Is a Headhunter for You?

"The most important thing to remember in choosing a [recruitment] firm is that you, the employer, direct the search," say Shawn Smith, JD and Rebecca Mazin in their book, The HR Answer Book: An Indispensable Guide For Managers and Human Resources Professionals (AMACOM, 2004). The authors say to consider your recruitment budget, available time, and in-house resources before using a search firm. In the book, they analyze two types of firms: retained and contingent.

"Retained searches are exclusive searches where a specific recruiter is hired to fill a position, usually for a fee of up to one-third of the position’s annual compensation," say Smith and the Mazins. Retained searches are usually the most costly and you must be prepared to pay an up-front deposit as well as expenses, along with the balance payable at the time of hire.

"Before you agree to a retained search, clarify the types of expenses that will be reimbursable and the methods that the recruiter will use in conducting the search," advise the authors. "Remember that once you sign an exclusive agreement, you must pay a fee even if you hire a person that you located through another source."

Contingent search firms charge a percentage of the position’s annual compensation; however, you only have to pay the fee if the candidate is hired. The authors say that many of the contingent search firms will negotiate the fee amount. If you do negotiate a fee, make sure you are clear about what will be included in the calculation. Most contingent search firms offer a guarantee or fee reduction if the candidate doesn’t remain employed for a specific period. If they don’t, ask for one, say the authors.

While non-retained search firms are generally less expensive, the authors warn that their quality can vary widely. Be sure you do your homework and never let a firm "talk you into a candidate." They also recommend that you do your own reference checks and salary negotiations.

"If the firm informs you that it already has conducted reference checks, request copies of notes or records of conversations and follow up to verify or add to the information," advise the authors.