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The Recruiting Industry is Broken (Part 6)

August 20, 2018 by Kurt Wilkin

Over the course of this series of articles on the recruiting industry, we’ve touched on a number of reasons why I believe the industry is broken (See parts one, two, three, four and five for the full series). Some of them are fairly obvious but some may be less obvious to the casual observer.

When I started this series, I knew it would strike some nerves, but I didn’t expect the polarizing commentary on both sides of the argument. I might as well have entitled the series “Make America Great Again.”

In all seriousness, while there are some die-hard recruiting veterans out there who took offense to my series, and probably take offense to my classic line “I hate recruiters, too,” the feedback has been overwhelmingly in support of my stance that the recruiting industry truly IS broken.

Some of my favorite highlights on why I believe the recruiting industry is broken:

Most recruiters in the middle market are (a) contingent recruiters and (b) are paid on a commission-basis only. These are the main reasons why many of us have had bad experiences with bad recruiters.

“Contingent” means that you don’t pay the recruiter until they have delivered a candidate who is acceptable to you. It means they have to SELL you a candidate – and fast – or they don’t get paid. It means they don’t have time to look for really good candidates (you know, the ones who are not actively looking for a job).

It means they don’t have time to challenge your job description assumptions. It means they 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. The commission-only compensation model creates misaligned incentives and explains the high-pressure tactics employed by most recruiters. To put it bluntly, it is a business model that puts a service provider in direct competition with their client, which is an F’ed up business model.

Talent planning and acquisition is critical to the success of middle market companies – do you think the recruiting industry serves them well?

When Speed Kills

Contingent recruiters don’t have time to conduct a thorough search to find the superstar candidates who aren’t on the job market. They don’t even have time to truly understand your business and your talent needs. They need to move fast in order to send you a candidate’s resume before the competition does – it’s how they get paid. They can’t truly scope the position or challenge the job description your hiring manager may have cobbled together from a Google search.

They’re not paid to make sure your job description fits your situation, they get paid to match it ASAP! To make matters worse, their usual candidates are those whom they know are desperate to get out of their current situation (or even worse, those whom their employer is eager to get rid of!).

When Your Negotiating Skills Work Against You

Most of us like to think of ourselves as good negotiators, but sometimes your negotiating skills work against you.

Market rate for contingent recruiter fees typically range from 20% to 30% of the hired candidate’s first year compensation. Let’s say you negotiated your recruiter’s fee down from 25% to 15%. For arguments sake, we’ll assume your recruiter had other clients who did NOT negotiate their fee down to 15%. In fact, their other clients agreed to pay 25%. Do you honestly believe that you’re getting that recruiter’s best candidates? Think about it. I can assure you that the other company is getting any good candidates while you’re getting their rejects tossed over the fence.

When One Out of Six is Considered Good!

Statistically, contingent recruiters will fill one out of every eight roles they are working on (one out of six if they’re fortunate!), they just don’t know which one. Because they only get paid for the roles they fill, they simply can’t afford to spend quality time on one role. As a result, you’re getting scattered work across at least a half dozen other searches. This is why their work can seem haphazard.

Ever felt like your recruiter was throwing spaghetti against the wall, hoping something sticks? If you’re discerning, too deliberate, or you make them work too hard, they’re going to move on to easier positions to fill.

When Business-as-Usual is Part of the Problem

Speaking for recruiters everywhere (the good ones, the bad ones, and everything in between), “the way we’ve always done it” is part of the problem. As consumers of recruiting services, you don’t just tolerate the transactional nature of the recruiting industry, you expect it and even incentivize it. When you only pay for a body in a role, you incentivize speed, salesmanship, and cutthroat behavior.

You also don’t do recruiters any favors by hiring reactively. Many managers treat hiring as an afterthought, waiting until your internal team has failed miserably before you call a recruiter. The pressure you put on them to move fast and compete in a speed game often doesn’t allow them to do a high-quality job.

Thankfully, my team and I don’t work on commission. Our incentives are aligned with our clients’ incentives. Our professional approach allows us to take the time to not only deeply understand our clients’ business, goals, and needs, but to identify, recruit, and woo top talent (talent that is not actively looking for a job – they’re too busy building someone else’s company). It’s amazing how well things can work when incentives are aligned!

What are your thoughts? Is the recruiting industry broken? I’d love to hear from you, whether you agree with me or not. Talent planning and acquisition is critical to the success of middle market companies – do you think the recruiting industry serves them well?

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