Headhunting Firms vs. Recruitment Agencies. What’s the difference?

HR Insight

Need to outsource your hiring but don’t know where to start?

Recruitment industry jargons got you confused? Not sure which service is the right match?

This article gives you all you need.

Headhunting and recruitment agencies share a mutual purpose

As recruiters, the most popular question we receive from clients is “What’s the difference between recruitment service and headhunting/executive search service?”. To answer this, let’s first take a glimpse at the possible choices to fill a vacant position:

  • Internal: in-house recruiters
  • External: advertising job boards, headhunting/executive search firms, recruitment agencies

Headhunting firms (or Executive Search firms) and recruitment agencies both share this in common: they are third-party contractors that assist in filling vacancies for your business. Both will source candidates, shortlist them, present the qualified ones and facilitate the interview process.

But as we investigate further, the differences start to unveil.

Distinguished candidate pools

Recruitment agencies typically work on general, junior-level roles, or mass recruitment projects. Their talent pool consists of actively open-for-work candidates with common skill sets. These agencies tend to work on multiple positions at once and can deliver many candidates in a short timeframe.

Headhunting firms, on the contrary, establish intensive networks in specific industries. They can search an entire niche market to find the best candidates that fit a specialized position, regardless of their job-seeking status. A headhunting firm is a good choice when you need to hire revenue-critical, senior, or technical roles.

Different business model

While recruitment agencies usually work on multiple positions at once and receive commission only when candidates are hired, headhunting firms have two business models:

  • The contingency model: the recruiter is fully paid only when their candidates are hired. This model is often used for mid-level positions.
  • The retained model: the recruiter is paid an upfront fee when signing the contract. Then more commission installments will be made during the recruitment process. This model works best for senior-level searches within a bounded timeline.

Which approach is right for your business?

When it comes to picking the right service, consider:

  • Number of positions
  • Timeline
  • Experience level
  • Required skillsets, is it common or specialized?
  • Budget

If your company is growing and need a large number of freshers or junior employees, partnering with a recruitment agency is a wise choice because their massive talent pool can help fulfill the roles in a much shorter time than using internal recruiters.

But in case you need to hire manager roles, senior executives, or technical positions which are usually hard to fill, then leveraging the insider network of headhunting firms is the best approach.

Advice from a recruiter

When working with third-party recruitment service providers, it’s crucial to have a clear job description, without which may result in a waste of time for both sides.

Make sure to clarify the requirements as well. Use measurable and specific objectives in the contract rather than general terms. For example: How many candidates need to be presented for interviewing? How many need to be hired? What is the timeline for each process?

In most cases, a business’s staffing need is not a plain and clear number. It is much more complicated since lots of factors need to be put into consideration, e.g. industry, long-term vision, operating model, etc. Thus, businesses are more into finding a full-service HR partner who can consult and provide them with a tailored solution.

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