The agenda of the HR director for the coming year has a surprising trend to watch for; growth in recruitment, or to be more precise, growth in executive recruiting functions.

There are a number of potential angles from which to address the benefits of in-house executive recruiting; in the current financial climate it is most prudent to address the commercial reasons. Direct financial implications will be at the forefront of the argument but there are other commercial benefits.

In-house executive recruiting is not a new but it is still something of a rarity. For the sake of simplicity, executive recruiting can be handled in one of three ways. Tradition has an executive management team guard their relationships with headhunters and retain them as and when they want to, occasionally tipping off the frustrated HR director. This article seeks to encourage the adoption of one of the other two models, both of which demonstrate real benefit to any company of scale.

The first of these two models sees the dedicated management of external search providers and executive candidates through a member of the HR function, the second is the option to employ a pro-active internal executive search team that will manage external searches but equally seek to cut them through directly sourcing candidates.The dominant force in decision making at this time, for most, is clearly being able to demonstrate saving on the bottom line, and this is at the heart of many organisations decision to develop their own in-house executive recruitment function.

Alexander Nicolaus, international recruitment director at Willis and a former headhunter is unequivocal: “Our aim is to make cost-savings against an external search provider.” Equally an executive recruiter in FTSE100 company who wished to remain confidential had clear goals: “We are targeted to save £500,000 in search fees through our own candidate sourcing, if we do that and cost £100,000 to employ we have a clear impact on the bottom line and it’s easy for HR to justify our presence.”

The commercial benefits are clear in this model expenditure on search fees are dramatically cut. This in itself raises another issue particularly relevant in a market as turbulent as the one we sit in. As executive teams seek a long-term solution to the current market, management structures are becoming increasingly fluid.

One benefit of the in-house direct sourcing team is that should a structural change occur mid-search, there is no cancellation fee to a search firm and need to re-negotiate with the partner, as Alexander comments further: “Two-thirds of roles worked on to date have been changed from the original specification”. The greatest risk is a frustrated internal headhunter who will have to start again costing time but little compared to a wasted search cancellation.

Having demonstrated the clear financial value of the direct in-house search model, it is necessary to address the dedicated management of external searches and executive candidates in the same light. This model, while not as radical as delivering searches in-house, still offers a range of financial benefits and to many companies, is a more satisfactory model.

Directly sourcing candidates is seen as ethically ambiguous by many HR directors and C-level management teams. As we are addressing these models from a commercial perspective we will not dwell on this further, although I am sure some readers will have had a range of negative reactions to the direct model. If you hold concerns, then the management model may best suit your business.

On hiring an individual to manage your executive searches they are likely to find a range of terms agreed with search partners lacking commonality in fee structure, rebate terms, hands off agreements and payment terms.

In using this model you are still reliant on your search providers and need to treat them as true partners, but through sensitively standardising your terms you are likely to make savings in the first year. It’s also a good opportunity to bring your search partners in and explain your goals without making them fear for their long-term relationship.

We typically presume executive hires to be the result of executive searches but this is not the case, typically at least half such hires made by major companies come from internal promotion and referrals off the executive team’s network. The appointment of an executive recruiting manager adds commercial value in evaluating these hires.