You’re going for a job at a big multistrategy hedge fund when another big multistrategy hedge fund comes along and wants to hire you. You’ve already signed the contract, but the new offer is sufficiently differentiated to make you think signing the contract doesn’t really matter. You ditch the first fund and join the second. Who cares?
Firstly, the hedge fund that thought it had hired you. Secondly, the headhunter who thought he/she had placed you and who lost a huge fee when you reneged.
Headhunters in London say rogue candidates have been an increasing issue this year. “It’s soul-destroying,” one tells us, speaking off the record. “People have signed terms and then they’re gazumped,” he adds, using a phrase common in the British housing market to denote house buyers who swoop in with a higher price at the last moment. “I’ve lost six figure fees because of it.”
Fortunately for impoverished headhunters, hedge funds themselves are doing something about the issue. Bloomberg reports today that Millennium and Brevan Howard, both of which have been doing some enormous hiring this year have begun adding clauses to contracts stating that candidates will need to pay damages if they don’t join as promised.
Headhunters we spoke to said the rogue candidates are most prolific in London. In the US, hedge fund candidates are more mannered. “Most people fulfill their commitments to accept a role. It’s very rare that they back away,” said one.
In London, though, candidates seem to have been taking their chances. “It’s a very tight market and people have more offers,” says another London headhunter. “People have always been snapped-up before signing, but being snapped-up after signing is a new thing.”
Headhunters are paid a proportion of candidates’ compensation, but only if the candidates actually join.
Rogue candidates that sign hedge fund contracts and then have a change of heart, risk more than just paying a fine and hurting headhunters’ pockets. Headhunters say they will also be blacklisted. For this reason, such behavior is not advisable at the start of a career, but might make sense later on. “If it’s your last big move you might not care,” muses the headhunter.
Under the new contracts, hedge funds themselves are also committing to hiring people. They too have to pay damages if they pull out.
Brevan Howard didn’t respond to a request to comment. Millennium declined to comment.
Sarah Butcher – Read more on efinancialcareers.co.uk