Time to Disrupt Recruiting Fees?

If technology is helping recruiting, then why are recruiting fees the same?

Picture it: New York City. 1992. Hazy autumn afternoon, Wall Street.

Mr. Carl, Esq., has had another row with his mistress, the Upper Eastside temptress, Adaline.  Except this time, they wouldn’t make up.  Ever. She’d thrown her Calvin Klein heel through his signed Patrick Nagel original.  It was OVER. 

The fallout was almost immediate. The gossip was relentless.  Adaline was a widely-adored ingenue with multiple suitors.  And Carl’s spurned, soon to be ex-wife, was a decade older, but equally as popular. Carl’s firm lost three great accountants that week.  All of them quit to go work for some up-and-comer named Mr. Bloomberg, a man who Carl thought to be a total loser.

No one was answering his newspaper ads for help. And it was almost corporate filing season. Desperate, Carl thumbed through the white pages and found Mr. Anderson, Professional Headhunter.

Mr. Anderson had been working the street for the last 25 years. He was an active member of the chamber of commerce, a long-time Freemason, and head of the local Toastmasters club. Mr. Anderson knew everyone.

He went to every networking event, wedding, funeral, and graduation. He spent years building his valuable personal network, with methodically sent birthday cards, and regularly-scheduled “catch-up” coffees and dinners.  If anyone could find Carl’s firm an accountant, it was Mr. Anderson. 

“Well, who do you have?” Carl barked into the phone.

Mr. Anderson was calm. “Nice to hear from you Carl, I was expecting your call. I’ll take care of it.” He hung up and dove into his famed Rolodex.

The price was 20% for the first years’ annual salary. But it was worth it.  Mr. Anderson’s years and years of in-person networking meant he could get the job done and done quickly. 

Fast-forward to 2018.

Times have changed. Technology has changed. The role of the headhunter has changed. But, some things have not changed, not one bit.  And one of them is the fees.  So…why hasn’t price changed with the times? I’m here to tell you that it’s time we all stopped pretending that those agency staffing fees from the 90’s make any sense in today’s world.

As of today, 2018, quality firms with talented recruiters use roughly the following metrics to fill a position open with a passive employee (someone currently employed elsewhere who is not actively looking for work).

• Source and reach out to about 100 candidates
• Hear back from about 25 candidates
• Speak to about 15 candidates
• Get about 10 resumes
• Submit about 5 candidates
• Hiring Manager will interview 3 candidates and
• Offer the position to 1 candidate.

In total, sourcing for one role might take a good recruiter about three business days. Then they’ll submit to the client, facilitate interviews and on a very good day, deliver an accepted offer.

This recruiter does not need to personally know or even have ever met any of these candidates. They can use LinkedIn recruiter’s Boolean strings to find exactly who they want, with what skills, in what city the position is located. With the click of a button, they can narrow down the search to a particular college graduation range, or degree program.

And, candidates don’t care where the job opportunity comes from. If they like it, they’ll interview. Personal network be damned.

So if the amount of preparation and the amount of work involved in filling a role has so dramatically decreased, we all really are fools to think that 20% is still a reasonable fee to pay.

Staffing firms know this because they only have to pay the recruiters, (you know–the people who are actually doing the work) between 10%-30% of the fee they collect. So…the rest of the money? Where is that going?

Have you checked stock prices for the big agencies lately?

I’m just saying; they’re not too shabby. CEO, C-Suite and management pay isn’t too bad either.  In fact, the profit margins of these firms are downright ridiculous. But for how long? How long until clients stop buying it? If you ask me, not for very much longer.

The recruiting industry fees are a dinosaur and those 20% fees? They should be looking over their shoulder for an asteroid.

Authors

CEO and Founder of Talent Savant.  Mission-Based, Employee-Benefiting recruiting business. Paying Recruiters more and charging less. Bending over backwards to do good deeds and make others happy-Monday-Friday between pre-school drop-off and boxed wine happy hour.  Radically pro-woman and pro-family.  www.talentsavant.org