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Recruitment
business in for a shakedown
Following
the résumé scandal of Veritas CFO, headhunting business has come under
greater scrutiny in corporate America. MOHAN BABU writes that in a
slowing economy both employers and candidates have become cautious of
headhunters
An
interesting scandal rocked the high-tech community in the US recently. Just
when all thought that the dust was settling in on the Enron and WorldCom
accounting fraud, news of Veritas CFO’s résumé scandal rocketed the market.
Amid a revelation that Kenneth E Lonchar lied about his education—stating on
his official résumé that he had a master’s degree in business administration
(MBA) from Stanford University—the company forced him to resign. Reacting to
this news, Ellwood Oakley, an associate professor specialising in ethics for
the Robinson College of Business at Georgia State University said, “Wall
Street’s backlash to Veritas’ bombshell will likely to add a new concern to
the credibility issues facing corporate America.” He went on to add, “A lot
of companies are going to be sending out internal e-mails during the next
few days asking for executives to re-inspect their résumés for accuracy.
There really is no excuse for this kind of thing.” This scandal is bringing
renewed focus on the whole profession of headhunting.
In the
industry, a “headhunter” is formally known as an executive recruiter.
Typically, a headhunter earns his or her living by recruiting top-notch
candidates for hard-to-fill corporate positions. The basic premise of
executive recruiting is that really good candidates are happy in their
current jobs and are not likely to read (or respond to) want ads in
newspapers or on the Internet. Ideally, executive recruiters, begin each
recruiting assignment by carefully gathering the specific requirements for
the job to be filled. They then attempt to locate the ideal candidate using
their network of contacts in business and industry. Contrary to popular
myth, executive recruiters are not employment agencies but free agents who
receive a fee from the client (not the candidate), at the completion of the
hiring process, typically 60-90 days after the candidate begins work. This
is called a “contingent fee”. In the US, the National Association of
Executive Recruiters (NAER) is a premier industry group for professionals in
this industry.
To many IT
professionals and HR managers, headhunters are a “necessarily evil”, a
conduit to connect suitable candidates to companies. Of course, the only
other popular recruiting route for companies is employee referrals.
Advertisements in newspapers and job portals do work but by far cost the
companies more in terms of time and cost. There was a time, not long ago
when a recruiter’s job was one of the simplest and most lucrative ones. All
s/he had to do was to maintain a small “database” and pull up Cobol, Java or
C++ candidates from the list and pass it on to HR people at IT companies
looking for candidates. Recruiters are responsible for the initial vetting
of suitable candidates in a market saturated with qualified individuals. In
a slowing economy, the recruiting industry is receiving an added scrutiny
not only from employers but candidates too who wish to be represented by
“credible” middlemen.
Interestingly, Indians in the US, after their failed foray into the
consulting and body-shopping businesses have taken to headhunting. Even a
cursory search on Dice or Monster for US based technical jobs is sure to
bring up dozens of Indian names like Raj, Singh, Kumar, etc. Many
consultants and IT professionals also moonlight as “middlemen” placing their
friends and colleagues into positions they become aware of. Of course the
slowing economy means that such moonlighters are giving way to value added
recruiters.
With projects
increasingly being outsourced to India, companies there are probably
starting to look for talented individuals with the right skills who can hit
the ground running. In a more competitive market, Indian headhunters whose
popular refrain is “We will add you to our database” are in for a rude
shakedown. Some of these recruiting agents masquerading as corporate
headhunters are nothing more than a scam running from their garages and
basements in suburbs of Bangalore, Hyderabad, Delhi and other high-tech
hubs. Use of Internet websites and e-mails helps them remain relatively
anonymous. Some claim to have MBA’s from prestigious institutes including
IIM and contacts at “top multinational” companies. With the lack of formal
recruiting and headhunting associations in India, the fly-by-night operators
seem to have a free reign. The flip side is that since most of the big
recruitment push is coming from Indian companies and not international
players, it will be hard for the bad apples to survive in the long run. If
the hiring manager in a large company like Wipro asks for résumé of people
with J2EE, middleware technologies and HTML/XML, it will be harder for
middlemen to “fake it” by sending résumés of dud candidates without the
right credentials.
Needless to
say, genuine executive recruiters who provide a value added service to their
corporate clients will continue to survive and even thrive. They are the
ones who will be able to advice the Veritas’ of India if the candidates
really have the MBAs and MCAs that they claim to have, saving much grief and
embarrassment at a later date.
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