What is Headhunt? Differences between Headhunter / Recruiter

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What will you learn after reading this article?

As the title:

  1. What is Headhunt?
  2. Who is Headhunter?
  3. Who is Recruiter?
  4. Similarities/ Differences, Pros/ Cons between Headhunter & Recruiter.
  5. Other definition and information about HR industry.

What do we have inside this article?

There are many posts and articles on the Internet about Headhunt and related topic. But most of them are talking about individual topics or just briefly explain a single problem.

This article will gather knowledge and information as many as possible and put them in one article.

>> Before reading, I have some notes for you:

  1. This is a LONG article, do not scroll down if you are a lazy reading!
  2. Because I will explain very detail every topic that I mention in the article.
  3. This article is based on my own experiences and aggregate from the Internet so there will be mistakes and omissions. I will edit and upgrade this article frequently so you can follow up and reference.
  4. Inside the article are sub-contents that explain relate definitions which I cannot write all of them in the article.
  5. If you want to contribute ideas for the article, please feel free to drop a comment below. I will collect ideas and use it to upgrade the article.
  6. The last thing, I hope this article can become a handbook for newbie to lookup or reference whenever you need to find HR information.

General

In HR industry, Headhunter and Recruiter are two employees working in two completely different organizational structures.

While Headhunter working for Headhunt company, then Recruiter is company’s recruitment employee.

The relationship between Headhunt company and recruitment need company is the relationship between Agency and Client.

>> Definition of Agency and Client in HR industry

Simply, Headhunter is a third party hired to searching candidates for other companies. And Recruiter is the company’s employee who’s in charge of finding candidates for the company.

However, the final purpose of both Headhunter and Recruiter is to find the right candidates on the market.

>> Where should I start my HR career path?

Overview of the relationship between Headhunt-Company, Headhunter-Recruiter and Candidate

The relationship between Headhunt company and the company needs to hire employees is the win-win relationship (both sides have benefits).

But between Headhunter and Recruiter is a more complicate story. Sometimes it’s a partner relationship, sometimes it’s a competitor relationship.

>> Relationship between Headhunter and Recruiter

1. What is Headhunt?

Headhunt is “outsource recruitment department” hired by companies that have demand for hiring employees. Depending on the characteristics, strengths and company structure, each Headhunt company will focus on a segment of its own depth.

Headhunt companies offer a wide range of HR related services including ESS (Executive Search Selection), Retained Search, HR consulting, Training, Career Transition …

Headhunt companies call their customers Client. While companies using Headhunter service considered Headhunt company as Agency.

How many types of service a Headhunt agency have? And what are there?
>> 8 basic types of services that a Headhunt agency have

Simply, in a company, there are a lot of departments and Human Resources is one department in it.

Besides the recruitment responsibility, the HR department also do many other tasks such as check attendance, salary calculation, health insurance, social insurance, etc.

Because taking many responsibilities, the HR department is hard to optimize one single array. That’s why we have HR Consultant services and Headhunt is one in it.

>> What is HR Consultant?

So, are there differences between Headhunt companies?

The answer is YES.

Nowadays, with the rapid growing frequency of the market, go along with the demand to recruit high-level employees recruitment. There are a lot of Headhunter companies are raised.

To classify between Headhunt companies, we can divide them into Categories and Function.

  • Categories: FMCG, Manufacturing, Oil & Gas, IT, Mass Recruitment, etc.
  • Segment: Fresher -> Junior -> Senior -> Manager -> Top C (CEO, CFO, CMO,…) etc.
Example diagram distinguishes the differences of Headhunts by expertise and market

Why do companies need Headhunter while they still have Recruiter?

If there are supply there will be demand and either opposite.

Although have private recruitment department but it’s not always possible for companies to find “right person at the right time”.

Three reasons that make companies need Headhunter.

1. Save times:

Many high-level and strict requirement positions need a lot of times to plan and budget to recruit.

While working with Headhunt agency things will be easier and simpler to enterprises. The entrepreneurs only need to give a detail brief and timeline to Headhunter and let them do their professional work.

>> Basic working process between Headhunt agency and Client

2. Save money:

Although have to spend fee when using Headhunter service. But if controlled wisely and planed well. The use of the service will bring back a big save to company.

  • Knowledge: Maybe it’s sound weird when the company’s recruiters don’t have to do anything. But beside of that, recruiters will have a chance to work with professional Headhunters in multiple segments and can learn a lot from them. The same thing happens with marketer at the client side, every time attend in an agency’s pitching they can learn the way they are working, ideas.
  • Save recruitment fee: Instead of putting effort and money out to recruit or running a campaign to find candidates that the results may be uncertain. Headhunters only charge you when you find the right candidate.
  • Save project: Imagine if you were running a project urgently and needed supporter immediately, but the Department of Human Resources cannot guarantee the recruitment progress to run on time. In this case, the Headhunter service will be your saviour.

>> Finding right people can save a whole project

3. The potential of Headhunt companies.

Besides the large amount and professional staffs, what makes the power of Headhunt companies are network and database.

With a wide network of professions, multi-industrial and from candidates who have been successfully introduced good positions. Plus the number of candidates records accumulated over the years and constantly increased through searching.

As a result, Headhunt companies always get a macro view of the transition of human resources in the market and know exactly where to find the right people.

With these “weapons”, surely the potential of a Human Resources department cannot be compared to the strength of a Headhunt company.

>> Why Companies’s Leader afraid of Headhunter?

Disadvantages when enterprise use Headhunt services

Everything has the other side of the coin. Although convenient and helps solve many problems, using Headhunt service still has some disadvantages.

  • Money: Yes, it’s always the largest concern topic of the enterprises. Like I mention above, Headhunter service can only bring benefit when controlled wisely and planed well. If don’t have an accurate understanding about the service and choose the exact type of service that needs at the moment. Companies may have to pay an additional fee or waste of times but the result is not as expected.
  • Efficiency: If even the low-level and non-demanding positions cannot be undertaken by the Recruitment Department. The company should review the effectiveness and operation model of the HR department. Moreover, using Headhunt service can’t always be absolutely guaranteed. Except using the Retained Search service (which I will mention later below), it is normal to have a Headhunt “quit” from a project.
  • Dependency: Headhunt service should only be used when the company really needs human resources immediately. As a leader, you will definitely not want to pay for the HR department while still have to hire outside services all day.

Abuse of outside services also causes internal Recruiter to lose skills due to not practising regularly. And because there is no pressure for KPIs, they will not be able to develop and improve their professional experience.

2. Who is Headhunter?

Headhunter is employees of Headhunt company. The main responsibility of Headhunter is to search for candidates according to Client’s brief or request from Business Developer, Account Manager.

What are the main responsibilities of BD (Business Developer) and Account in Headhunt agency?

Headhunters are distinguished and managed according to Function and Segment.

Two common Headhunter management models

1. According to Function

Each function will correspond to an employment category that the company is serving. This will help Headhunters to focus on their strengths and not be distracted when searching for too many candidates in different positions at one.

However, if you want to advance and go far in the role of a Headhunter. You have to go through many functions and be able to handle all functions.

Diagram of the division system according to Function

As you can see from the diagram above, only when a Headhunter can handle all functions (Others) that Headhunter will able to advance to the highest position.

What interesting with this model is that the Freshers usually starts from the general function. After having enough skills they will choose a function they like or most advantage. And after mastering your function, to advance a higher position, they have to return to the original synthesis function. What an interesting loop right!

2. According to Team

In addition to the functions model, some Headhunt companies also use a self-managed team division system and have a leader reporting directly to the Manager / Director.


Diagram of the division system according to Team

Different from the function model, Headhunter will search for candidates according to the field they are assigned (sales, marketing, accountant,…). For the team model, when BD earn a contract, Headhunter will split the job and search candidates by any Client’s demand (brief).

With the team division model, the promotion path will be more difficult. Because not only need to have good performance in the headhunter role, you also need to understand the process and working methods of BD, Account, Finance, Legal to be able to be a Team Leader.

But in return, those who can be a Team Leader will often have extraordinary skills, knowledge and leadership. Which will help them go further to the “top C” positions.

Three basic service segments of Headhunter on market

The “segment” here is the candidate segment that Headhunter searching.

We have three main segments:

Diagram dividing candidate segments from low to high

In differences segments, there are differences difficulty and demand.

  • Mass Recruitment:

Is a recruitment method for a large number of candidates. Mass recruitment requires Headhunter to have candidate screening experience and speed CV rating.

Because not only have to recruit an enormous number of candidates but also has to guarantee about the quality, Mass Recruitment is suitable for those who are agile and good information capture. But in return, Mass Recruitment does not require too much about experiences and major expertise of the candidate.

  • Contingency Search:

Also know as Executive Search Selection (ESS) is the most popular Headhunt service. And also the most competitive segment of human resources on the market.

To be able to interview a candidate from Senior -> Manager beside of self-experience and skills, Headhunter also have to has the knowledge of the candidate’s working industry and understand the Client process to find the right audience.

Although the difficulty level is higher than Mass Recruitment but also the commission of Contingency Search is also much higher.

For both Mass Recruitment and Contingency Search, Client only has to pay after they hired the candidate.

  • Retained Search:

Retained Search is a Headhunter service that employers must pay a fee in advance to Headhunt company to start the contract.

Headhunter, on the other hand, must commit to finding suitable candidates for a certain period of time or follow the contractual arrangements. Retained Search is the hardest and has the highest fee in Headhunt service segment.

Because at this segment, the candidate is senior personnel from Manager -> Top C (CEO, CFO, Director, …). In order to convince the candidate, Headhunter, besides being extremely ingenious and knowledgeable for the industry, the relationship is also an indispensable factor. Because at the very first steps of access and gain candidate’s trust are already a challenge.

Binds and profits of Client / Agency when using Retained Search service

A contract of Retained Search may take from 6 months -> 1 year to be done.

Due to the bindings between the two sides, the Retained Search contract negotiation also takes a lot of time.

Binding

  • On the Agency side, they were forced to complete the project under the timeline agreement. Because with Retained Search, Headhunters are received a part of contract costs before starting searching, not like Mass Recruitment or Contingency Search – the services only charge after the Client has recruited a candidate.
  • On the Client side, they were forced to work independently with only one Agency throughout the project and prepay a fee (20-40% contract). This means that the Client must put all beliefs as well as accept their risk in the selected Headhunt Agency.

Profits

However, every effort will be rewarded with sweet result.

  • On the client side, the completed project will bring them high-quality personnel according to their needs. The person who might change the future or success of the whole company.
  • On the Agency side, when completing a “hard to swallow” project like Retained Search. In addition to having a loyal customer, reputation and prestige are things that every Agency are looking for. Plus, the service cost of a project Retained Search is also a huge revenue for the Agency.

Generally, no matter what Categories or Segment, the skills and qualities that any Headhunter needs are:

>> Traditional interview and Behavior interview

3. Who is Recruiter?

Recruiter is the one who seeks and convinces candidates to work or become members of their companies/ organizations.

Recruiter’s searching target depends on the needs and requirements of the candidate’s ability.

Unlike Headhunter, Recruiter is distinguished by categories.

Three ways to recognize a Recruiter?

Although working in the same HR industry and having the same goal of finding the best candidate in the market. But Recruiter and Headhunter are completely different in both essence and working process.

1. Working for company/ organization

Recruiter is an “internal employer” and only works for one company which pay them salary monthly.

Because of the fixed monthly salary, Recruiter’s productivity and efficiency are not comparable to Headhunter. The person whose main income comes from commission. But in return, Recruiter is the one who understands the most about work, culture and company policies.

2. Directly offer salary and decide to recruitment

Unlike Headhunter, although the appropriate candidate has been found, the final result is still decided by the Client. Except for senior or important positions. In most cases, Recruiter is the one who directly offers salaries and decides to recruit the candidate or not.

Therefore, when interviewed directly by Recruiter, you will be answered directly about the results or have a specific response time.

In addition, interviewing with Recruiter usually the last step, not the intermediary like Headhunter.

3. Working in a specialized categories

As mentioned, Headhunter is divided by function and Recruiter divided by categories.

Diagram divide Recruiter according to Categories

For easier to imagine:

  • A longtime Headhunter can recruit a senior position (A) of any industry.
  • A long-time Recruiter can recruit all positions of an industry (A).

Limitations of Recruiter

1. Do not have an overview of the market

Because of their focus on the company, most Recruiters neglect the outside market. Recruiters are very well aware of their company, culture, system and data. However, the “good” candidate has never been enough. Sometimes the suitable candidate is coming from another industry. So Recruiters should build relationships with other company’s Recruiter / HR to expand their data, relationship network and have an overview of the market.

Moreover, having a panoramic view of the market also helps Recruiter offer the salary rate more exactly. In addition, you can also build Mastermind Group for yourself.

>> What is Mastermind group?

2. Data and Network

A Recruitment department certainly cannot compare about the data potential with a Headhunt company both in quantity and quality. Plus, technology also one of the reasons make the data of Recruiter could not be equal to Headhunter. For sure, the cost of investing in a department cannot be equal to the investment cost of a company.

Another drawback of Recruiter is the network.

With Headhunter, especially in the high segment, their network not only from relationships but also from their candidates – people that keeps important positions of companies introduced by Headhunter.

In contrast, when an employee decides to quit a job, they often rarely to keep in touch with the former company HR.

3. Speed

Due to the above limitations: limited industry, data, network, technology, Recruiter’s processing and searching speed is also limited compared to Headhunter. In addition, the number of staffs is also the reason why Headhunter’s speed is faster. Compare Recruiter and Headhunter will be like comparing a “team” against an “organization”!

4. Differentiate Headhunter/Recruiter

After reading everything I wrote above, I believe you have already know the answer. Let’s synthesis information again.

Differentiates:

Pros and cons:

Conclusion

If you make it here, congratulation, you are not the lazy reading.

So, you have got the most basic pieces of knowledge to be able to understand and choose your career path in the Human Resources industry.

The world changes day by day, so it is easy to understand that the content of this article will become obsolete one day. I will continuously come back to edit this article to make it always up to date as much as possible.

In the following section, I will write about the dark corners of the human resources industry in general and Headhunt in particular. In that article, I will also summarize the sharing and practical experience of seniors in the industry.

Waiting for my “HR the untold stories” series!

Related sub-contents inside the article should be read (I’m still working on it):

  1. Definition of Agency and Client in HR industry
  2. What is HR Consultant?
  3. What are the main responsibilities of BD (Business Developer) and Account in Headhunt agency?
  4. Traditional interview and Behavior interview
  5. What is Mastermind Group?

Thank you for taking times to read the article. Please comment below to contribute to the article. Or just simply to let me know I didn’t waste my times write this article.

Good luck!

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