By Curtis Krause, CFA
Every talent team faces a build-versus-buy decision: run searches internally or partner externally. “Going direct” (ie. posting publicly, sourcing on LinkedIn, leaning on inbound and referrals) may seem like the obvious answer as it creates the perception that the company retains:
- more control
- lower costs
- without needing to explain / translate company, team, role, etc
So why not just do it yourself?
The observation
Nobody questions going direct for a mid-level analyst. The stakes are lower, the talent pool is deeper, and if it doesn’t work out, you move on. But we’re now seeing this direct playbook move upstream into MD+ roles where the cost of a miss is a different animal. Three current examples:
- MD Investment Strategy (12-15 years experience) at one of the country’s largest life insurers
- MD Public Investments (12+ years experience ) at a leading foundation, with base compensation listed at $450k
- MD Head of Midwest Institutional Sales (15+ years experience) at a global equity manager
These aren’t roles you backfill quietly. They’re in front of clients, in front of the Board/IC, reporting to global leadership. The right hire can change the trajectory of the business. But getting it wrong can create a problem you’re trying to manage around for two years, sometimes pretending it’s working.
Before moving into executive search, I was an operator at alternative managers across client/product, fundraising, and revenue leadership, working closely with our internal recruiting teams on senior external hires. We regularly debated when to run a search ourselves versus bringing in outside help and learned the trade-offs the hard way. Five lessons stand out:
1) the Market-mapping Challenge and Adverse Selection
Your view of the candidate market gets colored by the most visible – the subset we touch – overindexing on:
• Applicants – active job seekers
• Referrals – your network’s network
• Low Hanging fruit – people easy to find or easy to assess quickly
And simultaneously underindexing on those:
• succeeding in their current seat
• discreet and unlikely to apply
• reachable only through targeted outreach and peer-level credibility
The risk is an illusion of coverage.
2) the Persuasion problem
For senior roles, you’re not “selecting” as much as you’re recruiting. Top candidates need targeted outreach, peer-level credibility, and a pitch personalized to their situation. And they’re judging your firm by how you run the search. Anything less than excellent turns off the exact people you’re trying to attract.
3) Referrals high-quality, but biased
Referrals can surface excellent candidates, but they’re not neutral. They tend to be:
• narrow (same school and company alumni circles)
• politically influenced (“help my person”)
• soft on fit (with chemistry and similarity to incumbent substituting for objective evidence).
4) the Shortcut trap
When applicant volume spikes, or when the day job crowds out recruiting, even disciplined teams start looking for ways to cut corners: screening by keyword, defaulting to pedigree and brands, and pattern-matching off the last good hire.
And as compensation transparency drives more applicants to senior postings, the pile only grows. Strong people can get lost in the pile, and some of the best were never in it to begin with.
5) the Cost Reality versus Perception
The biggest cost in senior hiring is leadership time. When you run it direct, your most expensive people end up getting drawn into time-consuming work. Every extra interview, reset, and false start consumes leadership attention and slows down the business.
A retained partner absorbs that work and reduces wasted effort. You get a real market map and slate of candidates who are genuinely interested and well referenced.
Why this decision matters more for MD+ roles
For senior hires, early failure or early exit is common enough to make you wary of false economies in the hiring process. Sabina Nawaz reported in Harvard Business Review that roughly half of senior executives leave within 18 months, with failure costs estimated at up to 10x salary.
At the analyst level, you can take a portfolio approach: hire three, develop the best, and move on from the rest. MD+ hires don’t work that way. They’re more of an engineering problem: if the foundation of a building is a millimeter off spec, it haunts you for years and disrupts everything built on top of it. That’s why the search method matters — you need comprehensive coverage, honest calibration, and discretion.
From my years as an operator, going direct worked best when we had the luxury of time; a simple, well-defined, and internally agreed-upon role; and a margin for error if our hire didn’t work out. When two or more of the following were true, the risk of going direct outweighed the savings:
Does your team need structured calibration (scorecards, consistent bar)?
Would a miss plausibly cost 12–24 months of performance or credibility?
Is the best candidate likely not applying?
Is confidentiality material (team, clients, competitors, market optics)?
Do you need a real market map of tradeoffs across profiles, not just a shortlist of names?