As a former Financial Consultant and one whose decision making is driven through analytics, I like to contemplate similarities and differences between my former “Wall Street” life and present “Executive Search” life. When pondering the human capital industry, search and staffing firms might be thought of as Market Maker’s.
Wikipedia defines a Market Maker as “a company, or an individual, that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn.” The SEC defines a ‘“market maker’” as “a firm that stands ready to buy and sell stock on a regular and continuous basis at a publicly quoted price.”
Although one can measure outputs and costs, the terms “financial instrument” and “commodity” are irrelevant to knowledge-based workers. Moreover, search and staffing firms do not normally offer jobs in their own companies. Instead, they offer opportunities in the sectors they serve. Therefore, search firms do not offer true “liquidity”. Furthermore, search and staffing firms’ pricing structures are different than a Wall Street “Market Maker,” although they share some parallels with respect to contract staffing, in particular. Finally, the search, staffing and consulting services industry does not move at nearly the velocity that Wall Street does although I’m sure our client’s would prefer that we do!
A Market Maker on Wall Street sits between supply and demand of shares of stock. Similarly, search and staffing firms that focus on specific sectors sit between supply and demand in human capital.
Why is this important? In sum, it’s the proprietary information that search and staffing firms possess that others do not.
• Labor Force Composite | What does the labor force actually look like for a particular skill set?
• Client Competition and Reputation | Primary market research during contact campaigns that often involve hundreds of connections.
• Network | Search and staffing firms often contain the largest networks of any single resource since their business’ foundation is their network, and developing their networks is what they do all day long.
• Compensation | Actual compensation data of people in similar roles rather than salary surveys that tend to focus on broader categories of professionals.
• Skill Sets | Those that are growing in demand and those that are not!
The search and staffing industry is an enormous, untapped pool of informational assets that sits between market supply and demand. I was reminded of this fact by a Wall Street analyst who called me seeking impressions of a company of which he thought I might be aware. I asked him why he called, and he stated that search firms are fonts of privately held information that he can’t obtain elsewhere.