Jim Collins, author of Good To Great, says “Leaders of great companies start with WHO—get the right people in the right seats on the bus and get the wrong people off the bus.” But if talent is such a differentiator for successful companies, why is the recruiting industry so broken?
Yeah, I said it. The recruiting industry is broken. Have you ever had the feeling that a recruiter was trying desperately to “sell” you on a candidate? Have you ever compared a recruiting experience to a bad real-estate transaction or your prototypical experience with a used-car salesman?
Most of us have had bad experiences with bad recruiters—I know I have. The fact of the matter is that the recruiting industry is fundamentally broken. Incentives are misaligned. Recruiters who work on commission—especially contingent recruiters—are incentivized on the sale of a candidate. They can’t take the time to get to know your needs inside and out, to find stellar candidates for your position. They have to close the deal! This makes their work seem haphazard, and will probably result in you having to hire again. Soon!
Don’t get me wrong, recruiting can be an honorable profession. If done right, recruiters have the potential to make a significant positive impact on their clients. A strategic and honest recruiting expert can help you add game-changing talent that you wouldn’t have otherwise found, enabling you to meet your business goals faster. A good recruiting partnership can help you navigate the often-tricky waters around attracting and retaining the best people for your team.
There are good recruiters out there, no matter their business model, who are honest and have their clients’ and candidates’ best interests at heart. However, in my opinion, the majority of recruiters are doing more harm than good, due mainly to the challenges inherent in the contingent recruiting model.
You see, most recruiters, especially those who serve the middle market, have two problematic traits in common: First, they are (mostly) contingent recruiters; second, they are (mostly) paid on a commission-only basis. These are the main reasons why most of us have bad experiences with bad recruiters.
But just because the recruiting industry is broken doesn’t mean your talent solutions have to be. In the following pages, I’ll further discuss the challenges inherent in the contingent recruiting model and outline ways you can avoid some of the most common recruiting mistakes, on your way to building a strong and scalable, high-growth company. Simply put, I want to help you hire better.
Understanding Contingent vs. Retained Recruiting
There are several key differences between contingent recruiting and retained recruiting. On the surface, any recruiter’s job is to find talented individuals for their clients. But the surface is, unfortunately, where the similarities end.
Let’s start with the word “contingent.” Outside of the recruiting world, contingent means “subject to chance” or “existing only if other conditions are met; dependent on something else.” I can only speak for myself, but nothing about hiring next-level talent should be subject to chance!
Within the recruiting world, contingent means that you don’t pay the recruiter until they have delivered a candidate who is acceptable to you. Unfortunately, this makes selling a big part of a contingent recruiter’s job. By definition, they have to sell you their candidate. Even if a candidate is not the right fit, the recruiter is motivated to convince you he or she is, in order to fill the opening and get paid. It also means they have to move lightning fast. They can’t devote the necessary time and effort your needs require. They simply don’t have time to look for great candidates, especially the ones who aren’t actively looking for a job. Finally, contingent means that the recruiter doesn’t get paid if you hire someone through another recruiter, your own network, or a referral from your employees.
Ultimately, contingent recruiters have an incentive to discredit any candidate you want to hire for whom they won’t get paid. It means they are in competition with you, their client. And I’m sorry, but any business model that puts a service provider in direct competition with their client is F-ed up.
Let’s recap. Now you’ve got a recruiting firm that only gets paid when you hire a candidate put forth by their firm…and a recruiter at that firm who only gets paid when you hire their candidate. Talk about misaligned incentives! This explains why recruiters within the same firm will backstab each other over “ownership” of candidates and why recruiters pressure you to move quickly before you “lose the candidate.”
There is a better way. Partnering with retained recruiters fundamentally changes the nature of the recruiting process. First and foremost, we aren’t competing on speed to earn a commission. A retained recruiter’s interest is creating a lasting partnership between you and your new hire that will grow your
business. In order to make that happen, a retained recruiter can go below the surface—learn the ins and outs of your business and your industry, understand your needs and wants, and get a good grasp of what will truly help your business thrive. The retained recruiting model allows the recruiter to devote time and energy to finding the absolute best talent, especially stellar candidates who aren’t actively looking for a new job!
As you closely examine these misaligned incentives, you start to get a picture for why things are messed up. Here are five reasons I think the recruiting industry is broken:
- Speed kills. Contingent recruiters must move so fast that they don’t have time to challenge your assumptions or question the job description you cobbled together from a “job description” Google search.
- Your negotiating skills work against you. If you negotiate lower fees with a contingent recruiter, you’re probably going to get lower-quality candidates.
- One out of six is considered good. Contingent recruiters play the odds. Rather than focus on the best solution for each client, they do just enough to get paid by one of them.
- You have high standards. Contingent recruiters can’t afford to be patient if your hiring process has a high bar. They need to move on to easier searches so they can feed their families!
- Business-as-usual is part of the problem. The transactional nature of the contingent recruiting model incentivizes speed and quantity over quality. And your acceptance (even embracing) of that business model is part of the problem!
Let’s take a closer look at each of the five reasons and how you can avoid falling prey to contingent recruiting’s inherent flaws as you recruit talent to take your company to the proverbial next level.
