Would you quit Goldman Sachs for life as a headhunter?
It’s notoriously difficult to secure a role at Goldman Sachs and, once in, loyalty is expected and employee turnover remains low, at least for those who cut the mustard. Would you give it all up for a career as a headhunter - an occupation bankers sometimes compare to a used car salesman?
Sophie Saeed, who was an executive director in Goldman’s leveraged finance division, quit the firm to take a role as an executive search consultant at headhunters Russell Reynolds in April. She was at the bank since 2006, and has the sort of exemplary academics normally associated with Goldman recruits – a first class master’s degree in economics from Cambridge. She declined to comment on her reasons for the move.
Working in investment banking is tough currently, but it’s also lean times for most headhunters. Financial services firms are increasingly circumventing third-parties and hiring directly, and banks are generally unwilling to pay retainers, whereby headhunters receive an upfront fee while trying to identify suitable candidates.
Nonetheless, pay in the banking sector is shrinking, and will continue to do so if regulators have their way. If you're successful as a headhunter, there's the potential to earn big money - up to £500k for the elite. One investment banker who made the switch recently, claims that the combination of falling pay in the financial sector and the "increasing professionalisation" of the executive search industry makes working as a headhunter an appealing career.
Moving from investment banking to headhunting is not unprecedented and Stéphane Rambosson, managing partner, head of financial services at Veni Partners and former head of equity capital markets at Citi, believes there is a certain logic to starting out in a down market.
“I started in September 2008, which was arguably the worst time for financial services search,” he said. “However, starting in that market enabled us to put the work in, develop contacts and market intelligence and be in shape for when the market improved.”
Simon Hayes, a former managing director at UBS, left investment banking in 2003 for a career in executive search. He’s now head of the financial services division at Odgers Berndtson, but said that were the opportunity presented to quit banking for headhunting now, he’d think twice.
“The overriding desire for quality talent remains, but the structural changes in investment banking mean that the environment is simply no longer as attractive for the headhunting industry,” he said.
A logical switch
Although many investment bankers would scoff at the suggestion, working as a specialist financial services headhunter actually requires fairly similar skill-sets, argues Rambosson.
“Working in headhunting is similar to an investment banking advisory role in that you’re pitching for new business and trying to convince clients your firm is the best placed to help them solve a problem,” he said. “Success depends both on being credible enough to generate mandates and then competent enough to close them.”
Bill Allum, managing director at headhunters Execuzen and a former banker, said that having a background in the industry helps to fully understand the mandates you’re pitching for. Nonetheless, any investment bankers joining a headhunter will experience a culture shock.
“You go from working in an institution with a large infrastructure and support functions willing to do much of the administrative work to one where you’re completely autonomous,” he said. “You have to be the sort of person who doesn’t mind making your own tea and finding out where the stationery cupboard is.”
What’s more, although a background in banking may initially open some doors for you with both candidates and clients, building up trust takes a significant amount of time, argues Hayes.
“It’s been said many times before, but some people view headhunters as one step above used car salesmen. It can be a culture shock for those coming from a background where you’re considered a trusted adviser,” he said. “This happens over time, and clients want competitive intelligence and strategic advice. However, initially it’s about putting bums on seats.”