Devoted to recruiting, finding top recruits, and hiring tips and advice

The recruiting industry is a tough one to understand.  The hard-part is that hiring managers, dutifully focused on their P&L statements are often caught 'unaware' by the fees that recruiting agencies charge.

Which is ironic because the recruiting industry is uniquely slanted toward the client company through a (usually) completely contingent service agreement--if the recruiter doesn't deliver, you pay no fee.  Simple as that.

In thinking about this, I think the problem lies in the timing of payment when recruiter fees come due.  In short, by the time companies get the bill for recruiting, they have forgotten how urgent and critical that recruiter was.

Companies forget how much money they were losing because the director of marketing had taken another position.

Companies forget how much shipments were backing up and customers were calling to complain when the Director of Order Fulfillment was promoted to Regional VP.

Companies forget how all the programmers vowed to quit if the company didn't hire three more people to help the new enterprize CRM project along.

Companies forget that the recruiter(s) they engaged took on a job without any pre-payment or retainer, and that the recruiter assumed all risk (legally and financially) for the search process.

The recruiter also had no guarantee that they would succeed and achieve the placement for you (which is interesting since it seems that all companies demand guarantees from recruiters), but they spent their time and money on your 'urgent open req' anyway.

The recruiter searched and networked, interviewed and screened, checked references, and, in-short, went through countless hundreds or thousands of candidates to select the 1-3 most-excellent ones for your organization.

Along the way, they probably consulted you on the current job-market, helping you align your targeted job-listing at the right people, saying the right things.

If they took the time to visit your facility, talk with your executives and staff, and learn about your culture, mission and vision, that is even more time, energy, and money spent on the purely speculative gamble that the right candidate would be located.

All of this, as you recall, was done pro-bono.  Free. Zip, Zilch, Nadda.  Zero...

...until the placement is made, the hire letter is signed, and the new employees' orientation begins, and the recruiter fades into the background...

Within the first few weeks, you can already tell this was a supremely excellent move for your team.  You have such an excellent eye for talent.  Preliminary results are in, and you have no doubt this new employee will bring an additional 15% to your bottom-line immediately, with long-term growth year-over year.  Everyone around the office seems to be grinning from ear-to-ear...

... Except your CFO who just got a bill from blankety-blank recruiting agency for $20,000.  "I Hate Recruiters" they yelp, completely missing the value-add.

Of course, recruiters need to make a profit (ahem, so do you), and most-recruiters are paid somewhat (or only) by commission, so it may appear that recruiter's "only care about commission checks", but if you trackback through the whole process you'll realize, for supremely excellent candidates, you're probably getting a steal and you should quickly pay the fee and whistle all the way to the bank.

The bottom-line: Recruiters charge you only when they succeed for you, which is a much better position for you than being under a more traditional, "billable hours" arrangement. 

But, since you're charged a lump-sum for a successful hire, many companies simply don't understand the accounting behind the recruiter's fees.