Should Recruitment Agencies do more for less?

In the current Global economic climate do Recruitment Agencies need to share the burden of the economic recovery and do more for less? Some would say they need to wake up to the fact that customers are no longer prepared to pay or afford the exorbitant fees they have enjoyed for many years. 

Views: 519

Tags: Economic, agency, fees, recovery, recruitment

Comment by Dyll Davies on July 26, 2012 at 8:52am

Steven, you seem to be predisposed to answer your own question with a 'yes'.  The use of the somewhat pejorative word ‘exorbitant’ presupposes that recruiters don’t deserve their fees.

Markets dictate what is a ‘fair’ fee for any service rendered except , of course , not all recruiters are the same.  Some are downright awful and frankly are not worth paying at all.  Some add huge value to their clients’ businesses and can more than justify their fees.  The problem for the industry as a whole is most people can’t tell the difference between a good recruiter and a bad one and just regard them all with the same suspicion.

Many clients simply don’t do the due diligence they should before hiring a recruiter preferring just to send a quick brief to as many as possible in the hope they may get some CVs in return.  When you are not paying anyone until they find you a suitable candidate I guess this is an easy option but it is attitudes like this that undermine effective recruitment.

Imagine engaging five plumbers, whose credentials to do the job you have barely checked, to mend your central heating system and telling them you’ll pay the one who fixes it but not the others!  Any decent tradesperson will be out of the door before you can say ‘system pressure’!

If anyone thinks they are paying their recruiter too much do the sums:   how much is the role going to generate in extra profit annually for your company, divide this by 12 and then multiply this by the number of months your recruiter takes to fill the headcount.  It should be no more than three unless your interview processes are very sluggish – in which case you’ll lose the best candidates anyway!  If your recruiter has charged you less than the result you are still better off.   Of course try using cheaper recruiters but check them against this equation.  If they don’t fill the headcount and you have to go back to your more expensive but efficient specialist then you will have lost money for sure.  If they do, you just found a better recruiter for that type of role (same service cheaper price!)  This is a simplistic example I know - I haven't even begun to factor in the costs of other internal resources but it is a start!

And to return to our plumbers.  Someone once told me a story about a plumber called out to fix a large heating system in a school.  After about ten minutes of looking at the system the plumber took out a large hammer and hit one of the many pipes next to the boiler.  The heating system immediately sprang into life and continued to function well from that day forward.  The plumber then invoiced the school £100.  Perplexed that the plumber had effectively billed at an hourly rate of £1000 for his work the school wrote to him and asked for a breakdown of his charges.  The plumber replied next day with the following:

“To hitting pipe with hammer = £1.  For knowing where to hit pipe with hammer = £99.”

Remember you get the recruiters you deserve.

Comment by bill josephson on July 26, 2012 at 9:53am

Steve, May the market be your guide and adapt accordingly.

In good times the client demand usually outstrips the candidate supply with businesses having more cash and thus business being more plentiful a byproduct is rising fees.

 

The reverse generally happens in bad times. 

I tend to let the marketplace dictate fees as I'm happy to win the business, letting them know what my fee is and if unable to meet it, make a determination as to if it's in my best interests working with them or walking away looking for other clients.

The problem I've had in this economy, really for many years, is finding the client with an expedited interview process, willing to pay fees, and urgent needs actually hiring people.  There seem to be fewer and fewer of them, or it's just harder for me to find them.

And with technology today changing disciplines is dangerous as without contacts to network through not expert in the respective market area you'll be slow and beaten by your better expertised/connected competition, or even by your client.

I've been 3rd party recruiting since 1980.

Comment by Steven Salter on July 26, 2012 at 10:09am

Dyll, I am certainly not trying to belittle the Recruiter's values; I am one and know how much value I have added my customers and over the years. I understand that the cost of the recruitment process and the fee are very different things indeed. Just because as Recruiters fees is less it does not mean the process will cost less; more often it’s more expensive. Whenever I am discussing this topic I am always reminded of the quote “If you think I am expensive, imagine how much an amateur will cost you”

The very best recruiters are rare commodities; finding and engaging with them requires a clear strategy. I often tell customers that just driving down the agencies recruitment fees can be a false economy, the negotiation process with the Recruiter must be managed correctly. The best Recruiters are motivated Recruiters, and understand the value of making an investment in the negotiation process; and for the right commercial engagement or agreed process, they will often agree to reduce their fees; whilst still being motivated to deliver quality. Those are the agencies that realise that an equally motivated customer, who has a commitment to hire, with a refined recruitment process in place, is also an equally rare commodity. 

Comment by Dyll Davies on July 26, 2012 at 10:33am

Steve your points above are completely valid and I agree wholheartedly - indeed your original question was valid too.  I did check to see if you were a recruiter and found you were, so I guessed there was something of devil's advocate in your original post.

I guess it was particularly the word 'exorbitant' that strikes a wrong note.  Too many people look from the outside at a recruiter's placement fee and go "Wow you got that for just one candidate!?" and then do a quick mental calculation which has us all millionaires in the blinking of an eye.  They don't see the hours of work to get that one candidate to the table - often the result of a relationship built over years and many emails and phone calls.  They don't see the times you have got a candidate all the way to offer and then the deal falls through after maybe months of work.  All they see is the dollar signs when they find out you earned 'x' for a single placement.  Even my wife who recently helped me out with some research for a couple of roles left the office a wiser woman.  "I see what you mean about 'never ending' . . ."  Yes I get paid well - although like the hungry lion I never know when my next meal is going to come from! - but no better than other professionals and considerably less than many bankers and financial traders who we have to thank for our current economic predicament.  I work hard and earn my money and if a potential client wants 'cheap' then I tell them go buy a canary!

Comment by Brian K. Johnston on July 26, 2012 at 2:30pm

No

Comment by Cindy Cremona, CPC on July 26, 2012 at 7:08pm

I require and get full fees as well as retainers. There are those who also believe in money back guarantees, though I wonder if the same clients require their Attorneys and Auditors to lower fees and return fees when they don't like the outcome? We are a service business that gets paid for a service in a free market system. Is not taking contingency business risk enough? It's bad enough we have to educate clients on our value - drives me a little wild to have to remind recruiters that companies cannot only afford us (as well as not afford to not hire us), but get what they pay for.

I don't think my fees are exorbitant by the way. They're part of the value added investment that stellar talent brings to the party.

Comment by Sandra McCartt on July 27, 2012 at 12:01am

Do more for less?  Sure, you give me more to work on and i will do it for less.  Less time to hire, less risk of a bad hire, less wasted  time digging through 400 resumes.  Less internal recruiter who are the payroll + benefits full time.

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