Replacing Recruiter Greed with Goodwill: A new paradigm to evolve the talent acquisition profession

Employers rely heavily on staffing agencies to find, qualify, and hire talent, and this cost inhibits us from innovation.  The emerging talent acquisition market is estimated to be valued at $85 billion dollars.  Organization leaders are fed up with traditional recruit my dogma coming from self-proclaimed recruiting leaders, and several popular companies who have unlimited resources are now working on creating the new sourcing and recruiting paradigm that will replace traditional approaches. Let me take it one step further. This doesn't mean that our industry will revolutionize because a new tool like connectifier (I like the Aevy tool better and nobody talks about it - contact Martin) comes to light that creatively automate a secondary recruiting research. Tech leaders are about to wipe out a primary function of talent delivery with an entirely new approach to finding talent and the kicker is that it will already seamlessly include the incremental secondary technology we get excited about at SourceCon and other venues.  Contact me if you would like a couple links to show you the research. I don't have enough fingers on my hands to count the amount of CTOs in 2015 that are aggressively scaling with a mindset to acquire talent differently. Before you argue, yes, I agree that you can never sunset something 100%. The recruiting minority will have a vehicle to operate the old way, for example, even casino and hotel industries in Las Vegas still run AS/400 midrange and there is a small market for RPG programmers. I doubt the vehicle for that talent delivery will adopt a new paradigm for obvious reasons.

We've driven technology execs to be passionate enough to reinvent our industry and we can't change that but as recruiting leaders, we can recognize the shift and evolve our practice.  Let the tools do the heavy lifting and lets focus on the relationships.  Let's make investments toward supporting the shift rather than fear it, because  a new wave of recruiting and sourcing is upon us and we as talent acquisition professionals are best equipped to lead the charge. However, in order to restore trust to our profession we have to make a sacrifice and show leaders that we do our work for the right reasons. It is time we set aside the ridiculously large agency fees. We have to reduce our huge margins on direct hire and contract staffing services. Only then will we receive authority and the figurative keys to the 85 billion dollar castle.

I was raised in a recruiting family and supported my parents nationwide, successful recruiting company and I can't honestly justify how we assign value in the majority of these huge staffing fees. Let's be real and take ownership.  I joked in a forum recently saying we are in recruiters anonymous and the first step is to acknowledge the dysfunction. Let's reinvent what our value is to the organization rather than justify our value to each other. The only thing the extra margin in our fees really do is fuel our lifestyle until we put in the work to make the next match. Not very progressive.  Please acknowledge that I say match because placements don't accurately define the actual thing we are trying to do.  We are consultants that identify a match.  The minute we start placing people, we become sales people who are interested in generating revenue, not focused on aligning to the objectives that people have within an organization.


After supporting a few 100M managed service contract staffing programs (MSP) at a couple well-known enterprises, I was amazed at the corruption and reallocation of spending going to the wrong people for the wrong reasons.  It is obvious to me why most professionals do not like and do not trust recruiting professionals.  With recent advances in technology, we have the capability and opportunity to let go of the past.  We can provide relationship-building results and replace the stigma of greed and mistrust if we use the tools as our ally and develop new creative approaches to monetization, just like every other industry is working toward.

Greed will be replaced with Goodwill. Let's take out the trash within our profession and begin by boycotting huge staffing agency placement fees. In case you missed it, that's our call to action. Let's evolve our relationship with hiring leaders and walk away from the thing that many think is the only thing we care about. Let's support the development of better systems and trust me, we will unlock the door to monetization that will flow throw each and everyone one of you. In an effort to grow discussion and bridge the gap between tech and staffing leaders, I'll be sending out a survey to collect realtime data on the areas discussed and present feedback and results.


 James
@techstardust

A New and Emerging Recruiting Paradigm | james@techstardust.com | @techstardust | talent leader & advisor | 

Views: 742

Comment by Nicholas Meyler on December 20, 2014 at 5:31pm

Interesting perspective.  Meanwhile, air-conditioner installers are charging thousands of dollars a day,and a new sink installed by a plumber a few years ago cost $2000 (it took two whole hours, though).  My doctor visit takes five minutes of his time, an hour of mine in the waiting room, then he charges me $150 for telling me what I already know (but he's a Harvard-educated specialist).

Calculations have shown, over and over, that not having positions filled costs companies much much more than it does to fill them.  The whole idea of a 25% fee evolved based on the idea that it should be reflective of the salary of the person NOT yet hired, and the amount of time it took the recruiter to find that person (using three months as a baseline for time spent filling a senior position).

By all means, people should be generous and helpful, and offer repeat clients discounts, etc., but, by and large recruiter fees are very fair and probably are too low, in many cases.

So, I guess that I disagree.  However, I have sometimes volunteered to do CEO and other searches for companies that don't yet have funding.  In those cases, I took my fee only in stock options, which I would collect if and only if the company ever received funding.  If you want to work for free, that's one good way to do it, and it might actually pay off one day.

Goodwill is a good thing, but how about keeping the rates the same, and just being more attentive to the needs of individuals seeking counseling?  I return every phone call, and am always available to any candidate that wants advice or wants to bounce ideas off of me.  That way, I can do 'pro bono' work, while still focusing on making a living.

How are you going to "boycott" large fees anyway?  By slashing yours in half to see what the results are?  I'm not sure that this idea is one that makes sense for most recruiters.  On the other hand, I do like the emphasis on sharing and helping -- but let's help the individual players, not focus on dropping hard-earned fees paid by companies with huge amounts of money.  

When the Indians traded away Manhattan for $26 in beads and trinkets, they made a fundamental mistake.  History should teach us not to repeat it.

Comment by Nicholas Meyler on December 20, 2014 at 6:21pm

Another thought or two:  Perhaps you would be happier doing some kind of volunteer work, or recruiting for non-profits?  Not everyone wants to be a businessman, and volunteer organizations like Medecins sans Frontieres are doing great things, winning Nobel Prizes, etc.

If you want to go to Liberia to fight Ebola, I can introduce you to my relative Katie Meyler, who was one of five people profiled by Time Magazine as "Persons of the The Year: Ebola Fighters".  I would never put down volunteerism, and I approve of it heartily, but it is a different thing from trying to run a business.

Comment by James Chmielinski on December 20, 2014 at 7:15pm
Great. I was waiting for someone else that could chime in with the two predictable responses I knew we would see. You nailed it!

1 - you should want to cut cost and split the fee in half to increase market share

2 - you just want to do the right thing so you should become a social worker not a recruiter

Now that we got that out of the way, neither of your assumptions are compelling to me. I want to be a successful professional in this industry that recognizes that there is isnt as much value in what recruiters are doing because tools have been invented that replicate a lot of what of what represented the value and now there is going to be even more change once mass adoption hits. Technology is our companion and it is making talent more readily available driving down the demand and the cost per transaction. I am saying that we should adopt the new technology that is rolling out and create new monetization structures that will start to open up the financial possibilities in our recruiting industry. Otherwise, recruiters will get cut out of the loop. NEWSFLASH: All the tools we use to find the best talent are being adopted and studied by tech leaders. This is already happening. They are using the tech and reinventing it. Here is a good example. Online dating sites. Interest for different dating partners is delivered at a ridiculous scale for singles now. Unless you are millionaire matchmaker, you aren't doing well in the match making business. Good luck justifying any matchmaking fee for connecting two star crossed lovers. The focus isn't on needle in a haystack search anymore, it is on qualifying or a balance of both. Placement fees are based on search and filter but that value is no longer there because we can automate the process just like online dating is doing at a scale. An app does the work, now. There is still a redistribution of monetization. You pay for online dating services and we are starting to see similar structures with staffing services. Those structures are most predictable to be adopted in staffing. Think about this. What is our value with the inclusion of the tools we use to get the job done. What is the difference between what we do and a tool we use now? I was tweeting to Hubspot CMO about the shift in talent acquisition and he agreed that the problem isn't finding the talent anymore, it's there to be found, tons of it. Now it's about filtering the right talent.

Come up with a better argument, please. Something progressive and something we haven't all heard before.

James
Comment by James Chmielinski on December 20, 2014 at 8:01pm
Sorry for the typos. Mobile texting.
Comment by Nicholas Meyler on December 20, 2014 at 8:23pm

Whether my argument is better than yours is purely subjective, but honestly, I am using ALL the technical tools and 'hacks' that I can, as much as possible, all the time.  NOTHING that technology comes out with ever works as well as having a great network of great people to go to -- and you can't buy that with tools.

If you were correct, Google wouldn't have had to pay Heidrick and Struggles $100 million to find them Eric Schmidt.  If Google is the best search engine in the world (it isn't), then why did they need Heidrick and Struggles? 

Let me say that I certainly respect your right to your opinion as well as your right to express it.  However, I have to completely disagree.  No tool can replace human intuition, yet.  Artificial Intelligence can beat world champions at chess, but it doesn't come close to being competitive at search.  If it did, Google sure spent a lot of money for less than nothing.

Let me make an analogy: Sourcing tools are great, like robotic surgery.  Robots can get to places where surgeons can't, and do precision work that surgeons can't do by hand.  But, we are a long long way away from replacing surgeons with robots -- because they need intelligent direction.  All the tools in the world do not a recruiter make.

However, it's a free market, and you should charge whatever you think is appropriate.  Best of luck to you!

Comment by James Chmielinski on December 20, 2014 at 9:16pm
I appreciate the conjecture. This is all heathy conversation and we are going to get emotional about it, for sure. This conversation will be growing in numbers and I appreciate your input.
Comment by Nicholas Meyler on December 20, 2014 at 11:04pm

Well done.  Another point is, historically, the 'research staff' were always the people getting shorted by the "real headhunters" who do all the closing...  So even if the research staff could be totally replaced, the bulk of income would still be earned by the Senior-level people who aren't doing any of the dirty-work anyway... You need to learn to market yourself as more than a mere 'finder'-- you are also the rainmaker/negotiator/deal-maker and management consultant that makes the whole process come together.  If recruiters see themselves as 'management consultants' (one of the highest-paying professions), they add a lot of value to what they provide a client.

Another example:  "What about cameras?"  The mere fact that anyone can buy and easily operate a camera doesn't mean that there is no such thing as charging for photography.  In fact, if anything, the technological advances in cameras have actually made photography much more lucrative for people who are specialists in photography.  The operator is at least as important, if not more important, than the technology itself.

Comment by Barbara Goldman on December 21, 2014 at 3:41pm

Recruiting is a very difficult profession. Recruiter greed? Are you kidding? Not one recruiter I know of comes to work in a limo. This is insulting. If companies didn't need our services, they wouldn't use them. We provide a valuable professional service, that is worth so much more than we charge. We work long hours in a difficult profession. What is the cost of an unfilled position?  The number differs in each company, but 5X salary is not uncommon.

Comment by James Chmielinski on December 21, 2014 at 3:56pm

I agree with:

"you are also the rainmaker/negotiator/deal-maker and management consultant"

 The functions at the beginning of the recruiting lifecycle will inevitably become automated and the newer ideation of the traits quoted above will become the next generation Recruiter's true value.  Conniving leaders of this is the challenge which is why we require thought leadership now. Those who adopt the automation quickest can realize most of the coming opportunity and the dollar signs attached to it which are incredibly more lucrative than the messily 20k placement fee.  Those who hold onto that small amount are going to miss out on millions.  I am money motivated and try to align my motivation to value delivers to our clients and workers, personal satisfaction, and long-term financial security that yields residuals.  We aren't that different, I just think I am closer to the source of technology on the forefront of change within recruiting and I'm trying to give everyone the heads up.  Maybe it is better that people don't have my vision.  It will be easier to separate the people who have vision and foresight as this brave new recruiting world evolves.  "There are no secrets in recruiting, only head starts."  Keep an eye out for my next blog article.

Comment by James Chmielinski on December 21, 2014 at 4:22pm
Cost of vacancy. The core problem that fuels the recruiting industry yet we haven't made progress in reducing cost of vacancy or TTf for FTE in decades until now. Solving the cost of vacancy keeps recruiters employed but you can support your client more productively for them and adopt the tools that exist now that will get the job done faster and cheaper. The goal isn't to fill your bank account or for you to slave away using outdated approaches. The goal is to solve your hiring manager or clients problem ASAP. In response to your insulting comment, you must be hanging out with an isolated recruiting circle because I have a laundry list of stories about recruiting greed. Here is one - I know of a recruiting company CEO who bought all of his staff Cadillacs. True story. I appreciate your sincerity but you don't represent the majority of recruiters. You work long and hard even when there are new systems and tools that will help your clients and hiring leaders. Save the money and do the job faster and that's how you build the relationship. We have to think the best way to do the job and keep our emotions out it. Or think about our clients emotions and how they feel during the vacancies.

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