Attention, HR Directors: Pay your exec/professional recruiting firms MORE (and use them LESS!)

Part 1:  Recruiters are more valuable now than any time in the past 15 years.

The other day we found a direct hire agreement we signed with a client in 2009 (the        height of the recession).    It was for 18% and we had a good chuckle about how desperate things were that year and how proud we all were that we survived as a smaller recruiting firm.  Many did not.   We had a gritty team and great leader and we also we willing to do anything to stay alive, including take on searches for 18% (and temporary pay reductions!!).

Those days are long gone now and the idea of 18% was foreign to some of our current Recruiters and Account Managers.   What’s funny, if I’m honest, is that from a value standpoint it wasn’t as bad as it sounds.   Back then you could post a job or hit the job boards and fill most of your openings with B+ or better players.  LinkedIN hadn’t hit its stride yet and a lot of recruiters left the field altogether.   As a result, the best options to fill a job WERE postings and both CB /Monster resume search.   (Of course referrals and direct recruiting were effective as well, but this was a once- in-75-years recession).   So the ROI on 18% was pretty decent (even though we only had one of those agreements).

Unapologetically, we harvested and placed dozens and dozens of solid candidates this way for our clients and had tremendous growth years in 2010 and 2011.

So why does this mean we are more valuable now (and should charge more!)???

First, let’s look at how professional roles are being filled now.   Last year we were at nearly triple our revenue from 2010 and we did so virtually without the aid of the job boards or job ads (for direct hire placements = < 20% of overall placements).   These methods have clearly reached their twilight years.

So jobs are staying open longer and many 3rd party firms and HR depts haven’t universally adapted, still using “post and hope” and “surf the boards all day” strategies.   When the reality is, if you want to fill roles these days you must DEEP DIVE (cold call, direct recruit, massive InMail campaign, research, Facebook, data mining…).   In other words, a MASSIVE time investment.

Now rewind back to that 18% in 2009 (a good value) and then fast forward to now and it’s in the 27-30% range for skilled professional search.  That’s where the value is, whether you pay that or we charge that, etc.   If you are paying 22% – you’re getting a great deal.  If you are paying 28-30%, that’s appropriate value given the investment required.

There’s no magic software or automated solution (or people would be using it).   LinkedIN is a dynamic tool – but only as effective as the person using it.  Because professional recruiting requires such an immense amount of sourcing/talking, reaching out to people, talking messaging them, and, most importantly, figuring things out, only a few firms will be taking the pains to do them.

No firm is going to bat 1.000 on their searches, but HR professionals with tough-to-fill roles need to become effective at finding firms that are deep diving and producing quality results.  It’s no longer just lining up 5 firms and beating them back on price.  The industry isn’t desperate anymore.   25-30% fees, while laughable in 2009, are becoming the norm in 2015 – if you want results/value.

Stay tuned for Part 2, which turns the focus to how to become less dependent on 3rd party recruiters less so you don’t have to pay for those low value/easy fills!   

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Rick

~ 15 year vet of the recruiting industry. Passionate about my family, company and helping people reach their full potential.

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