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Why it is that headhunters and HR people find each other intolerable

Recruiter who has seen a headhunter

By all rights, headhunters and banks' HR people and in-house recruiters should get along. They have one all-important thing in common (finding candidates) and the two groups are somewhat interchangeable. Rather than liking each other, however, headhunters and banks' own recruiters often nurture a deep mutual dislike for each another. Here's why:

1. In-house recruiters think headhunters are overpaid

A good headhunter working in the City of London or on Wall Street has traditionally been able to earn £250k+ ($399k). By comparison, senior HR people working in banks rarely earn salaries in excess of £100k and receive very moderate bonuses.

Banks' in-house recruiters therefore look at successful headhunters and feel intense envy, although they will never ever admit this.

2. Headhunters think in-house recruiters are generally useless

Top headhunters know that in-house recruiters don't like them, but they do not care. As far as headhunters are concerned, in-house recruiters are tired bureaucrats who could never make it in the real world. This slightly derogatory comment (click here) from a headhunter is typical of the mindset.

3. In-house recruiters think headhunters undermine them by going straight to the business

External headhunters often hold relationships directly with line managers/business people (AKA bankers). These line managers rank above the internal recruiters in a bank's hierarchy. This causes problems. "You have to be very careful how you deal with some of these headhunters because they'll complain about you direct to the business," says one senior recruiter in a bank, speaking on condition of utmost anonymity. "The situation can be very difficult to manage."

4. Headhunters think in-house recruiters tie them up in bureaucracy

Headhunters want to work directly with the important line managers whose goodwill they've been nurturing for many years. They absolutely don't want to work with an HR administrator with a preferred supplier list and a mandate to cut recruitment costs.

5. In-house recruiters think headhunters are trying to rip them off

Headhunters typically charge based upon a candidate's first year pay, excluding variable bonus. Now that banks have increased salaries, headhunters' salary-based fees have risen. Banks' internal recruiters don't like this and want to pay headhunters a fixed sum irrespective of how much the candidates they place earn.

Banks' internal recruiters also accuse insalubrious external recruitment firms of sending them unsolicited CVs and then demanding a fee if the bank hires the CV's owner.

6. External recruiters think in-house recruiters are trying to bleed them dry

Headhunters have lost money as a result of the end of guaranteed bonuses. In the past, they could charge a huge fee based upon a candidate's guaranteed first year earnings (salary plus guaranteed bonus). Now that guaranteed bonuses are banned, they can just charge a moderate fee based upon a candidate's increased first year salary. Worse, banks want to pay them a flat rate (see point 5). The glory days for headhunters are gone, they complain. No one makes any money in headhunting any more. Banks' inhouse recruiters are to blame (etc. etc.).

AUTHORSarah Butcher Global Editor
  • aH
    aHH, London
    13 November 2013

    Really brilliant article. thanks.

    There's this concept that HR recruiters are 'failed head-hunters'. It's not always the case, but generally £200k is preferred to £65k, but some people use recruitment jobs just to get into HR, so it can be the other way round. Generally, only the failures are the ones with the envy.

    Some firms have a rule that external recuiters cannot be used until the internal team has tried for 3 months, the professional recruiters still often nail those roles in weeks and make the internal teams look bad. External recruiters are on average far better, I can name internal recruiters who are always getting fired too, or never getting permanent contracts etc

    But there are often times when managers go to head-hunters, who pick up the first person on linkedin and make an easy £30k fee... it's this where in-house can save money and contribute, so their function is useful when applied properly.

    Bit all too often HR side is full of envy and goes out of their way to prevent solutions being achieved by head-hunters.

    For example, a contributor (banker, trader etc) to a bank adding £2m per year is giving £38k per week to their bank, if a head-hunter saves three months of faffing about then that's £500k, well worth a £50k fee... but HR don't always get that, they're trying to save the £50k recruitment fee not realising that the desk is missing £38k of revenue every week.

  • tr
    12 November 2013

    dont forget that, when line managers recommend someone through internal systems to their HR, they only get 5-10k taxed reward. when they do hire someone from a headhunter, the bank pays close to 30% of the annaul package to the headhunter who will happily oblige 50% of that to the hiring line manager.

    i have seen this happen many a times where line managers hire only from a certain headhunter for kickbacks and other "perks" if you know what i mean. the banks lose, but hey they also make their money in a similar way.

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