Headhunters vs Recruitment Agencies: What Is The Difference?
Feeling unclear about the differences between headhunters and recruitment agencies? You’re not the only one. Even in the industry there is confusion and use of the terms interchangeably. But while their ultimate goal is not that different, the way that they work to get there is.
Firstly, headhunting is a specialised subset of external recruitment.
This diagram shows the main ways that you can recruit someone into your business:
Internal recruitment consists of employees of the company advertising for the vacancy.
In external recruitment, a third-party recruiter is contracted by the employer. They will either carry out the advertising, selection, or entire placement on their behalf.
The two types of external recruiters which manage the entire process are headhunters and recruitment agencies.
Both screen candidates, act as the point of contact, present a shortlist and facilitate the interview process.
These are the key differences:
Headhunters and recruitment agencies fill positions by sourcing from different pools of candidates.
A recruitment company adopts a “reactive” search strategy. They advertise through job portals, social media, and a CV collection database, and are then approached by active jobseekers.
A true headhunter uses a “proactive” method where they are the ones approaching. Furthermore, they only approach passive prospects. These candidates are people who are employed and not actively seeking a new role, but are the perfect fit for that vacancy.
After a client brief to establish the ideal fit, the headhunter scours the entire industry. They utilise their comprehensive network of industry contacts, including referrals and word-of-mouth. This is how they hunt out those hard-to-find candidates who aren’t currently looking, or even casually networking for new opportunities.
Typically, a recruitment agency recruits for:
- Roles which are lower-level.
- Positions which are less specialised or do not require a very particular skillset.
- Multiple roles at once.
Recruitment agencies are often generalist and work to fill any position, although some do specialise in certain sectors. If a candidate doesn’t get offered a particular position, an agency may have another similar role for them instead.
Headhunters tend to find candidates for positions which:
- Require a highly unique, technical or hard-to-find skill-set.
- Are revenue generating, business-critical, or senior level.
- Are confidential (perhaps a present employee is being replaced!)
- Or are simply hard to fill.
Headhunters are also more likely to specialise in particular industry niches. This is what makes them so valuable for employers in those sectors. They tend to fill a small number of roles at a time.
The headhunter must persuade the candidate that this role is worth interviewing for. However, they will only ever suggest a role if the move is a genuine career-enhancing opportunity. They would never shoehorn someone into a position just to make that fee.
It's impossible to say in concrete terms that one form recruitment is faster or slower than the other. Different firms will offer different timescales to their clients about how long it takes to present a shortlist. Processes will take different amounts of time depending on how specific and unique the candidate profile is.
However, the fact that headhunters search proactively rather than reactively means that they have far more control over the timescale, so the client can have a much better idea of when to expect a fully qualified list of candidates.
Given that recruitment agencies search reactively, they are completely dependent on waiting for applications to come through from job boards and other reactive sourcing channels. This could happen quickly, or for a top-tier, candidate-scarce position, it's likely that it won't happen at all.
The better way to think about timescale is to consider the number of hours invested into presenting a shortlist. Both a recruitment agency and a headhunter may present candidates two weeks later. However, agencies work on more jobs at once so their time is spread more thinly across each role. Headhunters invest more hours into proactively hunting out the perfect match for that one particular position.
A headhunter is also more efficient with this time. Generalist agencies often recruit across different industries, meaning that their network is not industry-specialised. Whilst they are still understanding the position, a headhunter will already know the competitors and be networked with the target candidates, which means more time talking to high potential individuals and less time finding out who they are in the first place.
Recruitment agencies often compete with other agencies on the same position, and are used to filling only a small percentage of the roles that they work on. They will only receive a commission if one of the candidates they shortlisted is placed.
Headhunters frequently charge their fees in instalments during the recruitment process. They tend to charge a retainer payment upfront (often a third of the overall fee). The research involved in headhunting is more comprehensive, which requires an initial investment.
The second payment is made when the client is presented with a shortlist of candidates to interview. The final installment is paid upon successful placement.
The overall fees charged by a headhunter tend to be around a third of the candidate salary, while a recruitment agency charges a smaller percentage.
The obvious reason for a headhunter to only focus on sourcing the best talent is that it increases the quality of hire for the client. But beyond that, headhunters also think longer term. As they often recruit for senior positions, candidates more often than not become clients. An agency's focus tends to be more on making each fee rather than finding the perfect candidate and building relationships for the future.
Recruitment agencies and headhunters are both important for filling job vacancies. Their services are suited to different situations, so if you’re thinking of working with either, be sure to consider the key differences.
Also be aware that not all agencies or headhunters work the same as their competitors. Some recruiters who claim to be true headhunters may still use strategies which attract active candidates.
Always clarify the exact services that a recruiter can provide for you, where the candidates are coming from, and what the fees are.
- How to Hire the Best Talent in the Industry
- When is a Headhunter Worth the Investment?
- 10 Reasons why you Should use a Specialist Headhunter