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Professional Recruiters as Traders

Professional recruiters, or headhunters as they are commonly called, are hired by companies to find their ideal candidate for a position.  In some cases it is a small position that just needs to be filled, other times it is for a new president of a fortune 500 company.  Particularly in high up positions in the biotech field, headhunters play a particularly intricate roll.  They are traders in a buyer and seller network.  The buyers are the talented professionals and the sellers are the companies.

What is fascinating about this network is that the product being marketed by the sellers is not revealed to the buyers; in addition, buyers and sellers can directly do business with each other.  If a large company, say Genzyme Corporation for example, were to need a new CEO, they would not publically announce this information.  Suggesting key management is changing could create instability with Genzyme’s associates and investors.  In this case they would hire a headhunter to fill the position.  If the headhunter were to provide the candidate that Genzyme eventually were to hire, the headhunter would make a large sum of money in return. At the same time, Genzyme could hire a candidate directly if the opportunity arose, leaving the headhunter with no profit. This makes the position of trader a very delicate one.  They must be able to chase down viable candidates and capture their attention while revealing very little.  Sometimes in desperation, a head hunter will reveal some information on the company but this is risky. By telling the buyers what company they were recruiting for, the headhunter risks the buyers and sellers doing direct business and cutting them out of the network.

To avoid this, headhunters must be secretive.  They must reach candidates, who more often than not are in high up positions in rival companies, and then try and convince them to leave their job and meet with a company to discuss future employment without revealing what the exact position is.  From the buyers position, they are unaware that they are in the market to buy.  They already have good employment and must be convinced to enter the market by the trader with very little information on the network.  Agreeing to enter the network involves risk and many professionals resist for this reason.

This is counterintuitive compared to what we have seen in class. Under common circumstance, if a buyer and seller can communicate directly without fine or fee, they will cut out the trader.  In this situation the reputation of a company keeps information private and changes the network dynamics.

Sources:

http://www.businessinsider.com/the-advantages-of-workingsp-with-a-headhunter-becoming-part-of-the-inner-circle-2011-9

http://sciencecareers.sciencemag.org/career_development/previous_issues/articles/2008_04_18/caredit_a0800058

Professional recruiters, or headhunters as they are commonly called, are hired by companies to find their ideal candidate for a position. In some cases it is a small position that just needs to be filled, other times it is for a new president of a fortune 500 company. Particularly in high up positions in the biotech field, headhunters play a particularly intricate roll. They are traders in a buyer and seller network. The buyers are the talented professionals and the sellers are the companies.

What is fascinating about this network is that the product being marketed by the sellers is not revealed to the buyers; in addition, buyers and sellers can directly do business with each other. If a large company, say Genzyme Corporation for example, were to need a new CEO, they would not publically announce this information. Suggesting key management is changing could create instability with Genzyme’s associates and investors. In this case they would hire a headhunter to fill the position. If the headhunter were to provide the candidate that Genzyme eventually were to hire, the headhunter would make a large sum of money in return. At the same time, Genzyme could hire a candidate directly if the opportunity arose, leaving the headhunter with no profit. This makes the position of trader a very delicate one. They must be able to chase down viable candidates and capture their attention while revealing very little. Sometimes in desperation, a head hunter will reveal some information on the company but this is risky. By telling the buyers what company they were recruiting for, the headhunter risks the buyers and sellers doing direct business and cutting them out of the network.

To avoid this, headhunters must be secretive. They must reach candidates, who more often than not are in high up positions in rival companies, and then try and convince them to leave their job and meet with a company to discuss future employment without revealing what the exact position is. From the buyers position, they are unaware that they are in the market to buy. They already have good employment and must be convinced to enter the market by the trader with very little information on the network. Agreeing to enter the network involves risk and many professionals resist for this reason.

This is counterintuitive compared to what we have seen in class. Under common circumstance, if a buyer and seller can communicate directly without fine or fee, they will cut out the trader. In this situation the reputation of a company keeps information private and changes the network dynamics.

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