In a Go-Go Market, Recruiters Make a Killing

If you’re wondering whether these are frothy times, look no further than to tech recruiters. The candid ones will tell you they’re making a killing in this market.

“More companies are putting more value on the quality of their recruiting talent than I’ve ever seen before,” says longtime recruiter Bill Beer, who works in the San Francisco offices of Daversa Partners. “Things right now are definitely crazy.”

How crazy is hard to know, with many recruiters reluctant to discuss their own pay. But anecdotal evidence suggests a bit of a behind-the-scenes bonanza. For example, information technology-focused partners at blue-chip search firms such as Korn Ferry and Spencer Stuart have begun earning “between $2 million and $3 million a year” up from a million dollars annually  several years ago, according to one veteran executive recruiter who asked not to be named. “Tech is just so much more robust than every other category right now,” says this person.

Another recruiting partner at a smaller executive search firm confides that his colleagues have begun drawing annual pay of roughly $1 million, up from $500,000 in 2005.

Contract recruiters are seemingly experiencing a sizable jump in pay, too. Teri McFadden, a recruiting VP at Norwest Venture Partners, who directs talent to the firm’s portfolio companies, says that the contractor recruiters she knows now command $125 an hour, up from roughly $70 per hour in 2009.

What’s going on? “I think bubble is the word for it,” laughs McFadden, who handled recruiting for Accel Partners back in 1999 and who sees many similarities between the go-go days of the first boom and what the startup industry is in the throes of today. “Things are just moving at a very fast pace again.”

Companies hoping the right combination of employees will carry them to the big leagues are “saying we need to hire these eight people yesterday, yet the talent pool – particularly on the engineering side – is scarce,” she says.

It’s hard to overstate the supply-demand imbalance, says one Bay Area startup recruiter who says he has never seen the “stakes so high” in his more than 15 years of hiring executives into mostly venture-backed companies. “There are a lot of companies looking for talent.”

More, many of those startups “look at LinkedIn and Zynga and Instagram and think that [a similar growth story] is within their reach,” says the recruiter, who asked to speak anonymously. “Though the valuation of most of these companies is more likely to go down than up, [their management teams] are operating on the belief that the opposite is true and they need to hire a good recruiter who can then hire a lot of good people — and quickly.”

Unsurprisingly, the number of skilled headhunters has dwindled as a result — so much so that poaching is no longer uncommon. McFadden, for example, often hires contractors to drop into startups for months-long assignments; these days, she says she’s working harder than ever to keep her top “two or three folks” placed at all times because “I may not get them back otherwise.” Meanwhile, the veteran executive recruiter tells of one associate who was hired straight out of college by his firm in 2010 for annual base pay of $40,000. Last year, Google came knocking and hired the recent grad for a starting salary of $125,000.

“There’s no doubt that the battle for talent is more difficult than ever,” says Beer, whose firm’s clients include high fliers Zynga, Airbnb, and Twitter, and who says he knows of some “private company talent execs” who have asked for, and received, pay packages at the $200,000-plus range in the last 12 months.

Of course, demand for these “chief people officers” and the like is just fine with Beer, even if they’re becoming harder to find. His firm now gets paid to recruit them, “which never used to happen” in past years.

It also makes for an interesting twist. As Beer notes, when asked how one becomes a recruiter: “There’s no educational training for it. Most recruiters I know didn’t seek it out. Recruiting is still not necessarily a business that people think of as their first choice.”

Photo: Image courtesy of Shutterstock.