roles for other bakeries in the greater [Southern City] area. I know of a great candidate for your production manager role with a strong bakery background that lives near [X] and is currently looking to make a change. I’d be happy to send you more info on him. You may already have this search covered, but if you need any assistance or have any questions, feel free to give me a call or shoot me an e-mail. For what it’s worth, my dad and I are both [X] grads, and we remember smelling your bakery.

The hiring manager at the bakery responded to the e-mail, asking for more information, and a conversation had since taken place. An advantage of e-mail solicitations is that they can be composed with care and

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read and processed whenever the recipient has a spare moment. A first phone call then takes place as a second step, which some claim is easier and more productive than an ice-breaking cold call. Another common direct approach to contacting prospective clients involves offering to be a “talent scout.” The goal of the call is to ask if there are any positions the prospective client might want the headhunter to monitor and to stay in touch about. Consider the following version of this approach, presented as a script: The reason for my call is that I wanted to make you aware of a complimentary service that we offer to a select group of clients that I thought may be of interest to you. Some of our clients use us as talent scouts whereby we keep them informed of the best accountants that surface in the market as they become available. The benefit for them is that they get a first look at our top tier of candidates before we send them out to their competitors. They have the option to pass or ask for more information if they have an interest. Would you like to be kept informed of the best accountants that come across our desk? Can you give me a thumb nail sketch of the types of people that you have the most difficulty locating? Are there any other types of people you’d like for me to keep an eye out for in the next 90 days? (Stauble 2006)

The talent-scout approach makes it difficult for the prospect to say no. Who, after all, would not want to hear about great candidates, especially those that are hard to find? As one headhunter pointed out, an offer of this sort can also be used with existing clients who do not have a job order to extend: I tell my clients, “Listen, I see candidates all day long. One of the things I want to do for you is to help find your type of candidate. So, when one crosses my desk, you’re the first person I’m going to send them to.” I always have my eyes open, for lack of a better phrase, for the types of candidates I know my clients really like to see.

Contacts of this sort also serve as a prelude to a widespread technique of headhunting—the marketing of “most placeable candidates” or MPCs— that we describe in the next section. They are also ways to broach the topic of top-grading or replacement searches, where a client is encouraged to think about swapping out a poor performer for a top candidate. Several

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headhunters we interviewed regularly use the top-grading approach to encourage clients to take a look at candidates, whereas another described at length how his firm’s business had recently become largely focused— about 80 percent of the searches—on confidential replacements (i.e., the incumbent did not know he was being replaced). An example of a topgrading pitch follows: “No openings” is the big one—the easiest way to get us off the phone. It’s the one we hear with the most regularity. [A suggested rebuttal script follows:] “You are fortunate not to be concerned with an opening right now. On a scale of one to ten, one being the weakest link in your company, where do most employees fall? (The hiring manager says a six). With our recruitment and evaluation process, if I could locate a seven or an eight and keep your payroll costs equal to or lower than your six, would you like to meet that person?” (Marshall 2011d)

Differences in details and directness aside, these activities point to how headhunters try to create, not just meet, a demand for new employees.

Showcasing Products and Process: MPCs and Reference Checks Headhunters use two more approaches to secure business with clients. A traditional and contemporary mainstay of headhunting flips the logical order of events. Instead of seeking a job order from a prospective or established client, rounding up a roster of viable candidates, and then presenting them to a client, many headhunters routinely market exceptional, in-demand candidates. This is called MPCing a candidate, often via a “FAB” presentation that highlights the candidate’s features, accomplishments, and benefits. The point here is to show prospective clients in a very direct way what sorts of candidates the headhunter can provide. The e-mail from the young headhunter, presented earlier, hints at an MPC-inwaiting in order to pique interest. MPCs have three traits. First, they possess in-demand skills that will appeal to prospective clients. Second, they must be realistic about what they seek—compensation, benefits, location, position, and so forth—and must be committed to going on interviews and starting a new job quickly.

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Headhunters who tease prospective clients with a hard-to-find candidate who becomes hard-to-get curry no favor. And third, the candidate must support the marketing effort by providing information about prospective clients with whom he or she would most like to work—along with solid references that are verified in advance. Many headhunters prefer marketing MPCs to making businessprospecting calls centered on the headhunter and her firm. One headhunter we interviewed spoke directly to that issue, claiming that the MPC call is much more effective: Now with client development calls, are you marketing a candidate as you do that? Or are you simply calling to present your firm and describe what you do? I’ll tell you, we’ve done a thorough analysis of this. . . . The far more effective call is the MPC call. . . . There are a number of reasons, and none of them are B.S. Well, you’ve got something in hand—you’re showing what products you have rather than just an empty conversation. That’s exactly right. It also allows you as a recruiter to have a personal connection besides yourself. Instead of just saying, “I, I, I,” you can talk about an exceptional person and brag about them. . . . An MPC can be anything from an exceptional AP [accounts payable] clerk to an exceptional CFO. It doesn’t matter the price tag. What we do generally focus on is a good mid-level person that’s got a good education from a school such as yours with a great GPA that’s probably got a CPA and is looking for a move for all the right reasons.

In cases like this, the headhunter really appears to be working on behalf of the MPC, a posture that belies the oft-repeated assertion that “we find people for jobs—not jobs for people.” But when a headhunter markets an MPC, the candidate serves more to facilitate a conversation, and as concrete evidence of the types of people the headhunter can present, than as a person the headhunter expects to place. MPCs do get placed, but they also serve to generate other business. How MPC presentations are structured can take a number of forms. One headhunter we interviewed described how he would e-mail news of an MPC to fifty to sixty hiring managers, expecting two or three to express an interest. Most commonly, MPCs are presented over the phone. Barbara Bruno, the practitioner and industry trainer, comments on MPC presentations:

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Your call would sound something like this: “I would normally be calling my best clients, because I just interviewed an individual who (list sizzle that will get their attention) and my top clients always appreciate knowing when this high level of talent hits the job market. However, when I asked this candidate where they would most like to work they named your company as their top choice. I know if I can place a person at a company they have targeted, that is where they will flourish. What would it take to get the two of you together?” This presentation can go many ways and you need to be prepared to overcome any objections, reiterating that this person is a “sampling” of the type of talent you represent. If you have a Sam’s Club or Costco near you, think of how often you have made a purchase because you were allowed to “taste” a sample. It is the same concept when you market a candidate. Often this results in obtaining a job order for this candidate, obtaining another job order, or at least getting your name in front of prospects you have targeted. (Bruno 2008b)

It would be difficult to overstate the perceived value of this approach among headhunters. A veteran headhunter, in a piece in the Fordyce Letter aptly titled “Ten Things Most Tenured Recruiters Believe but Rarely Admit,” made the following astute and startling comment: Most positions can be filled quite effectively without us, so HR people have a point when they say a lot of unnecessary fees are paid. Often, we just happen to introduce someone impressive to a person with clout at a company who ended up liking that person a lot, so he/she got hired. If we were used only when we are needed, we would go broke. (McNulty 2006)

The notion of introducing a candidate to “a person with clout” is critical. If there is real urgency to fill a position, and a hiring manager “with clout” falls for an MPC, then the recruitment effort may suddenly include a headhunter, even if that was not intended or desired. MPCs can thus disrupt traditional hiring practices and help a headhunter receive placement fees from companies that do not routinely use headhunters. In many ways, they make headhunters the quintessential visible hands of the labor market—as they quite literally “bring the labor market” to potential buyers on a daily basis. A second common practice among headhunters is to show not the products—the MPCs—but rather a deliberate, thoughtful process that can

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then be turned into a sales effort. The typical vehicle for this is an extensive reference check on a candidate who is under consideration by another client or as a possible MPC. Headhunters use reference checks in an effort to establish rapport with a potential client and to display the quality of the process they use to vet candidates. One headhunter argued that “reference checks are one of the easiest ways to land new clients” (Bruno 2008b). They are “easy” because the interaction starts with a service, not a sale, and rapport can be established well before the headhunter transitions into a sales pitch.

Online Marketplaces Since the dawn of the new millennium, a new way has arisen for headhunters to approach and secure clients and for clients, in turn, to reach out and extend job orders to headhunters. The basic logic of headhunting, however, has not changed. Clients still pay a placement fee and provide direction as to what sort of labor they seek. Headhunters still rustle up candidates and submit one or more to the client. Interviews happen. Hires are made. But the first steps of the process—where a client and a headhunter learn about each other and agree upon a search—occur in an online marketplace. Our aim here will be to briefly introduce these new marketplaces. What are these electronic marketplaces, and what do they purport to offer headhunters and companies? Chief among them, and with no claims that we are being exhaustive, are the following, all of which were active in 2016: Scout (2016c); RecruitAlliance (2016); Recruitifi (2016); BountyJobs (2016e); CrowdRecruiting (2016); Jobhuk (2016); and Recruit Loop (2016). Despite differences, they share five main features. A first is that they are all online, typically cloud-based, and can be reached and used with mobile devices and computers. A second is that they are simple to use and easily linked to the “applicant tracking software” common in midand larger-size companies. They are seamless extensions, according to the marketplaces, of software already in use. A third and central feature is that the marketplaces aim to attract and match companies that have job orders with headhunters eager for those orders. Companies can continue to work in these online marketplaces with longtime and favored headhunters as long as they also agree to make

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use of the marketplace, as transactions like agreeing to work a job order, presenting candidates, and providing feedback are supposed to at least start, if not stay, in the marketplace. Companies can also open up searches to other headhunters who participate in the marketplace. In some cases, the marketplace—and most notably Scout—provides strong guidance via proprietary algorithms in selecting which headhunters are deemed most appropriate for a company’s job order. Who is seen as “best for handling the job” depends on features of the job, the company posting the job, and then the specializations and placement histories of headhunters affiliated with the marketplace. Companies can control how many headhunters get involved. They can nix or bar certain headhunters and can limit the total number of candidate submissions. In general, the marketplaces are designed to permit companies to exercise considerable control over the hiring process. Headhunters in turn have at least the possibility of gaining access to many companies and job orders that are, quite frankly, already out there, not the eventual products of a long string of gut-wrenching sales calls. A fourth prominent feature of the marketplaces is that they collect data on the recruitment process and claim to provide valuable performance and financial insights and oversight. For example, BountyJobs aims to get companies to move all their third-party recruiting to its marketplace. Companies thus gain a better vantage point from which to understand and presumably manage headhunters, in terms of overall spending but also in comparing how various headhunters perform with respect to the submission of candidates, the ratio of candidates interviewed to those submitted, and so forth. In many companies, data of that sort is either not collected or is difficult to collate and summarize given the often decentralized way in which headhunters are used. Headhunters, too, can gain insight into how many others have been accepted to help fill a job order (a measure of competition), how long a job has been posted (a measure of hiring urgency and decisiveness), and performance data on past job orders posted by a company (e.g., how quickly interviews took place, how many candidates were considered, and so forth). Information of this sort purports to help both companies and headhunters make decisions regarding participation in any given search. A fifth and final main feature is that all online marketplaces siphon revenue from the placement process. Some charge fees to companies, some to

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headhunters, and some to both. Some take a percentage of the placement fee, as BountyJobs has done; others, like RecuitAlliance, leave placement fees untouched but require monthly subscriber fees. More participants and more placements generate more revenue for the firms that design and run the online marketplaces. For them, the marketplace is the product, a product that has some kinship with the “multiple listing service” or MLS that has long dominated residential real estate. How headhunters have responded to these online marketplaces and what they might mean for the future of headhunting are taken up in chapter 4.

Relationships, Repeat Business, and Risk Long-term relationships with clients are widely viewed as the holy grail of the industry. Those relationships often yield deep insights into clients and their hiring process, which means that headhunters are more likely to source the right prospects and to fill the job order. The best long-term relationships also generate repeat business. As one veteran headhunter put it, “We really avoid transactional-type business—we’re much more focused on building a long-term relationship.” In part, those relationships are prized because they represent a steady flow of placement revenue. But they also allow some relief from client development, especially when those development activities involve many calls each day. So a main answer to the two questions at the core of this chapter—How do headhunters sell search? How do they secure job orders?—is to form long-term relationships with clients who offer repeat business. Among academics this is known as clientelization (Geertz 1978; Groysberg 2010). Long-term relationships spring from good service and staying in touch. Headhunters know that the boundary between candidate and client is permeable: today’s candidate can be tomorrow’s client, and vice versa. A headhunter in the retail market, with thirty years of experience, describes the candidate-to-client transition: We used to say a long time ago when the first recession [for her, 1990– 1991] came through that anybody who survives were the folks who really understood making a good match, building a good relationship, and that the people you place today will be your clients tomorrow. So, hopefully, if you’ve done a good job, they are going to grow with that company or go to

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another. But you’re going to stay in touch with them and they’re going to take you wherever they go. And you know, your business is going to build in that way.

By providing what is perceived as good service through a series of successful placements, a headhunter builds trust. In some cases, headhunters become “viewed as an organizational insider and no longer just an outside vendor” (Petra 2007b). This status is prized, and its attainment is the subject of many articles in the Fordyce Letter, with titles such as “The Five Cs of Client Monogamy” (Honn 2013). A headhunter who has one or just a few clients who provide a sufficient number of job orders to keep him busy and financially successful is widely understood to be in an admirable but nonetheless risky predicament. On the positive side, consider how a headhunter describes his primary client. Most of my work is coming from this one client. It’s a client I know very well. . . . At any given time, I’m working on one to three job orders for them. For the most part, I don’t even waste my time elsewhere. If I’m filling a job order a month or two job orders a month, I’m doing very, very well. . . . They’ve got a lot of in-house people [HR staff recruiters]. They also use other recruiters. I’ve just got a really good relationship with somebody in HR there. I’ve filled probably 90% of the job orders I’ve gotten from them. That gives them reason to come back to me. It’s only been a few years, but nobody’s left, and they’ve been happy with everyone I placed.

A high fill rate, a really good relationship, good placement outcomes, and a steady stream of job orders make this client exceptional—the stuff of a headhunter’s dreams. More broadly, the practice of investing substantially in one or just a few clients is common among headhunters. Most of the headhunters we interviewed did not share how dependent they were on long-term clients, but broader evidence suggests considerable if not staggering dependence. Survey data from 2014 shows that 72 percent of headhunters make at least half their revenue from repeat client business and that 22 percent obtain at least half their revenue from only one client (Zappe 2014b). The downside of investing so heavily in making placements for one or a few firms is substantial. Part of the risk is that relationships can end

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or hiring can grind to a halt. Another part of the risk is that marketing skills are thought to be maintained and honed through practice. A veteran headhunter with more than twenty years of experience comments on these issues: I do a lot of marketing calls with MPCs to get new business. If you don’t do that, by which I mean aggressively pursue new clients, you’re just an order taker. What you do is fill the searches that they’re kind enough to bring you. When that dries up, you’re back to the basics like you’re ten minutes into the business. You’d better remember how to do it. I do it all the time as a matter of discipline.

Comments of this sort bristle with concern about dependence—about filling searches that “they’re kind enough to bring to you.” Experienced headhunters tell vivid stories about clients who vanished. One, whom we re-interviewed after a twenty-year hiatus, described clients in this way: What about clients? Are you dealing with more or less the same group of clients you had 20 years ago? No, that’s always in constant change, I would say. You know, you may have a great relationship with a hiring manager at a big company. They may be the VP of human resources or the president or the CEO. And then they change jobs and the new person steps into their role who doesn’t know me, doesn’t know my company, and you really have to start all over again. So there’s always that constant flux. . . . You still have to do marketing to try and find new clients all the time.

Warnings of this sort are common among headhunters and in industry publications. They reflect the observation that a client is less often a company than a person. A headhunter might speak of her client as, say, Georgia Pacific, but in reality the client is Bob in a particular department. In addition, passively waiting to “take an order” when a client chooses to offer one clashes with the sales orientation of so many headhunters and industry trainers. Pursuing business in a proactive, aggressive fashion, and securing job orders, through MPC and other solicitations, from companies who did not intend to use headhunters remain the gold standard in the industry. For those in the business, headhunting is a verb, not a noun. An answer to the chapter’s central question—Why use a headhunter?— is thus complex. On the one hand, headhunters sell their services in a

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general way, claiming that they can produce exceptional candidates quickly because they are deeply familiar with particular labor markets. They profess to know where to search and how to lure passive candidates into considering an opportunity. Evidence suggests that companies are persuaded by those arguments, as the “need to hire quickly” and a headhunter’s “talent and recruiting expertise” are the two main rationales companies offer for using headhunters (Zappe 2015c). On the other hand, headhunters disrupt the hiring routines of companies through relentless marketing efforts. Dazzling candidates are described in an effort to prompt a company to abandon in-house hiring routines or to make an opportunistic hire. Deliberations of the sort suggested in Bidwell and Keller (2014), Cappelli (2008), and Williamson (1981, 1985) fall by the wayside and spontaneity surfaces. Spontaneity might imply an irrational impulse buy. But it also seems entirely consistent with the classic notion of “satisficing” (Simon 1947, 1956), where the choice of a “good enough” solution to a problem trumps efforts to reach an ideal solution. Is the search taking too long? Are candidates hard to find? Saying yes to a headhunter’s MPC can indicate satisficing: using a third party to bring closure to an otherwise protracted, time-consuming hiring process.

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Qualifying Clients and Job Orders Seeking Information, Assessing Risk, and Allocating Effort It is awfully nice to be able to talk to the hiring manager to find out what they want. A lot of times, a talent acquisition person or an HR person will say, “Hey, this is what we need—A, B, and C.” You talk to the hiring manager and they tell you something completely different. “Well, no, that’s not what I’m looking for, I want this, you know, or I want that.” —a Southern City headhunter

Getting a job order from a prospective client is rarely easy. One would naturally expect, then, that headhunters would be thrilled to secure a job order, and would then throw themselves into a search for suitable candidates. Rookies, they say, nearly always do that, but experienced headhunters know that having a job order is often little more than a license to waste precious time, and many are deemed unworkable. Their general logic is straightforward. Pause. Take a deep breath. Then begin to vigorously “qualify” both the client and the job order to gauge how likely it is that a placement will be made, given a reasonable investment of effort and time. To be clear, getting a job order does not mean a headhunter will work it. Nor does having a client mean a headhunter will not abandon that client. Among headhunters, the old trope “time is money” is uttered often and taken seriously. A headhunter’s assessment of the likelihood of making a placement represents a rough guess, as it incorporates many unknowns and must

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average promising attributes of the client and job order with others that seem perilous. Investments in a search also depend on what else a headhunter has in the air at the time and whether a client might be the source of more job orders, and especially those that might be lucrative and easy to fill, down the line. Any mix of “good” or “bad” can be applied to a client and job order, and headhunters often conclude that a placement is unlikely, therefore putting little or no effort into the search. Some quietly withdraw, while others boldly “fire clients” or detail why a particular job order, a client behavior (or lack thereof), or some aspect of the headhunter-client working relationship is untenable. Others do a quick inhouse “file search,” as we will describe more fully in chapters 3 and 4, and may present their best available prospect. But they do not invest in hunting heads if a payoff seems remote. Headhunters believe they must make these assessments in order to manage their time and, more fundamentally, survive. In the words of Paul Hawkinson (2006), “success in recruiting is tied more to declining searches than to accepting them. Wrong clients with wrong jobs at the wrong time are the reason 20% of recruiters make 80% of the placements.” In this chapter, we describe the main dimensions along which first clients and then job orders are qualified. When qualifying clients, headhunters attend carefully to their process and policies, which tend to be reasonably stable across the jobs a client seeks to fill. How, in short, does a client structure interactions with a headhunter, communicate, and make decisions? Does it treat candidates well and sell its job offers and company as attractive opportunities, or does it largely grill and dispirit candidates through a meat-grinder process that is slow to reach a decision? Is the placement fee generous, about average, or a pittance? Job orders, in contrast, are qualified on the basis of what we call particulars, conditions that often vary widely across the positions a client may hope to fill. For example, how urgent is the client’s need to fill the position? What has the client already done to fill it? Is the position clearly defined or vague? Are expectations—like pay and credentials—realistic for a particular labor market and location? Headhunters believe that clients tend to have stable qualities, which means that their process and policies are largely the same across job orders, but that the particulars of job orders vary widely even for the same client. These evaluations provide unique insights into hiring processes and organizations, as organizational insiders rarely pull back the veil in this way.

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Our analysis sheds light on some of the limitations of two longstanding and intriguing initiatives: efforts to formalize job descriptions and centralize hiring processes. Most companies roughly approximate a Weberian bureaucracy, with a set of positions, or jobs, that together comprise the activities that make the organization tick. For many years, companies have attempted to craft and use formal job descriptions (e.g., Noe et al. 2013; Mathis, Jackson, and Valentine 2014). When a job incumbent leaves, the description can be used to guide a new hire’s selection, as opposed to saying, “We need another Susan.” Such descriptions are thought to facilitate functional interchangeability (Zerubavel 1979, 43), where one worker can be swapped out for another, while the activities of the organization—and the organization itself—march along without missing a beat. Headhunters suggest that formal job descriptions typically fall short, as they often omit or only vaguely specify key aspects of human capital, while typically neglecting completely key dimensions of culture and soft skills (see also Cohen 2013). In short, job descriptions rarely indicate well what companies want and need in a new hire. In this way, efforts to implement functional interchangeability through formal job descriptions often fail. We explore how and why failures occur. The chapter also explores the consequences of bringing the hiring process more fully under the oversight and control of talent acquisition and HR departments. One striking contrast with our earlier observations and interviews was that headhunters are currently much less likely to always, or even routinely, deal primarily with hiring managers. A more centralized and formalized approach to hiring may have many merits, but it often generates noise and delays for headhunters. Noise and delays stem from disconnects between how hiring managers understand a job, and what they seek, and what is conveyed to headhunters through job descriptions or conversations with staff in talent acquisition and HR departments. Headhunters view talent acquisition and HR staffers as largely unhelpful links in a communication chain, and thereby strive to establish direct ties to hiring managers. Those managers provide information needed to breathe life into moribund job descriptions, which links to our first point, and to fine-tune and encourage a headhunter’s best efforts. Direct access to hiring managers increases the effectiveness and engagement of headhunters.

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Clients Clients are qualified on the basis of process and policies. By those terms we mean how they structure interactions with a headhunter, communicate, make decisions, and treat candidates. They also include the fees and other policies that shape the transaction. We describe these issues in four sections. First, we explore how and why headhunters strive to gain access to hiring managers, even if they also work collaboratively with HR. In many companies, this has become uncertain, as headhunters claim that talent acquisition and HR departments have gained influence in recent decades and much of the hiring process now runs through them. Second, headhunters continuously assess the client’s clarity and timeliness of communication and decision making. Clients who provide only vague job descriptions, fail to provide feedback, or drag out decisions are viewed as risky. Third, headhunters attend carefully to how clients treat candidates, especially whether they recognize the distinctive status of passive candidates and whether they make an effort to sell promising candidates on the company and job alongside their efforts to vet them. Clients who fail to sell the opportunity, or who treat passive candidates like actives, make placements more challenging and less likely. And last, headhunters consider the placement fee the client is willing to pay and the onerousness of the increasingly common “placement services agreement,” or PSA, that governs the transaction. While these factors can vary across particular job orders a client may extend, they are mostly thought to reflect fairly stable attributes of the client.

Access to the Hiring Manager In many companies, there is a structural barrier to good headhunter-client communication—namely, a talent acquisition or HR department that positions itself as the sole source of contact with the headhunter. Headhunters firmly believe that hiring managers, not HR, know best what is needed and sought in a new hire, and will thus go beyond generic, inaccurate, dated, or otherwise unhelpful job descriptions to share the keys to the hire. Adding HR to the mix, in more than a facilitating way, is thought by headhunters to effectively add another link to the communication chain

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and thereby create noise and delays. Consider the following account of a disconnect between a hiring manager and the marching orders HR provided to a veteran headhunter who works with manufacturers, primarily of aircraft and large vehicles: One manager literally picked up the phone, called, and wanted to know why we were sending him these kinds of people. I said, “Let me e-mail you the job description.” We sent it over. He said, “This is not what I’m looking for.” He then told us what he wanted, and we were able to fill the job. The problem is that they create a library of descriptions, if you will, under terms like “Tech Specialist I, II, II.” So the manager says to HR, I need a design engineer,” and it’s a Tech Specialist I because of the pay rate. HR pulls something out of the library of job descriptions, and they send it out to us to work with.

Headhunters argue that discrepancies between job descriptions offered by HR and what hiring managers seek are common. Another veteran headhunter put it this way: It is awfully nice to be able to talk to the hiring manager to find out what they want. A lot of times, a talent acquisition person or an HR person will say, “Hey, this is what we need—A, B, and C.” You talk to the hiring manager and they tell you something completely different. “Well, no, that’s not what I’m looking for, I want this, you know, or I want that.”

In both cases, headhunters were rescued by hiring managers who reached out to complain or correct. But their initial and misguided efforts were due to a poor job description that HR had not cleared with the hiring manager prior to sending it out to the headhunter. When headhunters can speak with the hiring manager to confirm and flesh out the job order, they believe that time and effort on both sides can be saved, and that searches are more likely to be successful. A headhunter’s direct access to hiring managers permits far more than a verification of the basic features of the job order. That verification is critical, but so also is the headhunter’s ability to gather deeper insights that will guide her efforts both at the front end of a search (identifying, attracting, and presenting the right prospects) and the back end (working through negotiations, offers, and counteroffers). Consider first a typical

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comment from a headhunter about the value of direct access to the hiring manager at the front end of a search: A lot of these companies have a talent acquisition department. . . . They’ll contact us, tell us about an opening, and you know we don’t get to talk to the hiring manager to find out their nuances of what they’re looking for. . . . But on my end, when we are able to talk to the hiring manager, we just are able to zero in on what they are looking for. If you talk to the hiring manager, you can find out their background, and from that you can find out possibly their likes and dislikes, or you find out, “Hey, we hired a couple of people from XYZ company and they worked out really well.” Oh, okay, they like people from XYZ company, so I might target that company, or people that have experience from that company or similar experience.

With good information, headhunters can better identify and present the right candidates. But as we describe in chapter 3, there are countless ways in which ideal matches fall by the wayside, which means that headhunters aim to position themselves as middlemen or brokers to keep promising matches from faltering because of inadequate offers or strong counteroffers, to name just two concerns. One headhunter described how his ability to “close”—to get a candidate and client to a point where the offer that is extended will be accepted and honored—hinges on access to hiring managers, and how he now avoids searches where he lacks that access. I can tell you that my experience shows me that if I’m working directly with a hiring manager on a search, and we get to the point where the manager makes an offer, we’ve got about a 90–95 percent success rate in closing that. The candidate starts and everybody’s happy. If the hiring manager won’t work with me and wants their general recruiter to communicate with me . . . that statistic drops to 10–15 percent. . . . I’ve just gotten to the point where I don’t work a search if I’m not working with the hiring manager. . . . I can’t afford to bust my ass for a 10 percent chance of success. . . . I may as well be a blind monkey with a handful of darts!

Although the figures are surely just rough estimates, the gap between them is large and meaningful, as is the gap between an experienced headhunter and a blind monkey with a handful of darts. When headhunters abandon an actual or prospective client in this way, they often “make

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them a source,” which means targeting their employees as candidates for other searches. In the world of headhunting, companies are either clients or sources, as the traditional proscription regarding sourcing candidates from clients remains in place. Abandoning or avoiding some searches is an unhappy outcome, because headhunters need clients to survive. Two other responses are common when HR or a talent acquisition department positions itself between a headhunter and the hiring manager. A first is to either seek out, or hope to stumble on, a hiring manager who insists on direct contact. Recall our discussion in chapter 1 about how an MPC presentation could prompt use of a headhunter if a manager “with clout” got involved. A similar logic holds here, and many headhunters aim to leverage internal power struggles, where one or more hiring managers become disenchanted with their HR or talent acquisition departments. One headhunter described how that sort of disenchantment presented an opportunity for him to work directly with the hiring manager: I work with a company now out on the West Coast. They’re a large company and they’ve got an extensive recruiting arm. But I’m dealing strictly with the hiring manager because he doesn’t feel like he’s getting the kind of candidates that he’s looking for from their HR department. So he’s reached out to me to see if I could help him.

Bypassing HR in this way is risky, as there are many ways that HR and talent-acquisition staffers can complicate if not derail a hiring process that involves a headhunter. Twenty years ago, the playbooks of headhunters included a bold if not brazen end-run around HR (Finlay and Coverdill 2007, 51–54), but that play has largely been abandoned. It is now seen as “career suicide to treat our human-resources partners as anything but significant” (Greenberg 2010). Headhunters on this path proceed with caution. A second option involves negotiation, where headhunters work to persuade HR or talent acquisition staff to permit if not encourage regular and direct access to the hiring manager. There are many ways they do that, but the following comment points to a common strategy: One approach would be to ask very specific, tough, technical questions of the HR person you are working with. If he or she cannot answer them and

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starts squirming you now have an excellent segue to say something like this: “What we have found to be the most productive method of conducting a search is when we are able to work cooperatively with both HR and the hiring authority. If we only work through HR, our effectiveness drops considerably because we don’t have first hand information as to why a particular candidate did well or bombed out that we can use to hone in on the best people. Also, our credibility with candidates we are recruiting drops considerably if we cannot answer any of their questions about the process and the personality of the players involved. This affects the quality of people that we are able to attract for you. As you know, a big part of finding the right match is the “soft skills” like chemistry and personality and these are only gauged if we have contact with the hiring authority.” (Stauble 2003)

Arguments of this sort can fall on deaf ears, as a no-contact policy might be enforced because it is established policy, not because it is viewed as right or sensible. In addition, some headhunters, such as the one quoted above who felt like a blind monkey with darts, say that, increasingly, they do not even get to make arguments for direct access to hiring managers: “I can’t even get to a conversation in which I explain to them that if you relegate me to HR that the likelihood of success drops from 90 percent to 10 percent.” A strong and recurring piece of advice with respect to this issue is to target prospective clients who lack substantial HR departments. In practice, that often means small to midsize companies that do not have talent acquisition or HR departments with the political will or capacity to box hiring managers out of the process.

Clear and Timely Communication and Decision Making Even with direct access to the hiring manager, headhunters are hardly assured of clear or timely communication. Some hiring managers, for example, are either slow to return phone calls or fail to do so entirely. Others do not respond in a timely way to candidates who are submitted, seem to have no time to schedule or then conduct interviews, say things like “I will know it when I see it” when pressed for details about what they seek in candidates, or fail to get in touch with the headhunter after a candidate interviews (Adamsky 2007). Headhunters loathe those situations in part because they delay the hiring process, a point we discuss below. But more important, they make it difficult if not impossible for the headhunter

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to assess what sort of candidate will sparkle in the eye of the hiring manager and induce her to hire. In that case, they often feel as though they are just “throwing paper at the wall,” a sentiment voiced by the following headhunter: We’ve had people call and say, “Hey, send me your two best résumés for this job.” And it’s like, “No, we’re not going to help you, you’re not going to like what we do in the long term, so let’s sit down, we’ll talk about it, what the job is and why you are looking at these things. You know, we can help you assess what the needs are, what the culture is, and that type of thing. Let us help you. Let us be a human capital consultant for you, not just throwing paper at the wall.”

Even if the client wholeheartedly agrees, he or she might fail to sustain clear and timely communication. Headhunters constantly assess communication and will partially or completely withdraw effort from a search if it becomes poor. A final aspect of communication centers on decision making. The expression “time kills deals” is undoubtedly more common in headhunting than in other sales occupations. The reason is that for most salespeople, the item being sold—steel, cars, copy machines—commonly remains available and poised to be sold even if there is a delay. For headhunters, the item being sold is a person, and people have a habit of getting annoyed with delays and pulling themselves out of contention. They also move on to other opportunities. Headhunters thus encourage clients to make timely decisions as candidates are presented. It also helps establish a decisive, no-dithering approach that headhunters associate with successful placements. Consider the following effort to prod clients to offer feedback and make decisions: Mr. Employer . . . one of the most common reasons why companies lose top candidates is delay and indecision, so you will have a very small window of opportunity to make a Yes/No decision. A “maybe” decision on your part almost certainly means that your firm will be out of the running for this candidate’s services. I implore you to make sure that everyone involved in the Yes/ No decision be available during the initial interview stage. . . . I’m not trying to force you into an injudicious decision but I want to make you aware of the realities of the situation where it concerns top candidates. (Hawkinson 2003)

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The point of the conversation is of course to instill a sense of urgency into the process and to hasten the pace at which communication and decisions take place. Others also stress how “no decision is a decision” and suggest techniques to get clients to recognize the “point of no return” and to make decisions more quickly (Petra 2007a). Despite their best efforts, headhunters often face delays in hiring processes, and it is a challenge that appears to have become greater in recent years. One headhunter pinned delays on the role of HR in the screening process: We don’t have a hard time finding candidates who are interested in new opportunities. When we serve them up, we have a hard time getting the employers to move quickly. . . . They’ll take forever to respond. Forever! Part of that, I believe, is that they use their HR department to do an initial screen to vet candidates. So, usually after you get the call, you have to work through an HR assistant. I’m not so sure, especially in health care, if they understand the critical nature of speed. . . . I think that there’s a big time drain in there because so much of this was moved to HR.

A recent and broader review of several sources of data suggests that “it’s taking companies longer than at any time in the last 15 years—maybe even longer than ever—to fill a job” (Zappe 2015b). Glassdoor, a website that gathers data on hiring, claims that average hiring time nearly doubled from 2010 to 2014, and that an analysis of 344,250 job-interview reviews posted on the site between 2009 and 2015 suggests that “the job interview process has indeed grown significantly longer in recent years” (Zappe 2015b).

How Candidates Are Treated We have already noted how headhunters work to get clear and timely communication from clients that allows them to select the right candidates and then keep them enthusiastic and engaged. Slow or no information after an interview makes that harder, while also raising concerns in the minds of some candidates that the headhunter is either not well respected or on top of the process. There is another more basic issue about candidate treatment that becomes critical for headhunters. Recall that one

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of the pitches headhunters use to sell search is that they hunt for candidates. While the process of sourcing candidates will be described in chapters 3 and 4, it is important to note at this point that candidates who feel as though they are not really looking for a new job—but who are nonetheless willing to consider an opportunity—often expect to be treated differently during interviews. While they expect to be vetted, they also expect the client to sell them on the job and company. Consider the advice of a veteran headhunter: We have been here since 1952 and have been through literally thousands of hiring processes. We are asked about the biggest and most frequent mistakes that hiring authorities make in the recruiting, interviewing, and hiring process. . . . Not selling the job and the company. Although this isn’t the biggest mistake hiring authorities make, it is certainly the most prevalent one. We can never figure out why, in trying to find the best talent available, hiring authorities act as if they are doing someone a favor by granting them the privilege of an interview. They act as though they have the only job on the planet, and candidates are begging to work there. Wrong! Good candidates will have many choices. . . . The company and the hiring authorities that sell their job the best will hire the best talent. (Beshara 2008)

Likewise, another recent commentary by a headhunter points to “failure to sell the candidate” as a common mistake clients make in the hiring process: Excellent candidates typically have multiple suitors and are not necessarily looking for a job. Therefore, everyone in the recruiting process should reinforce a consistent and inspired organizational vision, importance of the role, opportunity for success, potential for recognition and reward, and future career opportunities. Effective candidate evaluation is paramount. Simultaneously, however, a consistent and compelling value proposition must also be perceived by the candidate. This should be complemented by a prompt decision and an appealing compensation offer. (Baty 2013)

Headhunters realize that some clients may be better than others at selling their job and company to candidates. Moreover, a common belief among headhunters is that “great clients are made, not found” (Gionta 2013). Headhunters try to emphasize the need for clients to flip into a “selling

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mode” with candidates, and often try to communicate that through what amounts to “client prep” for an interview, the client side of the “candidate prep” we will describe in chapter 3. Consider the approach and advice of Barbara Bruno (2006c), the practitioner and industry trainer: If your clients don’t realize the incredible competition for top talent, it is your responsibility to enlighten them. It is also important in a candidatedriven market for you to prep your clients prior to an interview. Offer to give your client a competitive edge by informing them of the “hot buttons” of your candidates prior to their interview. Let them know your candidate has other interviews, and stress the benefits they will enjoy if they adjust their interview to address the hot buttons of the candidate. Your clients want to attract top talent to help them achieve their financial goals. If you can help them hire that top talent you will develop the level of client rapport that will ensure a solid business relationship.

Despite the can-do positivity of her comment, Bruno is well aware that some clients will be poor at selling their jobs and companies and will therefore be difficult to work with. Headhunters assess clients’ desirability and try to change some of them, but they also move on if need be.

Fees and Placement Service Agreements Two final issues bear on how headhunters qualify clients. A first is the placement fee, which is typically negotiated at the time the job order is received. Traditionally, headhunters receive a percentage of the base firstyear salary of the new hire, but there are many variations on fees. Some expect and receive an “engagement fee,” which is an up-front financial commitment from the client. Most receive straight contingency or “pay for performance” fees, which range from about 10 percent to 30 percent of the base first-year salary of the new hire, but currently cluster around 20–25 percent. A few offer a flat fee for each placement. Most agree that a discounted fee sets the stage for a discounted effort: When a company has engaged the recruiting firm on a contingency basis, this is a very polite way of saying “straight commission” or pay “for performance.” You’ll find that any recruiter in the marketplace will take any job order you give them. The key question is: “Will the recruiter actively recruit

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C h apte r 2 candidates for your position that you need so very much to be filled?” If the recruiter has had to agree to a reduced fee, the decision could possibly come down to working on another opening with a different company or simply walking away. (Mikula 2013)

For headhunters who work a variety of positions in an occupational or industrial specialty, the fee percentage needs to be understood alongside the likely starting salary. A low percentage can be offset by a higher salary or become even more disadvantageous if the salary is also low. Headhunters quickly do the math, and the likely placement fee is what shapes investments of time and effort. One described those deliberations in the following way: We work on contingency, so we’ve got to decide where to invest our time and energy. If I’m working on a VP of engineering at a 25 percent fee and I’m also working on a production supervisor at a 20 percent fee, I’m definitely going to go with the one where we can bill $50,000 as opposed to the one where we’re going to bill $11,000.

Without question, financial considerations of this sort influence the behavior of headhunters. Fees are increasingly codified in a client-produced document called a “placement services agreement” or PSA. In addition to spelling out fees and the conditions under which they will be paid, PSAs often include clauses regarding prior receipt of candidate information (i.e., if the client already has the candidate’s résumé buried in its files, then no fee will be due), the right of the client to use other headhunters or to hire on its own, a non-solicitation policy whereby the headhunter agrees not to recruit any of the client’s employees while the agreement is in force, and a guarantee policy, whereby the headhunter agrees to replace a candidate at no charge or refund the placement fee if the new hire resigns or is terminated within a fixed period of time, typically thirty to ninety days. Highly restrictive, take-it-or-leave-it PSAs are disdained by headhunters and are met with the same enthusiasm as a discounted fee.

Job Orders While clients are qualified by assessments of process and policies, job orders are qualified on the basis of particulars—how urgently the client

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needs the new employee, past and present efforts to fill the position, and the clarity and viability of the job order. Clients tend to have stable qualities, which means they either allow or deny headhunters direct access to hiring managers, offer low or high placement fee percentages, and so forth. But variation across job orders, even for the same client, can be substantial. An otherwise “good” client can extend a lousy, unworkable job order, and the opposite can happen as well. With a good client, however, headhunters will often, and sometimes regrettably, work a bad job order because of loyalty.

Urgency The perceived urgency of the client to fill one or more open positions is the single most important factor headhunters use to qualify job orders. Sometimes called “sincerity” as well, urgency is tied to what it means for the client to leave a position open. Can other staff cover the position effectively? Are sales being lost, products not being developed, services left unprovided? What, put simply, is the pain felt by the client company, in general, and the hiring manager, in particular? For headhunters, the equation is simple: no pain = no urgency = no placement. Also, urgency on a particular job order can easily overshadow a client’s typical tendencies regarding communication and responsiveness. A lack of urgency means that even a typically good client may communicate poorly and delay decisions. Conversely, a typically sluggish client in the face of urgency may become surprisingly responsive and communicative. Because of the critical importance of urgency, headhunters routinely comment on and include the issue in training efforts. Consider, for example, the following general advice: One of the major strengths that recruiters who are consistently ranked among the top producers in our industry have is the ability to clearly identify and qualify their client’s “sense of urgency” about filling the open position(s). By doing so, the recruiters are quickly able to focus their resources (time and energy) on orders/searches that justify this level of attention. This focusing of resources allows them to close more placements and have tighter productivity ratios than are the norm for our industry. (Petra 2007d)

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Headhunters routinely assess urgency and persuade clients that delays are costly. Consider the following additional comment by Terry Petra, who often uses the term “sincerity” instead of “urgency”: When you and your client have identified a specific need on which they want you to work, you ask the following question: “Is the priority you place on filling this position of such a nature that we should arrange our schedules within the next 24 hours to allow for a conference call at which time we can go into more detail?” If the client’s response is “no,” ask them “Why not?” . . . If the client is unwilling to meet and/or have an in-depth telephone discussion at the beginning of the process, do not proceed. Think about it. If you can’t get the client to properly respond at this critical point, what leads you to believe they will respond in a timely and appropriate manner later on in the process? . . . This is one of the best approaches to take for identifying their true level of sincerity. (Petra 2015)

The key here is the “action step,” whereby the client agrees to discuss the job order immediately and in detail. A quickly arranged discussion indicates urgency, but it also establishes what headhunters view as the right level of engagement and commitment to dialogue and responsiveness. Starting a search with the right level of urgency or sincerity is critical. But so also are efforts to periodically check urgency, as circumstances can change for the client. Urgency can be strong but then diminish, and experienced headhunters know to assess it often. Barbara Bruno recommends asking a simple question: Has anything changed? When hiring authorities provide you with a requisition, they provide accurate information based on the needs, timing and priorities that exist. However, need and timing can drastically change due to new priorities. Consider the following: the company announces a drastic loss for their last quarter; a key person resigns; projects anticipated are cancelled; an employee refers the perfect candidate; an internal employee applies for the position; additional duties and responsibilities are added to the opportunity. It is for this reason that every conversation you have with either hiring authorities or candidates should start out with “Has anything changed?” (Bruno 2016).

As she notes, check-ins of this sort are equally applicable to candidates, a point we will take up in chapter 3.

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Past and Present Efforts to Fill the Position Headhunters make a significant effort at the outset to put a job order into a short-term historical perspective. What, in short, is the history of the job opening, and what has been done to fill it? In part, answers to these questions help a headhunter assess a client’s urgency. A position, for example, that has been vacant for a long time without much effort on the part of the client to fill it smacks of low urgency. But an assessment of the past and present also helps headhunters qualify the job order. Several issues are key: Why is the position open? How many candidates have been interviewed? How many offers have been extended? Are any candidates—internal or external—currently under consideration? What other sources has the client used, or is currently using or planning to use, to fill the position? Answers to those questions provide essential information. For example, if a position is open because of turnover, a headhunter needs to assess the nature and causes of the turnover. If the position is open because it is a structured, predictable springboard for future opportunities, then headhunters will use that information to entice prospective candidates. Conversely, if turnover is the result of undesirable job or organizational characteristics, or a poor interpersonal working environment, then headhunters become less enthusiastic because recruiting will be a chore. Also, placing a candidate in a bad situation can damage a headhunter’s reputation, and if the candidate departs shortly after arriving, a guarantee period may be invoked whereby the placement fee is refunded or another search will need to be conducted at no additional cost to the client. The number of candidates interviewed can speak to both urgency (if the number is none or few) and the clarity of the selection criteria and the client’s decisiveness (if many have been interviewed). Likewise, if one or more offers have been extended, headhunters must learn whether they are still viable, and if not, why the offers were rejected. Two final issues, however, are the most highly charged for headhunters. Are any candidates currently under consideration? What other sources have been or will be used to fill the position? Answers to those questions are viewed as essential to qualifying a job order. The first is discussed in the following comment:

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C h apte r 2 Is there anyone currently in contention and if so, what is his or her status? An obvious question, and yet many recruiters do not ask it because they make the assumption that the client would not be giving them the order/ search if they were already serious about a candidate. In fact, many times just the opposite is true. The client may be serious about a candidate but prior to a final decision, want to ensure that they’re making the right decision by comparing your candidates with their own. . . . Knowing the status of each candidate currently in contention will allow you to properly allocate your resources in direct proportion to the probability of making the placement. (Petra 2007d)

Internal candidates, in particular, are often seen as favored, especially if they are well along in the selection process. Headhunters facing a strong internal candidate know they will need a knockout external candidate, but even that is typically seen as a long shot. A final issue centers on other efforts, ongoing or planned, to fill the position. Most headhunters believe that companies first try to fill positions on their own. A company’s use of job boards, company websites, LinkedIn, referrals, and so forth is meaningful for headhunters, but they rarely believe those efforts bear significantly on their own ability to make a placement. In contrast, few headhunters invest substantial time and effort in job orders that are already being worked by more than two or three other headhunters. What clients view as “healthy competition” among headhunters is seen by headhunters themselves as “little chance of making a placement.” The involvement of few—or, better, no—other headhunters gives a headhunter an opportunity to really invest in the search because the payoff is more probable. Some argue that candidate quality, not just the investment a headhunter will make, increases when a headhunter has no competitors. First, in a truly exclusive relationship, you can choose to apply the full resources of your organization in an unencumbered fashion to meet your client’s needs. . . . Second, in a truly exclusive relationship, you are the only access point to the client’s opportunity. Properly leveraged, this exclusivity can be a tremendous source of power for you when dealing with low-supply, high-demand candidates and recruits. . . . Here is an example. “(Client’s name), put yourself in the position of a well-qualified individual who receives an unanticipated call from a recruiter. Would you be more or less likely to speak with that recruiter if you knew they were working on an exclusive search for their client thereby providing the security of a closed loop

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communications process?” Most clients will respond “more likely” because they recognize the benefit to the potential recruit in terms of maintaining confidentiality. (Petra 2011)

The comments are also characteristic in that headhunters are adept at twisting an arrangement that looks largely advantageous to the headhunter— less competition—into something that is purportedly good for the client— better candidates. In this case, we believe they are correct.

Job Descriptions: Clear and Viable? A final aspect of the qualification of job orders centers on the job description embedded in the order itself. Generic, vague, or dated job descriptions are looked upon as mere starting points by headhunters for two main reasons. First, they make it hard to know which prospective candidates to target and, equally important, how to stoke interest in the job and company. And second, they make it impossible for headhunters to plausibly claim that they have found “the perfect candidate” because the position is only vaguely defined. For example, headhunters laugh at the idea of trying to excite a client by saying something like this: “I’ve found the perfect candidate—she has a CPA and, get this, five years of experience!” Headhunters cannot sell clients on generic candidates, and clients rarely act quickly or decisively to hire them. Poor job descriptions are thus thought to foster protracted searches and indecision. Headhunters are thus motivated to learn more about the job by working closely with the hiring manager to craft a specific and detailed description of the job, expectations for successful performance, and expected credentials and work history. This is a main reason why they are driven to gain direct access to hiring managers, who are the only ones likely to know the keys to a successful hire. HR departments that require headhunters to work only with them induce too much noise for headhunters to do much more than guess as to which candidates might be desirable. Consider two examples, from the same headhunter, regarding her need to clarify job descriptions, often through relationships with hiring managers: Unless you can create a relationship, it becomes very difficult because you don’t know what you’re working with or looking for. I can give you an example on an airplane. If you were looking for a design engineer, and you

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C h apte r 2 were looking for someone to work on the primary structures, if you will, the fuselage, that’s a whole different person than someone working interiors with cabin, bulkheads, and stuff like that. That may not be in the job description. The other issue too, just to give you another example, is that I see so many jobs where they’re asking for someone to design a part. But they don’t tell you what tool they’re using for the design. Or you’re talking to someone in HR who says “CAD.” Well, CAD just means computer-aided design. It could be many tools. You can’t just walk in off the street with one when they need another. Those are critical terms that, a lot of times, are missing from the job description.

In these cases, what remains unclear from the job description is largely technical and skill-based. Fuselage or interior cabin design? Which CAD software will be used? While HR might not be able to answer those questions, a hiring manager could answer them quickly and easily. But these are not the only things missing from most job descriptions. In addition, there can be a litany of important issues that often go unspoken, but can be probed by a headhunter. Untold hours can be wasted matching candidates to the job description only to find out that the “perfect” candidate in the eyes of the hiring manager may be quite different from the job description. When good old Ernie leaves his job, it’s often a great time to tinker with requirements of the job they vacated. . . . These are usually unspoken desires. They aren’t quantifiable in a written job description and they will vary with each managerial wishful thinker. Since they are often intangibles, they usually aren’t communicated to the HR folks because, in fact, they may even be somewhat discriminatory in nature. Can a short manager tell HR not to send anyone taller? Can a bald manager really hold a subliminal grudge against a well-coiffed candidate? Can a thin manager reject a well-qualified chubby? . . . It becomes mandatory to have a conversation about the real types that will likely be hired. . . . Of course, you can always waste everyone’s time by sending in a “stalking horse” candidate from which to fine-tune the actual wish list. (Hawkinson 2005a)

These comments points to several main concerns. Boilerplate job descriptions are too vague. They also fail to reflect the strong preferences of the hiring manager, who may have had no input whatsoever into the job description. Details from a hiring manager will likely be a mix of job description, “hot button” experiences, skills, or capabilities that would really excite him or her, and desired aspects of what headhunters refer to

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as chemistry and culture (to be discussed in chapter 3). Issues such as being “too tall” or “well-coiffed” are rarely addressed openly, but can be probed indirectly, as headhunters have long held that “likes hire likes.” Our main point here is to note that detailed job order information is strongly desired and often aggressively sought by headhunters. If it cannot be gathered up front, some headhunters will send in a “trial” candidate or “stalking horse” (mentioned in the quote above) who is then used to help refine the job order. But that is, admittedly, the longest of long shots for headhunters, because it requires a frank and extensive post-interview discussion with a hiring manager who has not previously been accessible or particularly forthcoming. Job descriptions, as conventionally constructed and conveyed, are nothing more than starting points for headhunters. If they cannot gain a greater purchase on what the job entails, what will make for success, and what, in particular, is likely to excite the hiring authority enough to make that person pull the trigger and hire, then they invest little in the search. Clarity about a job order is necessary but insufficient, as there are many cases where clarity prompts disengagement. That happens when the job description, and the stated conditions for the hire, are unworkable for any number of reasons. The salary could be too low. Credentials could be excessive or rarely found in the market. The technology or location could be undesirable for the types of workers sought and the proposed salary. An example of this sort of unworkable job order was offered by the following headhunter: I was working with a very small company in the middle of Oklahoma. They want to pay their maintenance manager $50,000, but they want a master’s degree and they won’t pay for relocation. They have to have not only food experience, but also the same product line experience within the food industry. They want five to ten years of experience, nothing below that. Well, there are very few of those people in existence. And the ones that are probably earn $90,000. Those, if they were willing to come, are not going to pay to move on their own. There’s nobody like that in your little town of five hundred people.

Job orders of this sort are commonly deemed unworkable unless some unusual circumstance is present. For example, it is possible, but unlikely, that the headhunter happens to know a maintenance manager, currently working in a Georgia plant, who grew up in Oklahoma. Further imagine

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that the manager has young children and feels the loving pull of grandparents in Oklahoma. Details of this sort can sometimes be gleaned from sources like Facebook and LinkedIn, so they do not hinge entirely on memory or happenstance. Do people with special considerations of this sort occasionally move “back home” even when it entails a loss of earnings or status? Headhunters are quick to say yes, adding that quality-oflife considerations play a substantial role in where people live and work. But knowing or discovering these sorts of mitigating details, and making a match happen, remain unlikely. In this particular case, the headhunter groaned and moved on. As we described it in the previous chapter, headhunting is a sales occupation best understood as a contact sport and a numbers game. Attempts to sell search most often net job orders that headhunters deem unworkable. Although there is variation across specialties, firms, headhunters, and economic conditions, our best estimate is that headhunters fill about one in every six job orders they secure. Typical advice (e.g., Marshall 2011b) is that of fifteen job orders received, between none and one will be “search assignment quality,” which means that they are worth a genuine and fresh effort to identify, vet, and enthuse passive candidates. Of the rest, four or five may be of “matching quality,” which means that a quick search of a headhunter’s existing network and database of candidates is in order (but not a genuine search). The rest are left untouched, as various attributes of the client, the job order, or both render them time-wasting long shots. Why hard-earned opportunities to conduct a search are so often abandoned speaks to what headhunters believe is essential for a viable hiring process. Many factors enter into this calculation, but the single biggest one is good information. They need to know what the job involves, and what mix of experience and skill is sought. But they also need to know what sorts of candidates, with what mix of characteristics, will be a good cultural match to the hiring manager and the company more broadly. And, as we explore in the next chapter, they need to know enough about the job and client to lure passive candidates into the market, keep them engaged and enthusiastic through exhausting and protracted hiring processes, and then close the deal with an offer that is accepted. Information permits and guides all those actions. Without it, headhunters are, in the vivid expression of one, “blind monkeys with a handful of darts.”

3

Constructing Candidates and Securing Placements Sourcing, Qualifying, and Brokering Deals You need something to sell and that is why you need the company information to build a Feature-Advantage-Benefit presentation. What would cause my candidate to leave their job and come to work with your company? What is unique about your company? You must do this in order to place the client company in the most positive light. Remember, your candidate base has to be motivated to consider new career opportunities. —Bob Marshall, “The Phone Rang: Recruiting the Candidate”

Headhunters need to sell search and secure viable clients and job orders. Those activities are, however, just the beginning of a sequence of actions required to produce a placement and its associated fee. To survive if not thrive, a headhunter also needs to identify, vet, entice, and submit a candidate who interviews well, stays enthusiastic, and then receives, accepts, and honors a job offer from the client company. These candidatefocused actions are taken up here as we shift attention from the buyers of labor to the sellers. Headhunters engage in four analytically distinct steps to align a person and a job order, but in practice they often overlap. A first involves sourcing. In this step, a headhunter identifies prospects who might be qualified for and interested in a particular job or the types of jobs the headhunter commonly fills. Sourcing can be targeted to a job order in hand or those anticipated down the line. A second step, qualification, involves contacting

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and investigating prospects to learn about them, their potential fit for the types of positions the headhunter has or anticipates, and their interest in exploring opportunities. A third centers on prepping those who are qualified and interested to interview effectively—to, in other words, put their best foot forward in light of what the headhunter knows about the interview process, the hiring manager, the job, and the company. And a fourth centers on how headhunters broker interactions between candidates and clients to maximize their mutual appeal and to secure placements. At each step, headhunters face headwinds that range from light to gale force. Sourcing can be futile when demand outstrips supply. Outstanding prospects can refuse to consider opportunities. Superbly qualified candidates willing to consider new opportunities can nonetheless fail to present themselves well during interviews. And candidates who receive attractive offers can spurn them, use them to pry a counteroffer from their current employer, or leave shortly after being hired. Importantly, these headwinds are inescapable facts of life that have buffeted headhunters for decades, although some claim they have gained strength recently. What headhunters do in the face of these headwinds points to the conclusion that they construct candidates and secure placements. There is no doubt that many candidates in the labor market are there voluntarily because they have decided to pursue another job and have taken the initiative to do so. Some are in the labor market involuntarily because of job loss. Both groups are dubbed active candidates, or actives, for short. But headhunters often target contented employees, as we described in chapter 1, and convert them into prized passive candidates by developing relationships, sharing news of alluring opportunities, and persuasion. They prepare candidates, active and passive, to interview well. Through those actions, headhunters construct candidates by luring them into the labor market and by shaping their presentations of self. Headhunters also position themselves to broker interactions and negotiations between candidates and clients in an effort to avoid impasses that can diminish interest and scuttle otherwise promising deals. Headhunters are emphatic in saying that placements do not just happen, even when a candidate and client are a perfect match. They are, instead, secured through skillful brokering. The analysis further develops ideas introduced in chapters 1 and 2. In chapter 1, we noted that headhunters are in the turnover business because they respond to and create turnover. In that chapter, the creation of

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turnover was on the client side, and sprang from efforts to entice clients to add employees or replace weaker ones with stronger ones. We extend that analysis by considering how and why headhunters transform one company’s contented employee into another’s new hire. Headhunters work both sides of turnover by fomenting both the demand for labor and its supply. In chapter 2, we explored a few limitations of organizational formalization, pointing to problems with job descriptions and centralized hiring. The efforts of headhunters to identify prospects, qualify them, and then broker deals further underscores how essential it is for them to have direct access to hiring managers. Denying headhunters access to hiring managers may reduce outside distractions for those managers and foster other efficiencies, but it also diminishes what headhunters know and handicaps their efforts to identify, attract, and place top candidates.

Sourcing Prospects: Identifying Potential Candidates Headhunters source prospects using a multitude of methods, often in combination. Some low-tech methods—the telephone and paper files— have been around since modern headhunting first emerged in the 1960s. Others are new and high tech, with some appearing over just the past few years, and invoke buzzwords like “big data” and “analytics.” Without question, sourcing methods have evolved rapidly and represent the single most transformed aspect of the work of headhunters over the past two decades. We begin by highlighting some traditional methods and then move to the newest, most technologically advanced options for sourcing. All headhunters create and maintain databases of prospects. These databases are built by relentless networking, often accumulated over many years. When asked about her main database of contacts, one headhunter put it like this: It’s really the relationships that I’ve built over twenty-two years in this business, in addition to my corporate experience. And I have kept in touch with a lot of those people. . . . It’s word of mouth and reputation, and that’s how I’ve built the business over the years. I get a lot of referrals from my clients, which I’m very thankful for. I also get a lot of referrals from the people I’ve placed as well. If they have a peer that is looking, that needs help, I get it that way.

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Headhunters also receive résumés submitted to their websites, some of which are added to their databases. One headhunter described how she gets “five to ten résumés a week” through her website and uses them mostly to solicit references who then enter the database. A first step in sourcing is thus to ask, “Do I already know someone who might fill a particular job order?” In the past, a question of that sort would be answered by drawing on memory or organized, handwritten notes, both prominent in the mid-1990s when we began to study headhunters. Currently, computers and software, mostly in the form of “applicant tracking systems” (ATS) like Bullhorn (2016) help headhunters to quickly and efficiently mine their databases: By now, the vast majority of us are utilizing some type of automation to keep track of our candidates, job orders, interviews, placements, etc. . . . You have credibility with these people. You have probably talked with most of them in the past. You know their strengths and weaknesses. You know their compensation. You can make an informed decision on the suitability of this candidate for your new job order just by running a search against your database. Most of your placements should come from existing records in your database if you have had one for any appreciable length of time. (Berger 2006)

ATSs permit easy and quick sorting by various dimensions such as skills, compensation, and location. Most include matching algorithms that rank prospects according to factors identified as critical to a job order. In most cases, headhunters first try to match job orders with prospects already in hand because it saves time, effort, and hence money (see also Klehe and de Goede 2012). In addition, for clients in a rush, or in situations where a headhunter faces competition from other headhunters or an internal recruiting effort, a quick match increases the likelihood of a placement. Searching an in-house database combines sourcing and qualification, as some attributes of a prospect will be known. What remains is to refresh that assessment and to determine a prospect’s interest in—and fit with— a particular job order. Catch-up phone calls have long been the primary way headhunters maintain and refresh their databases of prospects. While still common, they are increasingly paired with two other strategies. A first leans on

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e-mail, a strategy frequently promoted in articles with titles like “Increasing Candidate Shelf Life” in the Fordyce Letter (Beabout 2008). These efforts amount to formidable e-mail blasts that include a mix of articles that offer career and interview advice, a newsletter, hyperlinks to Internet sites of professional interest, résumé tune-up tips, and feedback questionnaires on working with a headhunter. The intent, as one headhunter put it, is that “the more love you give your referral network, the more referrals you will receive,” although love now comes in the tender form of an attachment or hyperlink (Edwardes 2013). A second strategy, less about refreshing than augmenting a database, advances a modern imperative: raise your online visibility so that prospects know who you are, seek you out, and respond if contacted. Headhunters create blogs with an employment theme and post articles on their websites, in their newsletters, and on social media. The aim is to build brands, gain referrals, and connect with prospects. As one put it, these online efforts help to frame headhunters as “consultative, knowledgeable career advisers” (Millhouse 2015). There are a number of traditional, low-tech ways to source if a database falls short. One approach is to ask clients for the names of prospects they might already have in mind and for the names of those who might provide solid leads (Petra 2007c). In many cases, one or more employees will know who should be contacted, and those prospects come with the added bonus of being prescreened for fit with the client. A second common tactic, described by the following headhunter, is to e-mail one’s network: I can send them a quick e-mail and say I’m doing a search in your area and I’m looking for X, Y, and Z. Who do you know? And they will shoot me back an e-mail with names. They’re wonderful. These are people that hopefully, one day, I’m going to be able to work with directly, but they don’t— you know, they don’t care. They’re just great networkers. They’re really good at it, and they’re always on their phones.

A third approach makes indirect use of candidates a headhunter has placed. The headhunter calls a candidate’s previous employer and asks for him or her, aiming to be transferred to a replacement who is similar. This last approach merges with the most traditional of all sourcing techniques, namely phone sourcing through cold calls into companies, an

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approach that is still practiced and revered by some headhunters (Rabin 2008; Sharib 2008). The rise of the Internet offers headhunters unprecedented sourcing tools. Job boards, with prominent generalists such as Monster (2016) and CareerBuilder (2016) and literally thousands of sites devoted to occupational and industrial specialties, are online forums for employers and headhunters to post jobs, for those seeking jobs to post résumés, and for the various parties to search for one another. Headhunters make use of both specialist and generalist job boards as sources of candidates, new network contacts, or both. Many also combine job boards with other sourcing tools by first speaking with prospects found on the boards and then requesting to connect with them via LinkedIn. As one headhunter who recommends this strategy puts it, “You can be certain they will accept and now you have online access to their entire network and work history” (Lebovits 2012). That strategy illustrates how headhunters often use sourcing methods in combination and for ulterior reasons, such as sourcing the references of active candidates on job boards and those who submit materials to a headhunter’s website. Some headhunters also use special-purpose software and third-party databases to source. InfoGIST Platinum Recruiter (InfoGIST 2016) is an example of résumé-search software that allows headhunters to scour the Internet for résumés and retrieve, analyze, and score them based on specified criteria. As with job boards and their own websites, headhunters often use résumés gathered from the Internet as stepping-stones to other prospects. Distinct from job boards and résumé-search software, there are several large proprietary databases that headhunters use to source candidates. One is Zoominfo (2016), which currently contains information on about 140 million people and 9.3 million companies. Another is SGA Executive Tracker (2016), which contains information on thousands of public and private companies. These sources of information are costly, but they can dramatically curtail time devoted to sourcing and substantially enlarge the pool of prospects. Headhunters also source through social media such as Twitter, Facebook, and LinkedIn, the professional network that launched in 2003. At present, Twitter and Facebook are used primarily to heighten a headhunter’s visibility or broadcast news about particular opportunities. The Fordyce Letter estimates that 25 percent of headhunters use Facebook and

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Twitter in any capacity for work purposes (Zappe 2013b). That figure pales in comparison to the astonishingly quick and wholehearted embrace of LinkedIn. By 2013—a mere ten years after its launch—more than 90 percent of headhunters used it to source, contact, and evaluate prospects (Zappe 2013c), and a similar percentage reported placing candidates sourced on it (Zappe 2013b). Those figures square with what we learned during interviews. As one headhunter put it, “LinkedIn seems to be the focus in today’s world.” LinkedIn has grown exponentially and now includes over four hundred million member “profiles” that roughly resemble a résumé. While it promotes itself as the “world’s largest professional network,” it accepts job postings, aggregates postings from accessible websites, and earns the majority of its revenue from corporate recruiters and headhunters through its “Talent Solutions” services. In 2014, it purchased a software start-up focused on matching people and jobs, and has subsequently incorporated state-of-the-art automated matching suggestions (Zappe 2014a). Those posting jobs receive news about members who may fit the job; members themselves receive notices of available jobs for which they may be qualified. For headhunters and corporate recruiters, LinkedIn offers advanced search options and ways to contact members who may be prospects. Recruiterfocused search and contact features are an upgrade that most headhunters acquire. We will revisit LinkedIn again in chapter 4, when we discuss in more detail its promise, limitations, and significance for headhunters. Monster’s Connections (Monster 2016) and Dice’s Open Web (Dice 2016) represent today’s pinnacle of high technology and big data for sourcing. Connections and Open Web generate profiles of millions of people by searching the accessible parts of more than 180 (for Open Web) social and professional networks along with the open web. They assemble information about skills and backgrounds—and résumés if they are on Monster or Dice—and create a searchable database of prospect profiles. Thus far, profiles include only those who work in information technology, engineering, and some skilled trades, but the aim is to expand that reach. The profiles are valued by headhunters because they contain “a ton of information you don’t normally get on a resume” (Zappe 2013d) and are seen “as more objective than a LinkedIn profile, which is managed by the individual” (Zappe 2013a). The profiles, however, require a web presence, and are thus more complete for some than others.

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Converting Prospects into Candidates: Qualification, Interest, and Risk Sourcing yields a roster of prospects. Headhunters aim to convert prospects into candidates for a pressing job order or into what amounts to inventory for future job orders. They do this most often in a traditional, low-tech way—they reach out by telephone. Headhunters tend to prefer telephone contacts even when they could easily send an e-mail directly or through a website, such as an InMail through LinkedIn. When e-mail is used, it is followed by a telephone call, as the phone is thought to produce more responses and better information. Initial calls to prospects are carefully crafted, sometimes scripted, and designed to help establish a relationship: After introducing yourself and ensuring the recruit is in a position where they can speak freely, you need to answer this critical question: “Why are you calling me?” . . . [suggested script follows] “My area of specialization is (specialty). Repositioning professionals within this specialization is all that I do, and I do it very well. It’s my understanding that you may match the (function title) profile that, from a career perspective, typically receives the most benefit from my services. Are you open to investing a few minutes with me in order to determine whether or not this could be true for you?” (Petra 2013a)

Calls of this sort can go many ways, as prospects can be receptive to a discussion, eager to know how the headhunter obtained their name, or in some cases hostile, as in “I hate headhunters!” Over the past few decades, however, headhunters have established themselves as familiar players in labor markets (e.g., Elmer 2010). One headhunter we spoke with nearly twenty years ago, and again recently, described that growing familiarity: More candidates understand the value of networking with recruiters as a whole than they used to. Back before computers and social media, we’d have to explain what our role was in the hiring process. Some just didn’t understand it, and they were afraid of it or didn’t appreciate it. That’s not a part of the picture anymore. Today, everybody at even the lowest level knows what a recruiter is and knows the value of talking to a recruiter. And that’s really great.

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Sourcing calls require improvisation and artful dodging, as headhunters rarely reveal how they identified a prospect or the identity of their clients. They seek to answer a deceptively simple question: Can the prospect become a viable candidate? A viable candidate has to clear two bars, one related to human capital and fit, the other to interest, motivation, and risk.

Human Capital and Fit Headhunters learn about a prospect’s human capital and potential fit with hiring managers, coworkers, how work is accomplished, and broader company cultures. At one level, headhunters probe general human capital that indicates the ability to contribute in a variety of ways in typical workplaces. They do this by asking questions about a person’s past and present, soliciting a résumé, and by checking references. Headhunters gather information about traits—like education, technical certifications, and experience—that enhance productivity in most workplaces. At another level, headhunters probe for specific human capital that is valued in only some settings. Examples include experience launching a particular consumer good, knowledge of a technology that has assumed legacy status or is still new and uncommon, or experience redesigning a particular manufacturing process. Being “good at” or having “experience with” specific human capital can be critical in some settings and irrelevant in others. What a client most values in the way of general and specific human capital represents what headhunters call the “hot buttons” that are needed for a prospect to become a viable candidate for a particular job order. Qualifying prospects requires sustained questioning that approaches grilling. When headhunters present what they believe is a viable candidate to a client, they extol the candidate’s virtues, but they also expect to be peppered with questions. The headhunter and the candidate are undermined if responses are poor or if it appears, for whatever reason, that the candidate has not been adequately qualified. A headhunter described his approach to qualification: There’s a lot of fluff in résumés. Our job, as a search firm, is to really drill down and get what’s real. . . . We take the résumé as a talking document, but our real interest is the behavioral interview, digging down deep into the

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C h apte r 3 candidate’s background. Asking those difficult questions, like “If I was sitting here with your boss right now, how would he or she describe your performance?” Really asking those questions and looking at body language, eye contact, looking for those things that might give us a little doubt. Our client is paying us a large fee for us to get to the bottom of those things.

As he elaborated, the headhunter made it clear that the rigor of qualification was the same for active prospects and passives he had wooed extensively. When presented to clients, passive candidates have extra luster, but they require the same scrutiny during qualification. Human capital assessments are one part of prospect qualification. The second is prospect-client fit, which is often explored at three levels: broader company culture; supervising managers; and personality or chemistry. A headhunter who occasionally places candidates in Israeli-owned companies in the United States described the critical nature of cultural fit: The business culture is totally different. Part of the reason I think we’re successful is that we understand that—we don’t try to put somebody in that’s not going to be either successful or have a good chance of being successful. Israelis are a lot more forthright, straightforward, in your face, argue about it, get it on the table, thick-skinned. . . . You can have real problems if you put the wrong person in there.

In some cases, culture is less of a factor than it is in this case. For example, a headhunter who places technicians in food-production facilities noted that if she could find a candidate “willing to work graveyard [shift] for $58,000 a year, it probably doesn’t matter a whole hell of a lot what culture they’re coming from.” Concerns about culture recede when candidates are scarce. Headhunters also explore how a prospect might fit with the hiring manager and coworkers. As with the other forms of prospect-client fit, this requires insights into the client, not just the prospect, as fit stems from one dovetailing with the other. To explore this issue, headhunters ask prospects questions of the following sort: With what type of manager do you work best? Give me some specific examples of this and explain why this works for you. In what manner do you prefer to receive direction from your manager? . . . What actions or

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mannerisms of co-workers and management irritate or frustrate you and how do you handle it? Here we are looking for specific examples of things that really trigger a negative response in the candidate. Although most people can adjust to the minor idiosyncrasies of others, there may be certain actions or mannerisms of others that cannot be tolerated over the long-term. (Petra 2008)

Some headhunters claim that no other factor shapes the success or failure of the employment relationship more than the compatibility of an employee with her immediate supervisor. Issues of this sort, however, are not well captured by what is traditionally understood or conveyed as human capital, either general or specific, and require careful probing to discern. A final level of prospect-client fit centers on personality, or what many headhunters call “chemistry.” In short, is a prospect likely to “get along” or “hit it off” with a hiring manager and his or her future coworkers? Do they share interests, hobbies, recreational pursuits, or backgrounds that might enhance rapport and generate excitement (see also Rivera 2012, 2015)? A pervasive conviction among headhunters is that a strong personality or chemistry fit is critical, as the following headhunter describes: It’s not just the company culture. I think it needs to go further than that— you need to know the hiring manager’s personality. It’s so evident today— people work for people they like, and no hiring manager wants someone working for them that they can’t stand. . . . When you go to work with somebody, you’re marrying them, you know, because you are going to be with them more than you’re with your spouse. You’re going to be with them in very stressful situations and you’ve got to be able to work together and be able to stand it.

Another headhunter noted that “the entire hiring world is based on personality” (McNulty 2010). Headhunters believe that good chemistry can overcome a candidate’s deficits in human capital, but that capability rarely overcomes a lack of chemistry.

Wounds, Sales, and Risk Qualifying prospects is tricky. On the one hand, headhunters must understand well a prospect’s hard and soft skills. They must ask tough questions

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to know if a prospect can become a viable candidate. But since they commonly source passive prospects who have not signaled any interest in changing jobs, headhunters cannot simply demand that prospects walk across the hot coals of qualification. Rather, a sustained sales process that incorporates flattery and wooing must be blended into efforts to qualify prospects. Why, after all, should a prospect consider another job, in general, or a specific position a headhunter is eager to fill? Key to that sales process is the ability of headhunters to probe and identify job-change motivations, what they call “wounds” or “pain points,” which are shortcomings in a prospect’s job that are framed as “problems” that can be solved only by a job change. However, as headhunters sell prospects on a job change, they must also look for, evaluate, and respond to signs of risk. If a prospect engages only halfheartedly, becomes a window shopper who is reluctant to interview, or attracts client interest only to withdraw, a headhunter’s reputation suffers, and a client can become furious. This phase of the candidate-placement process thus involves a delicate and shifting mix of ego-stroking flattery and hard-nosed evaluation, all with an awareness of the need to abandon a prospect if risks seem too high. An exploration of wounds or job-change motivations is an essential step in transforming prospects into candidates. One headhunter put it this way: It is imperative for you to quickly identify with the recruit any and all potential motivations they may have for a possible job change. . . . [A suggested script:] “Perhaps the best way for you to determine if now is the time in your career where you should seriously consider the possibility of a job change is to ask yourself a couple questions most frequently posed by professional career counselors: Are you still being challenged, rewarded and satisfied by your work? Are you still growing, learning and developing as a professional?” Work through these questions very carefully. (Petra 2013b)

Importantly, questions are presented as helpful to the prospect—the sort of questions a “professional career counselor” might pose—and the sales orientation of the headhunter remains veiled. The main goal is to identify one or more ways in which the prospect’s current position falls short. These become the wounds or pain points that a headhunter uses to convert a prospect into a candidate. Wounds that are nonmonetary in

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character, such as quality of life or location, are preferred to those that are purely or largely about money (for reasons we discuss later in the chapter). As academics have claimed, “leaving for money” is among the five most common ways to “bungle” a job change (Groysberg and Abrahams 2010, 138–39). Identifying wounds is a challenge; some say it is “the most difficult part of our job” (O’Shea 2015). Headhunters try to convert worthy prospects into candidates by selling the merits of a particular job. A headhunter’s ability to sell a prospect on a job hinges on information provided by the client. This is why, as we described in chapter 2, headhunters painstakingly qualify job orders and clients and devote themselves to job orders that are detailed and to clients who communicate well. One describes the process of selling a job: You need to FAB the JO [job order], much like you FAB the candidate, so that you can make a scintillating presentation. Here is where you remind the HM [hiring manager] that you are going to attempt to attract potential candidates who are happy, well-appreciated, making good money, and currently working, and you are going to entice them to move for a better opportunity, i.e., the HM’s opening. You need something to sell and that is why you need the company information to build a Feature-Advantage-Benefit presentation. What would cause my candidate to leave their job and come to work with your company? . . . The recruiter must constantly be prepared to answer the prospect’s often non-verbalized question, “What’s in it for me?”—also known by the acronym WIIFM. (Marshall 2011c)

Headhunters believe that a strong FAB-type presentation is necessary to transform prospects—especially passives—into candidates. But necessary does not imply sufficient, and in some cases a general sales approach fails. Headhunters thus tailor their pitch to address wounds by framing the opportunity as a solution to those shortcomings in the prospect’s current position. The candidate is going to base the decision on the extent to which he or she believes that your job opportunity will “fix” the pain points. If you don’t know how they will make their decision (think “pain points”) you won’t be able to hit the target with your “selling points.” Align the pain points with the position. . . . Their commitment depends on them being able to say yes to one key question: Does this position solve the problem I am trying to fix? (Parks 2012).

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It would be difficult to exaggerate the importance of a prospect’s wounds or pain points for headhunters. They are drawn upon during initial presentations of job opportunities, to sustain enthusiasm as candidates interview, and again to deflect counteroffers, as we describe below. It is risky to nudge reluctant, passive candidates to consider opportunities. Reluctant candidates might interview, impress, and withdraw. Others might go so far as to receive but then spurn an offer. Headhunters respond to those possibilities by assessing and acting on evidence of risk when dealing with prospects and candidates. As one headhunter put it, “If I had any concerns whatsoever, that sense that at the very end they may not accept an offer, then I would stop the process.” There are many indicators of risk, most of which involve a form of reluctance: to communicate or return calls; to provide a résumé or other job-related information; to provide references; to reveal if and where they may have sent their résumé or interviewed on their own; to talk about relocation with their family and secure approval; to discuss what they do and do not like about their current position and what they would like to have in a new one; to discuss salary and salary expectations; and to commit to interviews or accept a good offer. Ultimately, risk assessments are only guesses, and headhunters often work with incomplete if not incorrect information. One headhunter expressed a common point of exasperation: “Lies, lies, lies. They’re candidates. They lie!” (O’Shea 2015). This is why articles with titles like “Four Warning Signs You’re Dealing with an Unreliable Candidate” (Gay 2015) have been yearly staples in the Fordyce Letter. Passive candidates entail formidable risks and challenges. It is natural, then, to ask this question: Why struggle to convert contented employees into candidates when unemployed and other active job-seekers are eager to be considered? Headhunters answer that question clearly and consistently: clients prefer passive candidates. One headhunter described that preference in the following way: HR departments are particular. If they can view your résumé on a job board, they think they shouldn’t pay for it. The candidates who are advertising themselves aggressively are just candidates I really don’t get involved with. So, therefore, my presentations to clients really don’t include very many of the active people.

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Others echoed that sentiment: “If a company is going to pay the search fee that we require, then we have to be able to offer them a candidate that they can’t find on their own.” Later in that same discussion, he added that “there is clearly a bias against the active job seeker.” This is not, however, best understood as a constraint thrust upon headhunters by clients. As we described in chapter 1, headhunters often sell search by claiming that they can reach and reveal “hidden candidates” for clients. At least in part, clients demand passives because they have been sold on their value. Individual headhunters thus struggle with risks and challenges that headhunting, as an industry, creates and perpetuates.

Securing Placements: Prepping and Brokering Activities Rookie headhunters view an attractive job opportunity, several highly qualified and interested candidates, and a hiring manager who is both impressed and impressive as a done deal, as money in the bank. Veterans know placements can go off the tracks even when the client and the candidate would otherwise seem to be a perfect match. We focus here on two common practices designed to keep a promising placement on track. First, headhunters routinely “prep” candidates before they interview. This practice is motivated by the belief that otherwise superb candidates might present themselves poorly. Headhunters help candidates to be impressive and to manipulate luck—to, in effect, remove randomness from luck. Second, headhunters try to position themselves between candidates and clients so that they can act as brokers and engage in third-party impression management. Their goal is to enhance the appeal of one party to the other, to minimize conflicts and tensions, and to overcome obstacles that arise. They strive to make magic happen rather than just hoping for magic to happen. Once an offer is extended, headhunters secure the placement by working to ensure that the candidate accepts and honors it.

Candidate Prep: Putting Wood on the Ball Since headhunters are not present during the candidate’s encounter with the client, they have no direct control over what is widely understood to

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be the most critical phase of the placement process. Headhunters deal with a lack of direct control by exerting indirect influence. In short, they coach candidates once an interview with a client has been arranged. For the most part, these actions are aimed at reducing the role of random luck and maximizing the likelihood that their candidate shines. Consider the following headhunter’s observations about candidate performance and preparation: Clients don’t always hire the most qualified candidate for the job. It’s the one who interviews the best. It’s the one who plays the game the best, literally. And like any game, there are techniques and strategies that help you put wood on the ball. . . . A really good candidate doesn’t interview but a handful of times in their life. They don’t make that many job changes. How can you expect to be very good at something that you only do a few times? They need help.

Even top-level candidates are thought to need candidate prep: “I’m amazed by the number of executives who really don’t know how to interview—they don’t know how to talk about their successes or about strategy.” For headhunters, small differences among candidates are often thought to be decisive; trivialities, or what Stevens (2007) called “fine distinctions,” can move a candidate to the front or the back of the hiring queue. As one headhunter put it, “More good, potential placements are lost because of a lack of comprehensive interview preparation than for any other single reason” (Petra 2003a). Candidate prep is a mix of general advice—aimed at helping a candidate to impress most clients—and specific advice—aimed at helping a candidate to impress a particular client. General advice includes a wide range of issues from prudent attire to how to handle sensitive questions. For example, headhunters recommend that candidates search online for information and formulate questions about both the job and the company. That, they say, indicates interest, initiative, and curiosity. It also permits a more informed decision as to whether the job and company would be a good fit. How to handle a salary question is another example of an interactional skill that is useful with many interviewers and companies. In contrast, specific forms of candidate prep focus on the players and position in a more targeted way. For example, knowing that a

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particular hiring manager is passionate about cycling is an insight that might—with the right candidate—make all the difference in generating the chemistry that headhunters believe drives hiring decisions. Consider this story: I once placed a gentleman with a Fortune 500 company because he was a competitive biker. Don’t get me wrong: he was highly qualified for the position for which he was interviewing. He had a great professional track record. But for some reason he wasn’t impressing the interviewer, and he knew it. In desperation, he related a story about his competitiveness as a cyclist, and it resonated with the interviewer. He got the job and gained an important advocate in the company. Why? Because I had mentioned to him in interview prep that the interviewer really enjoyed—you guessed it—cycling. Commonalities sell. (Bartos 2007b)

Headhunters aim to manipulate luck by prepping candidates about chemistry-enhancing commonalities they have with those on the hiring team. Without that insider information, it would indeed be random luck for this candidate to have mentioned cycling. There are, of course, constraints on using commonalities, as a candidate who never graduated from training wheels would be ill advised to pose as a serious cyclist. Commonalities sell, but posing is perilous. A similar logic is used with specific prep for harder, human-capitaltype skills or experiences. If a candidate is in fact quite solid with A, B, C, and D, and the client is especially focused on ensuring a new hire nails C and D, then headhunters will prep a candidate to most fully address her capabilities with respect to C and D. Without that insider information, it is possible that the candidate might spend too much time on A and B in an understandable but nonetheless misguided effort to proportionately present her skills. That approach might leave interviewers with doubts about the candidate’s capabilities with C and D. Without prep from an informed headhunter, a candidate’s choice to emphasize C and D would be random luck. Headhunters walk a fine and precarious line with candidate prep. Impression management can, as they argue, help a candidate to more fully disclose who she is as a person and what she can contribute to the client. But it can also cross a line, creating misleading if not outright false

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impressions. Given that headhunters offer a guarantee after the placement, they remain liable for misplaced candidates and also suffer in the eye of the client. At the conclusion of a discussion of various techniques of candidate prep, a headhunter encouraged restraint: These tips work with candidates who are truly qualified but may be underconfident or rough around the edges. Of course, I would not advise using these techniques to manipulate or boost the confidence of candidates who may not be able to perform after they are hired. We all know how that can end. (Zappe 2014c)

Despite repeated warnings of this sort, the boundaries of impression management remain flexible and ambiguous, and how candidates present themselves during an interview is of course beyond the control of headhunters.

Brokering: Making Placements Happen Headhunters position themselves between clients and candidates in the role of broker. Their aim is to be a third party that each main principal— candidate and client—can talk to and negotiate with as interviews take place, issues and concerns arise, and offers are constructed. By and large, candidates accept the broker role of headhunters, but some clients need to be persuaded to permit headhunters to assume that role. Consider a script one headhunter uses with clients to establish her role as a broker: I know we both get that this is a collaborative effort. Your experience is crucial while evaluating who to interview and in the key component of attracting our candidates to your job. However, mine is focused on the beginning part of the process—the selection—and at the end—the deliverables. If he turns down the offer, I get blamed. I have no problem with that, provided I am allowed to do what I am trained to do. With all due respect, I make, negotiate and finalize more offers in a fiscal quarter than the average hiring manager does in a decade. It’s the very nature of the business. Please let me do what I do best in our collaboration. It will benefit both of us. (Millhouse 2014)

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Brokering activities include, for example, resolving concerns that arise for either party, sustaining candidate interest if clients delay, constructing an acceptable offer, helping a candidate to resign, working to either prevent or fend off a counteroffer, and then ensuring that the candidate stays on the new job at least through the guarantee period. Headhunters face substantial challenges with all of these brokering activities, a few of which we describe here. One common concern is a delay in a client’s hiring process. Candidates, naturally, are eager for a client’s decision, and often press headhunters for news about an interview or its outcome. After talking about the sluggish hiring pace of some of her clients, a headhunter spoke about how she used little lies—fibs—to manage candidates: Do you find that candidates lose interest if the process slows down like that? Well, there are some that do. I feel that’s our job to keep them interested. Sometimes we have to fib a little. We sometimes have to say to candidates, “It’s not because of a lack of interest. It’s just that the client is right in the middle of something and they’re really busy right now. They’re in the middle of a JCAHO survey. This or that. Don’t take it as a lack of interest.” . . . It’s our job to handle that.

Such delays could seem minor, perhaps even trivial. But for a candidate who becomes excited about an opportunity, gets prepped and stoked by the headhunter and then interviews, delays can disappoint and discourage. Headhunters also believe that interviewing unleashes newfound desires in candidates. Once candidates begin to interview, most become active job-seekers who will identify and pursue other opportunities, even if they were initially contented employees who needed to be persuaded to consider an opportunity. As one headhunter put it, “Even passives get active once they start to interview” (Bruno 2006d). Long delays make it difficult for headhunters to keep candidates available for a client: “Many companies are too slow to pull the trigger, which provides candidates with time to investigate other opportunities” (Zappe 2014d). Another example of brokering involves salaries. If presented with a salary range, candidates fixate on the high end, which makes

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negotiations difficult. Headhunters avoid ranges, preferring to remain vague but optimistic, saying things like “my guarantee to you is that I will only send you on opportunities that represent a step up for you” (Bruno 2006a). Most probe to learn a candidate’s “commit number.” That number will prompt an offer’s acceptance; offers below that will be rejected. Figures are expected to shift, as “commit number creep” is common as a candidate becomes more active and starts to interview. Headhunters thus revisit the issue often. Their overall strategy is simple and clear: “Close the client high and the candidate low, so that when an offer is extended it will be accepted with no hesitation” (Bruno 2013b). Headhunters recoil when salary looms as a candidate’s primary wound, and they work diligently to uncover and promote the salience of nonmonetary wounds. Headhunters recognize that job changes can be driven by salary concerns. But for them, some wounds are “better” than others, and they have the most leverage over candidates if wounds involve new professional challenges, quality of life, location, technologies, work products or processes, and other largely nonmonetary matters. Headhunters reason that wounds of that sort can only be “fixed” or “healed” through a job change. Some—and pardon the language—“pound on wounds” to spur passive candidates to consider opportunities and accept an offer if one is extended. Candidates who have only a monetary wound are at high risk of falling for a counteroffer, as a raise is an obvious, quick fix (see also Cappelli 2000, 105). In that case, when money is matched by a counteroffer, a headhunter has no leverage to promote a client’s offer. In contrast, a counteroffer cannot heal a wound involving, say, a relocation to be near aging parents. Headhunters claim that rejected offers and counteroffers are an increasingly common flash point. They represent dramatic failures, as the headhunter has teased the client with a top candidate but is then unable to deliver the goods. If the headhunter collaborated in the offer’s construction, then the situation is especially grave. If there is one commandment hiring managers and recruiters must keep sacred, it is this: NO offer will ever go out without the certainty it will be accepted. There is no way to fall from grace faster in the eyes of your client than to have a few candidates turn down fair offers. It may be one of

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the last recruiting commandments you break with a particular customer. (Bartos 2007a)

One veteran headhunter we interviewed stated that “we have definitely seen an uptick in counteroffers.” Another described how “counteroffers are now rampant—one of out of three offers . . . are resulting in counteroffers” (Risalvato 2014). Nonmonetary wounds are thought to be helpful and necessary to discourage candidates from strongly considering if not accepting a counteroffer. But they are by no means sufficient. Headhunters use two other methods to derail a counteroffer. They first revisit and redouble their efforts to sell the candidate on the new opportunity. As one put it, “Keeping deals closed at the end starts at the beginning by converting boring job descriptions into compelling career opportunities” (Adler 2007). These are the Feature-Advantage-Benefit presentations—the FABs—described earlier that are collaboratively constructed by the headhunter and the client. FABs are used first to convert prospects into candidates, and then candidates into placements. If that approach fails, then headhunters resort to a scare tactic. In short, they argue that candidates have essentially forced their employer’s hand and have forever tainted their standing in the company. They recount tales of careers and lives ruined by counteroffers. One headhunter stated that “if a person takes a counteroffer, typically we’ll hear from them six months to a year later, saying, ‘Wow, I shouldn’t have stayed.” Articles about the dismal fates of those who accept counteroffers circulate among headhunters, and are shared with candidates, with titles like “Counteroffer Acceptance: Road to Career Ruin” (obtained as a copy from a headhunter; also mentioned in Petra 2013c). For headhunters, this is a last-ditch effort, a Hail Mary pass. Falloffs and buybacks represent failures similar to a counteroffer, but are more vexing for headhunters to manage. In both, the offer is accepted, the candidate placed, and work begins with the client company. Falloffs occur when the new hire quits to take a job at another employer; buybacks occur when a late-arriving counteroffer from the previous employer lures the candidate back. Given the guarantee periods headhunters offer clients, they often remain on the hook when these events occur, and are seen as having been derelict in their choice of candidates and brokering

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efforts. They might be obliged to begin and complete another search without any additional compensation. Alternatively, they might be required to refund the placement fee. A headhunter we re-interviewed recently after a twenty-year hiatus described falloffs in this way: People go to work somewhere. They had an expectation that they were going to be treated special because they were being treated special by the recruiter. All of a sudden, now they’re there and feel they’re not being treated that well. Or they were supposed to get three weeks of vacation because that’s what they were getting at their old company, but somehow that fell through the cracks. It’s not their fault. Those are the kinds of ripples that happen all the time. We have to keep those things from turning into falloffs.

Unlike falloffs, buybacks were not a problem for headhunters two decades ago, emerging only over the past decade. A headhunter describes buybacks and why they occur: There’s a new type of counter-offer emerging. We call it the 30-day counteroffer or “buy back.” This type of counter-offer occurs within the first 30 days on the new job. It goes something like this: Your new hire just started and is learning the ropes, i.e., adjusting to the culture, diving headfirst into the job and proving that hiring them was the right decision. During these early days, many new hires feel overwhelmed and develop a sense of “buyer’s remorse.” Former employers know this and many view it as an opportunity for a possible buy back. (Peterson 2006)

Previous employers might encounter difficulties filling the position, hire someone who does not work out, or otherwise realize the value of the former employee. For the new hire, early experiences might disappoint relative to lofty expectations regarding the job, coworkers, boss, and company. Passives, in particular, are made to feel special during the recruitment process, and are unusually disposed to develop unrealistic expectations. For both actives and passives, the honeymoon period of jobchanging excitement comes and goes. What this means for headhunters is clear, and emphatically stated by a veteran: “Your job does not end when you make the placement!” (Bruno 2006b). She recently elaborated on that imperative:

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The past employer also knows your candidate better than you do. They know just what buttons to push to entice them to return to the company. The only way to counter this is to have an extremely strong follow-up process after you place someone in a job. You need to contact them on a regular basis to make sure they are happy and not being wooed by their past employer. It is also important to discuss this trend with their new employer. They need to be aware of the fact that when they hire top talent, there is tremendous competition for this individual. (Bruno 2013a)

Falloffs and buybacks exasperate headhunters because they are held responsible for events that occur on the client’s watch. They can also sully a headhunter’s reputation, as candidates who experience a falloff or buyback are unlikely to laud their headhunter-facilitated job change. They might also blame the headhunter for creating a bad situation. Not surprisingly, headhunters view “onboarding” and “employee engagement” as the client’s job. Once a candidate starts the new job, headhunters are in a very weak position, as they have little to no leverage to exert. Talk of wounds and FABing the new position fall on deaf ears; the candidate has now experienced the boss, job, and company, and is unlikely to be swayed by words. In response, headhunters implore hiring managers to do what they can while also dusting off the lastditch scare tactic used for counteroffers. For headhunters, this is a grim situation and a likely trifecta of losses: candidate, client, and fee. One headhunter put it well: “It’s never a good thing when somebody doesn’t work out.” Headhunters thus construct candidates and secure placements. As they construct candidates, they often skip past those who are actively seeking employment, favoring instead the passive candidates they believe excite hiring managers and elicit offers. Cultural-matching processes play a key role (Neckerman and Kirschenman 1991; Lamont 1992; Bills 1999; Rivera 2012, 2015), but at least some aspects of culture can be manipulated or staged in ways previously unrecognized. The identification and probing of small discontents is also pivotal, as they are then magnified and manipulated to the point where passives conclude that new opportunities should—and perhaps must—be explored. In this way, job satisfaction, which most theories of turnover view as a cause of search activities (e.g., Steel and Lounsbury 2009), may at times be more endogenous

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than exogenous to the search process. The extensive brokering efforts of headhunters suggest that cultural matching and, especially, the emotional aspects of hiring (Rivera 2015) do not stop with a decision to hire. For headhunters, the negotiations and offers that follow a hiring decision are minefields. Placements are secured through skillful and persistent brokering.

4

Evolution or Revolution? Information Technology and Social Media

Do I think our world has changed a great deal because of LinkedIn? Absolutely! It’s been the biggest recruiting tool that I’ve ever seen. It changed us—completely. But at the end of the day, it’s still not about LinkedIn. It’s about people and relationships that are augmented through IT. —a Southern City headhunter

In previous chapters, we introduced several ways information technology (by which we mean the electronic processing and transferring of information) and social media (by which we mean things like LinkedIn, Facebook, and Twitter) have entered the world of headhunting. In those chapters, our aim was to present an overview of the general practices of headhunting and to link those practices to several broader conceptual and theoretical issues. We have not yet focused squarely on the technology itself or described in much detail how, when, and to what end headhunters use it. Given the prominent role that technology plays in headhunting, and the strong possibility that it shapes behavior at the level of individual headhunters—and quite possibly the prospects of the entire industry—in both anticipated and unanticipated ways, we focus this entire chapter on those matters. More details also help to develop two strands of theorizing, a first centered on classic notions of information and search, a second on the problems of electronically formalizing and centralizing portions of

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hiring routines. Both were introduced in the introduction, developed in subsequent chapters, and will be woven into the analysis here. The chapter has three main sections. We begin by drawing out the most widespread and important ways electronic technologies—a simple expression to refer to both information technology and social media— have touched and transformed headhunting. A first is the pervasive use of e-mail to communicate with prospective or actual clients and candidates, a matter that might at first seem like a mundane shift away from telephone calls and the postal service. Headhunters, however, argue that it is consequential, and there are good reasons to suspect they may be correct. A second is the rather stunning embrace of electronic technologies, and especially LinkedIn, to source prospects. We describe that sourcing in some detail, illustrate its remarkable potential, and note problems it poses for headhunters. At this point, there is no doubt that headhunters have lost their unique ability to unearth prospects that in the recent past would have been deemed “hidden” candidates. The second section of the chapter explores how electronic technologies have yet to dramatically enter or alter the ways headhunters turn prospects into candidates and then candidates into placements. How headhunters understand and respond to these limitations suggests that electronic technologies are largely used for extensive search, the identification of prospects, but not for intensive search, where prospects are encountered and explored to learn if they can become viable candidates (Rees 1966). The rise of matching technologies embedded in LinkedIn and Elevated Careers, a job-focused spinoff of the online dating giant eHarmony, reflects the allure of algorithmic approaches to matching people and jobs. Headhunters argue that such algorithms are, at best, crude tools, and their arguments point to the main challenges those efforts face. A third and final section explores efforts to formalize, through electronic technologies, contacts between headhunters and clients. Two manifestations of formalization are considered. A first is the widespread adoption, especially among larger companies, of electronic portals through which employment-related materials must flow (e.g., Marler and Fisher 2013; Robb 2013; Stone et al. 2013; Stone et al. 2015). Intended to streamline and control a human-resource function, the portals produce sighs of exasperation from headhunters, and point to unintended consequences that may negate their advantages. A second, introduced briefly in chapter 1,

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is the emergence of electronic marketplaces where companies post job orders and headhunters affiliated with the marketplace vie for the opportunity to present candidates and make placements. Illustrated well by two key players, BountyJobs and Scout, these marketplaces offer a disruptive technology that challenges traditional headhunting practices, in particular forms of client development and control. How headhunters view these electronic marketplaces sheds light on a new contested terrain as well as the promise and problems of formalization. Their experiences with electronic portals and marketplaces point to an “irrationality of rationality,” in the conceptual language of Ritzer (2010, 2013).

Electronic Revolutions: Talk, E-mail, and Sourcing Technologies Headhunters have traditionally been loquacious. They talked on the phone, one-on-one, and in various professional networking groups as much and as often as they could. Networks built by talk, and smooth talk polished by practice, were the foundation of headhunting, as that is how job orders were secured and candidates were placed. One veteran headhunter described how, during his first few days as a rookie, his manager slapped a list of MPCs and one hundred companies on his desk. He was told that he would call to present the candidates the following day. He was also informed that he would be fired if he did not work his way through the entire list. Years later, he mulled that encounter and practice: I was in shock. . . . I didn’t realize it at the time, but getting on that telephone and making hundreds of calls and, yes, fumbling around, is the only way to learn this business. There is no other way to succeed. As difficult as it was for me to accept, success only comes from putting my words into the ears (note: “ears” not “eyes” as with email or written material such as resumes) of people who can hire someone, and also authorize payment of a significant amount of money. As my manager told me at the end of a frustrating day of plowing through my 100 calls: “If I could take an IV with 10,000 calls in it and inject it into your arm, you would understand.” . . . Today, I believe nothing has changed regarding the telephone and our business. Cold calling and call volume remain the staples of this business, and it’s a misguided belief that that has changed. (McNulty 2008)

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Calls and call volume built productive capacity and also served to indicate a good day’s work. Fumbling around was expected. Those who failed to master smooth talk and rebuttals, or who could not handle the stress of cold calls and the inevitable rejections they elicit, simply quit. Talkers persevered and perpetuated a talk-centric occupational culture. E-mail and electronic sourcing technologies have ushered in a new era, although one that is hotly contested by many veterans, as suggested by the last sentence of the previous quotation. As we noted in our fieldwork twenty years ago, the offices of headhunters were commonly filled with voices, a jarring cacophony for academics more accustomed to calming silence. One headhunter, whom we re-interviewed after a twenty-year hiatus, spoke about phones and the loss of talk in a wistful way: When I was doing this when you and I talked twenty years ago, I was on the phone all day long. I’m not on the phone much now at all, you know? Quite frankly, it’s not as much fun. I enjoy really talking to people and learning about them and getting referrals and making phone calls. But now it’s all electronic—that’s the biggest change.

Another veteran, also re-interviewed in the same way, was less wistful and more appreciative of the efficiencies of e-mail. I really have to use e-mail in order to get conversations going, move things along, or exchange information. . . . So today, where we sit, on any given day I make, whatever the number is, twenty-five or thirty contacts with people. Back in the day, when you and I first talked, that meant thirty phone conversations. If I got to thirty people in a day, it was thirty phone conversations. That was challenging. Now, I can do a lot more in a shorter period of time. I can communicate with more people because I send an e-mail out and get a response. . . . That’s every bit as good as a live phone call.

Today, the offices of headhunters have a decibel reading more akin to a library than the lively pits of commodity trading in years past. But electronic trading has silenced those pits as well. The single most prominent cause of the new silence and reliance on e-mail is the rise of electronic approaches to sourcing prospects. Networks built by talk—by phone sourcing into companies and by pressing network contacts by phone for referrals—have given way to those built by

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keystrokes. And those networks are not so much built and sustained by headhunters, in a largely in-house, proprietary way, as they are hosted by profit-seeking companies and then tapped and exploited by headhunters. As one veteran recruiter in health care put it, LinkedIn is not something that gives someone a sustainable competitive advantage. It’s available to everybody! It would be like saying, “Everyone has the telephone book.” So it’s just a matter of who chooses to look up in the telephone book and how they look it up. Everybody has it at this point.

Despite that lack of control or exclusive access, electronic technologies for sourcing now dominate practice. As one headhunter put it, when asked to ballpark her use of the various methods of sourcing, “I’d say 5 percent referrals, 15 percent direct [by which she means prospects identified via traditional phone sourcing], and 80 percent online. That could be through LinkedIn, Twitter, and CareerBuilder, any of those.” We will focus our discussion and examples on LinkedIn, by far the most commonly used electronic sourcing technology. Headhunters source prospects on LinkedIn in three ways, all with remarkable success. A first can be called the connection approach. Headhunters strive to have well-polished profiles on LinkedIn, with many connections, endorsements, and recommendations. On occasion, a connection quickly becomes a candidate. Consider the following account, told by a headhunter who places those who sell software to businesses: I had a guy connect with me yesterday on LinkedIn. When I accepted, I then looked at his profile. He’s perfect for two jobs that I have. I e-mailed him and said, “Hey, if you’re interested in a career change, give me a call and shoot me a copy of your résumé.” So he did. I’ve got him set up for an interview tomorrow and probably will set him up with another one for a Fortune 100 company next week.

Three aspects of this example are important. First, the connection was surely driven by the candidate’s interest in the headhunter’s LinkedIn profile. This was not an affinity connection, as in having graduated from the same college, but rather an instrumental one. The prevalence of accounts of this sort suggests that passives on LinkedIn rub shoulders with a substantial number of actives. Second, profiles on LinkedIn can be sufficiently

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detailed to allow headhunters to do at least an initial qualification to determine if a person might have what it takes to be a candidate for a particular job. And third, profile information on LinkedIn is rarely sufficient, which means that headhunters still have work to do. They need to probe motivations, obtain a résumé, and have a phone conversation to vet the prospect. LinkedIn starts the conversation, but it is just that—a start. We expand on that idea in the next section of the chapter. A second common way in which headhunters source on LinkedIn involves searching on attributes of member profiles to identify prospects. We call this the search approach. LinkedIn’s search capacity increases substantially with paid subscriptions, not the free access familiar to most members of the network. Searches require familiarity with Boolean logic and a penchant for tinkering. One headhunter described a highly specialized LinkedIn search that probably could not have been accomplished, let alone quickly, through traditional networks or phone sourcing. One of my clients is an international media company that has a very strong reputation in certain religious circles. They hired us to help them find a senior producer in a major U.S. city. They’re doing a new news program, and they want someone to produce the show. Here’s the caveat: not only do they have to be experienced working with news programs, but they have to also share this particular faith background. . . . That’s almost impossible to search for! Legally, I can’t just get on the phone and say, “Are you blank?” What I did with LinkedIn, I went to the city and found all of the people who had the news background I sought. That got me three hundred–plus candidates. Then I came up with keywords from this particular religion. I used four of them that I found. I put them in the keywords section and screened the three hundred against those keywords. I came up with seven people. Of the seven, I reached out to six of them. One of them got back to me, and she is perfect for the role. . . . She’s interviewing today at three o’clock.

Asked if this was a “rare example” of the use of LinkedIn, the headhunter replied by saying that “it’s an outstanding example of something that can happen every day.” The three cornerstones of the search—location, a background in news-program production, and a religious affiliation— would have taxed the very best in-house databases. Phone sourcing, as he notes, would have been impossible. LinkedIn provided the initial roster of prospects and the analytical capacity to extract potentially viable ones in

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a matter of minutes, not days or weeks. Another example, more typical, is from a headhunter who places managers in wireless technology: I have a client . . . in central New Jersey. They are in the mobile device management space . . . a software platform that carriers buy to help them manage the devices on their network. . . . They broke the company up into three divisions. They’ll have a separate carrier division now and will need a VP, either a senior director of marketing or project management, for that division. They want the person to reside at headquarters, which is Edison, New Jersey. And they don’t want to move somebody. We’re in a world now where, “We don’t really want to pay relocation!” . . . All of a sudden, it becomes within thirty-five, forty, fifty miles of Edison, New Jersey. . . . That’s not something I do every day! But I can go onto LinkedIn and build a keyword search. . . . I probably did six different searches different ways, using different keywords. . . . I don’t know that there’s been a day in the last year, or however many years, where I haven’t done at least one LinkedIn search!

In this case, the primary issue was location, which represented a significant constraint and challenge. The headhunter used his in-house database along with LinkedIn to develop a roster of prospects that he subsequently qualified by phone. Prior to the use of LinkedIn, a search of this sort would have required numerous cold calls into relevant companies in the vicinity of the client. In contrast, the speed and efficiency of LinkedIn are astounding. A final way headhunters use LinkedIn mixes phone and electronic sourcing. In this approach, those on LinkedIn are viewed primarily as new network resources, not as prospects. We call this the network approach. A manager whose firm places accountants, broadly defined, described this approach: We were looking for a SAP [inter-enterprise software] specialist. My recruiters went and looked on LinkedIn SAP groups. From the SAP groups, they started to create a list of individuals who had the qualifications that we were looking for in the role that we were recruiting for. Then, through networking with them, we were able to get recommendations that led us directly to a candidate that was the right fit. . . . LinkedIn gives you that ability to find that person effectively and then make a phone call that then leads to that recommendation. Again, rarely do we find the person directly on LinkedIn that is the right person. It’s the next step we take that does that. LinkedIn

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By using information gleaned from the SAP interest group on LinkedIn, the headhunters were able to network their way to referrals who became prospects. What is notable here is the value of combining new and traditional approaches to sourcing, where neither alone suffices. Talk, e-mail, and electronic sourcing technologies easily coexist in the work of headhunters. Although electronic sourcing is commonplace, and many placements are made through it, there is also a strong undercurrent of concern. The rampant use of e-mail generates similar worries. Two main issues underlie these concerns. First, increasing reliance on electronic sourcing means a lesser role for the in-house database of network-derived “hidden” prospects that for years has been a main rationale for headhunting. Outsiders to the headhunting industry, with different interests and agendas, manage, sustain, and grant access to electronic networks, all of which foster a sense of vulnerability. LinkedIn, for example, aggressively markets recruiter subscriptions to companies, and has claimed it can “eliminate third-party staffing spend” and “reduce time to hire for hard to find niche talent and increase overall quality of hires by tapping into passive candidates” (Hale 2011). Headhunters strongly dispute those claims (for reasons we will discuss in the next section), but they nonetheless face the undeniable fact that their industry has become reliant on outside resources and that access to hundreds of millions of “hidden” candidates is now keystrokes away for companies. A second source of consternation stems from weakened relationships and a decline in phone and face-to-face communication due to the rise of e-mail and electronic sourcing. Some interpret this as a generational divide, with the old guard gripping their phones and clinging to relationships while newcomers revel in the ease and efficiency of keystrokes. But there is more to it than that. Consider a plea for voice contact from a member of the old guard (Bruno 2012): Recruiting has been, is, and always will be a relationship building business. It’s difficult to build a relationship communicating only by email, text, or IM. I believe you have to use all means of communication, but I also believe every third contact should be a telephone conversation! In this competitive market you want to elevate your client relationship from

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“one of many vendors” to the status of “trusted advisor.” Clients will give more business to individuals they trust and like. The more you allow clients to talk about themselves, discuss their challenges, or complain—the more they will like you! You can pick up buying signs or issues during a phone conversation that you can’t in an email. . . . Some of you may think it’s old-fashioned to pick up the phone and have a conversation, but I’m telling you it’s the most effective way to consistently hit your production and income goals!

The idea that relationships foster business is hardly new or contested. Nor is the idea that we “trust and like” people more if we have opportunities to talk about ourselves, our challenges, or complain. Some push these ideas and argue more formally that “with its ability to add context through tonal subtleties plus the ability to glean feedback in real time,” voice communication has strong advantages over e-mail and texts (Marshall 2011a; see also Byron 2008; Menchik and Tian 2008; and Turkle 2015). Others add that it is possible to learn and accomplish much more through a phone call than an e-mail, and argue that point passionately in articles with titles like “What You Can Learn by Phoning That You’ll Never Know from LinkedIn” (Sharib 2014) and “Trump InMail by Going Old School: Use the Phone” (Savage 2015).

Electronic Evolutions: Qualifying Candidates, Matching, and Brokering Placements The use of electronic technologies falls off once the focus shifts from sourcing to qualifying, piquing prospect interest, prepping candidates, and brokering placements. No doubt, fully completed LinkedIn profiles provide information that approximates a résumé, and headhunters definitely use that information to make rough assessments of a prospect’s viability as a candidate. But profiles need to be explored and verified, often through phone calls with the prospect and her references. Even then, the information in hand is mostly relevant to harder skills, not soft skills, chemistry, or fit. A prospect’s interest in a job change, and the wounds that might prompt and sustain that interest, need to be identified. And as we discussed in chapter 3, headhunters engage as brokers to nurture and facilitate matches by preparing candidates for interviews, managing conflicts or

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concerns that emerge, negotiating offers, and then thwarting counteroffers, falloffs, and buybacks. In our discussion here, we draw out the various ways headhunters believe electronic technologies currently fall short, and conclude with a few observations about the development of matching technologies. Consider first the matter of qualifying prospects. Does a prospect have what it takes to be a viable candidate for a particular job—or, more generally, for the types of positions a headhunter handles? Can that assessment be done via one or more electronic technologies? The following is a typical response when we posed that question to headhunters: So the use of LinkedIn gives you a roster of prospects that you then have to qualify in what sounds like a fairly low-tech way by talking with them. Is that right? Correct. Absolutely. Is there any information technology that helps with qualifying prospects? Not that I know of. It’s just that there’s nothing, for me, that has what I need about a person. You get a sense of so many more things by talking than some kind of questionnaire or some type of Internet tool or something like that might do.

The main issue for this headhunter is incomplete information, and how a conversation with the prospect permits a “sense of so many more things” that bear on qualification. Another headhunter noted how prospects identified by electronic technologies are “unknowns” in ways that differ from those surfaced through personal networks: LinkedIn sounds like a powerful tool for prospect identification. Do you also use it to qualify prospects? Well, we’re the qualifiers! . . . Now, when you are talking to industry people that you know and they give you referrals, those are strong referrals. When you do LinkedIn, you have no clue, obviously, so then you’ve got to go backdoor and try to assess what you find. . . . I can go back to my database, do some searches. I can probably come up with somebody that was the person’s boss or whatever. The person may give me references, but you know how it is. If someone gives you a reference, it can be a setup. I’d rather go backdoor quietly and find out what I need to know about that person.

These comments point to the two main limitations of electronic qualification: it is skimpy, at best, and untrustworthy, at worst. Headhunters

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overcome each through talk with prospects and trusted members of a personal network. Assessments of softer skills, and fit with cultures that vary across workplaces and parts of the country, are also thought to be difficult to accomplish with electronic technologies. Recall from chapter 3 the importance that headhunters place on fit and chemistry. One headhunter described at some length how a sense of fit and chemistry are “things that you can’t get from technology”: It cannot properly vet a candidate. . . . It’s not going to tell us, especially in health care, whether these people have real compassion for helping others. Do they really have good, strong leadership skills? Do they have the ability to process tough questions? It’s just things that you can’t get from technology. Can they use proper English, “Standard English,” as I call it? If I’ve got a client in Manhattan, I’ve got to be careful who I’ll send there. You’re not going to find that from a piece of paper or something online. There is a difference—expectations, cultural differences, and I’m not talking about diversity and all that, just a client and a manager who works totally different than a little hospital I’m working with in Dubuque, Iowa. You can’t get that from paper. . . . I think technology plays a big role. It’s going to have a big role going forward. It’s not going to eliminate the need for us to have some touch with our candidates on behalf of our clients.

Electronic technologies, in this view, can determine if a candidate meets requirements in terms of license, background, degrees, and experience, but falls short on fit and chemistry. As one headhunter put it, “We can get algorithms that pull out candidates with just the right technical skills—but if we’re hiring just around that, then we’re missing culture.” Other dimensions of qualification cannot be explored easily, if at all, with electronic technologies. Is a prospect interested in a job change, now or possibly down the line? Would he be interested in a particular job a headhunter is trying to fill? What if that job is in Dahlonega, Georgia? And what if the necessary start date for that job would require a move during a school year? For headhunters, these are central questions, but they are also seen as things they can both discern and shape through skilled talk and a compelling sale, none of which can be accomplished with electronic technologies. As one veteran headhunter put it, In the history of contingency search, it’s never been easier to get a name. But it’s never been harder to obtain a candidate. I can get the names of guys in

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jobs easily. But turning that into a candidate who is both qualified and interested in an open opportunity, that’s a different deal. That’s what I get paid for. I don’t get paid for identifying who’s the controller in a hospital in, I don’t know, Dublin, Georgia. If I get that controller in Dublin to move to Dahlonega, then that’s what you pay me for. . . . Technology like LinkedIn gets you into the neighborhood of whether or not they’re qualified. It has no bearing whatsoever on whether or not they would be interested. It’s a zero indicator of whether or not they’re compatible with the company’s corporate culture.

Another headhunter said that having “a LinkedIn profile is just sort of something you do now,” which means that a roster of prospects sourced from LinkedIn must still be converted into candidates. In many ways, headhunting is increasingly less about hunting heads than it is about converting prospects into candidates. Another described those activities: Even though technology has accelerated us, and has made us more efficient, I think that you still have to have human interaction: the ability to really describe the role, get the candidate excited, and then help them get to the place where they say, “Yes, I will meet with your client.”

Phone exchanges play a critical role in creating interest in a job change and in a particular opportunity. Savage (2015) summed up the role of technology in a wonderfully poignant and apt two-sentence expression: “Technology identifies. Human beings recruit.” Electronic technologies recede even further after one or more candidates emerge from a roster of prospects. This is the point at which prepping, debriefings after interviews, and then negotiating offers, helping with resignations, and minimizing the threat of counteroffers, falloffs, and buybacks are all at center stage. As we described them in chapter 3, none of those activities lean heavily, if at all, on electronic technologies. Headhunters do indeed encourage candidates to aggressively scour client websites, to study the LinkedIn profiles of managers, and to Google with abandon. But they also learn and share information that cannot be gleaned in that way, a practice described by the following headhunter: We brief our candidates before they interview with our clients. That briefing is insights that are not available on websites, or LinkedIn, or other places.

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It’s, “Listen—let me tell you about John Smith. John has a great personality. He’s very outgoing. He loves talking about family and sports. He went to the University of Georgia. He’s really, really interested in leadership. His favorite author is Patrick Lencioni.” These are things that I learn from my relationship-building with John that are not available on LinkedIn. . . . We tell a candidate what we know about them to give them an advantage. Then we also challenge the candidate: “You go do your homework—LinkedIn, Google, you look at the company website.” I want them to get familiar with the company. But I’m going to give the intangible information that is hard to find that will really help them. I’ll also point out, because I don’t think it’s always intuitive, “Listen, Mike, you have been very clear with me that you need work-life balance. Well, the good news is John, the guy you’re interviewing with, believes in that as well.” That’s not available anywhere else— he can only learn that from me.

A hallmark of contemporary candidate prep is a combination of insights gleaned through electronic technology and old-fashioned familiarity and social interaction. The scale tips, however, decidedly in the direction of familiarity and interaction. Outside of e-mail, electronic technologies play no role whatsoever once prepped candidates head out for interviews. Even e-mail is rarely used for delicate issues like debriefing after interviews and offer negotiations. Headhunters thus reject the idea that electronic technologies do more than facilitate the creation of a roster of prospects. At least on the surface, that conclusion would appear to be under siege from “big data” job-person matching technologies, best exemplified by LinkedIn and Elevated Careers (2016), a job-focused website that debuted in April 2016. LinkedIn’s massive bank of résumé-like profiles, its entry into job aggregation, and the development of sophisticated analysis and matching algorithms mean that its capacities for candidate qualification will improve as it offers suggested matches and analyzes responses and outcomes. Anyone who has ever bought a “recommended” book or other item online, for example, knows that matching algorithms are becoming commonplace and meet with at least some success (Lu et al. 2015; Yu et al. 2016). As one headhunter quoted earlier said, “Technology like LinkedIn gets you into the neighborhood of whether or not they’re qualified.” Refinements will surely get LinkedIn deeper into that neighborhood, but the present and likely future success of that technology remains unclear.

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The logic of Elevated Careers is a twist on matching logic used to run the online dating website eHarmony, which developed and operates Elevated Careers. The site aims to match job seekers with jobs based on three types of compatibility: skills, by which it means hard skills or traditional human capital; culture, by which it means things like work-life balance, goal orientations, innovation, and social responsibility; and personality, by which it means fit between the job seeker and hiring managers. The goal is to produce a “compatibility scorecard” that is used to assess fit with a job seeker’s current company and with job listings on the website. On the job-seeker side, skills are assessed through an uploaded résumé; culture and personality are assessed through seventy-five survey questions. Jobs are assessed through information provided by job seekers, not companies, and much of this data is imputed (Raphael 2015). Compared to the rather wooden and limited matching systems that have been described in the academic literature (e.g., the RésuMatcher detailed in Guo, Alamudun, and Hammond 2016), this is an extraordinarily complex undertaking. For headhunters, these matching technologies—both LinkedIn and Elevated Careers—are substantially if not fatally flawed. In both cases, information about the viability of a job-person match is scant. Information about job seeker preferences in Elevated Careers is headed in the right direction, but it is static, whereas headhunters always presume people are in a state of change if not flux. The employer side—especially information on individual hiring managers—is largely absent or inferred from broader data (Raphael 2015). Bigger problems, however, are suggested by a veteran headhunter: What we’re talking about is a feel. We’re emotional creatures. Until we get to where a machine can have the same kind of human emotions, it’s just not going to happen. And it’s also timing and change. What’s important to me today, next week things can be completely different. That constant radar has got to be on. Somebody has got to be there that understands and can connect the dots. There’s just way too many variables associated with it.

The comment points to “way too many variables.” It also highlights the role of emotions, of feelings about jobs, lives, and making a job change, that are difficult to specify analytically and measure empirically. The role of change is noted, as what matters this week might not matter next week. Unmentioned

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is the strong likelihood of moderators, where the presence or degree of one factor alters the roles played by others. In sum, matching algorithms need to contend with many variables that are poorly measured (if measured at all), change values often and unpredictably, and combine in complex ways. Our strong hunch is that such approaches will not surpass anytime soon the ability of an experienced headhunter to “connect the dots.”

Electronically Formalizing the Hiring Process: Portals and Marketplaces Two of the most striking and meaningful technological developments in headhunting over the past two decades center on the way headhunters interact with clients. The first is the increasing adoption, especially by large companies, of electronic portals into which candidate information is entered. The second, more recent, is the rise of electronic marketplaces, introduced in chapter 1, where clients and headhunters meet and do business. Both attempt to centralize and rationalize encounters between companies and the headhunters who serve them. As headhunters describe these technologies, it is clear that they impede their efforts, thereby revealing unintended consequences. They illustrate what Ritzer (2010, 2013) conceptualizes as the “irrationality of rationality,” where some efforts to enhance rationality instead spawn irrationality.

Electronic Portals for Human Resources Electronic portals for job candidates appear sensible. A portal creates one pathway into a company, as opposed to many hiring managers receiving paper or electronic materials. A portal standardizes information fields, provides a date and time stamp, stores materials, and facilitates retrieval and review (Zielinski 2015; Robb 2013). In some cases, the portals also score and sort applicants according to criteria entered by human resources staff. As Lawler and Boudreau (2015, 12) put it, this type of e-HRM allows companies to “simplify and speed up” job posting and placement processes. Headhunters, however, see two main problems that diminish efficiency and efficacy: ownership issues and increasing distance between themselves and hiring managers.

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The portals prompt what headhunters describe as vexing ownership issues. Who “owns” a candidate is an odd but important issue. Traditionally, ownership disputes arose when two or more headhunters worked a job order. In that case, the first to submit a candidate owned that candidate for a fixed duration, often six months. If the candidate was hired, the headhunter who owned him was owed the placement fee. That ownership issue remains salient, but it has been eclipsed by the problem of companies owning candidates who were actually—or allegedly, for some—submitted to a portal and then forgotten. Headhunters can identify a prospect, convert her into a candidate, submit her to a portal, and then learn she is already owned by a company. Consider the following example, provided by a headhunter and conveyed with more than a hint of exasperation: We’ve had many instances where we’ll call a candidate. “Hey, you interested in this job?” “Yes, I am.” “Great, we’ll send your résumé. Have you ever sent your résumé to them before?” “No, I have not.” You go through their applicant tracking system and you send the résumé and hear, “Oh, we already have their résumé.” And then you find out after you’ve sent the résumé that they are now taking action to interview that person. You certainly have to scratch your head and go, “Well, why are they now interviewing that person? Why didn’t they do that before we sent the résumé?”—if they really had the résumé, you see?

In some cases, human-resource staff recognize that a person in their portal’s database was not under active consideration, and they give the headhunter the right to own that candidate and hence earn a fee. But that is no foregone conclusion, which leaves headhunters uneasy and vulnerable to these sorts of ownership claims by companies. Accounts of this sort of theft-by-portal abound in the pages of the Fordyce Letter and are now commonplace war stories. The ownership issues that portals present encourage a new submission game. With a portal, a headhunter can hastily submit candidates without immediately needing to justify them to a hiring manager. Some claim that is done to game ownership through the portal system—to enter a long roster of prospects, not just the candidates that emerge after qualification, to claim ownership. Many portals do not require salary history or any true vetting. As one headhunter put it, “All you really need is access to his e-mail and phone number.” The portal thus becomes

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bloated with prospects, not candidates, because of the race to establish ownership. Portals also influence the frequency and quality of interactions headhunters have with hiring managers. Submission of candidate information directly to the portal diminishes a headhunter’s opportunity to present the candidate. Candidate presentations, long a staple of headhunting, are short pitches, crafted and delivered with care, that highlight a candidate’s merits and how he would meet a client’s needs. Résumés alone do not speak effectively for the candidate. One headhunter echoed common sentiments as she described how portals create a buffer between headhunters and hiring managers: You definitely need relationships. Technology has allowed us to expand the way that we work, but on the downside, for example, I have clients that are using software where we cannot send them a résumé anymore. We go online. We log in. We enter information into a portal. That, to me, is a horrible setup. To do that, you dismantle the résumé. You have to put it in the way they want it. And sometimes, that does not allow you to show your candidate in their best light. With that being said, I don’t care for that side of the technology. . . . The relationship with your client is a very valuable relationship. If technology gets between that, like with the portals, it can be damaging. . . . If you cannot speak to anyone, you may not be able to really understand what they want. That can hinder the process.

The final portion of the headhunter’s comment speaks to her ability to “really understand what they want.” As they present candidates orally to hiring managers, headhunters pay careful attention to the feedback managers offer and whether enthusiasm is expressed. Feedback is prized because it allows the headhunter to stoke enthusiasm, note adjustments needed to find the right candidates, and to use closing techniques such as, “So you’d be enthusiastic if I find you a candidate like Joe, but with more X?” One headhunter described portals as an effort to “herd us into a box that makes us further removed from the decision maker.” Another described them as inefficient: “Does it really save time and money? How much time and money do you lose by hiring the wrong person?” In general, headhunters believe that the efficiencies of portals are more apparent than real for the companies that use them.

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Electronic Marketplaces Electronic marketplaces extend the logic of portals. As with portals, candidate-related materials are submitted online, but the marketplace is also the medium through which clients post job orders, contact is made between a headhunter and a prospective client, headhunters are selected for a search, fees and terms regulating placements are established, and payments are rendered. For some, like BountyJobs, the marketplace becomes the single point of contact for all positions in a company that are extended to headhunters, as no private, off-line deals are officially permitted. Companies, not headhunters, decide whether to move to, and stay in, an electronic marketplace. As such, online marketplaces represent a dramatic electronic centralization and formalization of activities that are traditionally dispersed and irregular. In addition, the electronic and centralized character of the marketplace fosters the creation and use of various quantitative measures of client and headhunter behavior. Each party can learn more about themselves and others than is ordinarily the case outside the electronic marketplaces. It is correct to say that one main “seed” of electronic marketplaces was the march of technology and the explosive rise of the Internet. No doubt, the technology is a prerequisite, but in our view two other seeds germinated as well. First, the process whereby headhunters approach prospective clients to solicit business is, as we have described it, an extraordinary contact sport and a numbers game. There is, quite frankly, a staggering number of unsolicited telephone calls and e-mails directed at companies by headhunters on a daily basis. Headhunters realize this; companies do too. For many reasons, not least of which is sheer quantities, headhunters and their firms may sound and seem homogeneous. Consider the following observation: By and large, many clients see very little, if any, qualitative difference between the services provided by most staffing firms. Therefore, they place little value on building or maintaining these relationships. They view the services as mere commodities. . . . If you take a moment to place yourself in the “shoes” of a typical client, particularly during these past few years of economic uncertainty, you may better understand their view of “reality.” Daily, they are inundated by calls from desperate practitioners who are trying to develop business. (Petra 2003b)

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Petra’s aim is to encourage the development of more distinctive sales approaches and branding so that headhunters and firms do not seem the same. This problem is particularly acute during down markets—as in the early and late 2000s—but does not vanish in better markets. How to be distinctive—of course not like everyone else!—is a recurring point of concern among headhunters. For the companies headhunters contact, there may well be too many solicitations and too much apparent homogeneity. Treating headhunters as “vendors” and subjecting them to a “vendor management system” thus seem like sensible if not inevitable strategies. A second seed for electronic marketplaces was foreshadowed by our discussion of MPCs. Headhunters are quick to note that a “client” can be an entire company, where a deal has been formally struck with HR, and the headhunter and her firm may be used by many departments and even different establishments (locations) of the overall company. Some companies work with headhunters only at that level and may maintain a small “preferred” roster of individual headhunters and firms. But in many other cases, a “client” can really mean an individual hiring manager, not the company per se, who has either struck up a relationship with a headhunter or becomes enthralled by an MPC presentation. In corporate terms, the “spend” on headhunters and oversight of many of those transactions are surprising unknowns in many companies, large and small. Consider the insights of Mike Hard, the CEO (at the time he wrote this) of BountyJobs, one of the largest and most prominent electronic marketplaces for headhunters: With all the consolidation and innovation [in recruiting technology], however, it’s ironic that one major source of talent acquisition remains stubbornly resistant to change: the way companies find, communicate, and work with search firms. . . . The reality is that the management of third-party recruiting agencies (“headhunters”) is anachronistic. Most companies have no way to manage compliance across the organization, no visibility into agency performance, and no workflow around communicating with agencies. In fact, many companies would be challenged to even tell you how much money they spent on agency fees last year, despite the fact that this figure can reach millions of dollars. . . . An employer’s decision to use a recruiting agency is often made department by department and without transparency. (Hard 2013)

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For Mike Hard and other developers of electronic marketplaces, their technology provides a practical and compelling way to gain management control over the rather decentralized, if not “anachronistic,” way headhunters form relationships with client companies. The websites for two prominent marketplaces, BountyJobs and Scout, are designed to sell employers, not headhunters, on their merits. But they do speak to headhunter interests as well. Most prominently, they tout democratization, simplification, and transparency. By democratization, they suggest that the marketplaces open up opportunities for headhunters, as job orders are no longer visible only to those already familiar to a client. The greater visibility of job orders is thought to allow headhunters unknown to the client to compete for business on the basis of their marketplace track record. By simplification, they suggest that headhunters can abandon client development efforts, concentrating instead on filling a ready supply of job orders, where fees and terms have been set. And by transparency, they mean that the marketplaces indicate how many headhunters are working a job order, how many candidates have been submitted, and whether one or more offers have been extended. Outside of the marketplaces, headhunters inquire about such matters, but doubt remains. Democratization, simplification, and transparency are presented as major advantages for headhunters. Like portals, there is no question that the marketplaces have become prominent. However, it is difficult at this point to determine how many and what types of client companies and headhunters participate, how many placements are made, the quality of the placements, and so forth. Industry news, especially about BountyJobs, suggests a substantial presence: Almost a decade after its launch, BountyJobs has become a leading broker of executive search job orders, handling nearly $60 million worth of fees last year and earning recruiters an average of $22,113 for every placement. . . . [fees] hover just above 20% according to BountyJobs data. . . . In fact, so popular has the site become with agencies that BountyJobs is limiting the number and niche of newcomers. (Zappe 2015a)

The average fee percentage may be lower than with placements outside the marketplace, but it is within the range of what we believe prevails for most headhunters. Clearly, the electronic marketplaces are succeeding,

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and some embrace them with enthusiasm. One headhunter described the value of BountyJobs for her business placing nurse administrators: Are you aware of the website called BountyJobs? Yes, I am. Have you made use of that? Yes. Okay. Could you briefly describe what your sense of it is—in terms of promise for your business? I think it’s a good fit for us. Why? Could you speak about it a little bit more? I do because you can reduce your sales staff. That’s probably the number one thing. We rarely do exclusives anyway. That’s what some people don’t like about it—“It’s not exclusive anymore.” You know what? You’re kidding yourself. You typically aren’t exclusive. . . . I will tell you, the nice thing is there are a lot of jobs out there. You turn it into your sales force. So if you’re a good recruiter and have a huge network of candidates, you think it’s a good thing? Oh, absolutely! Do you find that the communication is sufficient? Do you get enough contact to really know what sort of candidate they’ll find attractive? It depends on the client. It’s the same as it would be if we were doing it direct. Some are better than others. You sound very positive about it. Oh yes!

Some of her comments echo advantages noted by the marketplaces themselves. There is no doubt that the marketplaces can be engaged successfully by headhunters. The question, which we draw out below, is whether headhunting done in the marketplace is distinctive in one or more ways, and whether the logic of the marketplaces might shape the future prospects of the industry. In striking contrast, other headhunters offer strongly negative comments about electronic marketplaces, and a trade publication piece on BountyJobs made the following observation: “BountyJobs is often derisively regarded as being ‘a really great tool for really great companies to connect with really awful recruiters under really awful contract terms’” (Herman 2015, 4). An understanding of that statement and perspective requires a better grasp of how the electronic marketplaces structure headhunter–client encounters, how that structure is in tension with core headhunting practices, and why marketplaces curb the best efforts headhunters can put forth. How the marketplaces structure headhunter–client encounters can best be gleaned through the promotional materials on the sites themselves,

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represented here by BountyJobs and Scout. Both marketplaces aim to reduce cold calls from headhunters into companies, contacts between headhunters and hiring managers, and the time it takes to fill a job order. In contrast, the marketplaces increase competition between headhunters, the use of unfamiliar headhunters, evidence about headhunter performance, and management control over the entire process. Website material illustrates those aims. Consider a success story on the Scout website that provides narrative and then the words of a client, a human resources manager named Sider: Flatiron [a commercial construction company] simply clicks a button within their Taleo Applicant Tracking System (ATS) to post a job to Scout. Scout then shares the position with those recruiters who have had the best performance for those specific types of roles [in this case, seventy-eight headhunters]. Recruiters can see at a glance which job openings are recommended for them, and easily share candidates with the employer, right from their ATS. “I like the integration with Taleo,” Sider said. “I can just check a box, choose my placement fee, and post to Scout in minutes. I don’t have to speak with a soul or waste my time negotiating fees. I just wait for candidates to come in.” (Scout 2016c)

Elsewhere on the Scout website, one can read accounts of how human resource staff use the marketplace to reduce if not eliminate contacts with headhunters. Thanks to Scout, Paccione-Anderson [senior VP director of corporate services] says Epstein [a global design and construction company] has had a lot of success and cut their recruiting time down significantly. Overseeing all corporate functions . . . she appreciates that she can use Scout passively. “I don’t have to answer emails or take calls from recruiters. I just don’t have time for small talk.” (Scout 2016b)

The overall placement process in the marketplace involves a streamlined five-step process that is set in motion once a company submits a job order to Scout through its ATS: 1. Analyze the job. We analyze the job you submit to Scout and determine the type of position you’re recruiting for. 2. Find your recruiter. We scan

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our vast marketplace of third-party recruiters, looking for the ones with the best track record for filling your type of position. 3. The job goes to the best recruiters. They begin searching for the best candidates for your job right away [thirty-three recruiters, on average, are sent each job order]. 4. You see great resumes. As soon as a third-party recruiter has found matching candidates, they begin sending you resumes. You don’t have to waste time with the recruiter until they start producing candidates. 5. You hire, painlessly. Once you decide to hire a candidate from Scout, our standardized recruiting agreement means there won’t be any surprises or headaches. (Scout 2016d, 2016e)

BountyJobs is much like Scout. It does not match headhunters to job orders, leaving that to the client. Clients can scrutinize the marketplace track records of those who request to “engage” on the search, and they can “disengage” headhunters at will and immediately: Post a description of the job—along with the fee you’re willing to pay—to our private marketplace. Agencies that specialize in that job and are willing to work for that fee request engagement (BountyJobs 2016d). With our benchmarking data, you can select the right agencies, evaluate their performance . . . and even compare their results against other companies and agencies across the whole marketplace (BountyJobs 2016a). Employers have the power to control the flow of resumes for their jobs and with the click of a button can disengage any agency with whom they are dissatisfied (BountyJobs 2016b). You hire the right candidate with astonishing speed. (BountyJobs 2016c)

Like Scout, BountyJobs emphasizes control over the process and an ability to minimize time-consuming communication and relationships with headhunters. In the conceptual language of Ritzer (2010, 54–86), the marketplaces primarily emphasize efficiency (moving from a job order to a new employee quickly) and calculability (a focus on quantitative aspects of the process such as “time to hire” or “candidates interviewed versus candidates submitted”). The forms of efficiency and calculability emphasized by the electronic marketplaces are in tension with several central principles of headhunting.

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We see those tensions as the source of dissatisfaction with the marketplaces on the part of many headhunters. Can headhunters do a quick database search and respond to a Scout job posting—or “request to engage” on BountyJobs? Sure. But can they really qualify the job order and the client? The marketplaces claim they allow headhunters to “immediately access qualified job orders” (Scout 2016a), but the process whereby headhunters qualify job orders—the topic of chapter 2—requires extensive communication between a headhunter and the hiring manager. The marketplaces dub that “a waste of time.” But without an opportunity to communicate with hiring managers, headhunters do not know what mix of skills, chemistry, and cultural traits will make a candidate sink or sizzle. They also lack information and insights about the job, hiring manager, and company that can be used to entice passive prospects to consider an opportunity. Careful prospect qualification is thus difficult or impossible. The inefficiency of such conversations, from a headhunter’s point of view, is an investment that must be made to know what prospects to search for and how to entice them into considering another opportunity. That point is emphasized by a headhunter who places in retail outside the electronic marketplaces: I’ve been working with a couple of new clients that I’ve never worked with before and I’m making them spend a fair amount of time with me before I even begin a search. It’s a great investment, I think, on their part, and I think they know it because they are realizing that I’m learning so much more about them and their business. I’m able to not waste their time with candidates that aren’t a good fit.

Time spent with a headhunter can thus be seen as an investment that leads to better, more appropriate candidates. In addition, the idea promoted in Scout (2016d) that “you hire, painlessly” overlooks the brokering activities that headhunters engage in to help clients make offers that candidates will accept and honor. Headhunters cannot broker without good information from, and partnership with, a client. An emphasis on quantitative aspects of the search highlights things like speed, not the quality of the hire or whether organizational needs were well understood and met. The fact that so many headhunters receive job orders—an average of thirty-three headhunters receive each job order

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on Scout (2016e)—means that hasty work becomes imperative. Careful sourcing, persuading passives to consider a change, and serious vetting are time-consuming and hence irrational. The emphasis on efficiency and calculability constrains the best efforts of headhunters and leaves marketplaces as outlets for candidates already in a headhunter’s database and by-products from a recent search (i.e., candidates presented to a client but not hired). One headhunter described his experience and approach to BountyJobs: Communications are sparse—they are done entirely through their messaging system. The corporate recruiters are not responsive. You’re dealing with a very junior person in the organization. . . . They basically put you on the other side of a website along with many other people. They can engage and disengage at the click of a button. There’s no investment. They have zero skin in the game. Therefore, I view it as having potential where I have some people that are a by-product of a search and I don’t actually have to do much work. It certainly is not worth it if you have to do a lot of work. . . . There is no ability, really, to develop trust, which for me is what a relationship is built on.

The marketplaces thus offer headhunters opportunities to make placements, but they structure transactions as though job orders are a commodity spot market. Headhunters have few incentives, and little actual opportunity, to practice their craft, a craft built on the conviction that people are not commodities and that hiring the right person can be consequential. Marketplaces reduce headhunting to database searches, the use of by-products, and hoping for the best. They also upend the use of MPCs to gain business, as companies in the marketplaces are required to do all their third-party searches on the marketplace itself. In this way, we suspect that the electronic marketplaces might dramatically transform the headhunting industry. Without question, technology has transformed the work practices of headhunters, but in an uneven way. Sourcing has gone high tech, but qualifying prospects and brokering deals have not. They remain decidedly low tech, high touch, and time-consuming. In Rees’s (1966) terms, extensive search has been transformed, but not intensive search. Technology like LinkedIn is used in different ways, supporting Orlikowski’s (2000)

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argument that people enact different technologies-in-practice across various contexts, and often use technologies for purposes that were not intended, such as sourcing references from online résumés. The character of the technology also matters, but not in the way anticipated by Leonardi and Barley (2008). They argued that some technologies, such as the electronic marketplaces we describe, create efficiencies, whereas others, such as LinkedIn, provide novel information that cannot be acquired in other ways. They surmised that as far as work practices were concerned, novel information would be more consequential than efficiencies. Our results suggest the opposite. LinkedIn has transformed sourcing but has left most other core practices intact. The marketplaces, however, constrain core practices and may well disrupt the entire industry if they gain market share while also retaining current practices.

5

Booms, Busts, and Changing Labor Markets Why the Great Recession Did Not Produce Good Job Candidates We have to look harder and harder for quality candidates. The higher-quality candidates are so afraid to leave their current jobs. —a Southern City headhunter

Executive search, perhaps more than any other business, tracks the ups and downs of the U.S. economy. When the economy is booming, headhunters do particularly well, and during busts, headhunting falls especially hard. As one headhunter said: “When an industry slows, the executive search slows further. When the economy picks up speed, executive search picks up much faster. There is a volatility to this industry that is really extraordinary.” A headhunter who entered the industry when Ronald Reagan was inaugurated president and who managed to last until the election of Barack Obama would have experienced (or endured) four U.S. recessions. It is this sense of being in the eye of the economic storm that allows headhunters to view their survival of recessions as badges of honor—these events provide them with their war stories. Recessions mark time for recruiters and are defining moments in their careers. They view recessions as purifying rituals that eliminate the weak, the lazy, and the unprepared from the search business and leave the survivors fitter, faster, and stronger.

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The survival-of-the-fittest rhetoric was on display in the articles that headhunters wrote for their industry newsletters during the Great Recession of 2007–2009. Consider the following titles from the Fordyce Letter during this period: “10 Reasons Why I Really, Really Love Recessions!” (Risalvato 2009); “The Bottom-Line 7 Laws on Survival in Our Business” (McNulty 2009); “Certain Strategies for Uncertain Times” (Finkel 2008); “Don’t Fret over the Recession, Embrace It!” (Fischer 2009); and “The Four Rules of Successful Recruiting in a Recession” (Bartos 2009a, 2009b). The articles all stress at least one of the following points: recessions winnow the competition, thus leaving survivors better positioned to profit from the recovery; to survive recessions headhunters need to concentrate on recruiting fundamentals (e.g., making cold calls, qualifying clients, recruiting and qualifying candidates, and securing interviews); and headhunters need to reiterate to clients and candidates that recessions are no reason to avoid hiring or changing jobs. We will argue, however, that the Great Recession was more than just another recession. It not only bit deeper and harder than previous ones, but it also changed, as seen from the perspective of headhunters, how employers and employees interacted in the labor market. Employers became more hesitant to hire, and employees became more reluctant to become candidates, effects that lingered on well beyond the recession’s end. A closer examination of the Great Recession and its aftermath illustrates how different the labor market is from other markets and why headhunters struggle to find the best candidates precisely when it is an apparent buyer’s market. This chapter develops in three sections. First, we will examine what made the Great Recession so much worse than previous downturns and how it affected headhunters. Second, we will look at how this recession changed the relationship between headhunters and their clients, as the latter became increasingly difficult to please when presented with candidates. Third, we will explain why the recession made employees so reluctant to become candidates and why employee wounds became less effective in turning them into job changers. As the subtitle of this chapter suggests, the Great Recession, notwithstanding the claims that it had created a buyer’s market for employers, was not a bonanza for them or for headhunters.

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Headhunters and the Great Recession The December 2007–June 2009 recession was significantly worse than the three previous ones in 1981–1982, 1990–1991, and 2001. It lasted longer than any of them, the decline in GDP was greater, unemployment reached a higher level (with the exception of the 1981–1982 recession) and was slower to come down, long-term employment was dramatically higher (making up nearly half of all the unemployed), and, most important of all, nonfarm employment took much longer to regain the level it was at when the recession began; it took over six years for employment to get back to where it was at the beginning of the Great Recession in December 2007, compared to two to four years for the previous three recessions (Center on Budget and Policy Priorities 2016). Some sectors of the recruitment business remained relatively unscarred by the Great Recession—in particular those involved in health care recruiting in some form—but for most other headhunters these years were a disaster, particularly 2009. One recruiter, when asked about the recession, said: “I’ll share this with you. In 2008, I went from my best year ever in business. That was the halcyon days. Two thousand nine was my worst.” Another recruiter, who had over forty years of experience, said 2009 was her worst year since she was a rookie. She described the recession as “horrifying”: It was simply horrifying. I was living off the equity in my house, using it like a checkbook. I really hunkered down. I’ve worked recessions before. There was a recession in ’78. I’ve always worked recessions. I’ve always done very well in a recession. This one, I looked at my life and I cut out the things that I thought were really important to me, like my personal trainer three times a week, getting my hair blown-dried twice a week, all those things. I cut back, cut back. I found out I didn’t need them.

She estimated that she made close to $300,000 “or maybe more” in 2008, whereas she earned just $50,000 in 2009: “I mean just down, down, down!” A third headhunter said that she saw her business decline from thirty to fifty placements a year to twelve in 2009 and eleven in 2010. A fourth recruiter said his business volume declined by 40 percent. Headhunters relied on various strategies to keep themselves afloat during the recession. Some cut back on office expenses by moving their businesses

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into their homes. Others trimmed their staff or shifted their focus into quasirecruiting activities, such as advising job candidates. For example, one found a new line of work in coaching candidates who had lost their jobs and were now back on the job market or who felt that they needed to make a career change. She explained: “I started coaching executives that were looking to make a career change. Teaching them how to interview, teaching them to go in and do these things.” Another found he could make a living offering a résumé service, a business that he had actually begun as a sideline many years earlier, at the start of his career, when few of his candidates had computers. Back then his objective was to prepare résumés for his candidates that would be attractive to clients—to edit and type them, in other words. This business had tapered off over the years as recruiting increasingly absorbed his attention, but he gradually shifted his focus back to résumé work as the recession cut into his job orders and placements: “It happened over two years. I woke up one morning and said, ‘Oh my gosh, I’m a résumé writer.’” Finally, some headhunters survived the recession by requiring their recruiters to increase their call volumes to generate sufficient job orders. One firm reported that during the recession it expected recruiters to make at least thirty marketing calls a day to clients—a huge increase from the five calls a day some of the firm’s recruiters made during good times. The mandated increase in call volumes was due to the difficulty of generating new job orders—the firm estimated that it took 100 calls to generate a single order in the recession, compared to a ratio of 15:1 when hiring returned to normal. A headhunter in the accounting field suggested similar numbers, with a call-to-order ratio of 15:1 in 2014, down from 123:1 at the trough of the Great Recession. Of course, many headhunters did not survive the recession. It is difficult to know how many did not make it, because the occupation is an easy one to slip into and to slide out of. To enter the business one needs little more than some space at home with a desk, chair, phone, and computer; departures are equally inconspicuous. The most commonly cited statistics by the headhunters we interviewed were that between half and two-thirds of the recruiters in the country had left the business since 2007. Although we have no way of knowing whether these numbers are accurate, they are consistent with the decrease in membership in the state association of recruiters that we used to identify possible interviewees. The challenge facing recruiters during the Great Recession was documented by the Bureau of Labor Statistics (2015), which showed that the

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hiring rate and the quitting rate fell by one-quarter and one-third respectively between 2006 and 2009. These two declines strike at the heart of headhunting because they show that both clients and potential candidates were, in effect, waiting out the recession on the sidelines of the labor market. The decrease in voluntary turnover during and after the recession meant that there was a significant loss of the kind of routine labor-market “churn” on which the recruiting business depends. In contrast to previous recessions, data from the bureau also shows that while the decline was steep and sharp, the recovery in hiring and quitting rates has been unusually slow. The decreases in hiring and quitting also undermined headhunters’ ability to pull off the double sale, even if they did obtain viable job orders. As we explained at length in our previous book and have touched on in earlier chapters, the double sale works when headhunters get both client and candidate into a selling mode rather than a buying mode. In good times a recruiter does this by pointing out to clients that her candidates are in high demand and to candidates that there are other contenders for the same position. But the Great Recession shifted clients and candidates into different modes: clients became very selective buyers; prospective candidates became reluctant sellers. We will show that it became very difficult for headhunters to bridge the gap between selective buyers and reluctant sellers, which has persisted into the post-recession recovery.

Picky Buyers: Clients In our earlier study we found that the modus operandi of a typical headhunter before the Great Recession was to find candidates who came close to meeting a client’s requirements as specified in the job order. Candidates who were good enough, even if they were not perfect, were acceptable because clients and headhunters knew that in a tight labor market it was going to be difficult to recruit the perfect candidate; further, as many headhunters noted, clients were often willing to relax some of the specs in the job order if the right chemistry developed between hiring manager and candidate. Chemistry made up for a candidate who might be light in some areas, with the assumption that he or she would receive on-the-job training to get up to speed (Finlay and Coverdill 2007, 119–20). The recession overturned the find-good-enough-candidates-to-satisfy-thehiring-manager recruiting model. Three changes in particular transformed

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how headhunters went about their business and made recruiting more difficult. First, headhunters found themselves trying to find perfect candidates because clients had become unwilling to consider anyone who was perceived to have any flaws. We call this the search for the perfect candidate. Second, clients had become convinced that perfect candidates were sure to be available and affordable because the labor market was now, from their perspective, a buyer’s market. This view overlooks the fact that the labor market often does not function like other markets. We call this the fallacy of the buyer’s market. Third, as the hiring purse strings tightened during the recession, headhunters found that they could not always count on hiring managers to either approve job orders or to make autonomous hiring decisions. Their authority was now more diffuse, because it was either shared with human resources, often in the form of the newly formed “talent acquisition departments,” or dependent on approval by the hiring manager’s superiors. We call this the diffusion of the authority to hire.

The Search for the Perfect Candidate A recent publication from the Federal Reserve Bank of St. Louis pointed out a startling difference in long-term unemployment rates before and after the Great Recession. The long-term unemployed (defined as those out of work for six months or longer) after the recession were more than twice as large a share of the unemployed as they were before it. The longterm unemployed share rose from 17 percent of the total unemployed in 2006–2007 to 39 percent in 2012–2013. These rates were even higher for unemployed people over the age of fifty, where one out of every two was long-term unemployed (Monge-Naranjo and Sohail 2015). Our interviews shed some light on this surge in long-term unemployment. Many headhunters, when asked about recruiting in the aftermath of the Great Recession, told us similar versions of the following observation that we heard from one recruiter: “The client calls us. They give us the ten things they want. As long as we find all sixteen, we get a guy placed!” He went on to contrast pre-recession recruiting with post-recession recruiting. Before 2007, he said, recruiting involved finding good candidates: “We oftentimes found what we often called the best athlete available.” He elaborated on what he meant by this: “We’d find someone. They were pretty darn close, they were a good person, we got good references. ‘Bring them

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in, let’s go.’” Since 2007 the focus had shifted to finding perfect candidates: “Now it’s ‘we want this, we want this’ . . . Today it’s all about specifics.” His summary judgment of clients was succinct: “Picky, picky, picky!” Headhunters interpret their clients’ pickiness to mean that candidates should be employed and not actively seeking a job, they should not have a history of frequent job-changing, they must have all the necessary qualifications, and they should not need on-the-job training. The most important of these is that the candidate should not be an active job seeker and, in particular, should not be unemployed—either of these sets the adverse selection alarm bells ringing. One recruiter was frank about his preference for employed candidates: I would say that there is clearly a bias against the active job seeker. There are ways, I believe, that they can overcome that. It’s difficult, but they can. But if I have a choice between an employed, passive candidate who’s in a job similar to the job I’m recruiting for, [who is] from a competitor, or a candidate out of work for six months, maybe they were let go as part of a downsizing, they weren’t performing. The candidate out of work has almost no chance. It’s a sad reality, but it’s true. I think that the passive job seeker is going to have a big advantage in this economy. I would say that there are certainly exceptions, a healthy number of candidates in transition, but they have to be able to tell their story well. They have to be able to explain it and just know that every day they’re out of work, it’s like another notch, another knock against them.

His remarks are particularly interesting because he puts his finger on the stigma facing out-of-work candidates: the assumption that the very best employees would not be let go, even during a downsizing. Headhunters suggest that downsizing during a recession is when employers separate their great employees from those who are merely good. Keeping one’s job during layoffs is not luck, they argue, but a signal of being a top performer during a period in which employers are engaged in “housecleaning.” Another headhunter summarized this attitude with the simple statement that “nobody lays off their top performers!” Those who are average, at best, lose their jobs. Other headhunters echoed—and elaborated—on this point: Well, certainly, you did have some people that were out of a job for all the right reasons. There were a lot of real companies who let everybody go. But

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what we found was that during that time a lot of people who were let go were not great employees. It wasn’t random—as much as those who were let go would tell you that. And companies would say it that way too: “This only has to do with the fact that business is down.” Many times that simply wasn’t the case. It was because they could afford to run the business without them.

Headhunters claimed that after the Great Recession, employers continued their housecleaning philosophy of firing and hiring. For example, one headhunter asserted that in contrast to previous recessions, where most of the post-recession recruitment consisted of new jobs, his firm was still mostly doing replacement search—confidential searches in which an incumbent either had been fired or was about to be fired. He said that he had found the hidden job market to be more important than it was before the Great Recession: Almost 80 percent of the work we’re doing, even today near the end of 2013, is still replacement search. So, on a pretty sizable scale, we get calls weekly, “We really want to get rid of our CFO,” or “We just fired our VP of sales, can you help us?” You look at our searches, and a vast majority of them are confidential. You would never hear about them. That’s another sort of hallmark of this period. The confidential, hidden job market is actually quite substantial, much more than it was before 2008. . . . What you’re seeing today is, “Hey, listen, we don’t have any room for a failing performer. We can’t tolerate someone who is just not getting the job done.” So there is a lot of churn out there at the director, VP-level rank.

It might be argued that it is headhunters rather than hiring managers who are biased against the jobless—that headhunters have misinterpreted their clients’ intentions. But we feel that this is unlikely, for two reasons. First, a number of headhunters described to us their difficulties in trying to persuade clients to consider unemployed candidates or even those who had lost their jobs at some point, even if they were not currently unemployed. Second, it would in fact be far easier for headhunters to recruit from the ranks of the unemployed and the active job-seekers than to search for passive candidates who, as we will show in the next section, had become very reluctant candidates as a consequence of the recession. Thus headhunters’ rejection of unemployed candidates is likely to be well

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founded—a reflection of their experience that clients are not interested in these kinds of candidates. Employers’ reluctance to consider jobless candidates was now matched, according to headhunters, by their lack of enthusiasm for candidates perceived as job hoppers. Their aversion to those who had changed jobs “too often” seems to have been aggravated by the recession—we heard far less about this concern during our first study of headhunters—and is motivated by their sense that a buyer’s market allows employers to reject candidates who have held too many jobs or who are actively looking. The logic of adverse selections means that employers have stigmatized these candidates as likely losers. Some examples illustrate this point. One headhunter said that clients were now more likely to turn down candidates who had changed jobs in recent years: “You send them a résumé, and if the person’s changed—you know, three jobs in the last fifteen years—they’ll go, ‘Oh, they’ve had too many jobs.’” Another said that anyone who had had more than two jobs in the last five years was “impossible to place.” He said that employers “look for stability, job stability. . . . There are not many employers who want to talk to somebody who’s had three jobs in the last four years.” The ideal prospect has always been the passive recruit—one who is not looking for a new job. Note how one headhunter turns the anonymity of a prospect, which might be seen as a drawback, into a benefit—an indication of stability, which in an era of uncertainty signals that the candidate is a strong performer: “It’s like: ‘Okay, where have you been? I see that you got out of school, you went to work at Rolls Royce in Indianapolis for the past seven years. Really, nobody’s heard of you, but you’ve been up there.’ These are the people I’m going after. It has changed.” Passive candidates, unearthed from the hidden market, have thus acquired an even brighter sheen. A history of no unemployment and job stability is necessary but not sufficient to get a candidate an interview and an offer. The perfect candidate must have all the specified qualifications for the job and not require any on-the-job training, as a headhunter explained: “When we leave a meeting with a client to launch a search, we have a pretty strict set of criteria that has to be met. What you’re seeing is that clients will not pull the trigger unless they feel like everything—and I mean everything [his emphasis]—is in place. All the ducks are in a row.”

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In the past, candidates would have been considered even if they fell just short of the requirements. Clients would have been willing to “flex,” to consider someone who was close to meeting the specifications. But those days are over. Headhunters told us stories of candidates who were rejected for barely missing the required qualifications. One headhunter mentioned a client who wanted candidates with two years of experience with a particular software program; the client wouldn’t hire a particular candidate who had one year and nine months of experience. The headhunter’s frustration was evident: “We were like, ‘Are you kidding?’” Even candidates who can clearly perform the job well are turned down if they lack the qualifications the client seeks. Headhunters said that the Great Recession made employers very specific in their expectations, as one noted: “The skill set and experience became incredible—unlike anything I’d ever seen.” He went on to say that clients’ pickiness had not changed, even as the economy improved: It hasn’t changed in five, six years. Clients want exactly what they want. They want somebody who knows the product, knows their customers, and has a Rolodex. Someone who can come in and start off at a run. They don’t want to babysit for three to six months to get them up to speed and to ramp them up. It still is incredibly difficult for us because there aren’t that many of those people.

The search for perfect candidates is significant not just for headhunters but for candidates themselves, because it means that they are being excluded from jobs for which they would have been contenders in the past. Unemployment is an especially difficult burden for potential candidates to overcome because, in an era in which candidates are supposed to be without flaws, it is a stigma that is difficult, if not impossible, to erase—it is a kind of master stigma, akin to a master status, a signal of failure that does not go away. It is little wonder, therefore, that the long-term share of the unemployed has risen in recent years. The question that remains, however, is why employers’ hiring standards did not relax as the recovery picked up steam after the recession ended in 2009. This indeed was a question that many headhunters found themselves asking as they struggled to meet client expectations. The answers lay in employers’ perception that the labor market remained a buyer’s market

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and in the increased organizational scrutiny of hiring decisions. We turn to these next.

The Fallacy of the Buyer’s Market Markets frequently become buyer’s markets during economic downturns. The declines in house and share prices during the Great Recession illustrated this process. Similarly, retailers faced with excess inventory will often reduce prices—or offer bargains on selected items—to clear their shelves. Savvy buyers know that they can hunt for and find bargains during these periods. The labor market was regularly described as a buyer’s market during and after the recession. For example, a USA Today article in January 2011 led with the headline: “Businesses Hiring in 2011 Face a Buyers’ Market for Employees” (Rugaber 2011). More than two years later, Robert Samuelson, a columnist for the Washington Post, wrote an article that began: “On this Labor Day, American workers face a buyers’ market. Employers have the upper hand and, given today’s languid pace of hiring, the advantage shows few signs of ending” (Samuelson 2013). Headhunters reported that many of their clients had embraced the view that the labor market had become a buyer’s market. These employers expected good candidates to be plentiful and affordable. Headhunters disagreed, however, and said that it actually became more difficult to find good candidates during the peak of the recession. One remarked that despite “the perception clients had that there was so much talent out there,” his experience was that “it was harder to find talent in 2008 and 2009 than it is right now.” The result was clients were often dissatisfied with the quality of the candidates that were presented, in the belief that headhunters just needed to work harder to find better ones. Another headhunter reported taking phone calls from clients in which they said to him: “‘Oh, I thought there were all kinds of people, how come you can’t find these people right there, why don’t you find them?’ you know.” A third described the frustration of working with clients who kept on wanting to see more candidates in the hope of finding a prince among the frogs: “They had this perception that ‘the talent market is flooded now, I can keep kissing frogs. The grass is going to be greener, I need to see more, I need to see more, I need to see more candidates!’ They got very, very selective.”

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Clients who expected headhunters to find talent bargains were overlooking what makes a labor buyer’s market different from other buyer’s markets. The most talented potential candidates are not unemployed or looking for a new job but are happy and successful in their current jobs. The very nature of the double sale means that they have to be persuaded to consider other opportunities and they have to be convinced that a new opportunity is better than their current position. Unlike other products, candidates are buyers as well as sellers. A buyer’s market resulted in excellent employees declining to become sellers because the new opportunities were often unattractive and the risks of taking a new job appeared greater than the benefits of staying in one’s current job. Just as clients spurned candidates whom they might previously have considered, so too did employees refuse to become candidates at companies they considered less than ideal. In short, a buyer’s market is a fallacy because it leads to talent becoming less rather than more available. Headhunters implicitly grasped this paradox. A common complaint, which surfaced repeatedly in the interviews, was how reluctant talented employees were to change jobs during a time of economic uncertainty and how difficult it was to find good candidates. Here, for example, is what one recruiter said about this issue: The great people were still in place with no desire whatsoever to change jobs. Changing jobs during that economic insanity was a horrible idea. You knew what you had where you were. . . . But the basic pattern was a whole lot of people hanging on to their current jobs with no interest in transitioning.

Another headhunter remarked that although every employer wanted the top talent (the “A players”), not every company had the reputation, history, and standing needed to attract these kinds of workers. A buyer’s market did not turn average companies into great places to work and did not mean they would be inundated with wonderful candidates. There were very few companies like Google, where everyone seemingly wanted to work, a point that his clients sometimes failed to grasp: You know, everybody wants the A players, okay? But if you’re going to get the A players, you’ve got to, you know, everybody wants to be Google so people are knocking on your door. Well, you know, that’s nice, that’s a great

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aspiration to have, but there’s pieces to becoming Google that 99 percent of the companies on earth wouldn’t even think to be, you know, to do, I mean as far as, you know, the structure. Because it’s a unique place. Okay, so you know, “Why aren’t they beating our doors like that? Well, it must be because we don’t have free food in the cafeteria” [laughs].

Headhunters were frustrated that searches often took longer than normal, which was a problem: “Even though it was a buyer’s market, it was still convincing the employer that good people are not going to be on the market very long.” When they did find the right candidate, headhunters needed clients to move quickly because they knew that this candidate was unlikely to remain available for long. Clients, however, often did the opposite, assuming that a buyer’s market meant that they could take their time with the hiring decision. The belief of many clients that better candidates were in the market somewhere and merely required longer or more effective searching was not the only factor thwarting headhunters’ ability to make placements. The other constraint was that it had become increasingly rare to find a single person with the authority to make the hiring decision, as this decision was now subject to approval by those higher up the executive hierarchy. An additional complication was that HR now had a role in overseeing how hiring was done, particularly in companies that had introduced electronic hiring portals. These changes were an indication of how carefully organizations were now scrutinizing recruitment and hiring, in an effort to avoid any expense that was not strictly necessary and could not be fully justified.

The Diffusion of the Authority to Hire Nearly nine million workers lost their jobs between February 2008 and February 2010, a decline in employment of more than 6 percent. It took six years for these jobs to be recovered—total employment did not reach its prerecession levels until the end of 2015. Two headlines summarize the slow recovery in employment after the recession. The first is from Fedgazette, a publication of the Minneapolis Federal Reserve: “Job Growth since the Recession: A Long, Slow Rehab” (Fedgazette, July 13, 2015). The second is from the International Business Times: “In a Post-Recession

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US Job Market, Employers Take Months to Make Hiring Decisions” (IBT, June 13, 2014). Neither headline would have come as a surprise to any headhunter who had managed to stay afloat during the recession. Headhunters regularly complained about how long clients were taking to decide on whether to hire someone. “It was the slowest market I’ve ever seen,” in the words of one. Many of these complaints focused on the search for perfect candidates, as we have already noted. But a pervasive second theme was the diffusion of hiring responsibilities, which meant either that the hiring manager would not make the decision without the approval of his or her boss, or that HR got involved in the process and slowed it down. Headhunters attributed the reluctance of hiring managers to hire without their boss’s agreement to the fear of making a bad employment decision. The recession, they argued, had made managers nervous about staffing levels and employee performance; in a climate in which managers were supposed to hire only top performers, no one wanted to be accused of hiring an employee who was merely average, because their own jobs were also on the line. It was less risky to load additional responsibilities onto existing employees than to hire new ones. One headhunter explained the organizational dynamic that fostered managerial hesitation: So what happens is that the hiring people are worried about their jobs. They’ve got to perform. They’re already performing with less. They’re understaffed, they’re frazzled, they’re just running five hundred miles an hour. They feel like they can’t possibly make a mistake. If they make a mistake, it’s either going to reflect bad on them and make their job get in danger or they’re going to bring a person in, they’re not going to do the job well enough. It’s going to put them behind wherever the project is or the goals of the company are. There’s this angst about making a mistake. So what happens then, is they become more picky.

The result of this angst was that managers looked for someone else to take responsibility for the decision: They want someone as senior as possible to make a hiring decision. . . . The hiring manager will defer to their boss. Sometimes we get delayed in the internal bureaucratic swamps trying to get the decision. So, yes, I’ve seen that reluctance to put your neck out in this type of economy.

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The “internal bureaucratic swamps” included HR and the electronic applicant portals, which as we described in previous chapters are an attempt to streamline and rationalize the way in which candidates apply for jobs. It is very difficult for HR personnel, who deal with many different positions in many different areas, to understand the precise needs of a particular hiring manager. The problem for headhunters arises when they are not permitted to have conversations with hiring managers because they are expected to work through HR or portals exclusively. A lingering effect of the recession, as headhunters saw it, was that it made clients forget, or at least overlook, the need to sell themselves to candidates, if the double sale was to be accomplished. Clients’ erroneous assumption that they held all the cards made them quick to assume that good candidates were available, without giving sufficient consideration as to whether they were good employers. As we will show in the next section, headhunters were very much aware that this was a pressing concern for potential candidates.

Reluctant Sellers: Candidates Much of the discussion of the effects of the Great Recession has rightly emphasized its costs to workers. The decline in labor force participation, the slow pace of job creation, and the lack of growth in wages all distinguished this recession from previous ones. Headhunters, as we have explained in this chapter, have experienced these costs in the form of clients who have become picky buyers. There is another cost, however, to which we alluded in the previous section and that we will now examine in greater detail: the reluctance of employees to become candidates. Headhunters discovered that there were two main reasons why potential candidates rebuffed their overtures. The first was that their homes had declined in value, often below the purchase price, and they were unwilling to take a new job if it required moving and, quite possibly, losing money on their houses. Headhunters learned what behavioral economists have known for some years, which is that people are loss averse and place a higher value on avoiding losses than on making gains (e.g., Tversky and Kahneman 1984). One headhunter expressed his dismay that some

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candidates placed a greater value on avoiding a loss of $20,000 on their houses than making a $20,000 salary gain: It became harder to get candidates to move. Definitely. There were deals that didn’t happen because of that. There were great candidates who should’ve moved for all logic and emotion, except they had already lost $20,000 or $30,000 in value on their house. They would rather not get a $20,000 raise than realize the $20,000 loss on the house. Some of them, they understood real quickly. “Let’s just take the hit on the house. We’ll make it up on the new house.” Others, they were great candidates I could’ve gotten fees for, but I could never get them over that emotional hurdle.

Another headhunter made the same point: “Some people become so risk averse that there’s just no talking to them. People say things like, ‘I’m miserable in my job, but I have to wait for my home value to come back up before I can move.’” These potential candidates were not persuaded by his argument that the value of any new house they bought was likely to appreciate as fast as the one they might have to sell at a loss. Fortunately for headhunters, the recovery in house prices meant that this objection to becoming a job candidate became less salient over time. But the second objection was less easy to put aside, because headhunters themselves shared it: clients could not always be counted on to be successful employers. The era of the start-up business had brought into being a range of new companies, many of which had subsequently failed. Candidates and headhunters had become cautious about glowing job offers from companies that lacked a track record because what they told headhunters and candidates about themselves did not always materialize. Products that were “almost there” sometimes turned out to be a long way from delivery, and “cash on hand for twenty-four months” sometimes ran out much sooner. One headhunter explained the challenge of trying to assess start-up clients with a series of rhetorical questions: “But how do you do an assessment of a client? How do you figure out which client is telling you the truth about their new technology or how much money they have in the bank? Especially when they are a private, small start-up or some early stage kind of thing.” Start-ups, particularly those funded by venture capital, are notoriously reluctant to disclose information about their financial

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status or long-term viability. The clients of one of the headhunters we interviewed are small to mid-cap software companies funded by venture capital, which meant “you never know when the well is going to go dry. These companies are five to ten years old. They go out of business left and right. So it’s a real risk.” In uncertain times, many prospective candidates were not willing to risk their futures on companies that hadn’t been around for long. Headhunters found that “a lot of people are not willing to take a roll of the dice on a new opportunity unless it is just a slam-bam home run for them.” Risk-averse and reluctant candidates had thus reversed the logic of the buyer’s market by becoming picky buyers themselves. The reluctance of buyers and sellers, however, did not occur in a vacuum, and was surely amplified and sustained by two other social changes. The first is the contraction of internal labor markets, and of the training and development they offer, issues we noted early in the book (Cappelli 2008, 2013, 2015). If organizations no longer have the capacity to train new hires, then the new hires must enter the organization with everything they need to hit the ground running. A problem, which internal markets had dampened, is that most jobs require a mix of general and firm-specific human capital, and mixes of that sort are difficult for companies—and the headhunters who serve them—to find, attract, and secure from the external market. This is why Cappelli (2008) insists that companies must buy and make talent. But he also knows that many companies do not do that, trying, instead, to find what they need on the market (Cappelli 2008, 7). A second change is the technologically driven explosion of information about jobs and candidates. Company websites, job boards, and unsolicited e-mails and content on social media about “jobs recommended for you” make possibilities seem endless for many workers. LinkedIn’s four hundred million profiles and the countless résumés on job boards do the same for companies. What we know about choice is well established and clear: more real or perceived alternatives makes the decision process more agonizing and less likely to yield an actual choice and action (Schwartz 2004). Put simply, we are easily overwhelmed by choice and succumb to dither and delay. Both of these processes surely contribute to the rise of the new mantra—picky, picky, picky!—and cannot readily be peeled away from the economic fallout of the Great Recession.

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The Great Recession destroyed lives and livelihoods. Workers lost their jobs, long-term unemployment soared, and headhunters went under. The headhunters who survived, however, bore witness to a labor market that had been transformed in fundamental ways, most notably in the confidence of employers that they were firmly in the driver’s seat and could hire stars—perfect candidates. Employers’ belief in the value of stars has been around for some time, despite evidence that individual talent may be less portable than is often assumed (Groysberg 2010). The recession encouraged employers to think that talent was abundant and available; all they needed to do was to find and then buy it. At first glance, employers who wanted to buy stars might have appeared like a good deal for headhunters, who, after all, are in the talent-finding business. But there is a subtle and yet important difference between finding good candidates and finding perfect ones. The old aphorism that the perfect is the enemy of the good applies to headhunting just as much as it does to other areas of life, and headhunters found that perfect-candidate searches were often exercises in frustration. The problem, in essence, was that although employers want stars, that does not necessarily mean that the stars want them. Headhunters do best when they are recruiting good candidates, not perfect ones. Equally important is access to the sort of information that comes from having direct access to hiring managers. As we have described in previous chapters, the rise of electronic portals and marketplaces have weakened ties between hiring managers and headhunters and have made it difficult for the latter to assess their clients’ needs and thus to find and attract the right candidates. We think that headhunters should be concerned about the impact of these changes on the future of their industry. Some recruiters have already begun to adapt, taking their business into new and sometimes unfamiliar territory. We turn to these developments next.

6

Being a Headhunter The Evolution of an Accidental Occupation

I really just stumbled across recruiting. . . . I went and talked with somebody, and when I was talking with this individual about recruiting, I just got real excited. It’s like you stumble across something that really excites you that you never knew excited you. —a Southern City headhunter

The basics of headhunting—finding clients, getting job orders, recruiting candidates, and matchmaking—continue to give the industry its distinctive character. Pulling off the double sale is the key to being successful, and headhunters cannot hope to succeed unless they are effective and committed salespeople. At the same time, the industry has evolved because of factors we have already discussed, such as the role of electronic technology and the Great Recession, and because of more general changes, such as the decline of internal labor markets and the rise of the millennial generation and other cultural shifts. These changes are reflected in headhunters’ careers and in the way in which they seek to serve clients and candidates. In this chapter, we take a closer look at careers, showing how headhunters have begun to redefine the occupation. None of the headhunters we interviewed grew up dreaming of making it their life’s work. Becoming a headhunter was a largely accidental process, in which a chance encounter with a headhunter or an off-the-cuff remark

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led the person to give the business a try. As we have noted, it takes little more than a phone, a computer, and some chutzpah to begin recruiting, although many do not last long in the job. Our focus here, however, is on those who have stayed, weathering the ebbs and flows of the business cycle, embracing new technologies ranging from fax machines to LinkedIn, tolerating the different styles of youthful colleagues, clients, and candidates, and figuring out different ways of promoting and selling their services. The chapter develops in three sections. First, we examine the various ways in which someone becomes a headhunter—the routes into this accidental career. Second, we examine how the recruiting environment has changed, with many companies doing their recruiting in-house and with less reliance on third-party recruiters with their traditional selling skills of cold calling, countering, and closing. Third, we examine how headhunters have adapted to their changing environment by developing new recruiting models, focusing less on old-fashioned selling and much more on being a “strategic partner,” as one headhunter put it.

Becoming a Headhunter Two schools of thought have in the past dominated the research on careers and career choice. One group defined career choice as largely a matching of individual traits and skills with job requirements (e.g., Holland 1973); the other regarded career selection as a stage process, with the individual having to go through specific developmental stages before he or she can make the right choice of career (e.g., Super 1957). What both approaches overlooked, as Hodkinson and Sparkes (1997) and others have pointed out, is the role of serendipity in career decisions: people decide on careers when opportunities are suddenly, and sometimes unexpectedly, presented to them. They end up in careers that were unplanned, in what have been termed “accidental” careers (Richardson, Earnhardt, and Marion 2015). We will see that chance plays a significant part in determining who becomes a headhunter. Headhunting is not an aspirational occupation. People mostly become one as the result of an event that triggers a reappraisal of their careers or lives, followed by an opportunity—often an unexpected one—to enter the business. The trigger is typically a mid-career crisis or a personal change

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of some kind. People become bored with their jobs, feel that their promotion prospects are limited, or simply have a desire to try a completely different line of work or to take on a new challenge. A common theme among our interviewees was a preference for a less corporate and more entrepreneurial environment—they wanted to be directly responsible for their own economic fortunes. Personal changes include getting married or a desire to move to a different part of the country; for some becoming a headhunter was a way of moving closer to family.

Job Candidate to Headhunter Regardless of their motivations, restless employees who became headhunters seldom identified their new career as their first choice. It was far more common for them to be looking around, often contacting recruiters themselves, only to be recruited into the recruiting business. In fact, some of those who became headhunters in this way often showed little understanding of how headhunters operate, which explains why they thought that contacting a headhunter was a good way of finding a job. Consider one headhunter’s account of how he moved from the IRS, where he was a federal investigator, to recruiting accountants and bankers. He had found his work with the IRS increasingly dissatisfying because “I was making all the money under the law that I could make, I had absolutely nothing to do with human beings, all I was doing was reviewing the reviews of reviews about review reviewers.” In addition, he was based in Philadelphia, and he and his wife wanted to return to the South, which they considered home: So when we made the decision that we were going to do something on our own, we had to do it then; we certainly weren’t going to do it in Philadelphia, and we figured that [Southern City] was the place to come. So we came down here, and I sent letters to executive search firms, not knowing what they did or why and figuring that these people found people jobs. And I started interviewing with every company I could get to talk to me, and I talked to a bunch of these recruiters. And I found out that they had very little interest in my background because they weren’t able to market that to someone.

But the owner of a recruiting firm with whom he had interviewed made him a surprising offer: come to work for him as a recruiter, with the

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option of buying him out at a later date. He decided to take the offer, even though it meant not having a guaranteed paycheck: “I said, hey, this is what we’re looking for, the entrepreneurial environment, the chance to do it on my own.” Another example is a former supermarket executive who became a headhunter after contacting a recruiting firm and then wondering why the firm had been unable to find him a job: My background had been in the supermarket business during and after college. And I decided I didn’t want to go further with that for a lot of different reasons, and I had sent a résumé to a search firm here in [Southern City]. They were not real good about helping me, so I took it upon myself to jump in the car and drive to [Southern City] from Myrtle Beach, South Carolina, and say, “What’s going on, guys?” And during the process of that interview was offered a position with them because they had a vacancy at that time to have someone direct their search efforts in the supermarket industry. And so, not having a lot of options at that time, I came to [Southern City] and went to work for that company as a recruiter in charge of supermarket search for the Southeast.

Others became headhunters after being initially recruited as a candidate for a different kind of job, only for the recruiter to persuade them to enter the search business instead. In these cases the recruiter comes to the conclusion that she would rather have the candidate working for her than for her client because she believes he would make an excellent headhunter. A financial planner became a headhunter following a meeting with a headhunter as a candidate for a different job: And I went there really as an applicant and interviewed with what would become my general manager, and he turned the tables on me and said, “Well, let me tell you about this business. Have you ever heard about this business? We’re starting a financial division. Your background dealing with people over the last couple of years, your sales background, would come into play in this type of industry as well.” He described what I would be doing on a day-to-day basis. And this was a financial group. “You’d be calling the controllers, VPs of finance, CFOs, and asking them for their business.” And that sounded like from an ego standpoint that it would be a lot of fun.

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The advantage of flipping people from job candidates to headhunters is that they know the industry—they are insiders, after all—and they may already have demonstrated that they can identify the best candidates. Take the example of a retail store manager who was headhunted to be a recruiter because her ability to find good employees had been noticed: My job was to hire all these great people and surround myself with them to make me look good, so any job that I needed, any specific job I needed to get done, I hired somebody who was an expert in it, and they did that. And it really did make me look great, and I was very successful because of that, and X [the headhunter] said, “You know, you do such a good job of hiring people for yourself, you should probably apply that skill to hiring great people for other companies. Why don’t you come work for me as a recruiter?”

The job-candidate-to-recruiter story is such a familiar one that industry trainers routinely advise owners and managers of recruiting firms to be on the lookout for candidates they can flip and offer suggestions for how to proceed. For example, Steve Finkel (2005) has stated: Whenever you determine the occupation of a person whom you may wish to consider, immediately make a comment such as “Hmm, you know some of the best producers in our industry come from exactly that background.” This will immediately surface any dissatisfaction with his present position. Make it a habit to comment in a similar fashion consistently. Be alert for interest.

Transferable Skills Prospective headhunters can be also be found in the ranks of those who have transferable skills—people who acquired skills in other occupations that would be effective in recruiting. Owners and managers of recruiting firms are advised that they can find likely prospects in two occupational groups. First, there are office-products and supplies salespeople. Barbara Bruno said that when she was looking for recruiters, she encouraged these reps to call on her so that she could assess how good they were at sales: “When they are selling you, rate their selling skills.” These off-the-cuff job interviews had generated good hires: “My current top producer was

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a rep for Minolta Copiers; they provide amazing training” (2008b). Steve Finkel also stressed the value of meeting with office-products reps: “Apart from the possibility of your benefitting from their products, they represent an often-ignored source of potential consultants [recruiters].” He added that they were often willing to consider new opportunities: “Do not assume they are all happy” (Finkel 2005). The second category consists of workers in customer-service jobs where the hours are long and the pay is low. Customer-service workers are favored because they are comfortable on the phone and are able to project a positive image of themselves and their organization; long hours and low pay means they can easily be recruited. These workers can be found in hotels, retail stores, and car rental agencies. Barbara Bruno (2008a) explained: I call into hotels and ask to speak with the salesperson who sells events. This person is always a college grad, great communication skills, very used to selling over the phone. They are normally underpaid and overworked. They have to sell the event and then work the event. They work weekends, holidays, nights, etc. When they come to work for us, they think they died and went to heaven! Over 50 percent of my current sales team came from hotels.

Tim Sackett also recommended looking for potential recruiters in the customer-service ranks: “Bartenders might be the best previous job, if I was forced to pick one. Any kind of job that had you on the phone talking to people would be second.” Headhunting, he suggested, was just a sales job with better pay and working conditions: The pay is way better than your normal crappy sales jobs selling cell phones or renting cars to people. . . . The hours are pretty good. No weekends. A few nights here and there. You get to interact with a great group of people. The latest and greatest tools. (Sackett 2014)

One woman became a headhunter because of her ability to do marketing research on the phone. A friend recommended her to a recruiting agency, telling her, “You live on the phone all the time anyway, why don’t you go and make a real income?” With little idea as to what recruiters did, she interviewed with the agency and got the job. Another woman spent fourteen years in telemarketing, working with her husband,

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selling seminars in sales and management training over the phone. When she began looking for a different job because of her impending divorce, “every recruiter and agency tried to hire me as a personnel consultant [a headhunter].” But she was reluctant to enter the industry because she felt it had a questionable reputation: “I didn’t want to be a personnel consultant. I thought that they were the sleaziest bags of no-good, nonprofessional people that I had ever met, for the most part.” Her failure to find a suitable alternative to recruiting finally led her to accept one of these offers, and she decided to try it for a year. Within a month, she realized she had found her calling: “I knew I’d never do anything else. I just absolutely fell in love with it.” She has been a headhunter for over thirty years.

A Personal Connection People also become headhunters because of a personal connection to a headhunter. One man, for example, decided to enter his father’s recruiting agency after completing seminary training and finding himself at a loose end, unsure of what to do next: My dad and mom were there helping me move or something. My dad was complaining about having more work than he could handle at the moment. My mom was jokingly saying, “Well, hire your son, then.” I had never once considered going into the field, but the timing was right. I had just finished. I was moving. I didn’t really have any kind of stable income ready. So, sort of as a temporary thing, I started with him. I’ve been working out of my house from the beginning. I’m still doing it almost two and a half years later, now.

Spouses and friends who are headhunters are the most likely connections leading to a recruiting career. Once again, this career is usually unplanned—headhunters use phrases such as “fell into” or “stumbled across” to describe how they came to know the search business. A legal services recruiter spent ten years working for law firms, prior to becoming a headhunter: “I did everything imaginable except for being an attorney. I’ve done receptionist work, I’ve chased dust bunnies, I’ve poured coffee, I’ve done secretarial work, I’ve done paralegal work, I’ve done court work, I’ve done just a little bit of everything.” She also worked in the

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administrative and personnel side of the business. Despite her extensive and wide-ranging knowledge of the legal industry, it took an unexpected event to make her switch from working in that industry to recruiting for it: “A couple of friends of mine had opened up a business, and one of them wanted to get out of the partnership, so I came in at that point.” Not, as she explained, to be a partner but to “learn the business from that side.” But the company subsequently dissolved, so she was able to step in and take over as the new owner. She summed up her serendipitous transformation from law-firm administration to legal recruitment: “[I] kind of fell into this actually. . . . It was just a matter of being in the right place at the right time, actually.” Although we have characterized headhunting as an accidental occupation, not everyone enters it by chance alone. Non-accidental entrants mostly come from HR and in-house recruiting, where they have encountered third-party recruiters. They saw headhunting as an opportunity to be more autonomous and to make more money than they could in the corporate sector. But they remain an exception to the general pattern we have identified here.

A Changed Recruiting Environment Over the past two decades, electronic technologies, the economy, demography, and cultural shifts have all affected how headhunters work. Chapters 4 and 5 focused on the impact of technology and the economy on recruiting. We now take a closer look at the effect of generational and cultural changes. In our interviews with veteran headhunters, we were struck by the distinction that some drew between headhunting today and the practices of the 1970s and 1980s, when they began their careers. Without any prompting, they contrasted the industry’s contemporary focus on providing a service with its previous, sleazier, “used car salesman” reputation. A veteran headhunter said: “We start off with much friendlier relationships with client companies and candidates than when I first came into the industry. We really were looked at by most folks as used car salesmen. We didn’t have a professional face.” Another longtime recruiter claimed that recruiting was no longer a sales business: “The world of recruiting

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has changed significantly from what it was when I began my career or even throughout my career. One of the significant ways in which it has changed is that this is no longer a sales business, in my opinion.” She recalled her boss’s words when she started her career: “Rhonda [a pseudonym], I want to be real clear with you. You’re not a social worker. This is a sales job.” In the next section we consider what headhunters mean when they suggest they are providing a service. What are they getting at when they say it is not a sales business? We do not think that these comments should be taken literally, because all headhunters know that selling is still the cornerstone of their industry. But there is evidence that opportunities to present candidates directly to hiring managers are now more restricted for some headhunters. One reason for this is that the portals and marketplaces that we discussed in previous chapters have curtailed traditional candidate presentations, and therefore it is understandable why at least some headhunters feel that their selling skills are not being fully deployed. Rhonda clearly felt that presentations were no longer as important for her as they once were: This business, this job, is now a matchmaking job. You get a job order. You put forward the people. You hope that they hire them. It’s not a job where you talk about each candidate and you use your closing skills, your Zig Ziglar [a well-known author, salesperson, and motivational speaker] skills. It’s not that kind of business anymore. . . . It’s not pitching anymore. It’s not aggressive sales anymore. It’s putting the right product or person or whatever you have in front of them and hoping it’s the right one and then it closes itself. That’s how it closes.

In Rhonda’s case, however, much of her frustration was due to what she perceived as a generational shift in her clients. She felt that millennial clients, unlike baby boomers, had little interest in talking on the phone or in developing relationships with recruiters: “This is all done by e-mail. They tell me who they want to see. It’s very polite. I send them out, and then they tell me who they want to hire.” Other veteran headhunters echoed her comments about millennials, even if they did not support her contention that headhunting was no longer a sales job. They criticized millennials for preferring text and e-mail to actual conversations. As one headhunter put it, “You can’t have

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a relationship via technology.” Another complained about millennials’ sense of entitlement and desire for immediate gratification: Everyone that I know who deals with them regularly, who is recruiting people in their mid-to-late twenties, says it is just hard. They are different. This whole culture of entitlement and all this “me-me-me” stuff. . . . They have a whole different, not just a mind-set, their whole character set is different.

The above criticisms are undoubtedly at least partly fueled by the perennial dismay with which older generations view younger generations. But there is no doubt that new technologies have left their mark on headhunting and that younger workers have adopted these changes much more enthusiastically than older ones. One headhunter explained that the challenge for older recruiters such as herself was not that millennials had different attitudes or values but rather that they were more adaptable to the new IT environment and had embraced its ability to keep others, including recruiters, at arm’s length: I’m a baby boomer. Things that are important to me and my generation aren’t necessarily the same for the younger generations. The things that motivate them and keep them motivated are different. I had a client recently ask me, “How do we communicate with the millennial? What do we do?” They’re afraid that what they’re looking for is so different than what other generations have looked for. So, we talked a little bit about that. So, that helped him quite a bit in how to address it and be able to attract and maintain good young people. I’ve also found with the people that I deal with, my clients, we touched upon it earlier. Younger people don’t want to talk on the phone. They want technology—that’s what they grew up with. So in some ways we’ve had to adapt to it rather than becoming a dinosaur and becoming extinct. People who don’t embrace that and who are not flexible and adaptable to change with the times and what clients are looking for and how they work and operate, those are the ones who are going to find themselves with less and less business.

New technologies and new attitudes have added to the challenges facing headhunters. The changes we have been examining—the importance of social media, the rise of electronic marketplaces, the Great Recession,

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the millennial generation and its preference for text over conversation— have eroded the certainties on which headhunting was based. Headhunters have had to come up with new ways of practicing their craft or face the prospect of failing. In the final section of this chapter we look at the different ways in which longtime headhunters have adapted.

Surviving as a Headhunter Headhunting has become a lot more fluid over the past decade. The traditional boundaries that defined the industry—between third-party recruiters and HR and between contingency recruiting and its retained counterpart—are starting to blur, adding to the uncertainty of those who do contingency search. Electronic marketplaces threaten to undermine the development of client relationships, which have always been key to successful recruiting. At least some of these changes have also created new opportunities, which are reflected in the evolution of headhunters’ careers. We observed four distinctive strategies in the headhunter response to the changing recruitment environment. First, some headhunters have doubled down on the traditional headhunting model by pursuing a niche or specialization strategy, focusing on hard-to-find candidates in narrow segments of the labor market that they can dominate. Second, some headhunters have sought to compel clients to put some “skin in the game” by getting them to pay at least part of the recruiting fees up front, thus ensuring that headhunters will receive at least partial compensation for their work, even if the search is fruitless. Third, some headhunters have taken advantage of new technologies to separate sourcing (identifying prospects) from recruiting (vetting prospects, turning them into candidates, and placing them). Finally, a fourth group has sought strategic partnerships with clients, either by working directly for them for extended periods or by offering them a broader array of services than candidate search and placement alone.

Specialization: The Niche Strategy A good illustration of the niche strategy is the agency that one headhunter and her husband operate. They do not employ anyone else: “We have

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had as many as four, but we’ve downsized because of the economy.” Her specialty is aerospace engineering, although they do fill related aerospace jobs if the client requests that. A headhunter with nearly thirty years of experience, she began her agency in 2004. At the time of the Great Recession, she was looking to expand her search activity to the auto and shipbuilding industries, what she termed “large moving objects.” She quickly pulled back when the recession hit, and she attributes her survival to her niche focus: I think, for us, the reason we were able to survive the downturn is because we are so niche oriented. As I mentioned, focusing on large moving objects helped us, but we’d expanded beyond that before things got bad. Money was extremely tight. We ran back to our niche and stayed there. I think that was a big help. Aerospace was hit, but not as hard as automotive, at least for my clients. We were still having work. With that being said, it was our niche, I think, that helped us through the downturn.

This headhunter argued that specialization, combined with her many years of experience, gave her the ability to offer her clients a higher level of quality than that provided by a generalist recruiter: “We put more into the quality side and basically said to our clients, ‘We’re small, we’re niche, we’ve been in aerospace since 1997.’ Also, as a small company, we targeted the harder-to-fill stuff.” We encountered a few headhunters who had pursued the niche strategy effectively. Another headhunter had built a successful career over forty years by specializing in the concrete industry: “I’m an inch wide, a mile deep” was his evocative description of his narrow focus. He added, “So I’m well known in the concrete industry.” These comments, however, also point to why more headhunters have not been able to pursue the niche strategy in responding to the uncertainties that have roiled the industry. Niches that are sheltered from economic turbulence work well for those who worked in them for many years and have established reputations, but they are difficult to break into, especially when it seems that every other recruiter is also seeking a safe haven. For most headhunters, therefore, the better options for coping with uncertainty lie elsewhere.

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Securing Commitment from Clients: The “Container” Recruiting Strategy The implacable logic of contingency headhunting, as we have stressed throughout the book, is that recruiters make money if, and only if, they make placements. There is no reward for finding the runner-up candidate. This is why qualifying clients and job orders is so important for headhunters: it reduces the risk of spending hours on fruitless job assignments that are unlikely to generate placements. To be successful, a contingency recruiter needs to be able to judge her odds of finding good candidates and to assess the risk of a rival headhunter producing an even better candidate. The uncertainty inherent in contingency headhunting has been exacerbated by the rise of talent acquisition departments (TAD), because inhouse recruiters pose a challenge that is qualitatively different from what headhunters face from their external competitors. The internal status of in-house recruiters confers two distinct advantages: direct access to the hiring managers, and the fact that the company, if it hires through a TAD, will not have to pay any third-party fees. A client may be indifferent as to whether it pays a fee to one headhunter or another, but it would prefer to pay no fee at all. In fact, there is an incentive for it to claim that its own TAD, rather than an external recruiter, found the candidate who was hired; some headhunters have complained that there are instances in which they have lost placement fees because they were unable to prove that the candidate was theirs, even though they were certain of this. For headhunters, portals exacerbate this problem because they are often used as an impartial referee, albeit one owned and controlled by in-house recruiters. Regardless of whether they experience any actual dishonesty or not, contingency recruiters always face the problem of working for no reward. As one noted, “This industry is probably the only industry where we work for free a lot of the time. We’ll get a search; we’ll put a lot of time and energy into it; we’ll have dived into it. Then the client could say, ‘Oh, we found somebody on our own.’ Or, ‘We’re putting it on hold.’ . . . Nobody likes working for free!” The most straightforward way of reducing the risk of not being paid for their efforts, other than to switch to retained search completely, is for headhunters to insist on at least some payment up front, prior to engaging

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in the search. They will be paid the rest of the fee if they make the placement. This is not the same as pure retained recruiting, which uses a feefor-effort model exclusively. It is a hybrid model, in which payment is based partly on effort (the retained approach) and partly on results (the contingency approach). Some headhunters refer to it as the “container” approach to recruiting because it combines the features of contingency and retained search. One headhunter explained the logic of the hybrid strategy: I would say, today, probably a third of our work is contingency. The other two-thirds is a hybrid model called “engagement fee.” It’s another sort of bullet in our gun that allows us to compete aggressively against retained firms. Their model, with retained search, is that you’re going to pay the entire fee, regardless of the result. With us you pay 25 percent of the projected search fee up front to retain my firm, but the other 75 percent of that projected fee is contingency. We earn none of it unless you hire through us. So it’s given us the ability to be more flexible and fluid. It gives our clients a great alternative that doesn’t put as much pressure on them. Quite frankly, we have to perform, so we have all the pressure. We have all the pressure— if we don’t perform, we don’t earn the bulk of our fee.

These remarks highlight the advantages of contained recruiting for client and headhunter. The client gets a full-scale effort from the headhunter because the “pressure to perform” remains very high. The headhunter gets a client who has made a commitment to him and is much less likely to offer the assignment to other recruiters. The headhunter described clients as “excited” about this approach: It’s been a huge boon for our business. Clients, when they hear about the model, really get excited about it. We typically can win those types of engagements. I’ll be candid: I’d say that we’re not likely to get the CEO of Home Depot’s search, but we would probably fill a niche for them by helping that individual build out their team.

Another headhunter echoed the point that a client who paid an up-front fee was unlikely to use other recruiters: “When a company engages your services with a cash payment, there’s a level of exclusivity that’s not there in a typical contingency.”

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An additional advantage of the hybrid model, in addition to securing commitment, is that is a flexible arrangement, in the sense that for any given search assignment the headhunter and client get to decide what percentage of the projected search fee will be retained and what percentage will be paid on a contingency basis. The difficulty of the search and the length of time it will take influence the retained-contingency split. Although search difficulty generally corresponds to a higher retained percentage, if the search assignment is particularly challenging, a recruiter may not want any portion to be retained because she may decide it warrants no more than a cursory effort. A retained fee creates an obligation that the headhunter may not want, as another headhunter explained: “Sometimes it’s a discretionary thing and a judgment call to whether you want a retainer. You don’t want to be on the hook of spending time on a one blue-eyed, one green-eyed unicorn.” The hybrid strategy shares the same problem as the niche strategy, however, in that it is predicated on successful past performance. Recruiters who have done well over time and have an established stable of clients will be much more likely to be able to persuade these clients to pay a container fee than those who are relative newcomers or who are struggling to stay afloat in choppy economic waters. And, of course, some clients may refuse to pay any fee up front in the belief that theirs is a buyer’s market and therefore there is no need to deviate from the pure contingency model.

Separating Sourcing from Recruiting: Taking Advantage of Technology Prior to the Internet era, finding candidates was hard work. It required headhunters to spend time on the phone checking in with contacts and making cold calls; it took a mixture of skill, luck, and deception to get receptionists and other organizational gatekeepers to reveal the names of employees. Obtaining a company directory with names, job titles, and contact information was the ultimate test of a recruiter’s ability to extract information from behind organizational lines. LinkedIn and other websites have, however, largely eliminated the need for that sort of effort, stealth, and trickery. With the Internet, many prospects are just a few mouse clicks away. This has allowed headhunters to separate sourcing

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(identifying likely prospects) from recruiting (turning prospects into candidates) and to hire researchers to do the sourcing. Researchers have always been a part of the search business, but almost always in large firms where they generally worked alongside recruiters. A researcher might make cold calls, for example, while the recruiters worked their contacts. Some recruiters began as researchers and then took on additional recruiting responsibilities. In contrast, the Internet makes it relatively easy to employ stand-alone researchers, who can do their work at home (or anywhere in the world, for that matter) and who have no aspirations to become recruiters themselves. Sourcing and researching are increasingly discrete activities and can easily be assigned to different kinds of workers in a more refined division of labor. As we have noted at several points in the book thus far, headhunting includes both extensive and intensive search. Researchers are hired to conduct extensive searches, freeing recruiters to concentrate on intensive searches. This distinction was implicit in how one headhunter described the use of the researcher in her office: How we’re set up, just to let you know, we usually have a support person in our office. It’s one person. That is her sole job: sourcing candidates. . . . She never picks up a phone. She understands the high-level perspective of the roles, locations, if the client is willing to relocate or not, what the general profile that we’re looking for is. She’s working the job boards. She’s working Careers and Foods, which is a very specific website for us. It’s great. She’s working Indeed. She’s working Monster and CareerBuilder. She’s got saved searches that she utilizes from her perspective to find candidates. So imagine that you get a new job order, a search assignment for, say, that client in Michigan that you talked about that has pretty specific needs. Would you mostly lean on this researcher to help you find candidates? Yes. That is our process. We have a pretty extensive, set process that we go through when we get a new job order. One is getting that job description directly to her. Then she can start sourcing the boards.

This headhunter noted that even if a recruiter uncovered a candidate on a site such as LinkedIn, the procedure followed in her office was to turn this name over to the researcher, in order for her to continue digging on the job boards mentioned above “to see if they’re on one of the job boards actively so that we can get a little bit more access. She can get their

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cell phone number, their e-mail, that kind of thing.” She made it clear how valuable this activity was by noting that in the previous year, twelve of her fifteen placements were candidates found by her researcher—candidates identified on the basis of the specs that the researcher had been given, without her ever having touched a phone. Another headhunter explained the scale of extensive searching that his office could do by employing part-time researchers, all of them stay-athome mothers with HR backgrounds. He described them as his “secret sauce”: You know, they understand HR, we train them up in how to use the tools that we use and that type of thing and—and so they’re out there screening and sourcing, you know, and it’s kind of odd when I get a 3:30 in the morning e-mail, okay, because I know that Kelly’s up with her baby because he was colicky, you know, and it’s like—but she’s up and she’s working. And that’s worked out exceptionally well for us because, you know, the quality of the people that we’re getting for those roles and, you know, and the quality of the work and then they’re desirous of, you know, having some work and it’s flexible, you know, they don’t have to be in the office.

The researchers’ efforts allowed him to conduct searches in which they had résumés from more than a thousand candidates. He described what the search process would look like. The researchers would use the specs to narrow this number down to 250 people, which would be narrowed down to 40 to 50 candidates on the basis of answers to a set of standard questions that the researchers e-mailed to the candidates. The winnowing would continue until ten to twelve candidates were left, at which point the recruiters would take over and do intensive search—gather in-depth information from those left on the long short-list. This group would be reduced to the three to five people who would then be presented to the client. Technology facilitates but certainly does not require this more specialized division of labor. That pattern is wholly consistent with Barley’s (1986) notion of technology as an “occasion”—not a deterministic causal force—for restructuring work practices, roles, and organizations. In the past, sourcing and recruiting were not distinct activities or roles. In fact, it was quite common for a sourcing phone call to turn into a recruiting call

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and vice versa. We anticipate, however, that specialized, high-tech sourcers will be the wave of the future.

Side Betting: Headhunters as Strategic Partners The fourth and final strategy that we discuss consists of headhunters trying to increase their appeal to clients by offering a broader range of services than traditional recruiting alone. This is a “side bet” strategy—headhunters are betting that if recruiting revenues decline they can make money by partnering in other ways with clients. Headhunters identify client needs, other than recruiting, and then show how they can address them. One such need is the HR function in toto. During the Great Recession some companies saw HR as one part of the organization where they could reduce costs by cutting personnel or by eliminating the entire department. This created an opportunity for headhunters to move into HR outsourcing, as one headhunter explained. He said that performing HR functions was now the third leg of his business, in addition to traditional recruiting and temporary staffing: The third part, which we started building during the height of the recession, was a, you know, an HR outsourcing or what we call an HR partnership situation where we’re, you know, we’re coming in and in some cases, we’re their complete HR function. In other cases, we’re just part of it. We might be the talent acquisition part or labor relations part of their business. So we started building that, and that side of our business is growing a lot because, you know, companies are interested in saving money, and they can generally save money by outsourcing. . . . So what the advantage of outsourcing is, they can get what they need when they need it. It’s kind of on-time delivery type thing where they need to work on succession planning or they need to work on their affirmative action plans, we have people that can, you know, can take care of those things for them.

Handling HR activities was a nice complement to this headhunter’s recruiting focus—HR positions. It meant that he regularly encountered candidates whom he could hire for his own business rather than for his clients. For example, he had agreed to take on the responsibility for handling the payroll for a small company, even though he did not actually have a payroll specialist on his staff: “And so we’ve started with them a

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couple of months ago and we run their payroll, you know, every week, and it’s for about seventeen hundred, eighteen hundred employees.” His company’s lack of payroll expertise wasn’t a problem, he said: “Because we’re a pretty good HR search firm, we found several good candidates in no time at all, and brought one, ended up bringing one on.” He soon realized that his new payroll specialist would allow him to encourage other companies to outsource their payroll functions to his organization. His pitch would be to remind his clients that doing the payroll was not necessarily a full-time position, and it would save them money if they replaced their payroll managers with his payroll service: My guess would be that, you know, the person, even though they’re running the payroll weekly, you know, we’re talking about someone probably one week, you know, is two or three days devoted to doing payroll, but there’s a couple of extra days in there. Well, a lot of companies, you know, a lot of companies will just have, this is our payroll manager or whatever, and that person’s not busy all the time. And so we’re able to draw them in and, you know, our plan is for the individual we’ve got doing this, as we get up and get comfortable, get the systems and process in place, is we’ll probably find opportunities for her to do payroll for other companies as well and we’ll have the capacity to do that and the ability to support it. So that’s kind of where we’re going on that. But we’re seeing growth in those areas, you know, the HR outsourcing.

The goal of headhunters like this who sought to expand their services to clients was to become strategic partners of these clients. Another headhunter emphasized the value she could bring to clients because her skills and experience had expanded in adapting to changes in the marketplace and the economy at large: “So, now what I have is four divisions. I do retained executive search. I do HR consulting. I do leadership training and development. I’m also a certified executive-life emotional intelligence coach.” She added: “My background has evolved, so I am a strategic partner. I bring a lot of value.” The side-bet strategy has the potential to change the nature of headhunting quite dramatically. It follows the classic organizational model of diversifying when faced with an uncertain or changing market. But because it is still a relatively novel strategy, it is not clear how feasible it is for most recruiters to provide the sorts of wide-ranging services that we

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discussed above. At least for solo practitioners, it is difficult see how they can both recruit effectively and run company payrolls or conduct leadership-training sessions. Perhaps the future will belong to multifaceted third-party agencies, with some employees assigned to sourcing, others engaged in recruitment and client development, and still others performing HR activities. The careers of headhunters are an exercise in risk management. Social, economic, technological, and corporate changes have left them feeling far more vulnerable than their predecessors of the 1980s and 1990s. Some headhunters have responded by developing strategic alliances and partnerships with their clients, either through more-or-less exclusive recruiting arrangements or by expanding the services they offer to clients. Other headhunters have continued their work in much the same the way as they have always done, hoping that the traditional skills of client development, extensive and intensive search, and candidate presentation will still count in a world of talent acquisition departments and electronic portals. In the concluding chapter we will offer our assessment of their future.

Conclusion What We Can Learn from Headhunters

We began this project with some questions about how headhunters had fared in the more than twenty years that had elapsed since we first studied them and their work. Those years had brought significant changes in the labor market and in American society in general, some of which we speculated might have threatened the recruiting business and others that might have steadied and even enhanced the industry’s fortunes. In the former category were the rise of social media and the Great Recession, a one-two punch that some observers predicted would lead to the demise of headhunting because employers and candidates would have both the means and the incentive to find one another without the benefit of formal intermediaries or matchmakers. In the latter category was the continued erosion of internal labor markets, which had led many companies to seek talented employees in the external labor market rather than to promote from within, a trend from which headhunters had undoubtedly profited. Our findings revealed an industry that has been dramatically altered by the developments noted above. Although it is difficult to measure with

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precision, it appeared that there were fewer headhunters overall than in the 1990s. Our sense that the ranks of headhunters had thinned, based on the declining number of members of industry associations, was supported by our interviews. Headhunters told us that the Great Recession had devastated their industry, forcing some out of business altogether and leaving others to tread furiously to keep their heads above the economic water. Our conversations with survivors, however, revealed a far more complex story than that of an industry in decline. Many headhunters were flourishing, even as others disappeared. Significant challenges remained for recruiters—to a person they disavowed the notion that the so-called buyers’ labor market made it easier to find good job candidates—but employers still needed, and used, their services. Technology had changed how they worked but not what they did. We were struck, in fact, by how the passage of time had touched but not transformed the fundamental work of recruiting. Successful recruiting was and is still based on the same core principles: finding clients, evaluating job orders, recruiting and qualifying candidates, and making placements by pulling off the double sale. There have been some notable changes—talent acquisition departments and electronic portals are barriers between headhunters and their clients, and e-mail and LinkedIn have made it easier to identify clients and candidates—but the hard graft of recruiting is the same as it ever was. This means that headhunters must spend hours researching potential clients and prospective candidates; making large numbers of calls and sending numerous e-mails to generate a handful of viable job orders and candidates; and brokering interactions between candidates and clients to ensure that good offers surface and are secured. The headhunters who survived the turmoil and disruption of the last two decades have been successful for two main reasons. First, they have continued to do the basics of third-party search well: finding a niche in the market, developing a core of regular clients, knowing how to form a pool of good candidates quickly, and understanding how to match client and candidate. Specialization, speed, and brokering interactions and negotiations between clients and candidates remain the skills that culminate in a successful placement. Second, effective headhunters work the invisible labor market, the one in which job openings are created and contented employees are persuaded to become candidates. It is the market in which a headhunter encourages turnover by suggesting to a client who has no job openings that she might want to consider top-grading. It is the market in

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which the best candidates are sourced (or poached, as some might argue) from competitors. It is the market inhabited by passive candidates, who often insist they have no interest in considering a new job, who sometimes withdraw from job interviews, and who occasionally succumb to the temptation of a counteroffer or buyback. The challenges that headhunters have faced as a result of social media, economic turmoil, and changes in organizational hiring procedures should not be underestimated. Headhunters reported that employers and candidates were using LinkedIn and other sites to identify prospects and opportunities on their own. The Great Recession had caused job orders to dry up and had made it more difficult to find passive candidates when jobs did become available. The centralization of hiring processes under HR’s oversight has made it harder for headhunters to find out what the hiring manager is really looking for in the new hire and to get a quick response when good candidates are presented. Talent acquisition departments meant that headhunters have faced competition from in-house recruiters, who could legitimately claim to save employers the cost of third-party agents. Our interest in headhunters is due to more than their just being an unusual and changing occupation. By studying headhunters, we have learned about and from them. An analysis of who they are and what they do has provided insights into broader economic trends and social patterns. They provide a distinctive vantage point for examining the modern American corporation and how the managers, administrators, accountants, engineers, salespersons, and other white-collar workers who run these businesses are hired. Headhunters, as corporate outsiders with direct access to hiring authorities, are the canaries in the labor-market coal mine: they are the first to feel the winds of change blowing through this market. We return in this chapter to four theoretical questions that we raised in the introduction and that we have discussed at various points throughout the book. One is the value of headhunters to employers. What do they provide that employers could not obtain on their own, at least not without considerable effort and difficulty? A second is the relationship between cultural fit, or matching, and hiring. There has been considerable discussion in the sociological literature about the role of chemistry in the hiring decision and about how employers want to be “excited” by candidates. Where do skill and performance come into the picture, if at all? A third question is about the labor market and, in particular, about how employers and candidates have adapted their behavior in response to the

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perception that the market, at least in the years during and since the Great Recession, favors employers—that it is a buyer’s market. Why are recruiting and hiring so difficult then? A fourth question or, rather, set of questions, involves the matter of technology and rationality. The recruitment industry has seen the emergence of a spate of new technologies, including social media, e-HRM tools such as electronic portals, and electronic marketplaces administered by third parties. Have these technologies changed how headhunters work, how they interact with candidates and clients, and perhaps even the very nature of recruiting itself?

The Value of Headhunters Headhunters bring high-touch search to a high-tech world. New technologies and social media make it relatively easy to identify prospective candidates today, a notable contrast with the past. Old-time headhunters, for example, had developed an elaborate arsenal of ruses to get organizational gatekeepers to divulge, either wittingly or unwittingly, the names of prospects. Headhunters—and employers—can now get many more names in a fraction of the time by simply using LinkedIn, which is a remarkably effective tool for casting a wide net and pulling in lots of prospects, although many will turn out to be uninterested or unsuitable. That type of extensive search makes hidden prospects visible by generating the names of potential candidates, complete with preliminary information regarding work histories and qualifications. LinkedIn is not good, however, at intensive search, which involves determining which prospects might be qualified and interested, persuading them to become candidates, preparing them for interviews, and encouraging them to accept offers. This is where headhunters earn their fees. Their job is to find the best prospects, convert them into candidates, and match them with a client. This deceptively simple description belies the complexity of the job because headhunters are engaged in a nearly constant evaluation of clients and candidates. Their value to both sides is that their evaluation of the other is a way of resolving the issues of information asymmetry and adverse selection that are an unavoidable feature of the labor market. Critically, employers do not know as much about the performance, character, or motivations of job candidates as they would like; candidates, on the other hand, do not know as much about the characteristics

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of the organization, the job, or their prospective boss as they would like. Both sides have limited information about the other, which creates the opportunity for headhunters to act as information brokers. Much of what headhunters do in qualifying or evaluating clients and candidates is decidedly high touch and has been common practice for years: they talk to people, usually on the telephone. Notwithstanding the value of job boards (e.g., Monster and Dice), third-party databases (e.g., Zoominfo and SGA Executive Tracker), and social media (e.g., LinkedIn), headhunters continue to create and maintain their own databases and to turn to them first when they are filling job orders. Their databases contain important information about the contacts they have cultivated over the years, using phone calls, e-mails, and blogs. Databases are a vital source of potential candidates and are equally valuable for generating names of new prospects—an e-mail to the members of a headhunter’s network is a quick and often effective way of generating leads in a search, which can be followed up with e-mails and phone calls to those who look particularly promising. Headhunters talk to prospects to determine whether they would make good candidates and to assess their likelihood of making the placement. This means drilling down past the “fluff” that is found in résumés and online profiles to get a true sense of whether a prospect could become a viable candidate. Headhunters need to find out about a candidate’s skills and work experience and how closely these match what the client is looking for, how well the candidate will fit with the hiring manager and his or her coworkers, and what would make the candidate accept the job, if it were offered. This is the art of turning passive candidates into active ones, an interaction in which headhunters learn not only what would make a candidate attractive to a client but also about the candidate’s ambitions, goals, and wounds or pain points that, if addressed, would make her particularly receptive to an outside offer. Almost all of this information has to be obtained through direct person-to-person contact, with headhunters in effect grilling candidates to get answers to these questions. That grilling, of course, has to be conducted skillfully, almost artfully, as passives must be wooed into the labor market. It is just as important for headhunters to hear from their clients, beginning when they initially receive the job order and continuing throughout the search. They regard a direct line of communication with hiring managers as essential because this confirms what kinds of candidates they should

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be seeking: knowing the desired mix of skills, experience, and chemistry gives headhunters a target to aim for and increases their likelihood of turning interviews and offers into placements. If they are forced to go through HR, instead of having direct access to the hiring manager, headhunters will often withdraw from the search or give it little more than a token effort. They not only need hiring managers to talk to them, but to do so regularly and promptly. Nothing frustrates headhunters more than a hiring process that is slow or lengthy, because this undermines their ability to sustain the interest of their top prospects, who are likely to walk away from a search that is protracted. Headhunters talk to clients and candidates at every step, beginning with qualifying the candidate and job order, continuing through the search process, and culminating in the interview, the job offer, and the placement. They act like career counselors or coaches, advising candidates and clients on what to do and what to say, in order to maximize their appeal and also to avoid antagonizing the other and derailing the potential placement. They selectively share inside information with both sides in their bid to ensure that clients and candidates successfully sell themselves to the other and that chemistry is formed during the interview, which increases the likelihood of an offer being made, accepted, and honored.

Human Capital, Cultural Matching, and Hiring Labor-market scholars have recently highlighted the importance of cultural matching or chemistry in the hiring decision (e.g., Rivera 2012, 2015; Sharone 2013). Cultural matching refers to whether hiring managers and job candidates pursue similar extracurricular activities, have similar backgrounds and tastes, or share similar presentation styles. These similarities result in a sense of fit between hirer and applicant: they discover a mutual compatibility, and excitement is created in the mind of the hirer or evaluator. For example, Rivera studied entry-level hiring in elite professional service firms and found that nearly 80 percent of her interviewees (the evaluators) reported that their emotional response to candidates was the primary way they assessed candidates and made hiring decisions. Further, evaluators believed this response—which they referred to as “gut instinct”—was a better indicator than the résumés as

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to which candidate was the best. What they were looking for and valued most highly were candidates who “excited” them (2015, 1351–56). There is equally strong evidence that job seekers understand or at least believe that the likelihood of their getting a job depends on the extent to which they generate rapport or chemistry with their interviewers. Sharone (2013) describes job seekers attempting to present a self that will fit with interviewers as “playing the chemistry game,” a game he regards as a defining characteristic of the U.S. labor market. One important limitation to these studies is that they focus on the hiring of those without jobs, either entry-level candidates (Rivera) or the unemployed (Sharone). Evaluators who are reviewing résumés of new graduates are going to find little direct evidence of candidates’ ability to perform the jobs for which they are being considered. Consequently, it is not entirely surprising that cultural similarity “was the most common mechanism employers used to assess applicants at the job interview stage” (Rivera 2012, 1006). Employers of these kinds of candidates anticipate that the candidates will be taught the skills relevant to the job after they are hired, which explains why they emphasize candidates’ conduct outside the workplace in their evaluations. The hiring of candidates who already have jobs, however, is a completely different matter. Employers commonly expect these hires to have a mix of skills and experience—the human capital—that will allow them to be productive performers from the outset. The search for perfect candidates, which originated in the dissolution of internal labor markets in the 1990s and became an employer preoccupation following the Great Recession, reflects the belief that companies cannot afford to waste time in training new employees. It is precisely to avoid having to do this that they turn to headhunters. The most telling indication of the value that employers place on skills and experience is the effort that headhunters make to discover the “hot buttons” of their clients and candidates. A hiring manager’s hot buttons are the specific experiences, skills, and capabilities that will excite her when they are presented in a candidate. They are much more precise than the often bland and generic job descriptions that are given to headhunters, which is why the latter value access to hiring managers so highly—they need to determine the manager’s hot buttons for the position at hand. Similarly, whether a candidate possesses the desired hot-button characteristics

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is seldom evident from his résumé. A headhunter needs to know exactly what the prospective candidate is doing and how he is performing in his current job (and quite possibly in previous jobs) to determine whether he will meet the hiring manager’s needs. One consequence of this matching process is that relatively small differences in human capital—whether, say, one candidate has had experience in launching a particular product—will influence an employer’s hiring decisions. Headhunters also pay attention to cultural matching, but as an addition to human capital. They look for candidates who will fit in with the company culture, whose work style, habits, and personality are likely to mesh well with their supervisors, and who are likely to get along well with hiring managers and coworkers. Much of their prepping of candidates and clients is designed to highlight shared hobbies and other common interests that will promote chemistry between client and candidate before, during, and after the interview. Headhunters suggest that cultural matching is, at least some of the time, more nearly an interactional accomplishment than a preordained outcome based on fixed traits a candidate might or might not possess. We found that cultural matching is important but not preeminent: it may seal the job offer and hire, but it is very difficult to get employers to consider candidates who lack the expected human capital. Fit and skill both matter.

A Buyer’s Market? In the opening chapter we cited Bewley’s (1999) observation that employers do not cut wages during recessions because they believe it would undermine morale and weaken worker loyalty. This was the only factor that he could find to explain downward wage rigidity. His argument is based on the insight that the units in the labor market—individual workers—are different from units in other markets because they have feelings and attitudes. They have a sense of how they ought to be treated by their employers (see also Bidwell and Keller 2014). We have extended Bewley’s argument by pointing out that workers also have a sense of how they ought to be treated by potential employers; if they are job candidates, they will look for some assurance that their treatment will match their expectations. The problem for job candidates, as

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we have noted, is information asymmetry, which means that they cannot know for sure whether a prospective boss or employer will be a good one. It is a particularly acute problem for workers who are happily employed, whose recruitment requires their willingness to exchange their current job and employer for ones about which they know far less. Economic downturns aggravate this concern rather than ameliorate it, a factor often not appreciated by those who write about the labor market. Consider the claim that the Great Recession meant a buyer’s market for employers. This claim is persuasive only if employers are looking to hire from the ranks of all job seekers, especially those without jobs. But we found that employers were leery of hiring people who had lost their jobs, even though they were the most readily available candidates, because the unemployed continue to be stigmatized as underperformers. Adverse selection led employers to prefer passive candidates—those who had jobs and were not job seekers—who were precisely the workers least interested in becoming candidates. The market did not work like a buyer’s market because employers were reluctant to look for candidates among the unemployed and because the employed were reluctant to become candidates. The labor market is different from other markets because of the double sale: employees are not only the products but are also themselves buyers in the sense that they have to be persuaded to consider and accept a new job. This might not matter much if employees are worried about their job security in their current positions and think that better opportunities lie elsewhere. Nervous and insecure employees are often easy to flip from passive to active candidates. During the recession headhunters quickly discovered, however, that the economic downturn had not caused employees to conclude that new jobs were better than their current ones. In fact, many employees had come to the conclusion that in a time of uncertainty there was no reason to trust the promises and assurances of a new boss and to take the risk of leaving their current employer. The recession had made staying put look like a far better bet than gambling on a new job. It was not just employers’ aversion to the out-of-work or active candidates that affected hiring during the recession. We argue that the conventional wisdom that it was a buyer’s market had the perverse effect of encouraging employers to delay making a hiring decision until they found the perfect candidate. Headhunters repeatedly stated that their clients had come to believe that they held all the cards—that the economy was so

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bad and jobs so scarce that their attractiveness as buyers had increased. This is the kind of logic that characterized the housing market during the recession when home prices plummeted, forcing desperate sellers to accept lowball offers from buyers who could afford to wait, to be choosy, and to force prices even lower. In the labor market, however, headhunters knew that when they identified, recruited, and presented good candidates, employers had to act quickly or risk losing these candidates; the recession did not buy anyone extra time. Headhunters found that slow decisions often generated failed searches. Headhunters discovered that the fears and concerns of employers and employees had turned a supposed buyer’s market into one in which there was stalemate. It simply exacerbated the existing problems of adverse selection and information asymmetry, with clients waiting for perfect candidates and the latter unwilling to change their status from passive to active.

The Limits to Technology and Formal Rationality Throughout the book we have considered the various ways in which new technologies have been used by headhunters and employers and how their use has in turn affected the recruiting business. It is a complex topic, not least because technology is a moving target. The research for our first book was done during the early years of the Internet, at a time when headhunters relied almost exclusively on their own databases, and job boards such as Monster were just emerging. These boards appeared to be the biggest change looming on the recruiting industry’s horizon. Our book was published in 2002, and a year later LinkedIn was launched—a businessbased social network whose success and impact virtually no one anticipated. It became perhaps the most significant labor-market innovation of the following decade. Any discussion of technology, therefore, has to be tempered by the sobering awareness that unforeseen technologies will replace current ones in ways and with outcomes that are unpredictable. We have focused on three significant innovations: electronic sourcing for finding candidates, electronic portals for managing job applications, and electronic marketplaces for matching employers and headhunters. We found that electronic sourcing is the most compatible with contemporary headhunting, whereas the portals and marketplaces threaten to reshape

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the recruiting business. We suggest that they could also have the unintended consequence of lowering the quality of candidates presented to employers. LinkedIn is the prime example of how technology has changed the sourcing of prospects. It allows a recruiter or researcher to search on attributes of member profiles to identify prospects and to do so at a speed that would have been dumbfounding to a recruiter in, say, 1995. Headhunters also use LinkedIn to expand their networks, to connect with people who, if they are not prospects themselves, can direct them to potential prospects. Electronic-sourcing technologies such as LinkedIn also make it possible to separate search from recruiting. Many headhunters, as we have seen, continue to do both, but others have started to outsource search to researchers and to rely on them to generate rosters of prospects. With a good Internet connection, a researcher can search LinkedIn and other sites from anywhere in the world, which raises the possibility that research can be offshored as well as outsourced. Electronic sourcing is a valuable technology, but it has not been a transformative one. In the opening chapter we pointed out that it produces novel information—data about potential candidates that would otherwise be unobtainable. It has changed headhunters’ work practices, by greatly reducing the time and effort that go into searching for prospects, without altering the essence of headhunting. Once a roster of prospects has been generated, recruiting becomes an almost wholly high-touch endeavor as headhunters begin the laborious process of assessing each prospect’s skills, experience, performance, fit, and interest in the position. Equally high touch is the process of prepping client and candidate for the interview and brokering their interactions, the offer, and the resignation. LinkedIn can provide some information about candidates—educational background and work experience, for example—but will tell a headhunter little about a candidate’s actual performance in her current position, how well she would fit the client company’s culture, her ambitions, or her willingness to take a new job. We anticipate that LinkedIn and newcomers such as Elevated Careers will continue to develop and refine algorithms that match candidates with jobs. Amazon and Netflix, for example, have used matching algorithms with some success to predict what movies, TV shows, and books customers might like. We are skeptical, however, as to how effective matching

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algorithms will be in the labor market, particularly for recruiting and placing passive candidates, for at least two reasons. First, headhunters’ assessments of these candidates are necessarily nuanced, requiring a continual and interactive evaluation of candidate qualities and client needs. It is through these interactions that hot buttons are identified. Second, a prospect becomes a candidate in part because a headhunter locates and activates his wounds or pain points and convinces him that the new job would relieve them. But knowing exactly when a prospect’s wounds will cause him to reach a breaking point is difficult to predict; sometimes he may reach that stage only after a conversation with a headhunter where interest in one or more alternative opportunities is piqued. The active involvement of headhunters in both responding to and shaping the feelings of clients and candidates is what makes them so different from an algorithm and why we do not see algorithms leading to the demise of headhunting. In contrast, electronic portals and marketplaces, which are designed to make hiring more efficient, seem to be potentially far more disruptive to headhunting. These innovations signify the extension of formal rationality into the job-application process. An electronic portal requires applicants to submit materials to a single online venue or portal, which is normally administered by the organization’s HR staff. A portal provides a standardized format for applicants to enter information and to attach supporting documents; every application can be tracked, and some portals allow them to be sorted and scored according to specified criteria. Portals were initially adopted by large businesses but have since spread to smaller business and into the public sector, including universities. Our own institution, the University of Georgia, has created a new portal for faculty hiring, whose stated objective is “to streamline the approval, posting, and hiring processes for the University and our applicants.” Electronic marketplaces share a common objective with the electronic portals of making the application process more efficient. Marketplaces differ from portals in that they are third-party agencies intended to bring together employers and headhunters in a single site or marketplace in which headhunters will have access to all job orders and employers decide with which headhunters they will work. The businesses that have created these marketplaces, most notably BountyJobs and Scout, argue that they increase access of clients and headhunters to one another and bring visibility and transparency to how job orders are assigned and filled.

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Electronic portals and marketplaces exemplify formal rationality because their stated objectives are to standardize and democratize hiring. They are organizational practices or routines designed to replace the perceived inefficiencies and potential irregularities of person-to-person contact between a headhunter and an individual hiring manager with a uniform, equitable, and efficient application process. Headhunters, however, have their own routines, designed to identify, recruit, and place the best candidates, which rest on securing access to hiring managers. Specifically, they require three conditions to be met in order to conduct effective searches: first, they need to be able to assess the quality of the job order, its urgency, and what has already been done to fill the job; second, they need to be able to talk to hiring managers to find out what they really want to see in good candidates; and third, they need to be able to present these candidates to hiring managers in order to highlight their strengths, probe any concerns or lack of enthusiasm, and help broker a placement. Moreover, access to hiring managers provides headhunters with the prospect of making an opportunistic placement through an MPC presentation, despite the absence of a job order. In short, portals and marketplaces on one side and headhunting on the other represent conflicting organizational routines for finding and hiring good candidates. We found that when headhunters were required to work through portals and marketplaces, they changed their search focus from quality to quantity. Instead of digging deep into the hidden market to find the best (usually passive) candidates, they submitted the résumés of those who were easy to find; instead of carefully evaluating candidates, they sought to get candidates’ names into the portal as quickly as possible. There is little incentive for headhunters to spend time and effort on a search when they lack information about what the hiring manager really wants in a candidate or what the organizational culture is like. For headhunters, a lack of information makes it nearly impossible to identify good prospects, talk them into becoming candidates, and sell them to a client. Portals and marketplaces encourage headhunters to do quick and dirty searches—“to throw stuff against the wall to see what sticks,” to use an old recruiting expression. The “practical rationality” of headhunters, by which we mean the pragmatic decision as to how much work to put into a search, thus collides with the “formal rationality” of organizations that focuses on making organizational processes efficient and transparent (for a

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discussion of Weber’s distinction between practical and formal rationality see Kalberg [1980]). The result is less-than-optimal search: the imposition of formal rationality undermines the goal of recruiting the best candidates. We conclude this book with a few observations on the future of headhunting. It seems likely to us that, barring dramatic changes in how corporations evaluate and hire employees, headhunters will remain an important feature of the labor-market landscape. We do not anticipate that, after having survived the upheavals and turmoil of the last two decades, they will suddenly disappear. There is a good chance, however, that the industry will be transformed significantly. The impetus for business as usual is that companies will continue to want highly qualified passive candidates from the external labor market. All the evidence suggests that they will seek employees who are already successful, contented in their current positions, and able to make an immediate contribution in their new ones. They will not want those who are looking for jobs or who require extensive training. Nor will they be willing to re-create the internal labor markets that previously developed and provided much of this talent. Headhunters therefore remain the best option that employers have for finding and recruiting passive candidates with the desired mix of skills, experience, and chemistry. The forces of change are to be found in the electronic portals and marketplaces, which are designed to formalize hiring and to centralize and minimize company–headhunter contacts. These arrangements offer the benefits and drawbacks of spot markets: the opportunity for quick transactions between large numbers of employers and headhunters but with little of the relationship building that has characterized headhunting. We think that the formalization of hiring and the shift to more transactional interactions between clients and headhunters will, if widely adopted, reshape recruiting practices. Relationships with clients have always been the primary way of mitigating the unknowns of contingency search; in the absence of these relationships, many headhunters will not feel that it is worth their while to conduct thorough searches. If electronic marketplaces do become prevalent, we would expect the quality of contingency search to suffer because there would be no reason for headhunters to invest in time-consuming and expensive recruitment with so little assurance of a payoff. The future of electronic marketplaces, however, ultimately lies in the hands of employers, not headhunters, and it is they who will have to decide whether efficiency and speed of search is more important than quality.

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Index

“accidental” career, 136; headhunting as, 135–42 active candidates, 68; bias against, 80–81, 123–25; passives becoming, 85; vs. “qualified talent pool,” 27; sourcing of references of, 70, 72, 116 adverse selection, 15; Great Recession and, 164; headhunting as solution to, 158–59; and preference for passive candidates, 163 Ag 1 Source (headhunting firm), 7 agricultural industry, headhunters specializing in, 7 algorithms, matching, 92, 103–5, 165–66 Amazon: matching algorithms used by, 165; use of headhunters by, 6 applicant tracking systems (ATS), 70 Bailey, Diane E., 19 Barbulescu, Roxana, 3, 14, 15

Barley, Stephen R., 18, 19, 116, 151 Barr Associates (headhunting firm), 8–9 Bayside Search Group (headhunting firm), 6 behavioral interview, importance of, 75–76 Bewley, Truman F., 20–21, 162 Bidwell, Matthew, 4, 16, 17, 21, 25, 45, 162 blogs, use by headhunters, 33, 71, 159 Bonet, Rocio, 4 Boudreau, John W., 105 BountyJobs (electronic marketplace), 40, 41, 93, 166; business model of, 29; cost of using, 42; criticism of, 111, 115; headhunters’ views on, 110–11; placement process in, 112–13; value of, 111 brokering, by headhunters, 68, 81, 84–90, 99–100, 156, 159; vs. electronic marketplaces, 114, 115

184

I n de x

Bruno, Barbara, 38–39, 40, 57, 60, 85, 86, 88–89, 98, 139–40 Bullhorn (software), 70 Burnison, Gary, 2 buybacks, 87, 88–89 candidates: active vs. passive, 68; brokering of interactions with clients, 68, 81, 84–90, 99–100, 156, 159; constructing, 68, 89; converting prospects into, 74–81, 87, 102, 159, 166; electronic portals for, 92, 105–7; as future clients, 42–43; hiring managers’ treatment of, 55–57; internal, headhunters’ approach to, 62; keeping interested, 85; ownership disputes regarding, 106; perfect, Great Recession and search for, 122–23, 125–29, 130, 134, 161; prepping of, 13, 68, 81–84, 102–3, 162; previous, cold calls to replacements of, 71–72; reluctant, during Great Recession, 128, 131–33; transition to headhunter from, 137–39; trial (“stalking horse”), 64, 65. See also active candidates; most placeable candidates (MPCs); passive candidates; prospects Cappelli, Peter, 3, 4, 15, 25, 26, 45, 86, 133 career: “accidental,” headhunting as, 135–42; choice of, 136 CareerBuilder (job board), sourcing of candidates on, 72, 95, 150 career counselors (coaches), headhunters as, 15, 71, 160; during Great Recession, 120 career development: Great Recession and, 121–25, 161; rise of external labor market and, 3, 4, 133 Careers and Foods (job board), 150 CarterBaldwin (headhunting firm), 5 chemistry: assessment of, 101; candidate prep and promotion of, 83, 162; importance in job placement, 65, 77, 160–61

choice: availability of, and decision making, 133; career, 136 clientelization, 42 clients, 23; companies vs. individuals, 44; educating on hiring success, 56–57; exclusive relationship with, benefits and risks of, 42–44, 62–63; formalization of contacts with, 92–93; former candidates as, 42–43; generational shift in, 143–44; impact of Great Recession on, 121–31; interactions with candidates, brokering of, 68, 81, 84–90, 99–100, 156, 159; mistakes in hiring process, 55–56; preference for passive candidates, 80–81, 89, 123–25; prepping of, 13, 57; prospective, approaches to, 34–40, 108; qualification (evaluation) of, 47, 49–58; relationship with headhunters, 24–25, 42–44, 143–44; research on, 33–34; search for perfect candidate, 122–23, 125–29, 130, 134, 161; small to midsize companies, headhunters’ preference for, 53; start-up, challenges associated with, 132–33; strategic partnerships with, 136, 145, 152–53. See also hiring managers coaches. See career counselors cold calls, by headhunters, 33, 34, 93– 94; electronic marketplaces aiming to reduce, 112; vs. e-mail introductions, 36, 94; during Great Recession, 120; and sourcing of candidates, 71–72; staggering number of, 108–9 communication, with hiring managers: formalization of, 92–93; HR department as barrier to, 48, 49–53, 63, 64, 131, 157, 160; importance for headhunters, 48, 49, 50–51, 53–54, 63–65, 66, 69, 107, 159–60, 161, 167; urgency of job orders and, 59 companies: as clients or sources, 52; electronic marketplaces and control over hiring process, 41; promotions vs. external hiring by, 16–17, 21, 25;

I n d ex small to midsize, headhunters’ preference for, 53. See also clients contained recruiting, 147–49 contingency fees, 57–58; alternative (hybrid) model of, 147–49 contingency headhunting firms, 5–6; breadth and specialization of, 6–9 counteroffers: 30-day (buybacks), 87, 88–89; as failure for headhunters, 86–87; headhunters as buffer against, 31, 87, 102 CrowdRecruiting (electronic marketplace), 40 cultural matching (cultural fit), 65; assessment of, 76–77, 101, 162; candidate prep and, 13, 83; hiring based on, 12–13, 76, 157, 160–61 customer-service workers, as potential headhunters, 140 databases, of prospective candidates: headhunters’, 69–71, 159; online (proprietary), 72–73 demand for labor, 25–26; headhunting and generation of, 26, 37, 69 Dice (job board), 73 discussion forums, 33 double sale, 1–2, 121, 163; impact of Great Recession on, 121, 131; as key to headhunters’ success, 135 economic downturns: labor market during, 20–21, 118. See also recessions efficiencies: electronic technologies and, 19, 113, 115, 116; headhunting and, 28–29 eHarmony (website), job-focused spinoff of, 92, 104 e-HRM (electronic human resource management technologies), 16, 105 electronic marketplaces, 16, 40–42, 93, 105, 108–16, 166–67; advantages of, 19, 41, 110–11, 113, 115, 116; criticism of, 111, 114–15; impact on headhunting, 16, 19, 116, 134, 145,

185

156, 166, 167–68; origins of, 108–9; placement process associated with, 41, 112–13 electronic portals, 92, 105–7; as buffers between headhunters and hiring managers, 16, 92, 107, 131, 134; disruptive potential for headhunters, 166; and ownership disputes over candidates, 106–7 electronics industry, headhunters specializing in, 8–9 Elevated Careers (website), 104; matching technologies embedded in, 92, 103 e-mail: and database of prospects, 71, 156; generational shift in use of, 143; and job order solicitations, 35–36, 156; limitations of, 98, 99, 103; phone calls replaced by, 92, 94 emotions, role in hiring process, 13–14, 104 employees: promotion of, vs. external hiring, 16–17, 21, 25; rise of external labor market and, 3, 4, 133; sorting out during economic downturns, 123–24 engagement fee, 57, 148 extensive search, 14, 150; use of electronic technologies for, 92, 115, 150–51 external labor market: vs. in-house promotions, 16–17, 21, 25; rise of, 3, 4, 133; search for “star” performers in, 20, 21, 122–23, 125–29, 130, 134, 161 FAB presentations, 79, 87 Facebook, use by headhunters, 66, 72–73 falloffs, 87–88, 89 FEA (finite element analysis), 19 Feature-Advantage-Benefit (FAB) presentations, 79, 87 fee(s): “container,” 147–49; contingency, 57–58; engagement, 57, 148; placement, 23, 42, 57–58; retainer, 5–6

186

I n de x

Feldman, Martha S., 17 finite element analysis (FEA), 19 Finkel, Steve, 10, 118, 139, 140 Fordyce Letter (newsletter), 2; contemporary portraits of headhunting in, 4–5; as data source, 9, 11; during Great Recession, 118 formalization, of client-headhunter contacts, 92–93 formal job descriptions, 48 formal rationality: electronic portals and marketplaces as, 166, 167; vs. practical rationality, 167–68 free-agency model, 3 functional interchangeability, 48 Georgia Association of Personnel Services (GAPS), 10 Gionta, Michael (Mike), 10, 56 Glassdoor (website), 55 Google, headhunter research on, 33 Great Recession of 2007-2009, 118; as buyer’s market for employers, myth of, 127–29, 163–64; compared to previous recession, 118, 119, 131; headhunters’ survival strategies during, 145–54; and hiring authority, diffusion of, 122, 129–31; “housecleaning” during, 123–24; housing market during, 127, 164; impact on clients, 121–31; impact on headhunters, 1, 2, 20, 21, 119–34, 155, 156, 157; impact on passive candidates, 128, 131–33; and labor market transformation, 118, 127–29, 134; long-term unemployment before and after, 122, 126; preference for passive candidates during, 123–25; and search for perfect candidates, 122–23, 125–29, 130, 134, 161; slow recovery in employment after, 129–30 Groysberg, Boris, 21, 42, 79, 134 Hamori, Monika, 4 Hard, Mike, 29–30, 109–10

Hawkinson, Paul, 27–28, 47, 54, 64 headhunters: adapting to changing environment, 144–54; as brokers, 68, 81, 84–90, 99–100; as canaries in labor-market coal mine, 117, 157; candidates turned into, 137–39; as career counselors, 15, 71, 120, 160; declining numbers of, 156; and demand for labor, generation of, 26, 37, 69; disruption of hiring routines by, 39, 45; financial considerations and behavior of, 57–58; Great Recession and, 1, 2, 20, 21, 119–34, 155, 156, 157; intensive search performed by, 14, 150, 151; as middlemen, 12, 30–32; as researchers, 18, 33–34, 150–51, 156, 165; sales orientation of, 44; sales pitch of, 26–32, 45; scare tactics used by, 87; specialization by, 5, 6–9, 29–30, 32–33, 41, 145–46; speed advantage of, 28–29; as strategic partners, 136, 145, 152–53; successful, characteristics of, 156; survival during recessions, 117–18, 145–54; as talent scouts, 26–27, 36; third-party status of, advantages of, 30–32; value of, 14–15, 158–60; wider-net advantage of, 26–28 headhunting: as accidental occupation, 135–42; basics of, 23–45, 93–94, 135, 156; as contact sport and numbers game, 32–45, 66; definition of, 1; evolution of, 135; future of, 168; generational and cultural changes in, 142–43; vs. HR candidate search, 34–35, 39; impact of social media on, 1, 2, 14, 16, 91, 155, 157, 158; market share of, 2; new technologies and, 16, 18–19, 91–93, 143–44, 158, 164–65; occupations with skills transferable to, 139–41; quality of, electronic marketplaces and, 167–68; and relationship-building, 98–99; research vs. recruiter roles in, 18, 150–52;

I n d ex risks in, 78, 80, 81; as sales vs. service business, 142–43; studies of, 4 headhunting firms: commonalties among, 11; variation among, 5, 11 health care, headhunters specializing in, 7–8 Heidrick & Struggles (headhunting firm), 2 hiring (hiring process): cultural matching/fit in, 12–13, 76, 157, 160–61; delays in, as challenge for headhunters, 54–55, 85; electronic marketplaces and, 41, 112–13; emotions in, role of, 13–14, 104; “gut instinct” in, 160; headhunters as students of, 13; impact of economic downturns on, 20–21, 118; intangibles in, 64–65; mistakes in, 55–56; outward perspective on, 17–18; vs. promotion, decision making regarding, 16–17, 21, 25; during recessions, 20–21, 118; skills matching in, 12, 13, 161–62; success in, educating clients on, 56–57. See also interviews; offers; placement hiring managers: access to, importance for headhunters, 48, 49, 50–51, 53, 63–65, 69, 107, 159–60, 161, 167; authority to hire, diffusion during Great Recession, 122, 129–31; candidates’ cultural fit with, assessment of, 76–77; check-ins with, 60; clear and timely communication with, importance of, 53–54, 59; decision making by, importance of speed in, 54–55; electronic portals as buffers between headhunters and, 16, 92, 107, 131, 134; e-mail solicitations to, 35–36; “hot buttons” of, 75, 161; HR as barrier to communication with, 48, 49–53, 63, 64, 131, 157, 160; individual preferences of, 64–65, 161; introductions to, 33; mistakes of, 55–56; needs of, vs.

187

job descriptions, 48, 49, 50; phone solicitations to, 34–35; relationship with headhunters, 15, 16, 109; treatment of candidates by, 55–57 Hodkinson, Phil, 136 home values, decline in: and employee reluctance to change jobs, 131–32; during Great Recession, 127, 164 hotels, recruitment of headhunters from, 140 HR department: as barrier to headhunter-client communication, 48, 49–53, 63, 64, 131, 157, 160; bypassing, headhunters’ strategies for, 52–53; candidate search by, vs. headhunting, 34–35, 39; and delays in hiring process, 55; and electronic portals, 105–7; headhunters’ perspective on, 48, 53; headhunters with background in, 142, 151; outsourcing to headhunters, 152–53 human capital, assessment of, 75–76, 161–62 human capital consultants, headhunters as, 54 human resources department. See HR department Indeed (job board), 150 InfoGIST Platinum Recruiter (software), 72 information asymmetry, problem of, 15, 163; external labor markets and, 3; Great Recession and, 164; headhunting as solution to, 15, 158–59 intensive search, 14, 150, 151 internal labor market, erosion of, 3, 4, 155, 161 Internet: sourcing tools on, 72. See also technology, new interviews: behavioral, importance of, 75–76; impact on candidates, 85; prepping of candidates for, 13, 68, 81–84, 102–3, 162; prepping of clients for, 13, 57; rapport/chemistry

188

I n de x

interviews (cont.) in, importance of, 65, 77, 160–61; as source of data, 9–10, 11 invisible labor market, 156 job boards, 164–65; choice provided by, 133; extensive search offered by, 14; headhunters’ research on, 33, 150; and sourcing of candidates, 72 job-change motivations (“wounds”/”pain points”), 66, 79; nonmonetary, importance of, 86, 87; probing of, 78–80 job descriptions: formal, 48; vs. hiring managers’ needs, 48, 49, 50; need to clarify, 63–64 Jobhuk (electronic marketplace), 40 job orders, 23; electronic marketplaces and, 108; e-mail solicitations for, 35–36, 156; history of, evaluation of, 61–62; phone solicitations for, 34–35; qualification (assessment) of, 46–47, 58–66, 114; refining, 64–65; unworkable, 65–66; urgency of, assessment of, 59–60, 61; variation across, 59 Keller, J. R., 16, 17, 21, 25, 45, 162 Kelly, L. Kevin, 2 Korn Ferry International (headhunting firm), 2, 5 labor market: as “buyer’s market,” fallacy of, 127–29, 163–64; during economic downturns, 20–21, 118; external, rise of, 3, 4, 133; Great Recession and transformation of, 118, 127–29, 134; internal, erosion of, 3, 4, 155, 161; invisible, 156; segment targeted by headhunters, 2; unique characteristics of, 163. See also external labor market Lawler, Edward E., III, 1, 105 leadership training, headhunters and, 153, 154

Leonardi, Paul M., 18, 19, 116 LinkedIn, 73, 164; choice provided by, 133; competition with headhunters, 98; headhunting distinguished from, 14; impact on headhunting, 1, 2, 19, 91, 116; matching technologies embedded in, 92, 103; novel information provided by, 19; sourcing of prospects on, 95–98, 100, 102, 158, 165; universal access to, 95; use by headhunters, 33, 66, 72, 73, 95–98, 165 loss aversion, 131–32 Manta (database), 33 marketing: of most placeable candidates (MPCs), 36, 38–39, 44; of replacement searches, 36–37 Marshall, Bob, 37, 66, 67, 79, 99 matching algorithms, 92, 103–5, 165–66 matchmaking, headhunting as, 143 middlemen, headhunters as, 12, 30–32 millennial clients, 143–44 money. See salary; wages Monster (job board): headhunting distinguished from, 14; sourcing of candidates on, 72, 73, 150 most placeable candidates (MPCs), 24; business generated through, 38–40; characteristics of, 37–38; marketing of, 36, 38–39, 44, 167 Netflix, matching algorithms used by, 165 networking: LinkedIn and, 97–98; and sourcing of prospects, 69, 70–71 newsletters: online, headhunters and, 71. See also Fordyce Letter occupational case studies, 11–12 offers: negotiating, 102; rejection rate following, 31 office-products salespeople, as potential headhunters, 139–40 online marketplaces. See electronic marketplaces

I n d ex opportunistic hires, 17 Orlikowski, Wanda J., 18, 19, 115 ownership issues, electronic portals and, 106–7 passive candidates, 68, 157; finding and recruiting, 168; job-change motivations (“pain points”) of, 78–80, 86, 87; preference for, 80–81, 89, 123–25, 163; qualification of, 76, 78; reluctance to change jobs, Great Recession and, 128, 131–33; risk associated with, 78, 80; unrealistic expectations of, 88 payroll functions, outsourcing to headhunters, 153 perfect candidates, search for: Great Recession and, 122–23, 125–29, 130, 134, 161; rise of external labor market and, 20, 21 Perrow, Charles, 18 Petra, Terry, 27, 31, 43, 55, 59, 60, 62– 63, 71, 74, 76–77, 78, 82, 87, 108–9 phone calls: client development vs. MPC, 38; continued importance of, 98–99; as foundation of headhunting, 93–94; job order solicitations via, 34–35; to prospects, 74–75; and qualification of candidates, 100–101; shift to e-mail from, 92, 94; sourcing of candidates via, 70, 71–72. See also cold calls Pinch, Trevor, 18 placement: headhunters’ responsibilities after, 88–89; hiring managers’ decision making and, 54–55; securing, 68, 81–90 placement fees, 23, 57–58; electronic marketplaces and, 42; and investment of time and effort, 57–58 placement services agreement (PSA), 49, 58 portals. See electronic portals prepping: of candidates, 13, 68, 81–84, 102–3, 162; of clients, 13, 57; technology and lack of, 99–105

189

promotions, vs. external hiring, 16–17, 21, 25 prospective clients: electronic marketplaces and, 108; MPC marketing and, 38–40; reference checks and, 24, 40 prospects (prospective candidates): converting into candidates, 74–81, 87, 102, 159, 166; cultural fit of, assessment of, 76–77, 101, 162; databases with names of, 69–71; electronic portals and, 106–7; electronic technologies used for qualifying, shortcomings of, 99–105; during Great Recession, 121; human capital of, assessment of, 75–76, 161–62; phone calls to, 74–75; qualification of, 67–68, 75–77, 159; sourcing of, 67, 68, 69–73, 92, 94–95, 103, 115–16 PSA. See placement services agreement qualification, by headhunters: of clients, 47, 49–58; vs. by electronic technologies, 99–105, 115; importance of, 147, 159; of job orders, 46–47, 58–66, 114; of prospects, 67–68, 75–77, 159 quality of life, job-change motivations related to, 66, 79 recessions: hiring during, 20–21, 118; “housecleaning” during, 123–24; impact on headhunters, 117–18; labor market as buyer’s market during, myth of, 127–29, 163–64; wages during, 20–21, 162. See also Great Recession RecruitAlliance (electronic marketplace), 40, 42 Recruitifi (electronic marketplace), 40 Recruit Loop (electronic marketplace), 40 Rees, Albert, 14, 92, 115 reference checks, turning into business, 24, 40 references, sourcing of prospects from, 70, 72, 116

190

I n de x

referrals, strategies for gaining, 71 replacement searches, marketing of, 36–37 researchers, headhunters as, 18, 33–34, 150–51, 156, 165 résumés: software used to search and analyze, 72; submitted to headhunting websites, 70 résumé writing, headhunters transitioning into, 120 retail industry, headhunters specializing in, 6 retained search (retainer headhunting), 5–6; hybrid model as alternative to, 147–49 risk(s), in headhunting, 78, 80, 81 risk aversion, 131–32 Ritzer, George, 16, 93, 105, 113 Rivera, Lauren, 12, 13, 14, 77, 89, 90, 160, 161

14, 16, 91, 155, 157, 158; sourcing through, 72–73 solicitations, by headhunters: reference checks used for, 24, 40; staggering number of, 108–9; via e-mail, 35–36, 156; via phone calls, 34–35 sourcing, of prospects, 67, 68, 69–73; from active candidates’ references, 70, 72, 116; from competitors, 157; separating from recruiting, 149–52; use of electronic technologies for, 69, 70, 72, 92, 94–95, 103, 115–16, 158, 165 Sparkes, Andrew C., 136 specialization, of headhunters, 5, 6–9, 29–30, 32–33, 41; as survival strategy, 145–46, 156 Spoke (database), 33 start-up clients, challenges associated with, 132–33 Stevens, Mitchell, 82

Sackett, Tim, 140 salary: brokering regarding, 85–86; jobchange motivations related to, 79, 86. See also wages salespeople, as potential headhunters, 139–40 Samuelson, Robert, 127 satisficing, 45 Savage, Greg, 99, 102 scare tactics, headhunters and, 87 Scout (electronic marketplace), 40, 41, 93, 110, 166; placement process in, 112–13 SGA Executive Tracker (database), 72 Sharone, Ofer, 160, 161 Simmel, Georg, 12 skills and experience, hiring based on, 12, 13, 161–62 Smith & Associates (headhunting firm), 7–8 social media: headhunters’ research on, 33; headhunters’ visibility on, raising, 71; impact on headhunting, 1, 2,

talent acquisition departments (TAD), and challenges to headhunters, 147, 156, 157 talent scouts, headhunters as, 26–27, 36 technology, new: and extensive search, 92, 115, 150–51; headhunters’ efforts prior to, 149; headhunters utilizing, 145, 149–52; impact on headhunting, 16, 18–19, 91–93, 143–44, 158, 164–65; limitations in qualifying and prepping candidates, 99–105; matching algorithms in, 92, 103–5, 165–66; and sourcing of prospects, 69, 70, 72, 92, 94–95, 103, 115–16, 158, 165; variation in use of, 19 telemarketing, recruitment of headhunters from, 140–41 third-party status, 12, 30–32 time management, 46–47 top-grading, 17, 26; sales pitch regarding, 36–37 training: diminished investments in, rise of external labor market and,

I n d ex 3, 4, 133; on-the-job, employers’ reluctance to provide, 121, 123, 125, 161, 168 training materials, analysis of, 10 turnover: assessment of, 61; generation of, 26, 68–69, 156; impact of economic downturns on, 20 Twitter, use by headhunters, 72–73, 95 unemployment: long-term, before and after Great Recession, 122, 126; during recessions, 20–21; as stigma, 126, 163. See also active candidates

191

University of Georgia, electronic portal used by, 166 wages: during recessions, 20–21, 162. See also salary Williamson, Oliver E., 17, 25, 45 Woodward, Joan, 18 “wounds,” of passive candidates, 78–80; nonmonetary, 86, 87 Yahoo, headhunter research on, 33 ZoomInfo (database), 33, 72