How Employers Can Select the Right Recruiter

When an organization has a key position that it needs to fill, either because of additional needs or to replace someone who has left, they often enlist the services of an outside recruiter.  The reason that this is so common is that finding great talent takes a lot of time and can be incredibly tedious, and most hiring managers understand that it is more cost effective to hire someone who can do most of the legwork for them than it is to stop doing their own jobs that produce revenue and take on the task themselves.

However, even when they do decide to use a recruiter, they still have choose the right one that can best fill their needs, and there are a few considerations that are very important in making that choice.  You can waste a lot of time and money if you make the wrong choice, so it pays to understand the basic criteria that you should consider.

First, understand that outside recruiters fall into two basic categories, and those two categories are retained search and contingency search.  I have done both, and both have their place, but the type of job you need to fill really dictates which one you should choose.  Contingency recruiters are the most common type and comprise the great majority of most outside recruiters.  That is the business model that most recruiters use when they start in the industry and it is the model that is the best fit for most positions that companies need to fill. 

When you engage a contingency recruiter, there is no contract or signed agreement in place.  You and the recruiter have a simple agreement that if they find a candidate and present that candidate to you, they earn a placement fee if you hire that candidate.  Unless you hire someone that they bring to your attention, you owe them nothing.  Many hiring managers prefer this arrangement because they figure that they can engage several of them at the same time, thereby increasing the odds that they will quickly get several good candidates to choose from in filling the position.

What the employer often does not realize is that the recruiter sees the arrangement from an entirely different perspective.  They know that if you are contacting them, you are probably contacting other contingency recruiters as well.  That means that everyone is hunting the same candidates, and that they have a lot of competition in filling the position.  Contingency recruiters have to consider whether it is worth their time, effort, and money to launch an effective search when they know that someone else could very easily find the right candidate before they do, which would make all their efforts go for naught.  Contingency recruiters typically pick the “low hanging fruit.”  Because all the other recruiters understand these conditions as well, if they do not find success early in the process, they quickly lose interest and move on to another engagement that shows more potential for success.  The employer is probably thinking that he/she has raised the odds on finding great candidates by engaging several recruiters, but the truth is that probably very few of them are actually drilling very deeply into the potential talent pool, and are unlikely to do so if it will cost them considerable time and/or money.  The reason?  They are not going to risk a large outlay of time, effort, or money if there is no reasonable expectation of a payoff.

When should you use a contingency recruiter?  Use them when the position is one that should have a relatively large pool of potential talent that is readily available for those who know how to access it. This usually applies to positions that are on the lower end of the pay scale.  That is why there are far more contingency recruiters than retained recruiters.  There are a lot more positions at the lower end of the pay scale than at the top end.  Generally, and there are exceptions to every case, open positions that will pay less than a six-figure income are the best fit for contingency recruiters.

When you need to fill a position where the standards are higher (even in positions that are less than six figures), when the specific required talents or experience are not common, or when you need a third party to act as a go-between to contact and persuade a talented executive to consider a new opportunity and often to negotiate the terms of the new deal, a retained search is usually in your best interests.  Retained search recruiters require an initial investment in the process from the employer.  The size of the retainer can vary considerably from one recruiter to another, but the recruiter knows that to find someone for a position for which the pool of talent is small and specialized will require extensive time, effort, and sometimes a large outlay of money, and if they are going to be investing serious time and money, they want the client to be invested as well.  The retainer paid to the recruiter at the beginning of the search is credited to the employer when the search is completed.  The net fee is the total fee less the retainer.

What are the advantages of a retained search?  You have a recruiter who is willing to invest the time, effort, and money that will be required to find not just qualified candidates, but the best candidates.  These candidates are rarely listed on job boards that most contingency recruiters use.  Most of them are happy where they are, not actively looking for another job, and are well-compensated.  One focused and dedicated recruiter who is retained knows where to look will not hesitate to take whatever steps are necessary to find the right person.  The retained recruiter wants to earn the balance of the fee and will stay on the search until it is successfully completed. That same position in the hands of a contingency recruiter may be treated entirely differently.  That recruiter may know where to look, but more often than not is not willing to make the necessary investment without some assurances that he or she will not be wasting time and money.  You will most often get better candidates with a retained search than with a contingency search.

Whether you decide to use a contingency recruiter or a retained recruiter, choose one who has experience in your industry or in finding the type of position you need to fill.  There are exceptions to every rule, but in my experience the best recruiters are those who have worked in the fields where they recruit.  They know the people, the language of the industry, and perhaps most importantly, they “know people who know people,” which can be a priceless advantage in the search process.

Ken Murdock is the owner of Murdock and Associates Recruiters and New Wave Resumes. He recruits top talent in sales, project management, accounting/finance, manufacturing operations, and engineering for the manufacturing sector, oil & gas, construction, and the packaging industry. New Wave Résumés offers professional résumés and interview coaching for executives, mid-level professionals, recent graduates, and anyone seeking to take their skills and talents to a higher level.

What Business Are You Really In?

May 10, 1869 was an important day in American history.  That was the day that the last rails were laid in place to connect the Central Pacific Railroad and the Union Pacific Railroad, creating the Trans Continental Railroad that connected the east coast of the United States with the west coast..  Until that time, travelers from the east coast could either go by wagon or horseback, or take a boat around the tip of South America and come up on the other side of the country.  The Straits of Magellan off the bottom tip of South America was and is one of the most treacherous bodies of water on earth.  Many ships that entered those waters never came out of them.

With the opening of the transcontinental railroad, people and freight could from one side of the country to the other in about ten days, rather than the six to nine months it took by wagon.  For the next fifty years, the railroads prospered very well due to the monopoly they had in hauling people and goods long distances.

They did, however, suffer from a very common malady.  They thought that things would always be as they had been.  When Henry Ford began turning out cars by the thousands per week, and roads began to replace dirt paths, people began to enjoy the freedom of going exactly where they wanted to go instead of wherever the railroad could take them.  Trucks soon followed the cars, capturing much of the freight business, and it was not long until the prosperity that the railroads had taken for granted for so long began to fall off rapidly.

The problem that the railroads had was that they always thought of themselves as being in the railroad business, when in reality, they were in the transportation business.  They assumed that their method of delivery was the same as their business, and those two elements can be very different things.

Fast forward to January, 2012.  Kodak, a name synonymous with photographs for the better part of the 20th century, filed for bankruptcy.  In the late 90's and early 2000's, Kodak was in a battle with Fugi, a Japanese company, for dominance in the the camera film market in the United States.  While Kodak and Fuji were beating each other senseless, it seems that no one in either company noticed that digital photography was rapidly becoming the default method of capturing photographic images.

Kodak discovered too late that they were not in the camera or film business.  They were in the memories business. Film and Instamatic cameras were simply their delivery method.

Some organizations have demonstrated a firm grasp of what their real business is.  IBM has changed their delivery method to fit their real business several times throughout its history.  They are not in the computer business...they are in the information business.  Customized data processing systems is their delivery method.

Often an organization's real business can be found in its mission statement.  Wal-Mart describes itself as " US based multinational retail company that sells general merchandise and groceries. It is the world’s largest retailer, third biggest public company, largest private employer and one of the most valuable companies in the world".  It's mission statement however, mentions none of those things.  It simply says, "We save people money so they can live better."  There is no hint of their delivery system. 

Southwest Airlines has for years outperformed others in the airline industry.  Their mission?
"The mission of Soutwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit."  Not a word about airplanes. 

Disney "gets it."  Their mission statement: “The Walt Disney Company's objective is to be one of the world's leading producers and providers of entertainment and information, using its portfolio of brands to differentiate its content, services and consumer products. The company's primary financial goals are to maximize earnings and cash flow, and to allocate capital toward growth initiatives that will drive long-term shareholder value.”

You don't see anything about movies, theme parks, or cartoon characters.


Why is it so important to know your real business...your mission?  Two reasons:

1. It gives you a compass for the decisions you make!  Whenever you are faced with an either/or condition, you can ask yourself, "Does this bring me closer to or farther from the accomplishment of my mission?"  If it takes you closer to the accomplishment of your mission, do it.  If it moves you farther from the accomplishment of your mission, don't do it.  It really is that simple.

2. It allows, even encourages, you to think "outside the box."  Is your product, your service, and your delivery method the best combination of elements to accomplish your mission?  Maybe it is now, but will that always be the case?  Probably not.

The landscape today is littered with companies that did not grasp their true mission and were replaced with something better.  How many record stores have you seen lately?  Their offerings, vinyl record and later CD's,  required consumers to purchase songs they may not have wanted in order to get the songs they did want.  With streaming, music lovers can buy the individual pieces they want and make their own collections.  It was not that long ago that Blockbuster was riding high with their VHS tape rentals, and eventually, DVD's.  How many Blockbusters have you seen lately?

This line of thinking applies to individual jobs as well as organizational missions.  As a solo, independent recruiter, my mission is to help my clients run their businesses more effectively, efficiently, and profitably.  My current method of delivery is finding talented, skilled, experienced people to fill their key positions.  If I need to adapt at some point add or delete from what I do in order to accomplish that mission, it is incumbent on me to do so.

What is the takeaway here?  It is to ask yourself if you are now confusing your delivery system with your organizational (or personal) mission.  It may be time to examine your purpose.
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Ken Murdock is the owner of Murdock & Associates Recruiters and New Wave Résumés. He recruits for the manufacturing sector, oil & gas, construction, and the packaging industry. New Wave Résumés offers professional résumés and interview coaching for executives, mid-level professionals, recent graduates, and anyone seeking to take their skills and talents into a new career.

The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit. - See more at: http://www.southwestonereport.com/2011/#!/thirty-thousand-foot-view/mission-and-vision

The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit. - See more at: http://www.southwestonereport.com/2011/#!/thirty-thousand-foot-view/mission-and-vision

The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit. - See more at: http://www.southwestonereport.com/2011/#!/thirty-thousand-foot-view/mission-and-vision

Retained or Contingency?

So you're in the market for a new accountant, or sales representative, or maybe an engineer, or an operations manager.  You're busy with not only your own job, but you're also doing the job of the person you need to hire, so you certainly don't have time to go through the laborious, time-consuming task of vetting candidates, examining countless resumes, and setting up interviews.  For every 50 resumes you review, you will be very lucky to get one or two that actually represent what you are seeking...and you can't be sure that the ones that look good are actually representative of the person behind the document.

Putting an ad in a trade journal or on a job board is rarely productive, and here's why.  Even when you specify the skills, experience, and education that the applicant must have, there will still be countless individuals who apply anyway when they are not even close to being qualified.  Why?  Because they have nothing to lose, but you certainly do...the time it takes to read and discard an unqualified candidate.

So, you consider using a professional, independent recruiter.  Your time is certainly more valuable when you spend it running your business instead of playing headhunter.  But there are two main types of independent recruiters...contingency and retained.  Which one makes sense for your needs?

I've been in the recruiting industry for 15 years and have practiced both ways.  The reason is that some searches make more sense one way than the other...but which ones are which?  In my years of experience, I have come up with my own theory of which types of searches are best for contingency and which are best for retained searches.

First, let's explain the different types.  Contingency recruiters work on the basis of taking all the risk and expenses in launching the search.  You pay nothing up front for them to get started.  Generally, they are looking for searches that offer a high possibility of a quick resolution and a quick return on the investment of time and money.  If they find the person you hire, you pay them a fee that is generally based on the first year's compensation to the candidate selected, usually around 25% to 30%.  This may sound like a lot of money, but remember...they are being compensated not only for their work, but also for the risk they assume.  There is no guarantee of a payoff of any kind.  You may think it makes sense to get several recruiters working for you in this manner, assuming that each of them is working hard on the search.  The reality, however, is much different.  Knowing that the search is contingency, recruiters assume that others are working on it as well, so it's really rare that this search is a top priority to any of them, and most of them are not working on it at all.  They realize that no matter how much time and money they put into it, someone else may find the right candidate first and make their efforts and expenses incurred completely wasted.  One big complaint that contingency recruiters have is that their clients are slow to return phone calls and/or emails.  Why should they?  They have nothing invested...no "skin in the game, " so to speak.  In the real estate industry, it is common practice that an interested buy has to put up "earnest" money" in order to take the buying process to the next step, and if they are not willing to put up the deposit, they are not really serious clients.  In my experience, the same can be said for recruiting clients.  If they balk at a retainer fee, they are not really committed to the search.  Clients often change their minds or hire someone without notifying the recruits who are working on the search, which makes the experience even more difficult for the recruiter.  Some recruiters will not even consider contingency searches for these reasons. Generally, they are best for positions that do not require a specific "culture fit' and/or personality type, where you need a warm body who can do a task repeatedly without critical interaction with others.   My experiences has been that most of these positions are below $80K in annual compensation.

If you want to hire a key performer for your business, retained search is generally your most effective option, not only in the quality of the candidate you will get, but also in cost.  A retained search means that you are saying to the recruiter that you are committed to paying a fee to find the best person for the job, and that you are agreeing to pay some of that fee to initiate the search.  The size of the initial retainer can vary from recruiter to recruiter, but the whole idea is to ensure that both parties to the search are committed to it.  The client is committed because an initial cash deposit is involved, and the recruiter is committed because he or she wants to collect the balance of the fee by finding the right person. It has been my experience that retained searches most often produce higher quality candidates.  The reason is that contingency recruiters generally try to pick the "low hanging fruit," which means the greatest number of candidates who generally fit the profile and are available to the recruiter without having to spend a lot of time or money to find those candidates.  When you choose from one of these candidates, you may be the best of that group, but you probably are not getting as good a candidate as you would get from a recruiter who is searching at a higher level.

With a retained search, you will generally get faster results and higher quality.  There is a place for both types of searches, the best "bang for the buck" will usually be found with a retained search.

Why Use a Recruiter?

There are several good reasons to use a professional, experienced recruiter to fill your key personnel needs in your organization.  Not every position you need to fill can justify using a recruiter, but the key positions you need to fill are worth your time and effort to find and use a recruiter that you can count on to bring you not only skilled, experienced, and qualified candidates, but also those candidates who will be a good fit in your organization.  Here are some factors for you to consider when you have some key positions to fill:

1.  Finding good candidates is incredibly time-consuming.  Do you have the time that you can take away from running your business and doing you own job to spend hours looking at résumés?  What many hiring managers do not realize is that it takes just as much time to look at a bad résumé as it does to look at a good one.  On average, I will look at 30 - 40 résumés to find one candidate that I want to contact to discuss the job.  Of those I contact, usually one out of five is worth sending to the employer.  As you can see, that's a lot of résumés to review.  

Part of the problem is that if you post the job on job boards or in trade journals, even if you are very clear about the qualifications that a candidate must have to be considered for the job, you will get seven or eight unqualified applicants for every applicant that actually meets your minimum standards.  It takes a lot of time to separate the résumés worth consideration from those that are simply time-wasters.

2.  The longer you go with the position vacant, the more it costs you in inefficiencies and opportunity costs.  When you are doing not only your own job, but also the job of the person you need to hire, it's doubtful that you are doing either of them very well.  The inefficiencies and opportunity costs you incur are real costs, even if they do not have a line item on your financial statements.

Recruiters have every incentive to find great candidates for you as fast as possible, but they also realize that they are judged based on the quality of the people they bring to your attention.  The best recruiters work fast, but they do not sacrifice quality in the process.

3.  Finding great candidates is a skill that takes time to develop.  If you are not doing it full-time, every day, you are not going to be as efficient or as effective at it as someone who does nothing but that all day.  The best recruiters can generally see the red flags that others might overlook.  Because we are in a strong buyer's market today, many candidates are taking extreme liberties, exaggerating, and outright lying about their skills, experience, and education.  The best recruiter know when something does not smell right, and they can spot the pretenders early in the process.

Conclusion: Not every recruiter works in every area.  The best ones will tell you what they do very well and what they do not do at all.  When you have a key position to fill, a recruiter who has your best interests at heart will tell you if he/she is the person you should use, and if they are not, they can guide you to someone who can fill that need for you.

The New Recruiting Environment

With the rapid advances in technology, the shifts in the social fabric and how people communicate, and the downturn in the economy, the recruiting industry has been through some big changes in the past couple of years.

One might think that with so many people looking for work these days, finding good people would be easy. Actually, the exact opposite is true for couple of reasons.

First, the haystack is a lot bigger and everyone is still looking for the needle in it. Every advertised position gets hundreds, if not thousands, of applicants, and it takes as much time to review a bad resume as it does to look at a good one. Many candidates today are either exaggerating their education, experience, or hiding something in their background, so the due diligence in vetting them takes longer.

Another reason for the difficulty in finding good people is that most companies are seeking people who are working, happy, and not looking for jobs. Those people do not advertise their availability, which makes finding them a more challenging exercise. Even those who are not happy where they are and might be willing to listen to an opportunity are reluctant to let it be known they are available for fear of their current employer learning that they are looking.

So how can a company that uses third party recruiters get the best "bang for the buck?"

That will be part of the next post. Check back soon.