Insights

The Economist Says: Skilled Recruiters are More Powerful Than Ever

March 3, 2020

A new profile shows how 3rd party recruiters have come to occupy a crucial role in the business leadership ecosystem.

Recruiters have always occupied an interesting space in the corporate world. In the popular imagination, high-level corporate recruitment is the realm of shadowy phone calls and corporate espionage, with companies competing to swipe leadership from each-other, and recruiters acting as ruthless brokers at the centre of the storm. Even the popular term “headhunter” – a term we prefer not to use – suggests something very mercenary and, dare we say, a little menacing.

The reality is less romantic than that – but at times just as thrilling. We’re friendly, we promise. We’re not out to get any heads – only to align companies’ needs with the best candidates’ hopes and dreams. But recruitment is often ruthless. It’s fast-paced. Companies come to us because the jobs are hard to fill, because they want to get it done fast, with a quick return of deeply qualified candidates in our specialty. They come to us because we just get it. We’re a tool in companies’ toolbox that can be extraordinarily effective – and we love it.

That’s why we were so excited to see the Economist’s new profile of the recruiting profession, showing how recruitment has come to occupy a crucial role in the ecosystem of business leadership.

Titled, “Take me to a leader,” it outlines the crucial role that 3rd party recruiters play at some of the top companies in the world. Though it’s focused on executive search, it has a lot of interesting things to say about specialty recruitment firms, and why companies still trust outside recruitment experts in an age of high-tech platforms promising to automate the process – maybe more than ever.

According to the Economist’s data, churn at the top end of the talent market is maybe higher than ever. In 2019, 311 of the bosses of America’s 3,600 top listed firms left their jobs, which is the most on record. That, combined with historically low unemployment rates, has created a record demand for candidates – as well as demand for for the talent brokers who have deep understanding of their industries.

Over the past few years, the conventional wisdom has been that hiring has become more automated, with new tools making it easier for companies to hire cheaply in house – which might suggest that 3rd party recruiting has become less relevant. But according to the Economist, the overall revenue in the recruitment industry has grown tremendously over the past few years. It topped $18 billion in the U.S. in 2018, (growing from only $11 billion in 2008), and many companies had their best year ever in 2019.

So why is that the case?

Recruiting is a deeply human profession. Recruiters rely on soft skills and emotional intelligence as much as more analytical skills – which seems, on its face, to put it at odds with trends toward automation in the hiring process. But the Economist outlines how recruiters’ skills are more valuable than ever. Working in concert with new assessment tools, recruiters are able to use their relationships, intuition and a subtle understanding of company culture to source the best talent. In business, there are some skills that never go out of style, and recruiters have them in spades.

The Economist charts some of the history of the profession. It grew out of the post-war U.S. economic boom, expanded internationally in the ‘70s and ‘80s, and gained a reputation as being a bit sloppy – anyone can hang up their shingle and call themselves a recruiter, after all. That proliferation at the low end of the market hurt the industry’s image – but companies all the while hadn’t forgotten the value of recruiters who truly know their stuff. As the Economist puts it, “fifty years later, [recruiters] have become tightly woven into the fabric of corporate life, and are seen by most multinationals as indispensable.”

Some companies insist that they can do all their hiring in house, but the Economist’s research shows that 80-90% of Fortune 250 companies use recruiters to find CEOs – the toughest job of all. The fact is, sometimes an outside expert is the best way to build internal consensus on a hire. They can offer new perspectives on skillsets or experience backgrounds you might not have considered – and if your experience requirements are set in stone, they can deliver candidates with those backgrounds often faster than internal HR recruiters who need to get up to speed on a particular role or function.

If the recruiter is a specialist, that is.

An internal recruitment team is valuable, of course, and will always have its place. This is especially for lower-skilled or more transactional roles. An outside recruiter isn’t necessarily going to provide much more value than junior HR when it comes to finding clerks, EAs, or front-line IT staff. But the value increases dramatically with more specialized roles, and specialized recruiters who understand specific niche talent markets. In the words of Nancy Garrison Jenn, a recruitment advisor to numerous top corporations quoted in the Economist, “[boutique firms] with deep expertise in specific industries or corporate functions have thrived.”

Forgive us, but as specialists in Supply Chain, we couldn’t agree more.

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