wilmott.com

Hi allDo you think it would ever put you at a disadvantage to use a headhunter if you were applying to a job? What I mean is, say you wanted a specific job at a specific place and you could contact the manager directly.You would have the choice of using a headhunter as an intermediary. What I am wondering is whether the budget foryour potential package at the company would be smaller if you did this, because they would need to pay the headhunter the extra 20% (or whatever)... so would you be limiting the maximum that you could be negotiating for?would be interested to hear anyone's opinionthanks

Although your ID is Complequant, it is the view I'd expect of an economist...And in principle that could well be true for staff , and is true in the case of contractors.Given that there are sites where you can advertise jobs for 50 a go, why use HHs ?That's because there is a cost to hiring managers time, though of course some HHs carpet bomb CVs anyway.But what if there was a public database where absolutely everyone put in their details, and were auctioned for the year, sort of like eBay ?That's actually how some labour markets worked before the industrial revolution.In that case there would be a small market for consultants who advised on pricing and gaming the system as we see in the market for high ticket art, but not the 25-30% we see now.But of course eBay would want a cut, so friction costs of around 10-15% are pretty close to inevitable.So you can price the 15% or so as the seeking part of pimp work.Should you use a pimp if you know the manager ?It depends.Some people would be offended if they knew you well, but applied extra costs to them.Some HHs are better than others at getting more money, but ironically of course they are paid by the hiring firm to do so. A HH who was the best at extracting cash ought to be able to charge the candidate, but that's actually illegal in a lot of places under laws designed to protect itinerant agricultural workers.A large % of all the shit in western economies can be put down to governments pandering to farmers. A HH can add value by asking questions and saying things that one side feels uncomfortable actually expressing. Also on more than one occasion I have been asked if the bank should hire this particular candidate. A superficial reading of that situation implies I would always say yes, but of course I am an honest chap, but if I screw a client in this case I harm my long term cash flow.

thanks for the response.. I suppose partly I was wondering how the budgeting works in the banks, ie. is the fee payable to the HH typically part of the same budget that the guaranteed bonus comes from? Presumably a certain amount is earmarked for this budget, and if 20% of it is eaten up immediately just by virtue of the fact that you have contacted a HH, then you ve limited the amount available to you.. or maybe it doesnt work like that.Im a quant rather than an economist by the way

Depends upon local accounting style.In my last job, our bonus pool was 50% of profit, so half the fee paid to a HH came out of our pockets.So everyone, including the new person paid for hiring.To some degree that applies to anyone who works in a firm that does bonuses.However the majority of quants aren't in a directly revenue generating unit.That means that the pimping fee is spread very thinly, so much so that it's effect is negligible upon your own earnings.Banks typically underprice the value of retention of staff, particularly in technology roles. If you add in management time for recruiting a replacement, dislocation from the hand over, the fact that even a good new guy will take time to learn the local ropes, and the chance that you hire a dud, I reckon each person you lose costs you at least a year base salary.Bit of course if banks priced staff correctly I'd have to get a proper job

Optimization is powerful in theory, but usually it is the human factor that does the trick in the real world. HHs have a specific role in the process. They can ask blunt question to the hiring manager, e.g. his budget for the advertised position. (Note: while many interviewers may ask the candidate his/her expected salary. It represents two completely different stories: the HH asks the budget given candidates with different level of experience and the candidate being asked how much does he/she worth.) Suppose a candidate gets through the interview, the HH would have a clue how far he/she can push and can try to persuade the manager that you are good enough to justify for a salary close to the top end of his/her budget.Cutting the middle-man seems to be a win-win situation on paper. But, negotiation for salary package is not an easy task esp for those with lesser bargaining power (i.e. those looking for the first quant job). I got my first job by direct application (saw an ad on website and applied). The salary negotiation process was not really that smooth...

They are a necessary evil in today's marketplace.