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How to Un-Break Recruiting

How to un-break recruitingI still remember the first time I hired through a traditional recruiter. I was at a law firm. We were sitting in a room and discussing salary, benefits, what I was looking for in a candidate, and what the recruiter would be doing. Then the recruiter said, “Our standard is to charge 22% of the salary, but we’ll knock it down to 20% for you guys.”

I thought I’d mis-heard.

But I hadn’t. I remember thinking, “Okay, so this recruiter is going to find a few candidates and send their resumés to me to review. And then I have to interview them. And I’ll check the references personally. And I’ll construct the offer. So I’m just paying $XX,000 for this person to be a resumé hose? I’m in the wrong line of work!”

Now, of course, I realize that sometimes recruiters do much more than that. But at the time, I was a bit taken aback. It felt like – no, it WAS a lot of money for an opaque process that they wouldn’t explain.

From an hourly perspective, it seemed like we were going to be paying the recruiter far, far more than our most senior partners charged. And, unlike our senior partners, this recruiter didn’t have a graduate degree and 20+ years of experience. Also, unlike our senior partners, the recruiter didn’t have to provide me with an itemized bill describing everything that he did and how long it took to do it.

We justified paying that recruiter (and countless others) exorbitant fees because we didn’t have time to do it ourselves. I worked at other companies where we had to make the opposite trade – we put in egregious numbers of hours because we couldn’t afford exorbitant fees.

Does this feel broken to anyone else?

Un-Breaking Recruiting

I don’t think of this as “fixing” recruiting – I don’t want to patch it. I just want to make the darn thing work! So I’m calling it un-breaking recruiting.  And here’s what I think we need:

1. Transparency

If I don’t know what a recruiter is doing, how do I know that I’m getting what I’m paying for? Maybe the recruiter is doing a crap-ton of work and their hourly rate isn’t actually all that good once we do the math. Or maybe the recruiter is making over $1K/hour. Which seems high, but maybe it’s worth it?

Or maybe it’s not. I have no idea, because, as a hiring manager, all I see is a stream of resumés or candidates as opposed to documented time.

2. Consistency

Most professionals have to meet certain bars, but I feel like my Great Aunt Sally could call herself a recruiter tomorrow. Conversely, I know recruiters who are real superstars and who (if I could afford them) would do all my recruiting for me forever and always. Sadly, there’s no way to know which one you’re talking to, since there’s no grading mechanism or consistency in the industry.

3. Choice

Each time I worked with a recruiter, they told me what they would do and what I would do. I’d have to fight with them if I wanted to see more resumés, or I would have to beg them to do more filtering if I wanted to see fewer. They would get angry if I worked with other agencies or on my own, and I ended up feeling boxed in.

I don’t like feeling boxed in.

4. Cost

Holy crap, using recruiters is expensive. So expensive it puts getting expert help out of reach of many small businesses and startups. So expensive that I had to choose between new servers and new people. That’s an awful, painful choice.

So, to un-break recruiting, we need to increase transparency, be able to figure out consistency, be able to choose what help we get from recruiters, and make it more cost-effective.

We Started Calling It Elastic Recruiting

I have a little confession to make – I used to work at Amazon Web Services (AWS). The coolest thing about AWS is that, with elastic computing, companies use only the computing power they need when they need it, and then they pay for what they used.  When I got to RecruitLoop, I realized that we do the same thing – companies use only the recruiting “power” they need when they need it, and then they pay for what they used. So we started calling it Elastic Recruiting.

What is Elastic Recruiting? It’s getting an expert recruiter who bills by the hour, gives you the help you want/need, and tells you everything that he or she is doing.

Apparently, I have two little confessions to make – Elastic Recruiting goes a long way towards un-breaking recruiting, but I don’t think we’re completely there yet. So part of the reason I’m posting this is to find out what else we need to do to un-break things.

In a bit more detail, here’s how Elastic Recruiting un-breaks recruiting:

1. Transparency

We push our recruiters to be completely transparent. They document their hours and what they do with their time just like lawyers do. You see what we’re doing, and you can always have communication with your recruiter.

2. Consistency

We’re a bit fascist with our recruiter marketplace. We reject 7 recruiters for every one that makes it to our platform. We hold recruiters to a high “two strikes you’re out” policy. We’re super careful to match roles with recruiters who have done that work before. We’re trying our hardest to get consistent, excellent results from our recruiters.

3. Choice

This is where the “elastic” part really comes in. We have clients who can’t afford much, so they only pay for their recruiter to do a couple of things (usually sourcing or screening). We have other clients who have our recruiters help them with absolutely everything. We encourage clients (and recruiters) to stop projects at any time. We’re stretching for truly flexible recruiting. (Sorry – had to get a bad pun in there somewhere!)

4. Cost

Our recruiters set their own rates, but I have yet to see any rates near what a senior partner at a law firm charges! (Heck, I have yet to see many that are even as high as my personal independent consulting rate of $190/hour.) I’m consistently amazed at how much clients save with hourly billing, and it has put recruitment help in the hands of a lot of companies that couldn’t afford it before.

We don’t yet have all of this 100% right at RecruitLoop. But we’re trying, and we have a slew of amazing recruiters who have bought into the concept of Elastic Recruiting. I’m six months in, and I’m pretty happy with how we’re doing.

What do you think? What more can we do? What have we missed? I seriously want to know. Comment below, Tweet me, send me smoke signals – what else can we fix?

Image courtesy of Sam Howzit.

Jenn Steele

Head of Growth at RecruitLoop. Previously at Amazon & HubSpot. Passionate about growing humans and companies, working out, and wine. Also blogs on leadership at leadinggeeks.net. Follow her @jennsteele.

  • Laura LaBine

    I agree that Transparency and Consistency are SUPER important, and that communication is the foundation for both of them to work. I’ve found that the most valuable recruiter – client relationship is based on trust first, and then process second. My process involves constant communication, and the communication offers transparency for both candidates and clients. This way, EVERYONE wins!!

  • Catherine Karena

    In the main, I think the standard in the recruitment industry is poor. I also think companies don’t take the hiring of staff seriously enough. I think if you get a good recruiter, they are worth their ‘exorbitant’ fees. Your job as a recruiter is to bring in exceptional people that justify your fee. The client presumably has got at least 50% of his hire through a well-crafted advert, offering incentives to internal staff to suggest people and does the right things to retain and attract good people. When you bring in an exceptional person, you are bringing people in who are going to bring some real value into the company that are worth more than the client is paying. Otherwise, don’t do it. Get a failed recruiter in to do a HR screening type role.

    I trailed offering an hourly rate instead of a fee, there’s a couple of things that’s unfair about it.
    My job as a recruiter, is to be always networking, looking for and meeting exceptional people, even before the role comes along. What’s if a role comes along and immediately you recognize Joe Bloggs is perfect for it. A guy you met 2 years before, you call him up because you know what he needs to move from his present company and you pitch him the opportunity accordingly. (It’s called ‘sales’). You submit him – how much time is that for the client? A phone call of 10 minutes, you already have notes on him, so a bit of updated cut and paste from your database. And you get paid for 30 minutes work, when in reality it’s consistent work you do all the time week in and week out. Of which a portion justifies the larger number of meetings that don’t pay out at all.

    The second problem I found with an hourly rate, is you don’t have as much lee-way to argue. My best placements were with clients, who rejected the candidate a minimum of 3 times. For the various reasons that clients reject fantastic clients; the candidate might know C#, but he’s C++ and capability to ramp up is phenomenal, his resume is crap but the guy is great, they haven’t actually worked out what they wanted (whereas you spent some time researching the company through past hires, people who have left etc.) Or they don’t realize that other industries afford the same skills they’re looking for and trying to play it safe with hires out of their own industries. A whole heap of reasons why you the customer is not always right, and if you know your job you need to educate the client. One of these hires, I remember 3 months in, saved his new employer’s butt where he did a complete rewrite of poorly done work of an expensive contractor, earning him a 25K bonus on the spot. That guy, just to get the manager to meet him was a bribe of free happy hour for the development team, if the manager didn’t wish to interview him after a 5 minute phone call.

    If you have a good recruiter, you have a person with domain knowledge, industry knowledge, a network that they grow, nurture and build. They keep tabs on trends, get to know your business and are prepared to back their call on people they know will bring exceptional value to their client’s business. And given the impact that that has on the business, yes those fees are justified.

    Further more, bad recruiters don’t ‘earn’ those fees, they don’t last long in the industry anyway.

  • Judith Eller

    I recruit in the legal sector and have been looking for a new business model to deliver recruitment services. I am not convinced that adopting the legal model of charging by billable units or hours is the way to go either because the legal business model is stuffed as well! I think the Recruitment Loop model looks good for the owners however is it good for the recruiter and the client (obviously it does when it comes to price but then you get what you pay for)? If I worked on an hourly rate. knew who to call when a senior position came in and put it together say in 20 hrs at $150 an hour that would be $3000 for a candidate who could bill $500,000 and was paid $166,666. That makes the fee 0.6% of the potential income or added value to the firm . Admittedly I am speaking about a higher level of recruitment where added value, fees and client base come into the equation.
    I agree that striking a percentage of a salary as a fee bears no relationship for the time and effort.
    So if we were to move to value billing like the legal sector will have to move to in time. What would our value be? To attract talent through searching, networking and using a lot of soft skills is becoming an art. How do you value that? I don’t have the answer yet!

  • Jane Martin

    Thanks for share… This blog is really very helpful for us and i hope it will also help us in future. For more information visit our website

  • Terence Verma

    If the product ( read candidate) that the recruiter provides, gets the job done (read performance), and consistently so…it is indicative of value which is worthy of the fee charged. The client will seek out one such and, gladly pay. Smokin’ signal??

  • Jeremy Pierce

    I interviewed someone outstanding in 2012. They had a poorly written CV. They didn’t interview all that well. Their references, however, were consistently outstanding.

    I didn’t interview them because I had a specific role.

    I interviewed them because they were recommended to me by someone as somebody I should know. They wanted to meet me, because I have a reputation. I wanted to meet them, because they have a reputation.

    If I’m only working billable hours, I’m incentivised to not bother interviewing them unless I have a job.

    Have you ever recruited lawyers? I have some colleagues who do. Because they bill by the hour, every decision takes everyone forever. It’s a joke.

    I, however, work predominantly with manufacturers of chilled, short shelf life food products. They don’t bill by the hour. They get paid for results.

    Like recruiters.

    And they make their decisions quickly.

    If you want someone to find you the right person, but to take their sweet time about it, then this makes sense. Apart from the fact you’re incentivising people away from meeting good people based on what they believe you will do from them in the future, not just for a live role.

    Plus, you’re pushing people towards even more transactional recruitment.

    Might work for some, but it seems a bit short sighted to me.

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