Executive Search vs. Recruitment: What’s the Difference?
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If you are confused by the difference between Executive Search and Recruitment, then you are not the only one. The two terms are often used interchangeably, even by the people working within the industry.
Although, we could say that recruitment agencies and executive search firms share the same objective – hiring the best possible talent – they do not work the same way. There are several significant differences and businesses should have a firm grasp on these differences when deciding which one will provide the best results for their next search. Choosing wrongly can result in costly mistakes, lengthy recruitment processes and even wrong hire. So, which one should they choose?
Senior Level Roles vs. Entry & Mid-Level Roles
One of the main differences lies in the seniority level of the roles. Executive search firms, as their name implies, focus on attracting highly skilled and experienced senior, executive or top-level management roles (C-suite, VP, Director, Boards). These searches are usually high-risk for recruiters due to their preference for contingent-based business model (explored further on). Executive consultants also specialize in positions that are typically harder to find or require a specialized skill set. These senior level positions are business-critical in terms of leadership as well as the unique abilities individuals require to execute long-term plans and daily operations.
In contrast, recruiters typically focus on sourcing junior positions up-to and including lower-level management. Some choose to differentiate themselves by specializing on the basis of experience level – for example, entry level or intermediate.
If the role has strategic oversight, either for the organization (top-level management) or for a division or department (middle-level management), consider appointing an executive search firm specializing in your industry or business function.
Sourcing Passive vs. Active Candidates
Another difference, and a major determining factor for whether you need an executive search firm or recruitment agency is the type of candidate you wish to attract for the role. Executive search consultants employ proactive search methodologies – targeting passive candidates, the ones currently not seeking new roles or the ones not yet applying for roles but networking – called “tiptoers”. Passive candidates and tiptoers comprise about 60% of the talent pool. In executive search, most of the time the successful candidate is not an active job seeker that submitted their resume. In certain cases, however, executive search firms extend their coverage also to active job seekers, using job ads and social media to complement their search. If the search is not confidential, that is. This ensures they target the whole talent pool and reach out to the best candidates irrespective of their circumstances.
On the other hand, recruitment agencies traditionally target active candidates – job seekers – candidates who are either unemployed or are actively searching for a new role through various channels. Active job seekers account for about 30% of the talent pool, thus limiting the scope of the search. These may also be database individuals, registered with several recruitment agencies and interviewing for multiple roles. Recruiters seek to mitigate these drawbacks to some extent by reaching out to candidates on their LinkedIn network or their database.
Retained Search vs. Contingent Search
Another difference that must be highlighted is the different business models applied. Executive search firms operate on a retainer business model, which means they charge an upfront fee. The upfront fee typically equates to 30% – 35% of the investment fee. The initial investment reflects the thoroughness of the search process and the resources required to deliver it. Executive search consultants take the time to understand your market offering – your mission, values, culture – as well as establishing the skills, experience, and competencies essential for success in the role. Together with a signed-off job profile, the executive consultant takes your role to the market. The remaining fee will be charged as instalments during key milestones in the search, for example, after submitting a shortlist of candidates and the rest upon placement. Furthermore, executive search firms offer a guarantee period, that typically lasts 3 to 6 months, or the probation period of the placed candidate. This means they will redeliver a search should the individual they place leave their role prematurely.
Executive search firms take advantage of their reputation. Because they deal with a comparatively small volume of roles and work on exclusivity, they spend time getting to know their candidates; their personalities, working style, motivation, leadership abilities and drivers. Likewise, because they are mostly dealing with passive candidates, executive search consultants must present the role as attractively as possible and motivate the candidate. The role must still be a career-enhancing move for him or her, but the way it is presented is essential. This means better experience for candidates, with the added benefit that executive search firms can deliver a more tailored search, presenting shortlisted candidates who better match the job description.
Recruiters, on the other hand, traditionally operate a contingent business model whereby they only charge a fee on the successful placement of a candidate. Usually, more agencies are searching to fill the same role, meaning they are in direct competition with one another. While no upfront costs, low risk and direct competition might sound attractive, it comes at a cost. As they will only place a proportion of the roles they take on, they will seek to prioritize searches that are less demanding – consuming less time, money, and energy. Difficult-to-fill roles may be indefinably postponed in favor of ‘quick wins’, delivery of shortlisted candidates might be sporadic, and the quality of shortlisted candidates might be inconsistent. They focus on quantity over quality – they cannot afford to invest in the resources needed to gain a full understanding of the client’s market offering (products, services, mission, values, culture).
It should be noted, however, that not all recruiters operate solely on a contingent business model. Some will offer a retainer, mostly in situations where multiple hires are sought, where the hire is niche or confidential, or for repeat clients who have an established relationship with the recruiter.
Confidentiality is of the utmost importance when it comes to executive search. When senior candidates engage in discussions about a new role, keeping it confidential is essential. It might also be important to keep the search confidential due to replacement of someone still in the role. Sometimes even “top-secret” term is used.
Recruitment agencies usually do not perform confidential searches, especially not very secretive ones.
Operating Internationally vs. Serving Local Markets
Executive search firms are more likely to operate internationally. This reflects the needs of their clients who, when looking for their next a-player, are prepared to look beyond geographical borders to engage the very best talent, wherever they reside. They may or may not have a physical presence in the country, but they will have established networks in these territories.
Recruiters typically serve local markets. This is especially the case for independent recruiters, though larger firms with multiple branches offer national and sometimes also international coverage. The term ‘local’ could relate to an area as small as a district or as large as a county or region.
There are other differences between the two as well. For instance, while recruitment firms are rarely industry-specific, executive search companies often specialize in specific realms
At the end, I wish to emphasize that both are equally important. Recruiters are the backbone of the staffing industry, as they do a fantastic job of finding and placing many candidates in a variety of roles every year. But they will be best suited for entry-level to mid-management level roles, positions that do not require specialized skills, and multiple hires that meet these criteria. They are also better to fill immediately required roles where you are looking to hire in a matter of days.
In comparison, executive search firms provide a solution for seniors and executive level roles that are critical to the success of the business. They are best placed to fill senior management and executive roles, difficult to fill roles, confidential roles, niche or specialist hires and multiple hires that meet the above criteria.
To conclude, understanding the differences between executive search and recruitment can ensure that you choose the right type of firm to maximize the chances to hire the best of the best for the required roles.
Marta Rojko is a communications specialist and sociologist. She has been active as a consultant at P&P InterSearch Slovenia for four years, where she is also in charge of international communication and cooperation and certain personnel searches as well as marketing projects and a part of operations.
She started her career straight after completing her studies in a highly technological, development- focused manufacturing company and then moved to Dubai where she worked for 5 years before joining P&P InterSearch Slovenia. P&P InterSearch Slovenia focuses on executive search, but also offers a range of HR consulting services from reorganizations, optimizations, a variety of analysis for management assessments and leadership development, succession planning, outplacements, and more.