After reading Chase Morrow’s article on SourceCon last week – “Agency Recruiting Is Broken. It’s Time to Cut Out The Middle Man!“ I feel compelled to write my own article in response. Rather than countering Morrow on a point by point basis, let us instead focus on constructive advice to hiring managers and anyone involved at all in the corporate hiring and recruiting process. It is important to challenge Morrow’s contention that agency recruiting is broken and thus is in need of disintermediation. While his diagnosis of problems plaguing agency recruiting has merit, his proposed cure does not. It is the procurement of agency recruiting that is broken, not agency recruiting itself. It is essential for the SourceCon community to help bridge the divide that exists between hiring managers, in-house talent acquisition teams, and external recruiters. We need to address the numerous inefficient, counter-effective, and illogical methods we have observed many well-run companies apply when procuring and using agency recruiters.
Many of the critiques and well-known complaints about agency recruiters highlighted by Morrow are certainly well deserved. However, in recruitment, it takes two (or more!) to tango. Agency recruiters and employers alike must be held accountable. If agency recruiters truly do behave in the way described by Morrow, then it is only because they have been incentivized, rewarded, and encouraged to do so by the way their employer clients work with them. If we can end these counter-effective practices from employers, the ineffectual and unprofessional practices of agency recruiters highlighted by Morrow will also be addressed.
Below I have addressed the ten most common counter-effective ways most employers work with contingent agency recruiters and constructive tips for employers to address them. After considering these ten tips, I hope employers will understand that, on a cost and risk-adjusted basis, there is no replacement for the ROI of the services of good agency recruiters.
1) Make Sure to Vet Your Recruiting Agencies
Most companies, besides the very largest enterprises, have no set policies, procedures, or guidelines on how to procure the services of recruiting agencies. Therefore, these SME companies often find themselves engaging whoever they happen to know already, whoever they happen to be referred to by their friends and colleagues, whoever happens to cold call them at the right time, and/or whoever they happen to find in a Google search. If you as a hiring manager or corporate recruiter are unsure the type of questions to vet and differentiate recruiting firms, it could be helpful to ask them “why should we choose you and why should we pay your fees?” A good recruiting firm will have a clearly defined and unequivocal value proposition for every search. In fact, a good agency recruiter will be able to articulate very specific pros and cons of using their services versus HR tech solutions offered by some automated companies. This may seem like common sense, but for reasons described below most corporate recruiters and hiring managers fail to ask this question, or at least do so in the proper context.
2) Engaging Multiple Recruiting Firms On a Single Job Opening Might Not Be a Good Idea
Many companies think they are being smart by engaging multiple recruiting firms and forcing them to compete on price. While this can be effective in nominally lowering recruiting fees and making sure as wide a net as possible is cast in the search for top resumes and candidates, it has many hidden costs that corporations often fail to take into account. The more search firms you engage and the lower fees you pay on a strictly contingent basis, meaning there is no guarantee any of them will collect a fee, the less motivated recruiting firms are to actually devote the time, energy, and resources necessary to conduct an effective search on your behalf.
In other words, the less motivated and the less likely they are to do what you are actually paying them to do: recruit, source and sell your company on your behalf. What these firms will do is send you un-vetted or minimally vetted candidates in their existing database and hope something sticks. Some of the less professional and less reputable firms out there will even send you resumes of candidates from whom they have not received permission to do so. If you engage one of these less reputable recruiting firms then your employment brand to prospective top candidates is hurt by your association with that less reputable firm.
3) Beware of Focusing On Nominal Fees Rather Than True Value Being Delivered
Like most products and services in this world, in recruiting you often get what you pay for. If you are only willing to pay small fees, limit the interaction with your company, and minimize information about your company and the job opening, then you shouldn’t be surprised if you do not receive high-level service and, ultimately, high-level candidates.
Many companies make the mistake of forcing all recruiting firms, as the price of even discussing engaging them in a search, to agree up front to what fees will be paid for a successful placement. In many cases, what employers are actually receiving is lower quality recruiting, not lower fees. Think about this – how likely is a recruiter, who is willing to sell out his own value proposition and fee levels when negotiating with you, going to be able to successfully close a candidate on your employer value proposition and job offer?
4) Procure Recruiting Firms that Can Be a True Prospective Strategic Partner to Your Business
Many companies fail to take into account the many free services they can receive from top recruiting firms regardless of whether or not a successful placement is made. A good recruiting firm, among other things, can provide free market intelligence, free insight and feedback from individual candidates (things candidates would never tell you directly or openly), and free assistance in making sure a candidate is properly closed on an offer.
None of these free services can be performed by a matching algorithm. Many companies are not welcoming of these free value-added services, they are sometimes downright hostile and dismissive of them. Some companies view recruiting firms as sources of additional resumes for a job opening. Many individual recruiters and recruiting firms are willing to work under this type of transactional relationship, but what they do not have is a vested interest in the success of your candidate search or the long-term success of your company.
To them, you are merely a source of fees; an indefinite source of fees at that (if you have not retained them). Therefore, recruiting firms will not be motivated to fully guide you and assist you throughout the search process. Recruiting firms merely will be motivated to send you candidates they come across and/or have in their database and hope to collect a fee. If that is the case, you are not receiving recruiting services you are receiving “referring services.” Employers should make sure to understand the difference between these two services when engaging recruiting agencies.
5) Make Sure to Clearly Define What Constitutes “Success” When Working with Recruiting Agencies
It seems obvious to many companies that success can simply be defined as a recruiting firm finding and submitting a candidate the company ultimately hires. While this may technically be true, it also fails to take into account the long-term goals the hiring manager and the company have for the person that was hired. A company should clearly define to recruiting firms not only the traits and qualifications they are targeting but what they actually desire for the person hired to achieve in the coming months and years.
This can make the difference in helping the search firm merely find a minimally acceptable hire for your company compared to the best prospective hire for your company. If you cannot articulate to a recruiting firm what constitutes a successful long-term hire, then it makes it exceedingly difficult for the recruiting firm to find one for you.
6) It Can Be Very Helpful to Allow Recruiting Agencies to Come On-Site and Meet with The Hiring Managers
Amongst other things a good recruiting firm does for you, being a brand ambassador for your company in general and the hiring manager specifically, as a prospective employer, is one of the most important services they provide. If your company wishes to engage a recruiting firm, you presumably wish for them to be a salesman on your behalf to those top non-active candidates you would not otherwise find or recruit on your own via job boards or a LinkedIn message.
That being the case, it can help the recruiting firm tremendously if they know what they are actually selling. Inviting the recruiting firm to come on-site, meet the hiring manager and his team, and receive a quick tour of your offices can make the recruiting firms you work with better employment brand ambassadors on your behalf, and therefore better able to find and attract better talent on your behalf.
7) Hiring Managers Should Be Heavily Involved Throughout the Recruiting Process
This is a top issue at many large firms that outsource the entire recruiting, interviewing, and hiring process to the human resource department with minimal input from the hiring manager. Many of the other issues on this list involve not enough set policies, procedures, methodologies, etc. to procuring human talent; this one is the mistake of too rigid a policy. The end-user (i.e. the hiring manager) of any product or service a company procures should be heavily involved throughout the entire process. HR, the hiring manager, and the hiring manager’s department must all be aligned with the strategic goals of the hire.
Too often and at too many companies, HR is focused entirely on costs of the hire, while hiring managers are focused solely on the quality of the hire without taking costs or corporate hiring policies into account. Outsourcing the entire candidate search and offer process to human resources can result in faulty or outdated job descriptions that fail to attract the proper pool of candidates. Additionally, without hiring manager input or supervision of the process erroneous or even entirely false information could be relayed to recruiting firms engaged in the search.
Nothing discourages top candidates from considering joining a company more than feeling they are misled and/or a company does not know what they are doing. Human resources, the hiring manager and their department, and the recruiting agencies all need to be in contact, involved, and aligned throughout the search process.
8) Make Sure to Commit to Making an External Hire Before Engaging Recruiting Firms
This is one of the top employer transgressions in working with agency recruiters and one of the top root causes of the misdeeds of agency recruiters described by Morrow. As mentioned in the article introduction, agency recruiters continue to engage in the types of activity described by Morrow for the very simple reason that they are allowed to do so and incentivized to do so, by the way, most of their employer clients work with them.
Nothing discourages recruiting firms from working hard on an employers’ behalf or agreeing to work with them at all, if they gain a reputation as a company that will go through an entire search and interview process only to go with an internal hire at the end or decide that they really don’t need to hire anyone at all. If employers want recruiting firms to work on a contingent basis and they want them to truly cover the market and sell candidates on your behalf, the least you can do as a client and employer is evaluate all prospective internal candidates and make a 100% commitment to hire an external candidate before engaging a recruiting firm and having them spend many hours researching, recruiting, and screening candidates on your behalf.
9) Make Sure to Have Reasonable Expectations for Recruiting Agencies
It is completely fair for a company to ask for a higher quality of candidates from recruiting firms in order to justify their fees. However, it is not fair or reasonable for a company to expect recruiting firms to be a miracle worker.
In the 2004 movie “Miracle” Herb Brooks (played by Kurt Russell) famously said to his Assistant Coach “I am not looking for the best players, I am looking for the right ones.” If you are not a top employer, if you do not pay top money, if you are not in a top/desirable geographic region or a top location/desirable location within that region, and/or if you do not have top culture or career advancement opportunities then you will have limited ability to attract top talent and therefore you should not demand a recruiting firm to do as much.
What you can and expect from a search firm, if you are an employer like this, is for them to find the “best fit” for you. Just like in the dating world there is a right person for everyone, there is a right candidate for every job and company out there, just not necessarily the best candidates overall who nonetheless are indeed the best fit for you.
It is important to be realistic in your expectations of the type of candidates you will be able to attract. If your competition has a better reputation than you, has a bigger budget than you (for salaries, etc.), and provides better long-term career prospects and benefits than you, then it will be nearly impossible for a recruiting agency to successfully poach the top talent you want from your competition.
10) Do Not Let Recruiting Agencies Post Ads Online That Compete Directly with Your Own Job Postings
This mistake is more on the recruiting firms you engage than on you and your company, but if you allow a search firm you have engaged to do this then you are prospectively paying them a fee to compete against you for active candidates you would find/attract on your own. The most reputable and experienced recruiters will ask you about what advertising mediums you are using. You are paying a recruiting firm to recruit, if they are posting job advertisements on the same job boards you are using then they are not only repeating what you are doing on your own, they are competing against you.
Why would you be willing to pay a fee, any fee, to such a company? This goes back to Mistake #3. You may have gotten a lower nominal fee from these firms, but what you actually got was 0-10% level service for which you are actually paying 20-25% fee if you hire one of their candidates. It is important you set strict guidelines to the recruiting firm as to what search tactics will and will not be allowed in order for them to collect a fee.