Why ‘agency recruitment’ is totally screwed

Why ‘agency recruitment’ is totally screwed

The recruitment agency business model is grotesquely dysfunctional.

It is broken.

Yes. It. Is.

Certainly for permanent recruitment.

We are just so used to it, have it so imbued in our psyche, that we don’t appreciated how farcical and damaging it is.

For everybody.

Multi-listed, contingent job-orders benefit no-one.

Clients, naively thinking they get a better service because they get agencies to compete, actually get a far worse service because they are actively encouraging recruiters to work on speed, instead of quality.

Recruiters suffer because even if we want to, we can’t really ‘partner’ or ‘consult’, or ‘value-add’, and in the end we only fill one out of five jobs, if we are lucky, destroying profit in many cases, and the careers of recruiters too, who simply burn out, chasing rainbows.

And, the often ignored fact, candidates suffer the most because they do not get service or due care from third party recruiters, who are too busy chasing mythical job orders in competition with five other recruiters, to actually focus on the candidates needs. That’s right. If recruitment worked like accountants, or lawyers, or doctors, or even real estate agents, where the service provider is not working on each case in competition… our recruiters would work on 20% of the orders they currently do, but fill 300% more! And who would benefit the most? Candidates! Yes candidates, who would no longer be treated like cattle, but rather like crucial partners, as they should.

No wonder candidates are increasingly avoiding job-boards, and recruiters, and transferring their job search energy to web-searching, social media, and other tactics.

Yes, that’s a screwed system all right.

But it is getting worse as recruitment evolves.

Have a look at my wizz-bang chart below (Yes, agreed, I am not a PowerPoint expert. But I did this at my desk at home, late at night after my third bottle of Boags, and trust me, it may not look pretty – but what it represents is uglier still.)

Screen Shot 2014-03-06 at 1.37.04 pm

Look at the left circle. It represents all the candidates available for recruiters to place in jobs. Look at the little segment on the right of that circle. That shows the tiny proportion of suitable candidates that recruiters actually access. To this day, most recruiters focus on so called ‘active’ candidates, those that come from job boards, or who are already on the database. There is nothing wrong with these candidates per se, except that they represent only a tiny percentage of the available people. What is more, because they are actively job-searching, they will in all likelihood be working with other recruiters already, or possibly well down another recruitment process.

Which means that you are not likely to place them. You understand that don’t you? It’s not only jobs that are ‘in competition’. It’s candidates too. And in a candidate tight market, a good talent that you have exclusively is a walk-in placement. Do you even think like that? Do you know who you have exclusively? Do you ask? Do you seek to find these people?

Look on my chart at the massive pool of candidates most recruiters do not access. There is your opportunity!

Now look at the right circle. This represents the majority of clients’ commitment to actually filling the job. We all know that most clients do not give their agency recruiter full commitment. That is what the shaded segment represents. Tiny commitment. In fact, many use third-party recruiters as an afterthought, or in competition. The vast majority of the commitment clients give to filling roles, goes somewhere else, such as the internal recruitment team, or using LinkedIn, or their own recruitment strategies.

So right there you have an incredibly dysfunctional situation.

The majority of recruiters access only a tiny percentage of the good candidates, and what’s more, secure only a fraction of the clients’ commitment to filling the job.

What other professional would deal with the customers on such a flimsy premise? Who else would invest the time and resources, that we recruiters do, on the tiny off-chance that a fee might be generated? But it gets a lot worse.

Not only do most recruiters run their businesses on the same basis as someone playing a lottery, they do it in competition with five other agencies. This is ridiculous. Some very significant recruitment companies with massive turnover, still can’t make any profit because such a huge percentage of their staff time is spent on fruitless work that results in no return. In fact many such businesses are now going bust. Their cost base is too high for their income generation ability. And this is why! Their business model is screwed.

And it’s a vicious cycle of discontent. Clients get increasingly irritated because they are dealing with low-level recruiters, who don’t do a thorough job. Ironically the fault for this lies with the client, who asks recruiters to compete on the same job, thereby dumbing down the process. Recruiters get disillusioned, desperate, burnt-out, and take shortcuts, which continues the cycle. And of course worst of all, candidates suffer.

But it’s not all doom and gloom. In the chart above lies tremendous opportunity, if you look for it. The prize goes to the recruiter who can develop strategies to access those candidates in the segment of the circle that are not active. The skill of bringing top hidden talent, that clients can’t find themselves, to the hiring table. That is the Nirvana we should all be seeking.

That is where the fun and the money is. And of course those recruiters who can blend technology with the craft of recruitment, and who can secure a greater percentage of the clients commitment, via retainers, exclusivity, or other partnership arrangements, will differentiate right now, and into the future.

So, the winners will be those recruiters who recognise that the way we work now is terminally dysfunctional, and who act to access the parts of my circles that most recruiters do not.

Excellent! Got that off my chest. Time for another Boags…

This topic is crucial to our industry. Please have your say below.

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If you enjoy ‘The Savage Truth’, connect with Greg Savage on LinkedIn.

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About Greg Savage

Over a career spanning thirty years, Greg Savage has established himself as a global recruitment leader. Greg is a regular keynote speaker at staffing and recruitment conferences around the world.

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123 Responses to Why ‘agency recruitment’ is totally screwed

  1. Jayne Rice March 11, 2014 at 7:41 am #

    Well said Greg it’s a sentiment shared by few in the Recruitment Industry who just keep plugging away with the same old thing, churning through new “BYT: Recruiters the majority of whom crash & burn within the first few months. On the bright side the tide is turning and as the economy grows new & innovative offerings will emerge bringing back the “fun and the money” into Recruitment (minus the flashy suits & ties). Now for another cup of tea for me

    • Damien November 3, 2014 at 5:15 pm #

      Agents are pimps….nothing more. They are no better than RE agents

      • Greg Savage November 3, 2014 at 9:37 pm #

        Thanks Damien, such a sweet sentiment…

  2. Meri Stockwell March 11, 2014 at 9:31 am #

    Really well written. Thought provoking and hopeful! Thank you!

  3. Mark Hall-Smith March 11, 2014 at 9:39 am #

    Yes it’s a tough one Greg. I would love to know how Recruitment got to this model – and real estate (for example) didn’t. Does anyone know the history of why it has evolved this way ? As an industry I am assuming it is newer than Real Estate, so why didn’t we replicate that model ?

    • Warwick January 5, 2015 at 4:17 pm #

      Mainly because the Real Estate market is regulated and an agent must be licensed… Unlike recruitment where anyone with a computer and a phone can charge fees for placement.

      • Greg Savage January 5, 2015 at 4:25 pm #

        Mechanics, plumbers, Financial advisers, lawyers, accountants – all licensed.. all industries we can point to hundreds of examples of fraud and deceit. I dont think regulation is the issue..do you? (All the boys and girls on Wall Street are Licensed bankers, stock brokers and advisers too aren’t they? How does that turn out?)

        • Warwick January 5, 2015 at 4:56 pm #

          Regulation has to be the first step… Unless you have attended a course and have been taught best practice recruiting, any hire that’s new to the market (I had no recruitment experience when I took my first recruiting job) will be trained by the Agency and thus will learn their Employer’s best practice as opposed to industry best practice. It makes sense to start with new Consultants as it’s easier to teach the correct way from the start than trying to break bad habits that have been formed over years of ‘experience’. Also, you’ll note that all the industries mentioned above have some kind of industry association or regulator that you can report offenders to. The REA exists but can only punish member agencies (or at least that’s my understanding).

      • Mark Hall-Smith January 5, 2015 at 4:45 pm #

        Hi Warwick. I wasn’t trying to establish some sort of pecking order or pi**ing contest of recruiters v real estate agents; I was just genuinely curious about ‘why’ the recruitment model is so out of step with so many other similar sales sectors. Re your licencing argument – Greg has tackled that one below far better than I could have done ! Cheers, Mark

  4. Sue Justice March 11, 2014 at 9:52 am #

    I couldn’t agree with you more. At our company, Earth Talent we have tried to offer our clients a new and fresh approach to talent acquisition, even refusing to use the word “recruitment ” on our website because we feel it has been so devalued by the traditional model. Too many clients cannot see beyond this, get bad service and definitely do not get “the best in class ” with their new hires. For a limited enlightened few they are a joy to work with and put the fun and challenge back into our industry.

  5. Paul Ridley March 11, 2014 at 10:06 am #

    A great article Greg and this time I wholeheartedly agree with you. My own specific market would benefit greatly from developing strategies to attract passive candidates, I would as you say place 300% more people if I could tap in to that passive market… but how?? I have been inn recruitment for 4 years but only in Australia for a year, I use linked in which is actually turning out to be a pretty useful tool as many of my contacts are in that passive space, networking at events also helps but these are long term solutions and don’t help in the immediate. Would you agree that it is a long game developing that shaded part of you circle or can it be accessed by anyone at anytime?
    I will be bringing this to the table at my next meeting and can hopefully brainstorm with the talented colleagues I have to develop strategies to overcome the lank of talent available on the active market.

  6. Jane Eggleton March 11, 2014 at 10:07 am #

    Firstly, Greg what a great write up, at last a man who gets to the point without being pompous 🙂 Although both of my agencies (Logistics and Construction) are predominantly contingency staffing, we will service clients and those who come to us by word of mouth, with perm staffing solutions. We do not hold a database for perms, we actively headhunt. And dare I say it, mostly via LinkedIn and our other Networking Channels. And it works for us, no time wasted trawling through faceless names who we, and/or our connections, know nothing about. W cherry pick.

    Secondly, Mark Hall-Smith, the industry has evolved this way because as Greg says, companies believe they are working smart by putting the work to a number of agencies. Usually to create competition or for ‘price buying’. Cheap usually means cheerful, and rarely means attention-to-detail-researched-and-selectively-sourced-quality.

    Personally, I would rather be our clients number one choice to use for headhunting because they believe in our capabilities due to historically delivering a measurable service. We will not only understand the challenges of the role they are seeking to fill …. we will also be able to source candidates who are a complimentary match for our clients companies personalities, ethics, visions and business characteristics. And we can still do it at a competitive price because our overheads are lower for not having to pay salaries to people who chase their tail and become burnt out.

    • Mark Hall-Smith March 13, 2014 at 4:47 pm #

      Thanks Jane for coming back to me. I am sure you are right (on the issue of “it’s cheaper that way”) but it still begs the question, why just Recruitment and not other sales sectors where people are also highly focused on price as a differentiator ?

  7. Pauleen March 11, 2014 at 10:15 am #

    Agreed! Well said Greg!

    I had my own agency for 6 years and specialised in the Digital arena in the last 2 years. I spouted this argument time & time again to clients; I tried very hard to make the clients see their own mistakes and the loss they were suffering but to no avail. It fell on deaf ears. I was so disheartened about the way the industry was performing due to client attitudes and this vicious circle for recruiters that I lost all passion for the job and walked away from it for 2 years.

    I noted this attitude more in the digital arena than other specialist areas I had worked in. The clients in this industry are particularly brutal in setting recruiter against recruiter all thinking they are winning somehow yet not seeing the bigger picture and their own disadvantage in missing out on the best candidates.

    I have always viewed candidates as an asset to be taken care of and never a unit as I have heard them referred to. The treatment of candidates in the marketing sector was particularly cruel with some clients calling in candidates for interview after giving them a product spec to make a presentation on, then stealing their ideas on how they would market it. There never was a job to fill.

    I have begun to dabble in recruitment again but as an independent individual recruiter, no target based environments & on my terms not the clients. I select the client I want to work with rather than market to them hoping to get on their PSL and I only work with those ones that are open to being educated about the recruitment process and the best strategies to secure the best candidates.

    The recruitment industry and those who work within it must also take responsibility for the mess the industry is now in. If the recruiters worked to a code of professional ethics and agreed not to entertain such client manipulation then just maybe, things would change but this will never happen because there are too many cowboys within the industry and profit too important.

  8. Felix Tydeman March 11, 2014 at 10:23 am #

    So every candidates perception is reality. Well written Greg!

    I am a candidate, and along with that which you write my perception is that in the main the recruiters, who clearly have a job, don’t really care about the candidate who doesn’t have a job, unless they are such an outstanding candidate that they cant possibly be overlooked by their client. All dollars driven.

    Observation No.1 – There are also way to many recruitment agencies, new agencies popping up almost daily. That’s good, but only for the employees of the agency. I wonder, do retrenched recruiters find it as hard to get a new role if they are just an average recruiter? I wonder.

    Observation No.2 – Most recruiters are that young that they can not possibly be expert in their field of recruitment. How exactly does someone that’s all but just out of university and has never actually held down a real job within a specific environment for a real length of time class them-self as a “Specialist” recruiter.

    Observation No.3 – Most recruiters are just way to young. Combined with the above, there is now a compounded problem, as a candidate I actually know more about the reality of whats involved than they do, sometimes more than their client actually does, but as a candidate now i am double the age of the exceptionally young recruiter i become intimidating. End result, and one which you stated Greg, they don’t call you back.

    Perception many senior candidates is that the real recruiters are those employed within HR departments of a business. These recruiters, who may have actually grown and progressed though that business from the shop floor, actually know whats involved. They are aware that the business needs specific people, not everyone has a degree, but then do you need a degree to be a painter. Well unfortunately it would now appear that you do. You no longer need to know the difference between oil paint and water based paint, you now need to have intimate knowledge of it molecular structure. That will of course help when recommending the correct washing powder to get the paint out of the suit one was wearing whilst applying the paint. Of course, this is only an example, a real painter would have taken his jacket off!

    It actually seems like if you cant get a real job, and you don’t really have a real skills, but you do have a degree in whatever, well you get a job as a recruiter, make a million and retire. How very sad.

    So having written such a wonderful piece Greg, I hope that some of the recruiters who read your piece actually take notice. Well no i don’t actually mean some, i actually mean those that i have placed my CV with!

    For a call, just now and then would be nice.

    • Lachlan March 11, 2014 at 11:39 am #

      It happens because we say “Yes” all the time. Recruiters hate saying no – to candidates or to clients. If a client asks a handful of recruiters to find a candidate, we will all say Yes.

      The multi-agency model is a delusion of effectiveness fed by fee values which demonstrate the inefficiency.

      I cannot help think there is a sustainable model possible based on qualitative feedback to allow agencies the time to a) find the best candidate and b) help those they cannot place find a role and be rewarded for their time at least.

    • warren kirchner October 17, 2014 at 1:16 pm #

      Felix I hear your angst from my own observations.
      Go for the grey circled areas and pitch role specifics carefully to selected recruiters – no scatter guns, or better still go direct to the client from own research.
      The amount of times I read a multiple listed role that has been interpreted in different ways must make the client cringe.

    • Kerry Sauriol January 2, 2015 at 10:18 am #

      Well said Felix. I used to think a ‘recruiter’ or recruitment agency was above the usual temp/job posting companies where you had to take soul crush stupid tests to prove your skills. I used to think recruiter could look beyond key words or a less than conventional resume and take the time to see potential in someone for their client vs just filling a post. I have yet to see this either in my own experience or others. To get noticed and that talent respected..you have to pretty amazing…some of us are just ok, if not good..but have unconventional experiences that I would like to think a sharp eye would take notice of and advice their clients….again….not seeing this at all.

  9. Mats Eriksson March 11, 2014 at 10:36 am #

    Yes, it’s time to change!. It is the economic impact of the contingency basis relationship that drives the behaviour as you describe it. How could an industry provide a high level of service (or even survive) when it operates under a financial arrangement that offers no guarantee of being paid?

    The industry must move towards a retained model as it promotes commitment from both sides and a need for highly structured and well defined processes.

    The primary differential between contingency and retained service model is that under the contingency scenario, the recruiter has an incentive to fill a position, whereas under the retained model, it is an obligation.

  10. Claire Scott March 11, 2014 at 11:32 am #

    Hi Greg

    I agree with you 100%. Actually, I saw another article talking about the underhanded tactics that some recruiters employ the other day and referred to this myself only this morning on my LinkedIn business page, about an hour before your post came through. I also stated that I thought one of the reasons that recruiters end up doing a bad job is partly because of the way clients insist agencies work. It’s ridiculous.

  11. Howard Searle March 11, 2014 at 11:49 am #

    Interesting article highlighting the reality that our industry is changing.

    This era may well herald the dawn of a true recruitment “Profession” in our country and the evolution of what the consumer expects and receives from the Modern Recruitment Professional.

    Here’s to the future!

  12. Anthony Mackaiser March 11, 2014 at 12:00 pm #

    Spot on, Greg.

    It’s because of his that I perceive recruiters to be ineffective and useless. In almost two years of selling myself to a range of recruiters I have yet to be recommended for an interview, despite having what I consider a really good CV. It’s broken alright and only a total revamp will fix it.

  13. Matt Howard March 11, 2014 at 12:42 pm #

    Exactly – I wrote a small few lines on this and was flamed by one particular recruitment person in one agency – I suggested that I did not need generally agencies and in my roles as a senior manager I did not use them and actively worked to get organisations to see the light and do it themselves. This provoked an interesting response with the recruiter providing a veiled threat that they would make my post on LinkedIN known to the board of directors of a company I was working for at the time. Funny – all the board members were on LinkedIN and were connections so they would have read it.

    You will note that my network is not visible to anyone – a purposeful action to stop recruiters using my list to “find” candidates.

    I was tired of all the issues raised in the piece – recruiters offering me roles that were not in my skill range, telling me one thing about a job and finding out something different from the company people looking to fill the role.

    Yes the model is broken and it will take all sides to fix it – candidates, recruiters and companies seeking candidates.

  14. Wayne Vermillion March 11, 2014 at 2:03 pm #

    At the risk of providing a defense for agencies, I’ll offer that American state and federal agencies are required to solicit everywhere, and leave job postings up for quite some time (90 days is not uncommon), to guarantee equal access. Every agency in the country therefore has equal access. Although not quite as legally bound, large companies also advertise widely, whether in hopes of garnering the largest possible candidate pool or to stave off complaints of “insider-ism.”

    In the case of businesses, so many agencies advertise “our client seeks…” and other misleading terms. Many of these agencies don’t manage to edit the original job description, so that a carefully reading applicant can find the hiring company’s name in the agency ad, and apply directly. I’ve also used Google search for certain phrases to track back to the original employer. An experienced candidate also knows not to sail with the first recruiting agency, because in the case of large firms, solicitations from a dozen or more agencies is common, and it’s easy to find a slightly better rate in that pool. They’re all in the same hunt, after all.

    In fact, the lie that “we have a special relationship with the hiring manager…” is one of the top lies told by recruiting agencies (#1 lie, of course, is the ubiquitous “We’ll be in touch.”)

  15. Ex. Recruiter March 11, 2014 at 2:36 pm #

    The problem is simple – any pricing model is based on the asymmetry of knowledge between you and your customers. The fee a plumber charges is ridiculously high even if the work they do is simple – because you don’t know how to do it. You pay for the expertise you don’t have.

    People don’t need real estate agents to sell their property, but real estate agencies have convinced people that it is difficult to sell a house – you have to know where to advertise, how to run an open house, negotiate with lots of bidders, etc.

    Recruiters have no such luxury. Long before recruiters came around people were hiring candidates for jobs. Why pay a fee for something that is so simple to do in-house? “But I can do it better” you say – except what proof do you have? Now that I have to hire people I get 10 calls from recruiters every time I put an ad up on seek. How am I suppose to tell them apart? And what evidence is there that they can do a better job than we can in-house?

    See – it all boils down to asymmetry of knowledge. Everyone knows how to read a resume, everyone knows how to post an ad on seek, everyone knows how to use LinkedIn and everyone who’s been in their industry a while has contacts. So what asymmetry is there between you and an employer? I was hired in my current job without showing a resume and there was no job opening posted anywhere.

    Clearly the balance of knowledge does not come down on the side of the vast majority of recruiters.

    We have used recruiters, and one of them is really good: he finds highly technical people who aren’t very likely to respond to an online job ad and it takes a lot of networking to know who they are. When we need those people we call him and he charges a 10% fee for excellent candidates. Most of the agencies that call us daily probably don’t even know who they compete with and expect to charge me 25% for flicking over a CV they found on seek. Why are you 2.5x better than him?

    • Mark Hall-Smith March 13, 2014 at 4:57 pm #

      I think you have answered your own point. Your last paragraph details you using a recruiter because…… “he finds highly technical people who aren’t very likely to respond to an online job ad and it takes a lot of networking to know who they are.” That is it in a nutshell. I can find candidates that (in many instances, not all I agree but many) my clients cannot. This is because my network is bigger and established over a much longer timeframe. The other reason for using a recruiter is that most hiring mangers have a day job to do which is not recruiting. They have to decide what is the best use of their time and energy. Often it is best to use a recruiter and concentrate on what you are paid to do – in the case of my clients that is selling advertising.

    • Mark Fielding January 6, 2015 at 10:47 pm #

      First off great article.

      Secondly, one point made by ex Recruiter puzzles me. I’m a very, very technical recruiter, suffice to say I could carry out many of the jobs that I recruit for. There is absolutely no way I would offer 10%, not even to Microsoft. To access the candidates we’re discussing it takes long hours, lots of networking and at 10% i’d be better off working in a supermarket.

      I think that’s certainly a point many clients miss, if you’re looking for someone good they’re (generally) not going to be cheap, by forcing agents onto low rates because “that guy” does it then again your forcing the situation discussed above.

  16. Sheryll Dobso March 11, 2014 at 2:49 pm #

    Well written Greg and something I have been saying for many years. although I liken it to you still have to pay your accountant even if he doesnt get you a tax refund, or your lawyer even if doesnt get you off and you go to jail.

    With 28 years in the recruitment industry (working with only two companies) I have always aimed for exclusive work and in fact are one of the few recruiters who says NO to a client if they multilist with more than one other agency. I have no issues in working against one other agency but if a client lists with more than that I have no issues in telling them why I wont assist them on this recruitment need. In fact at times the fact that I have said No has secured me an exclusive order.

    Also in 2011 I started asking for retainers at the commencement of the recruitment process (I had always charged cancellation fees) but felt that getting a retainer upfront would really ensure my clients committment. Am pleased to say still getting retainers and getting 100% client commitment.

    • Lisa Zee March 12, 2014 at 5:57 am #

      Congrats on getting exclusive, retainer arrangements. If the client is not willing to sign an exclusive or pay a retainer to you, then you know you have a client who do not respect your time and effort. It’s true. If you are happy to ‘compete’ with a dozen other agencies and be ignored by the client then take the assignment. Otherwise walk and politely invite the client to call you after they have exhausted all their options and still cannot fill their positions. I find that if you respect your time, others will respect you more.

    • Cindy Cremona March 18, 2014 at 7:03 am #

      Sheryll – These could have been my own words exactly – accept I have more than 2 clients!

      This issue comes up every time the economy improves and lots of rookies jump in to make ‘easy’ money, so I put the blame squarely on our industry.

      Some of us look at our investment in the indusry as a profession and as a long term business based on the old win, win, win concept. It may seem old school, but I still believe everyone shoud benefit in the transaction. I like to sleep at night!

      Yes, it may be broken, but in 30 years, I still don’t see the incentive to right side recruiter/client interactions. As long as there are recruiters who will cut fees (and each other’s throats), there will be employers willing to use them.

      For those of us invested in our clients and candidates, it’s just another cycle of waiting til the next economic downturn blows the wannabe’s out of the water.

  17. Carolyn Tarrant March 11, 2014 at 3:10 pm #

    Hi Greg,

    While I agree with what you are saying, I believe it’s up to the individual recruiter to focus their energy and build the right relationships with both clients and candidates. Truly consulting to your clients and giving them the advantages of a true partnership. Too many recruiters focus on quick wins and not prepared to put in the hard yards. My question is “what do we do about it?” What is the solution to this industry problem

  18. Kevin March 11, 2014 at 3:12 pm #

    Greg – I think this article is well written, very well written!! and I totally agree with you. Love the data points.

    I also remember you writing this: http://www.recruitingblogs.com/profiles/blogs/agency-recruiters-will-always-beat-internal-recruiters-always?xg_source=activity

    What made you change your tune? I talk to hundreds of recruiters in my role. I think most agree with your latest view point.

    • Greg Savage March 11, 2014 at 4:52 pm #

      Thanks Kevin..I am not sure why you think these two views are mutually exclusive. I continue to hold both opinions. The recruitment industry model is deeply flawed. That is not all the fault of recruiters at all, but it is a fact, as explained in my latest blog. At the same time, agency recruiters are in a far better position to help candidates than internal recruiters are. Not better recruiters necessarily, but better positioned to offer unbiased 3rd party advice. Not all agency recruiters do that of course..but they could if they wanted to. So, no tunes changed my end.. Cheers Greg

  19. Jim March 11, 2014 at 3:43 pm #

    I agree with you Greg however I think this is industry specific you cant blanket the industry. Fine for executive recuit, white collar, higher end roles etc.. however demographics of the place you source from gives lots of variables. If possible you can access or tap into niche groups of candidates for specific roles however without a large population and right demographics this is quite hard to achieve. Therefore the Sydneys, Melbournes, East coast with a consistent population and close proximity has a greater pool than your West Coast, Northern Territory, Rural areas where the pool in quite smaller.

    I have been working in mining recruitment for the past six years which has been very opulent industry however during slower times quite challenging. While higher level engineering, managers etc.. are accessable through social and other forms of media, on top of incentives like housing, relocation included in their package, your mobile plant operators, labourers and trades assistants are not going to have active accounts on linked in or other web based media. They are more likely to pick up a newspaper or use old fashioned media. This is their culture so you need to tailor for the candidates needs as well.

    Active recruitment also comes back to candidates, I dont think candidates realise that at the end of the day the agencies represent candidates to clients. I believe the majority of candidates think that they can drop their resume or apply online to a company and thats it, job done, why didnt I get a phone call? How about following up the company you applied with, show some initiative and enthusiasm when applying for work instead of being annoyed that no one called. I am also glad I go this off off my chest as well, its a two way street! Time to screen another 100 applications from interstate and overseas although my advert specifically said “residential only”!

  20. Carolyn Hyams March 11, 2014 at 3:56 pm #

    Greg, I’m really impressed with your powerpoint skills these days, especially under the influence of Boags hehe 😉

    But on a serious note, if only recruiters could educate their clients better on why it’s in their best interest to give them a window of opportunity and have the role exclusively.

    Further to that, I totally with you — agency recruiters who can build their own communities/tribes of advocates will be far better off than those who keep on fishing in the same pond as everyone else. Stop advertising on Seek and spend that time and (not that much) money building your own communities!

  21. Todd Stubbings March 11, 2014 at 4:52 pm #

    Greg, a great article that has elicited some thought provoking responses on your website. Some consultants seem to forget that a (temporary) out of work Business/Corporate Manager who once did and/or influences an organisation’s hiring could potentially be a future client if they afforded those experienced people a little dignity. But whilst there are many executives creating lists of consultants to ‘not deal with’ in the future because of poor experiences, I suspect they will also be looking at how poorly an immature or uneducated hiring process (inc HR & senior management) reflects on a company’s image!

  22. Gail Townsend March 11, 2014 at 6:08 pm #

    Well said Greg, thank you, I agree with you.

  23. David Jansons March 11, 2014 at 6:11 pm #

    I thoroughly enjoyed reading this Greg and could not agree more. The knack I’m trying to improve is getting clients to realise this and engage or retain me so that I can “afford” to do the deep market research that is required to get the passive talent to interview. It feels wrong some times but I’m now convinced not taking on clients that want the dysfunctional model is certainly the right thing to do. When I think back over the years how much time and money I wasted on them…

  24. David Cherry March 11, 2014 at 6:14 pm #

    Well written and well said! having work in Search, Contigenct, RPO and now leading an onsite team in the software industry I’m going to have my own team read this. Far too much effort is spent on time consuming tasks with very little reward.

    We’re in the process of reviewing our relationships with external suppliers to avoid exactly the type of competition across agencies – ideal scenario for us will be… if we have 3 open positions we will either one partner work all three or three partners work one each – this way everyone wins.

  25. mike pilch March 11, 2014 at 8:23 pm #

    I am not one of you , but you all can work for me. I have been persuing opportunities throughout the Midwest because I do not and cannot trust your industry. Most in your industry act like you are in a Sam’s store and sampling things like looking at my profile on LINKEDN, but when it comes time to produce interviews and opportunities, time and time again lack of communication takes over and the trust factor kick into play.

    I see a need for your industry to be like mine, have clubs. The Chicago tax Club is meeting April 7. Most of you that handle finace and accounting should attend and even join. There is no competition amonst us candidates like you all think. We all will give people in your industry a chance, but the failure to communicate to us when openings are there are shared when we get toogether atour club meetings.

    If your industry wants to survive, then you all should brainstorm a way to keep the bad ones out that make your industry look more like misfits than professionals.

  26. Jef Miles March 11, 2014 at 9:30 pm #

    Hi Greg,

    First time reader, you make some excellent points, have recently (5 weeks ago) started a new job myself and it is tough with a lot of recruiters..

    Big commendation to one of your @people2people consultants Jordan Glanville though, he really is a dedicated, honest and transperent recruiter.. Hope you don’t mind the plug 🙂

    Cheers

    • Greg Savage March 11, 2014 at 9:32 pm #

      Plug away Jef… Jordan works at a company I am a founder and owner of, so I am delighted to hear he looked after you…I trust you are not his best mate in real life? 🙂

  27. Dorothy Dalton March 11, 2014 at 9:51 pm #

    Greg – bullish content which I support. Many forget that these business models are driven by companies who claim to put value on employees but that tends to be lip service only. Additionally hiring manager when driven by budget quite often fail to factor in business imperatives and the cost of a poor hire or the opportunity cost of a position which is open for longer than necessary.

    Personally I don’t and wouldn’t work on contingency, but also believe that as an industry some regulation would be beneficial especially with barriers to entry such as the finance profession. Currently anyone with a LinkedIn profile and a lap top can call themselves a head hunter or recruiter. That should stop.

    There is always the misconception that recruiters work for candidates and although developing relationships with candidates is important it is a mis-communication, which adds to the frustration.

  28. Kristie Young March 11, 2014 at 11:07 pm #

    Yes Greg. Totally agree with you.

    I have seen it from both sides. When I worked as a Mining Engineer I remember heading in to see a recruiter in Perth. She asked me some questions, gave me a coffee mug, asked a few more questions and I remember thinking “you really do not have any idea what a mining engineer does”.

    A week or so after I received a call from a mine site saying that they wanted me to head up for an interview. I didn’t even put myself forward for their role!?!

    This is your typical recruiter. Send a CV with disregard for the candidate.
    Crazy, wrong, unethical, dodgy…. the list goes on….

    Fast forward over 10 years and I began my life in recruitment. That was 2006. Well, did I do things differently!

    Candidates are paramount. Clients need to be educated on the ‘right’ way to recruit talent.
    The technical side must be considered.
    You need to operate in a smart, efficient, clever manner that benefits all parties.

    When both the client and candidate are right, the rewards will come for the consultant.

    Fast forward another 8 years and things have changed again. In 2006 LInkedIn was in it’s infancy. Today, we have a database sitting on the internet, available for all to see.

    Recruitment has changed on so many levels.
    I am aiming for innovation and a new way.
    Let’s see what happens……

    Think it’s my turn for a Boags.

  29. Mitch Sullivan March 12, 2014 at 3:21 am #

    Great blog, Greg.

    Great to see you finally come around to my way of thinking.

    What kept you?

    🙂

  30. Lisa Zee March 12, 2014 at 5:41 am #

    Hi Greg, Thanks for sharing your great insight. I think the barrier to entry to the profession is too low. That is a major reason why we see inexperienced people in the profession. Even real estate agents must pass a test to receive a license to sell and be registered with a licensed RE brokerage firm. The less qualifications/experience required to be in the profession the harder it is to gain respect from clients and get commitment as well. The profession should require a license to operate like an accountant, lawyer, real estate agents… It will benefit everyone in the long run.

  31. Mel Fisher March 12, 2014 at 6:12 am #

    Hi Greg,

    Pertinent and well written truths.

    The really smart ‘contingency based’ agencies have either evolved their offerings to incorporate ‘passive candidate management’, or have diversified their brands (often through new agency names/brands) away form the ‘agency’ model into the RPO or managed service offering.

    For me, the “Passive candidate’ market represents exciting potential, however the MOST exciting option is my belief that the change in attitude in my clients to employ ‘character’ and not skills is emergent and becoming increasingly attractive; you can train skills but not attitude. This model is one the ‘contingency agency’ is unable to fathom – i mean, how can somebody be right for a job when the acronyms on their CV doesn’t marry up with the published job requisition??!

    Good work.

  32. Anita Giddings March 12, 2014 at 10:09 am #

    Hi Greg,

    Great article. As a contractor, I’m often looking for my next job, and I’ve increasingly observed the effects of the multi-agency job.

    When I see the same job being advertised by four or five agencies, I actually often don’t even attempt to apply. That puts me in the left-hand side of your diagram Greg – a suitable candidate that the agency will never see.

    To make it worth my while, I would first need to talk to the recruiters at each of the agencies to find out what their real relationship is with the client, then select one recruiter, and hope that the client isn’t flooded with so many applicants from the other recruiters that my skills aren’t lost in a sea of other hopefuls.

    In the past, when I have applied for these sorts of roles, some recruiters have been unable to answer the most basic of questions. I want a recruiter who knows what the job is, who the company is, and whether I’m really a good fit based on my skills and preferences.

    Cheers, Anita

    • Wayne Vermillion March 13, 2014 at 6:32 am #

      Anita, I agree completely. As I mentioned in my original comment, only the inexperienced applicant goes with the first recruiter.

      Another question I ask is, “How many candidates will you submit for this position?” Before I learned better, I invested unnecessary time in the resume-editing and submission process, only to be told after the fact,
      “Oh, we already reached our quota of submissions on the first day, I just found out from my manager, so I didn’t submit you.”

      Multiply that by the number of recruiters, multiply again by the number of agencies (many agencies assign more than one recruiter to the same job listing, or worse yet, just post it for all their office’s go-getters), and quality is the first factor that gets subtracted.

  33. James March 13, 2014 at 12:04 am #

    It’s the industrial model of recruitment organisations that needs to change and the attitude of clients. Smaller niche companies are the future wit highly experienced specialist recruiters. Flexibility and innovative cost structures that help the client in exchange for exclusivity. The Australian recruitment market does seem to be struggling at the moment where as growth and optimism abounds in the UK, US and Asia. Not sure why that is the case.

  34. RM March 13, 2014 at 2:49 pm #

    I believe agency Recruiters have more success at finding candidates through direct search than they have at getting exclusive or retained work. We headhunt and it helps us make money. But we can not get elusive exclusive or retained work to help make money.

    We have explained to our client how much better it will be for our client that has a total pool of about 12 candidates for a very specialized financial modeling role but they give it to all 4 agencies on the panel.

    Greg, to headhunt is so easy. You just pick up the phone and go for it. Tick the box for that circle. The recruiters who do not head hunt that we comprte against make us look good and we beat them. But we have all seen exclusive and retained work nearly disappear, clients just say no… How do you get those roles? Focus on C level and exec managers?

    Every assignment I get is with other agencies and everyone requires a search. But exclusivity… Not any more. Have not had it for about the last 7 yrs since recruiting for large FS businesses. Got it over 80% of the time for my first 4 yrs in recruitment when specializing in suburban SME 10% roles.

  35. Mike McKerns March 13, 2014 at 9:43 pm #

    Loved this post. Inspired me to write one encouraging firms to simply STOP accepting contingent searches! http://www.mamumediallc.com/blog/2014/3/13/stop-accepting-contingent-searches.html

  36. David Stone (MRL, UK) March 13, 2014 at 9:47 pm #

    Hi Greg,

    At the risk of sounding contrary, I don’t think this is that much different to the situation 20-odd years ago, when I first got into recruitment.

    In those days you had loads of agencies who ran huge ‘shopping list’ ads in the print media (remember that?!) and they touted the same old candidates (who applied to all the jobs) round week after week. This was in the days before email & internet (remember that?!). But I was fortunate to join a firm (ERC) that gave excellent training in headhunting (proper, old school, original research headhunting). Hence we headhunted virtually every single job and most candidates were unique/exclusive. And so we placed them – at higher fees than the shopping list agencies charged. (Most of those agencies have long since disappeared, by the way).

    (As an aside – one of my favourite ever recruitment lines taught to me at that time – “Why do run recruitment ads, Mr Client? The only candidates who respond to ads are either unemployed or unhappy, and you wouldn’t want to hire someone like that now, would you…?!”, Cheezy, but I loved it – and it worked)

    All that’s changed is that the internet came along and the print media shopping list ads have been replaced by Monster / LinkedIn / CV databases / job boards. Which made our jobs easier – sure! It dumbed it all down, and people like to take the easy route and so stopped the tricky headhunting bit and started living online. And competition increased, and fees dropped. A proper race to the bottom.

    But you can break out of this cycle – pick up the phone, get proactive, do some original research and start headhunting! That’s how you access the white areas in your chart – both for candidates & clients – not much more to it. (OK, I admit, I live in a beautifully simplistic black & white world – my mind is a simple, uncluttered place…).
    Sure – it’s hard to get modern recruiters offline and onto the phones and making those tricky cold calls and doing some proper search work. But that is my role as a manager – train them to do it, help them to do it, show them how to do it – and ultimately – make them do it.

    No magic, no secrets, no tricks, no social media fandango – just take it back to the old school, back to the (early/mid) 90’s….

    The agencies who live in the shaded zone of your chart will ultimately fall out the bottom of the market – good riddance. Decent firms who can actually add some value will continue to thrive.

    I anticipate this view may not sit well with some modern recruiters, but it’s my view formed over many years and I stand by it.

    Keep up the great work, Greg – always love the articles – even if I don’t always 100% agree with them!! 🙂

  37. Rick Maré March 25, 2014 at 11:32 am #

    If recruiters were really serious about treating candidates like the ‘crucial partners’ they are, they’d get off their proverbial, and get serious about new media. What are they afraid of? Change? Learning something new? A new (better) way to do their job? Crazy stuff. We’re still very, very lazy in Australia, at a business level, in embracing social & digital media. Yet the perfect ‘first dip’ into this scary world is often via talent engagement & acquisition. Seriously.

    The smart recruiters WILL reap the greatest rewards because they & their staff will build an active, memorable, quality digital footprint (i.e. personal brand). They’ll re-skill. They’ll forget the lazy man’s recruitment tool – generalist job boards – and they’ll cultivate relationships with candidates based on quality content (their own; that which they’ve curated), they’ll be responsive, real, prepared for a dialogue, engaged & interested. All the traits of a quality recruiter, applied within the context of today’s (not-so-scary) digital media landscape.

    Full disclosure: I own and run a successful digital media marketing consultancy exclusively for the recruitment industry. We’re growing. Because the smart recruiters have realised.

  38. Steve Preston March 29, 2014 at 6:52 pm #

    Hi Greg
    I totally agree with your rant I left recruitment in 2003 after 18 years and I consider myself to be a good recruiter. I never had retained status with my clients but I had clearly defined working agreements with them.
    I worked to simple three point match system
    1) Match
    The candidate matched the clients requirements and then put the candidate in for interview I would not send the CV for the client to decide if they wanted to interview (that’s what they were paying me for)
    2) Close Match
    If the candidate matched most of the clients requirements I would then give the client the opportunity to interview or not.
    3) No Match
    I never put a candidate in front of a client who did not match their requirements, but always carefully read all CV’s and prospected the candidate out to other clients.

    I never lost a client unless I decided I did not want to work with them anymore, everyone I ever trained used the same method and became successful.

    I still get clients contacting me asking for help and the horror stories I am told scares me what’s happened to the industry I used to be proud to be a recruiter.

    I spoke to an ex colleague only last week still working for a major high street brand and his description of a recruiter was an automated booking filler.

    The internet is a great tool and I have embraced it since it first appeared it’s the best way to attract candidates but recruitment assessment or matching software is a definite no no would a major PLC recruit a new CEO using CV matching software NO
    So why should a SME be treated differently .
    Come on recruiters get of your backsides and start providing a five star service.
    That’s my rant over.

  39. Alan Ellis March 31, 2014 at 12:07 pm #

    I’m actually glad the model is messed up…
    Potential clients hate dealing with recruiters who hurl résumés at them hoping one will “stick”.
    Take the time to meet with them and get a complete understanding of their needs before individually targeting candidates based on their specific requirements.
    As a recruiter there’s no point in interviewing candidates whom you THINK might suit a particular organisation without first meeting that organisation and discussing “best fit”.
    Sending through a shortlist that I’ve come up with based on these requirements is far preferable to ANY client rather than being a résumé delivery service for them to compile their own shortlist from. They can already do this themselves [I mean, really, what are they paying you for!?!].
    Get off your backsides, meet the clients, and change the model!

  40. Andrew Thoseby April 2, 2014 at 4:42 pm #

    Greg, given the sales consulting we do and how many of our clients’ sales teams struggle with finding their own Blue Oceans I wonder if our industry has the capability to do so generally. Part of me hopes it does, while the selfish part of me is happy to keep swimming away from the Red Oceans while others flounder. I think that part of the problem is that clients talk about high performing teams to differentiate themselves and then behave like price driven procurers. This is the equivalent of Manchester United sourcing $100,000 a year footballers from the A-League. It’s cheap but it won’t win a Premier League title let alone a European Champions League. The best advice I can give is in three words – “Just say no!” Say it professionally, explain the reasons why, walk away, offer to come back when the errors mount, even say its “no for now” – but just say no. Our fill rate at http://www.1stexecutive.com.au is north of 90% and has been for over 12 years.

  41. Recruitment agencies in India Mumbai April 2, 2014 at 11:18 pm #

    Great post, I concur completely and appreciate the time you took to write it. Cheers! this is a nice website. I’m forever looking for blogs similar to this. Carry on the nice effort!

  42. Scott April 28, 2014 at 1:14 am #

    Hear, hear Mr. Savage! I agree wholeheartedly. Unfortunately, it is difficult to avoid those situations when you are at an agency. I was with an agency for a couple of years and we called those “horse races”. Now, I have a unique arrangement by which I use my agency’s back office, payroll funding, etc but am free to work with my own clients or I can collaborate with others if I wish. So I’m able to pick a couple of clients and really partner with them. I only make about 10 placements a year but when you keep 80% of the fee and the average fee is around $20K that’s all I need!

  43. Chris May 2, 2014 at 5:28 am #

    Nicely written and spot on. Unfortunately with agencies in M&A mode, and metric driven, this situation will only worsen. I was just talking to a candidate yesterday who remarked (as they often do) how recruiting is nearly dead and its only staffers now, and an 80/20 on the quality. I disagreed but only that its more like 95/5 now instead of 80/20!

  44. Norman Mogg June 11, 2014 at 6:02 pm #

    Some really good interesting points here, I believe though that staffing agencies still work and supply the right people for the right job. Just need to make sure they are very reputable and talk to clients of theirs to see if they were happy.

    • manavconsultants July 11, 2014 at 7:15 am #

      While the market is growing competitive each day, the recruitment consultants help you to find the right candidate in an easy way. Browse the web to avail info about the leading recruitment consultants in the city.

  45. recruiter joe September 11, 2014 at 2:07 am #

    I love the self indulgent responses by those recruiters that have set up their own agencies and try to claim that they offer fresh, new and cutting edge strategies in obtaining the highest calibre of candidate blah blah blah. Ive been a recruiter for over 5 years now. Its all the same old thankless task.

    Ungrateful clients who treat you like a piece of worthless dirt, even when you move mountains to find them candidates and have made multiple placements with them. Candidates who use you as an easy means of getting a counter-offer / pay increase at their current job. And then theres the people in the agencies..bosses who have absolutely no interest in anything other than kpis and your fees.

    The golden age of recruitment is dead and thanks to advances in social media and linkedin style sites it is becoming a breeding ground for disillusioned consultants who are totally burned out by their 30s. I cannot wait to get out of this horrific industry and would STRONGLY discourage anyone else from getting involved. The highs are never that high and the lows are frequent.

  46. Danny September 19, 2014 at 1:43 am #

    Great post. Very true.

  47. Yangwha Global September 24, 2014 at 5:39 pm #

    Yes you may right, some recruitment companies are like this once they get the commission they will leave you behind. but not all, in our company we guaranteed that our customer will be guided step by step and give an updated as soon as possible.

    Sorry mate, the next para is just promoting your own business. Deleted..by me

  48. Brenda October 1, 2014 at 2:02 pm #

    What about the other side of that coin? How does the recruiter company insure that the hiring company really has the job they’ve advertised and that their recruitee has signed a contract to perform? It’s a contract for that specific job isn’t it? It’s a contract. It’s like you want 100 years experience for something that was invented last year. Or, you want an MBA for a job that requries only an 9th grade education.

    I’ve done both a direct hire and a short contract job this year and neither had anything to do with the job description nor the goals described in the interviews. I mean not even close. It was like hiring an architect to clean the toilets with a toothbrush and pretend it was such a victory to feed the manager’s ego. So disappointed.

    Who is writing these job ads because they really need to step away from the pie in the sky language and get real.

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