Recruiter Shortages Forge New Front in Talent Wars

The Wall Street Journal, Tuesday, 30 January 2001 - ©2001 by Dow Jones & Company, Inc.-The recent recruiting boom has created a shortage of qualified recruiters and an ironic situation for headhunting firms. For years, the nation's 5,000 or so search firms have plied their trade by luring highly placed executives into openings at their clients' companies.

Now these firms are performing similar raids--on each other. Marylin Prince, a partner with PrinceGoldsmith LLC, a retained search firm in New York that specializes in asset management, admits she has stolen a recruiter or two from the competition, but says she's never seen anything like the present environment. "It's fair game out there. My people are getting calls from other recruiting firms all the time. It's a painful process when you train someone and another firm steals them away."

The recruiter shortage is also affecting corporations. Chris Ryan, who coordinates recruiting activities for computer services giant EDS in Plano, Texas, says, "We have about 120 recruiter positions across the U.S. Each time there's an opening, it's more challenging to fill."

New varieties of search firms are scrambling to fill those gaps by providing temporary corporate recruiters or by recruiting recruiters; while traditional firms are creating fat incentive packages to keep the recruiters they have.

The recruiter shortage is a testament to both the strength and nature of the search industry. With companies expanding and employees jumping from job to job at an unprecedented rate--the Bureau of National Affairs pegs employee turnover at 1.2% a month--recruiters are more important than ever. But nurturing new recruiters is a lengthy process and firms acknowledge they can't keep up with the demand.

Through a Side Door

"No one grows up wanting to be a recruiter," says Ms. Prince. Most people enter the field through a side door, after earning an MBA or other graduate degree and spending at least three years in a specific industry. They are discovered," Ms. Prince says, "when we're doing a search for a client and find someone who may not be right for that position but has the communication and relationship skills that would make a marvelous recruiter."

Executive search firms have formal training programs for new recruits and online courses like those offered by AIRS in Hanover, N.H., can teach the basics of Internet searches and sourcing. But new recruiters must be led through several months of searches by seasoned colleagues before they pick up the nuances of the profession. "New recruiters don't have a clue," says Larry Cooper, director of sales for Management Search International, a retained and contingency firm headquartered in Atlanta, Ga. "If they make a placement during the first six months, it's purely by accident."

Mr. Cooper is filling out the staff of MSI's Atlanta office with people once overlooked by search firms--women and minority groups. "Recruiting has become so fast-paced that many of the gentlemen who started this industry just can't keep up," Mr. Cooper says. "We're replacing them with younger women, African-Americans and Hispanics who are highly professional and driven to succeed here."

Kim Marie Hamilton, who had previously worked in computer sales, says she didn't know much about recruiting until an MSI staffer suggested she might be good at it. "I was surprised at how high energy the field is," says MS. Hamilton, "and how little prejudice there is. I'm recruiting on MSI's technical side and it's far more important that I know what will make a good match for IBM than what my gender and race are."

Matthew Corbett, president of Ideal Wave Solutions LLC, a staffing provider for the wireless data communications industry based in Carlisle, Mass., says he's pleased that the demographics of the entire recruiting industry is skewing younger. "I don't think that age is as important as technical aptitude, relationship-building skills and an analytical, problem-solving personality," he says. "But I'm worried that if there's an economic slowdown, the younger recruiters will be the first to go."

Danger Signal

If the demand for recruiters slows, Janet Jones-Parker's new firm could also be in jeopardy. When she left the presidency of Association of Executive Search Consultants in New York two years ago, Ms. Jones-Parker had planned to open a traditional retained search firm. "But I had a phone call from a colleague who said that the war for talent has hit the talent seekers, and he urged me to start a firm that recruits for search firms instead," she says.

Now Ms. Jones-Parker is the president of Jones-Parker/Starr in Chapel Hill, N.C., a firm that provides the same services for search firms that they provide for their clients. "It makes more sense for executive recruiters to spend their time and energy working for their corporate clients, and let us recruit for their staffs," she says. Unlike traditional search firms, Ms. Jones-Parker does not take on individual assignments, but works on a long-term retained basis with a handful of clients, helping them staff new offices both here and abroad.

Susan P. Ascher is tackling the recruiter shortage from yet another direction. Her firm, The Ascher Group of Roseland, N.J., provides recruiters to corporations on a contract basis. "There's such a dearth of good people," Ms. Ascher says, "that corporations can't find enough in-house recruiters. And recruiting is cyclical, with most hiring slowing down in winter. Corporations are discovering that it's more cost-effective to let us staff their recruiting offices with contractors during peak months and let them go during the valleys."

While there may be a shortage of full-time recruiters, Ms. Ascher is having little trouble finding contractors. "A lot of Generation Xers are fed up with the corporate world," she says, "and like the freedom of working at an hourly rate, and leaving at 4 p.m. if they want to." She's also convinced a pool of aging baby boomers, who have taken early retirement or been downsized out of corporate jobs, to try their hands at recruiting. And, of course, Mrs. Ascher has found some of her contractors by raiding other recruiting firms.

To stem that loss, some recruiting companies are offering their staff extra incentives to stay. Benchmark HR Solutions Inc. in Salem, N.H., for example, had been losing some of its best recruiters to the start-up technology companies it was helping to staff. "They were attracted by the promise of stock options," says company founder Bill Bench.

As part of its payment plan, Benchmark HR accepts equity shares in its young client companies. Last fall, Benchmark HR pooled these shares and offered a percentage to each of their recruiters. If one or more of the companies hits it big, Benchmark's recruiters will share in the wealth. Since that move, fewer recruiters have left, Mr. Bench says.

When a recruiter leaves to join another search firm, the raided firm loses more than a good employee. Search firms operate on client fees, which range from 25% to 35% of the annual salary of each person they place. When a recruiter is lured away, he may be taking along hundreds of thousands of dollars in future fees.

That becomes the second irony in today's recruiter shortage. Executive search firms abide by an unwritten rule that they will not recruit from their client companies. But no such rule places a recruiter's clients off limits when he joins a new firm. "At the end of the day, the client decides if he'll stay with the original firm or follow the recruiters to the new one," says Ms. Jones-Parker of Jones-Parker/Starr.

We're finally feeling the pain a corporation feels when we recruit away one of their top executives," says PrinceGoldsmith's Ms. Prince.

-JULIE BENNETT






























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