Why ‘agency recruitment’ is totally screwed

The recruitment agency business model is grotesquely dysfunctional.

It is broken.

Yes. It. Is.

Certainly for permanent recruitment.

We are just so used to it, have it so imbued in our psyche, that we don’t appreciated how farcical and damaging it is.

For everybody.

Multi-listed, contingent job-orders benefit no-one.

Clients, naively thinking they get a better service because they get agencies to compete, actually get a far worse service because they are actively encouraging recruiters to work on speed, instead of quality.

Recruiters suffer because even if we want to, we can’t really ‘partner’ or ‘consult’, or ‘value-add’, and in the end we only fill one out of five jobs, if we are lucky, destroying profit in many cases, and the careers of recruiters too, who simply burn out, chasing rainbows.

And, the often ignored fact, candidates suffer the most because they do not get service or due care from third party recruiters, who are too busy chasing mythical job orders in competition with five other recruiters, to actually focus on the candidates needs. That’s right. If recruitment worked like accountants, or lawyers, or doctors, or even real estate agents, where the service provider is not working on each case in competition… our recruiters would work on 20% of the orders they currently do, but fill 300% more! And who would benefit the most? Candidates! Yes candidates, who would no longer be treated like cattle, but rather like crucial partners, as they should.

No wonder candidates are increasingly avoiding job-boards, and recruiters, and transferring their job search energy to web-searching, social media, and other tactics.

Yes, that’s a screwed system all right.

But it is getting worse as recruitment evolves.

Have a look at my wizz-bang chart below (Yes, agreed, I am not a PowerPoint expert. But I did this at my desk at home, late at night after my third bottle of Boags, and trust me, it may not look pretty – but what it represents is uglier still.)

Screen Shot 2014-03-06 at 1.37.04 pm

Look at the left circle. It represents all the candidates available for recruiters to place in jobs. Look at the little segment on the right of that circle. That shows the tiny proportion of suitable candidates that recruiters actually access. To this day, most recruiters focus on so called ‘active’ candidates, those that come from job boards, or who are already on the database. There is nothing wrong with these candidates per se, except that they represent only a tiny percentage of the available people. What is more, because they are actively job-searching, they will in all likelihood be working with other recruiters already, or possibly well down another recruitment process.

Which means that you are not likely to place them. You understand that don’t you? It’s not only jobs that are ‘in competition’. It’s candidates too. And in a candidate tight market, a good talent that you have exclusively is a walk-in placement. Do you even think like that? Do you know who you have exclusively? Do you ask? Do you seek to find these people?

Look on my chart at the massive pool of candidates most recruiters do not access. There is your opportunity!

Now look at the right circle. This represents the majority of clients’ commitment to actually filling the job. We all know that most clients do not give their agency recruiter full commitment. That is what the shaded segment represents. Tiny commitment. In fact, many use third-party recruiters as an afterthought, or in competition. The vast majority of the commitment clients give to filling roles, goes somewhere else, such as the internal recruitment team, or using LinkedIn, or their own recruitment strategies.

So right there you have an incredibly dysfunctional situation.

The majority of recruiters access only a tiny percentage of the good candidates, and what’s more, secure only a fraction of the clients’ commitment to filling the job.

What other professional would deal with the customers on such a flimsy premise? Who else would invest the time and resources, that we recruiters do, on the tiny off-chance that a fee might be generated? But it gets a lot worse.

Not only do most recruiters run their businesses on the same basis as someone playing a lottery, they do it in competition with five other agencies. This is ridiculous. Some very significant recruitment companies with massive turnover, still can’t make any profit because such a huge percentage of their staff time is spent on fruitless work that results in no return. In fact many such businesses are now going bust. Their cost base is too high for their income generation ability. And this is why! Their business model is screwed.

And it’s a vicious cycle of discontent. Clients get increasingly irritated because they are dealing with low-level recruiters, who don’t do a thorough job. Ironically the fault for this lies with the client, who asks recruiters to compete on the same job, thereby dumbing down the process. Recruiters get disillusioned, desperate, burnt-out, and take shortcuts, which continues the cycle. And of course worst of all, candidates suffer.

But it’s not all doom and gloom. In the chart above lies tremendous opportunity, if you look for it. The prize goes to the recruiter who can develop strategies to access those candidates in the segment of the circle that are not active. The skill of bringing top hidden talent, that clients can’t find themselves, to the hiring table. That is the Nirvana we should all be seeking.

That is where the fun and the money is. And of course those recruiters who can blend technology with the craft of recruitment, and who can secure a greater percentage of the clients commitment, via retainers, exclusivity, or other partnership arrangements, will differentiate right now, and into the future.

So, the winners will be those recruiters who recognise that the way we work now is terminally dysfunctional, and who act to access the parts of my circles that most recruiters do not.

Excellent! Got that off my chest. Time for another Boags…

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If you enjoy ‘The Savage Truth’, connect with Greg Savage on LinkedIn.

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Views: 2778

Tags: Agency Recruiting, Corporate Recruiting, Human Resources, Job Seekers, Recruiting Tools / Sourcing

Comment by PAUL FOREL on March 26, 2014 at 10:08am

Exclusivity seems like common sense.

One would wonder why this is a hard concept to absorb.

We were asking for exclusivity right out of the box- it doesn't take years of experience to know this is an advantage worth shooting for.

Comment by Theresa Hunter on March 26, 2014 at 11:01am

Greg,

I appreciate the comments.  You are right if I am looking for a painter I don't hire 5.  I should have just left it at the real estate example and let it go.

Second have you ever worked with law firms in filling associate or partner roles?  I hardly ever deal with the partner who actually has the opening.  I deal most of the time with the recruiting coordinator so giving the lovely speech would be wasted on her/him.  They don't make the decisions.

It is funny but when I work on a search l never even get it a second thought that there are other recruiters working on this same JO.  After getting as much of a JO as I can and don't even get my start about getting an effective JO.  Than I start focusing in on what firms I want to target for my phone calls. Don't get me wrong I love some of what you say.  Especially when it comes to hearing from candidates who have been contacted from other recruiters on the same job.  I would love to bring that fact to bear with some of the law firms I work with.

I very seldom am the first one in line to hear about an open position most of the time it is something I have seen either posted on the law firms website or through internet searching. By this time they have already several recruiters engaged on the search.

Here is what I think would be helpful if all recruiters could be on the same sheet of music when it comes to exclusivity. It is not hard to walk away from a client when they do not take you seriously or don't seem to want to fill the job. Walking away because they do not want to give you the window of opportunity hurts me and why because if I stand up and say I am not going to work on this job because you have X number of recruiters working on this there reply will be OK suit your self.  Since EVERY firm that I have every worked with uses multiple recruiters even if I walk away there will be someone else to take my place.

When it comes to my recruiting I do interview every candidate before they are presented I know what they are doing now,like to be doing in there future job, what management style they would like, strengths/weakness, why they are looking to move, base compensation and what compensation they would need to make a move, I talk about counter offer and why it is not in their best interest to accept.  I also ask them if they are working with another recruiters and has their resume been presented anywhere company or law firm with in the last 6 months as well as firms they would/would not like to work for.  I also prep them for every interview with it is a phone or face to face and not just here is the address and who to ask for.  If I know an offer is coming I prep them for that too.

The nice thing for me is I work for myself so I don't need to fill alot of JO to be successful.  You can exhale now I want to fill as many as I possible can but I don't have an agency giving me a quota of numbers to meet.

Comment by Theresa Hunter on March 26, 2014 at 11:01am

Opps that should be give it a second thought.  Sorry

Comment by Keith D. Halperin on March 26, 2014 at 1:24pm

I'm a contract and not a contingency or a retained recruiter, so I really don't have a dog in this fight. (Forgive the vulgar metaphor.) I think that high-level recruiters like Greg, Paul, and Theresa provide a valuable service- doing things that I CAN'T do. In some cases, seasoned pros like you three are able to get in a situation where you can pick and choose clients, and not only get exclusivity but also retainers. I think this is something that  probably takes a long period of trust-building and experience to achieve, and in some areas (perhaps like Theresa's Legal) this is difficult or not possible. MY POINT: Greg's recommendation (and useful guides to it- thank you) can be a desirable goal, but it may not be one achievable by many/most recruiters, particularly the newbies....

-kh

Comment by Greg Savage on March 26, 2014 at 7:15pm

. MY POINT: Greg's recommendation (and useful guides to it- thank you) can be a desirable goal, but it may not be one achievable by many/most recruiters, particularly the newbies...

That is true Keith...my cry was for more of them to try and the leadership in the industry to train , coach and nurture the skills outlined in my two blogs posted in the reply to Theresa. It IS hard, you will get knocked back, you will lose some business if you push for exclusivity.. but the business you secure will be "better" more likely to close and you will bill more with less effort.. and your self esteem in tact.

Theresa, I understand the type of market you work in, that you have described here. I have been there myself. Its incredibly hard to shift the status quo. I believe one should continue to try. It can be done. And the benefits are career changing.. and life changing in terms of stress reduction and income increase. That is all I have been  trying to share with you all

Comment by Keith D. Halperin on March 26, 2014 at 9:00pm

Thanks, Greg. Do you have any ideas if many or few recruiters ask for it  (and either get/don't get it) in their agreements with the client? It's certainly a good thing to ask for.

-kh

Comment by Theresa Hunter on March 27, 2014 at 10:45am

Yes, Greg it is hard to change the status quo especially when you are the only one trying for the change.  I am not the best writer.  What I was trying to say was if we stuck together like the real estate agents were we all wanted that window of opportunity it would be a standard practice not a hit or miss practice. 

Comment by PAUL FOREL on March 27, 2014 at 6:00pm

Noel Cocca...

It seems Ms. Hunter has more-or-less hit the nail on the head-

'Sticking together' though, would be problematic since many Players would say what Mr. De Angelis said- he has time to read the blogs, time to comment but no time or interest in actively working to 'fix the problem' since, as he said, in so many words....the 'problem does not affect him'.

As long as the Players keep saying just this, there will be no Platform for Change, just people who like to talk/blog about 'problems' and how the system is 'broken' (e.g., Mr. Savage [who 'takes on the agencies' {but not to their face}]).

What is required is to extend Ms. Hunter's real estate idea in order to form a commonality amongst all the Players -Agencies, Contingency, Retained- so that we are not only on the same playing field (instead of Retained, who looks down its nose at Contingency and Contingency looking down its nose at the Agencies) but are collectively held to a 'higher authority' of some sort.

Many Physician recruiters belong to an organization that specifically calls for a 'higher standard'. The NAPC is similarly organized.

Why not start where we -here- can start?

With Noel Cocca, owner of RecruitingBlogs.com

Instead of allowing clueless bloggers to post erroneous information about our business with no one here fact-checking these blogs first;

....instead of completing a template when applying for membership here that asks "How do you introduce yourself to people you meet in business?" which gets a silly response such as, '....with direct eye contact and a firm handshake..';

...and that asks, 'What recruiting tools can you not live without?' and the person lists every Internet-based tool under the sun -but leaves out the telephone-;

...and having a section here where all the [newbie] <5 employees agencies are all seeking split partners (like homely girls/guys with dance cards, all waiting to be asked to dance) who in fact are not actually looking for 'partners' so much as they are looking for the other half of all their stacked up, not-to-be-filled Job Orders which of course is 'candidates'.

This is where you step in, Mr. Cocca. Instead of saying -as you did when you purchased this website- that you don't see the need for change (nothing broken here, right?) you elevate the membership requirements.

There was nothing at that template that referred to a promise to execute this business in a sane and professional manner.

There is apparently no one fact-checking/quality controlling blogs posted here.

There is no promise required of anyone here to perform to a certain Standard.

Change will only occur -in a free society- if it is instituted by those/that person [here] who controls the vertical.

That's you, Mr. Cocca.

Think about it- another selling point: agencies/search firms listed here would all have a RecrutingBlogs.com Good Housekeeping Seal of Approval.

People like Matt, Greg, et al could all collaborate, ask for input from the membership here and given a certain amount of effort, would be able to change the nature of RecruitingBlogs.com from a 'clubhouse' mentality to an Institutional mentality.

You have the vehicle, you are in the driver's seat- you could make this happen.

If you don't, we will continue to have the Savages' "taking on the agencies" and various other bloggers here simply repeating what is a commonly known background condition -that the system needs fixing- but no one wants to come help paint the boat.

Comment by PAUL FOREL on March 27, 2014 at 11:31pm

Mr. Cocca...

I think it bears mentioning that if, as you said, RecruitingBlogs.com is a 'community' then I think it would be in better form if bloggers such as Mr. Savage not post blogs referring to his '...taking on the agencies...' since if he is part of this community, then it is just plain rude for him to take such a stance.

If he came around my place of employment, suggesting he was going to 'take me on' he would receive a heavy does of 12 gauge rock salt in response.

But, really, now, he isn't even really 'taking anyone on', is he?

More accurately, what he is doing is throwing rocks from across the street.

And, 'not for nothing' as Donnie Brasco said, for you, Mr. Cocca, to publish his blog at LinkedIn is like setting two of your own sons against each other in a street brawl.

No one asked to be 'taken on' and if he wants impunity for doing so, then let's see him participate in a solution vs. merely publishing blogs that are adversarial in nature.

Mr. Savage is not a hero...he's just another guy with a bullhorn.

.................

Bringing this body of participants together would increase the Branding of this website and show industry that no, we are not laughing at those 'beneath us', we are all a Force to be recognized for our adherence to Quality and Excellence in Action.

Some of the membership here is ahead of others in this regard- client testimonials at their website.

A 'Comments' section at each member's site would be a step in the right direction and perhaps a rating system that is standardized throughout the membership would help to demonstrate a commitment to high value performance.

Each step we take in this direction distinguishes your site here from all the others.

But allowing bloggers to continue to take shots at our fellow brother and sister agencies/search firms is no way to create cohesion and credibility.

Everything I've said here is to your advantage. Are you going to man up or are you going to continue to ignore my phone calls?

I've put it out here for you, what you do with it, as Neo said, is up to you.

Thanks,

Paul

Comment by Greg Savage on March 28, 2014 at 5:59am

Paul I would love some of what you are smoking. I really could not bring myself to read through all your verbiage, for which I apologise. However can you just clarify for me where I said anything about "taking on the agencies". Which agencies? While you are about it, where did I say "I would take you on". You appear to be making up random garbage and pontificating like an extraordinary buffoon. Really, go back and read your own drivel. I admit I have lost the thread of what you are trying to say long ago,  but you should know that my goal is to defend the recruitment industry. To make it stronger and to encourage recruiters to work smarter, on better terms and with better clients.   If anything my blog attacks clients for using our industry in the way it does. I am trying to point recruiters to a better business model to work under.  I don't know the answers, I have no silver bullet,and as you correctly point out, I am no hero. But I am trying to help. In the meantime can you point out to me the offending words that lead to to post your extraordinary rant which includes the threat attacking me with rock salt apparently. Sleep safe  little Paulie,writing this last reply is the extent of the energy I will waste on you. Over and out.

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