Our last White Paper analyzed the four different corporate recruitment models, at least two of which required a relationship with an external recruitment partner. Now, we will try to provide some real world advice to help you with the vendor selection process.
Many employers have trouble identifying reliable and consistent recruiting partners. It’s confusing. Some employers assume that one placement made by a random vendor was skill but, in reality, it may have been luck. A recruiter who randomly sends a resume out to 100 companies may be a dolt to 99 of them, and a temporary hero to 1. I would suggest doing the same thing you do when choosing other vendors: legal, accounting, distribution, advertising, etc. If employment is an important function to you, due diligence is required. Here is some modest advice.
- What do you want from the relationship? Do you just want a source of high volume resumes? Do you want a few targeted resumes with lots of background info? How many projects will you have per year (1, 10, 50?) How helpful or aloof will your managers and executives be in the hiring process? Do you need advice on structuring your positions in relation to the market, or can that be done as a finished product in house?
- Create a specification of the type of firm that you want as a partner. Here are some thoughts:
- Do NOT look for recruiting firms specific to your industry. Why? Your competitors may be their clients and could be off limits to them. The more entrenched they are in your industry, the smaller the candidate pool that is available to you. I once had a company contact me to help them fill some industry-specific jobs. They said someone told them that I worked on projects for their biggest competitor. When I reminded them that I could not contact people for them from an existing client, they were surprised and disappointed.
- Do look for recruiting firms with clients that are around your size. Consider that a billion dollar company can be a very different place to work than a $100,000,000 firm. Scaling up and down can be tough for potential employees. Recruiting firms that work in the Fortune 500 space have candidates from large companies. They will pull corporate people for smaller clients, often resulting in a cultural mismatch. The same is true in the other direction. As an example, if your revenue is $200,000,000/yr., seek recruiting firms with clients from $100,000,000 to $500,000,000 in size. They are used to swimming in the right candidate pool for you.
- Do NOT worry too much about where the firm is located. Fifteen years ago, I would have said the opposite. At that time, a recruiter in Phoenix would have a hard time finding local candidates for a client in Baltimore and may have pushed an unnecessary relocation strategy on that client. Now, with public and private databases, it almost doesn’t matter where the vendor is. In the last 3 months, we have filled jobs in Florida, Mississippi, New York, Pennsylvania and Tennessee, all with candidates local to our client. If the vendor has a history in regions like yours, that is good no matter where they are. This is especially valuable if you have multiple locations. A good vendor should be able to handle all of them.
- Do look for a vendor that can handle multiple disciplines. Unless your needs are 95% in one area like IT, in the course of a year you may have openings in quality, sales, HR and finance. Unless you want to juggle 3-5 different vendors, find a firm that has worked in each area. The need to specialize in a discipline has evaporated like the need to be geographically specific. You want a vendor that will become an expert in you, no matter what type of opening you have.
- Do your research. Usually this is done by Mr. Google, but there can be another, more valuable source. Crowd source your employees. Most will have been contacted at least once or twice in their career by recruiters. They will have had some recruiter contact, maybe prior in their career. Anyone who has impressed them is likely to impress your potential candidate base. We just got a project from a new client. A candidate who turned down a job through us last year, recommended us to his CEO because he said we were thorough and professional, despite the fact he stayed at his firm.
- Get a 3-4 company vendor pool and interview them. If they are local, meet them. A visit to their location can be as helpful as them coming to meet you. In fact, I would suggest a visit to each finalist and then have the winner come to you for an informational meeting on specific projects. If they are not local, will they have someone fly to your location anyway? We have done that when the account seems viable. Here are some questions to ask:
- Company history is important. It’s normal to ask how long they have been open, but that’s meaningless if they have a lot of turnover. A 20 year old company with 50% annual turnover means that whoever is working your projects in November may be gone by May. Of course, questions about past clients, industries and geographical projects like we addressed in bullet point 2 are important.
- Who will specifically be speaking with candidates about your projects? This is very important. That person represents you. You should meet that person and be comfortable with him or her. If they are not at the meeting, it is a bad sign. You do not want a nameless junior trainee explaining your company, culture and position to prospective candidates. Drill down on this until you are comfortable.
- What information will you receive on each candidate? A resume, a resume with salary information only, or a detailed report on your vendor’s interview with the candidate? If it is the latter, ask for an example from a past client to evaluate the information provided. The more information the better.
- Will you get weekly reports on progress/problems? You should. Once again, ask for an example. Weekly reports can help you tweak specs, improve predictability and evaluate the vendor on an ongoing basis. A weekly report will also help your managers get comfortable with progress that may be unseen by them. We had a client last year with a very hard to please manager. When the HR Director showed him a weekly report that showed the 250 people we had contacted, the manager had enough data to realize that his specs were too tight. That was a huge help on the project.
- Get a timeline. When will resumes first appear? That data point is totally in the vendor’s control. We often get asked, “when will you fill the job?” That’s tougher because resume feedback cycles and interview scheduling are often under the client’s control, not the vendor. Our usual timeline is 2-3 months to fill a job.
- Fees. This is always an interesting topic. I would suggest that you get creative. We all know the typical structure – a percentage of starting salary. Most fees are 20% to 25%, with retained being more expensive for some unknown reason. However, each potential vendor has their own cost structure and business strategy. Higher or lower overhead. Transactional or relationship strategy. Process or sales focus. Let me tell you some things that may surprise you.
- Some recruitment firms want volume more than a higher price. A predictable volume of projects may bring a significant price reduction. For example, before they were bought, we had a 10 year relationship with a client that averaged 10 projects a year with an average fee of slightly lower than 15% and a 95% project completion rate. We sacrificed profit margin for consistent and regular business. As we refined our process for that client, we got more efficient and shared that savings with them.
- Monthly retainers can also reduce fees. It also ties the vendor to you because they don’t want to jeopardize the retainer. We just completed a $150K Director of Safety project at a $10,000 fee. For 5 years, that client has given us a monthly retainer and steady work nationally for a very low transaction fee. They like having us on call for speculative projects and we like the regular check.
- There are a million different models of a recruitment vendor and each one has different business needs. Some energy on your part may identify a perfect partner for you financially, as well as professionally. Don’t be afraid to throw out ideas that are unconventional to gauge a potential vendor’s reaction. Start the discussion based on your needs as a potential client, not the vendors arbitrary fee schedule and evaluate the reaction.
- This may sound corny but most people, including recruiters, want to feel helpful and important to the client. If you can convey a real sense of partnership, that has meaning beyond dollars. We have clients for whom we have put together whole departments or executive teams. For us at least, the opportunity to contribute at that level is priceless. We know we have had a positive impact on that company and we value that.
Lastly, you need to see the vendor as an ally. We’ve run into situations where the client’s HR function sees the vendor as a competitor, which is crazy. Your CFO does not see your outside accounting firm as competition. Your CMO does not see your ad agency as competition. Your engineering group does not see a technical consultant as competition. If you partner with a recruitment vendor, for gosh sakes, don’t compete with them at the same time. Give them the project and let them do their job.
I have literally seen ads on Indeed in which the employer runs an ad and right behind it two recruitment firms run the same ad that was cut and pasted from the job description sent to them by that very employer. All three ads were word for word identical. Any good candidate who sees that will run from ALL parties, employer included.
As ever, thanks for getting this far.
Jeff –
