For executives who are approached by a headhunter, the decision to become a candidate for the as-yet-unspecified position involves some costs, “including the time and energy to prepare for an interview”, find appropriate references and cope with the “anticipated psychological costs of rejection should the search not be successful”, the researchers write. There is also the danger that one’s current employer finds out that the executive is interviewing for another job.
At universities, faculty “court offers from the outside and then pretend they want to accept one because it is a way of leveraging a higher salary in their current job,” says Cappelli. “In the corporate world, you don’t get rewarded for this, and in fact can be punished. The risk is that your reputation will be damaged, which affects advancement in the current organisation and the willingness to recommend you for other positions.
So there is some risk in agreeing to be a candidate for a job search.” But it’s also true that search consultants are good at keeping confidences, Cappelli notes. “The risk is not huge that your employer will find out, although of course the further down the road you go, the bigger the risk becomes.”
Cappelli and Hamori cite research showing not only that companies spent about $10.4 billion in search fees in 2011, but also that, based on responses from close to 2500 executives in another study, “the number-one trigger for job searches by executives is receiving a call from an executive recruiter”.
The database used by Cappelli and Hamori was limited to financial service companies in the New York area, including asset management firms, banks, consumer finance companies and investment banks. The researchers drew a random sample of 2000 executives from a larger sample of 14,000 executives, or about 2% of the 740,000 people employed in “financial activities” in the New York-northern New Jersey-Long Island metropolitan areas.
Although the researchers were not given the names of the executives in their sample, they did get information on the executives’ current job and most recent previous job (including, for example, his or her title, function and industry segment) as well as his educational background and international experience. Information on the individual’s employer was available from other databases.
CEOs and chairpersons represented 13% of the database; executive and senior vice presidents represented 18%; senior managers including directors, vice presidents and managing directors as well as partners and principals represented 48%. The remainder were managers and professionals.
Of the respondents 45% were employed in investment banks and securities; 23% in asset and money management firms; 20% in banks and 12% in finance companies.
CEOs, executive vice presidents and senior vice presidents were more inclined to say ‘yes’ to the headhunter than those lower down, such as vice presidents. The most receptive of all were executive vice presidents. In addition, executives in the asset and money management segment as well as investment banking segment were less likely to engage in a job search than those in the domestic and international banks and consumer finance companies. Those in support functions were less likely to engage in search than those in general management.
While the two researchers used data from 2002, Cappelli suggests that the American economy today is not much different from the economy 11 years ago. The country was then, and is now, recovering from a serious downturn. In addition, the financial crisis makes it more difficult for people to move because of uncertainties surrounding both the overall economy and individual companies. “You heard from a lot of people in this downturn that it was difficult to change jobs because they weren’t sure what they were getting into,” Cappelli says, adding that he considers this a temporary phenomenon. “If you look at data on job satisfaction and commitment, the vast majority of people across all occupations and industries indicate they plan to look for a new job as soon as the economy improves.”
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