Advice firms often turn to recruitment firms when they have roles to fill. To help, recruiters also need access to individuals looking for a new job. But working on both sides of the fence can lead to a conflict of interest, as illustrated by one adviser’s social-media post.
Scott Gallagher, director of IFA firm Rowley Turton, recently shared his experience on LinkedIn of being courted by a recruitment firm during a ‘welcome’ session that involved tea and biscuits. To his dismay, Gallagher then discovered the recruiter had been contacting his staff directly to promote jobs that needed filling elsewhere.
With no formal code of conduct governing this situation, is it something advice firms need to take on the chin? Or should recruiters frown on such conduct and prioritise their long-term relationships with businesses over short-term gains?
Fair game?
Gallagher accepts that recruiters run a business working for both employers and employees, so they do need to build connections with individuals as well as businesses. But he finds it unacceptable for a recruiter to position themselves as a helpful resource to an advice firm while poaching their staff at the same time.
“It’s different if an employee is unhappy and goes to see the recruitment firm,” he says. “As long as it’s led by the employee, that’s fair enough. But if it’s led by the recruiter that firm is speaking to, I’d consider it unethical.”
Gallagher points out that if taken to an extreme, recruiters could profit handsomely by persuading people to constantly move around through direct approaches on one hand, then cosying up to employers to fill the roles they’ve helped to create.
Recruitment firms that operate in the financial advice space agree with Gallagher that this kind of behaviour is unacceptable.
Charlie Fairbank, managing director at executive search firm Avery Fairbank, describes direct contact with staff in that situation as an ‘absolute no-go’.
“It’s completely against what we’d see as our good long-term relationships with clients,” he says. “But it can happen when someone is desperate and under pressure from their client to place someone.”
“I’m 100% with the adviser,” says Andy Taylor, director at financial services recruitment firm Exchange Street. “If I was an adviser I’d think, ‘Don’t come in and make me look stupid by taking my business – my hard-earned money – and then take my staff.’ My take on that is a question of personal and professional ethics.”
Employee-led
For Taylor, the test is as such: if the details of a direct approach to employees were publicly posted on social-media platforms such as LinkedIn, would it be justifiable and could the recruiter defend its actions?
Like Gallagher, he sees no moral dilemma in dealing with employees that have initiated contact with a recruiter of their own free will.
“We get clients where some members of staff contacted us because they applied to a job ad,” he says.
However, things are not always that simple. Taylor says employers may agree terms with recruiters that prevent them dealing with staff members, even if they initiate contact with the recruiter.
“This doesn’t stop people having a legitimate reason for wanting to move on,” he says. “They might want to be paid more, their company might not offer hybrid working or they might think they’ve progressed as far as they can there.”
Although rare, Taylor says the relationship between an employer and recruitment firm can be so strong the recruiter will alert the firm if any of their staff get in touch wanting a move.
“I understand if there’s a client bond the recruiter will want to protect the firm but they’re not doing the right thing by preventing someone from leaving a job,” he says.
Going back to Gallagher’s situation, Fairbank puts forward a few legitimate reasons as to why a recruiter might approach staff directly.
“The only time you might approach staff after forming a close relationship with their employer is where information might be lagging after an acquisition happens and you’ve been instructed to assist the client in helping them to find new employment,” he says.
Another situation is where the recruiter might be working with a large group of firms and contacts staff by mistake, while being unaware they are part of the parent group.
“There might be a case where someone new has started at the recruitment firm and isn’t aware of the existing relationship they have with that company,” adds Fairbank.
Reaching out to someone by mistake is one thing, but if recruiters are trying to form relationships with everyone they can, just to get business through the door, they will tread on too many toes, damage their reputation and undermine trust.
“We don’t have relationships with everyone as it would be a problem,” says Fairbank. Limiting business relationships this way may sound odd, but it makes sense in recruitment as approaching everybody would lead to chaos and a lot of disillusioned former clients.
The long game
It is unrealistic for advice firms to expect recruiters to see their staff as off limits forever, just because they hired a recruitment firm a while back.
“It’s normally 12 months. If you’ve not done any business with a firm in that time, then typically the relationship isn’t there,” says Fairbank.
It is often the nature of the relationship between advice firm and recruiter that dictates what happens next. This may explain why recruiters might contact staff directly.
“Some firms see it as a transactional relationship – when the firms want you as a recruiter, you have a chat,” says Taylor. “But when they don’t need you, the recruiter might think, ‘You don’t answer my calls now, so if you’re going to be hard-nosed about it, why shouldn’t I speak to your staff?’ I can see how it might get to that.”
Gallagher points out contacting employees directly without good reason undermines trust and will ultimately be counter-productive for the recruiter. Taylor agrees and comes down in favour of long-term relationships as a win-win for everyone.
“Play the longer game and do the right thing otherwise firms can’t trust you,” he says. Even if the recruiter isn’t required to place people, Taylor says they can be a consultancy resource for employers who want some guidance on salary bands, for example, and to ask what kinds of things are ‘normal’ when recruiting in the advice sector.
“For any business of a certain size, it will pay to have a strong relationship with a recruitment business that fights your corner and won’t approach your staff,” he says.
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