By Neil Patrick
Over the last few days I have been spending a lot of time talking to recruiters about their businesses.
And I discovered things about them which are not typically well understood by job seekers.
Since they hold the keys to many job opportunities, I think it’s worth knowing a little about the different types of recruitment firms and how they function. If we feel they have not served our interests well, it’s not because they are wicked or unprofessional people (even if you have had some unhappy experiences), it’s because they are distinctly different types of businesses.
And of course because we are not their clients, we are their voluntary raw material.
Their business model determines how they behave with candidates
Different businesses function in different ways. So if you know what type of recruiter you are dealing with, you’ll be much better placed to understand what to expect and whether you should invest a lot or a little of your time in dealing with them.
How do you know what type of recruiter you are dealing with? If you ask them and they tell you, ‘I’m a head-hunter’, or ‘I’m a contingency recruiter’, what’s the difference?
And most importantly, what is the likelihood of each one actually landing you a job?
Here’s my five minute briefing which I hope will answer these key questions.
Placement agencies that charge you a fee
These agencies collect a fee from you, in exchange for arranging the entire placement process with potential employers. They typically handle lower-level jobs.
Many people have been burned by these types of agencies sometimes losing thousands of pounds. These types of companies prey on desperate job-seekers who have little or no other information at their disposal.
Any recruiter that asks you for any fee means that you should treat them with the utmost caution. Better still run a mile in the opposite direction!
Contingency based agencies
Contingency based agencies are also known as employment agencies and commonly recruit for administrative level jobs.
They seek suitable candidates by matching your qualifications and skills with their client’s requirements. If the criteria match, an interview is conducted followed by a background check and the taking up of references.
Some employment agencies charge a flat fee to the client company, while others take a percentage of the candidate’s first year’s salary. In most cases, the candidate serves a probationary period and the agency is only paid once you’ve successfully served your probationary period.
Now the bad news. Contingency based agencies are usually competing with others to place their candidate. And thus it often ends up as a numbers game. Their view is that putting as many candidates forward as they can gives them best chance of success.
Contingency agencies are also dealing with the lower end of the salary scale. So their fees are also much smaller than firms dealing with executive and managerial roles. For a candidate, this means you cannot expect much if any support from the agency and that you will likely be one of many candidates they find and put forward.
So what are the numbers? A contingency recruiter will typically take a fee of 15-20% of the first year’s salary.
If a contingency recruiter contacts you, what are the odds of you getting hired? 1 in 10 was the figure quoted to me. Sometimes it can be as low as 1 in 25. And if multiple agencies are involved, the figure may be even lower.
Retained search agencies
Retained agencies usually handle senior positions. These agencies are also known as executive search firms. The fee that a client company pays to a retained search agency is non-refundable and a part of it is typically paid in advance for carrying out the extensive searching needed. The remaining amount is paid once the client company hires an employee.
A retained search firm is a different proposition for the candidate. Typically, only 3-5 candidates will be put forward for interview with their client. And the agency will want to try and ensure that every single one is a good fit for their client. They also typically have a solus contract, so no other firms are involved. If you are approached by a retained agency, you should take it much more seriously than a contingency recruiter.
A retained search agency may well receive as much as 30% of the candidate’s annual salary as a fee. So for a £100,000 a year post, that’s £30,000. If you are dealing with a retained search agency, it’s not unreasonable for you to expect and receive some good support and help from them, assuming they consider you to be a good fit for the role.
If you are put forward for interview by a retained agency, then your odds are around 1 in 4 of getting hired.
Outsourcing
In the UK, James Caan (known for his Dragons' Den role on BBC television) was the first to develop Recruitment Process Outsourcing (RPO) in the 1990s and still offers global RPO solutions with his business partners Jon Bennett and Rachel McKenzie through his company, HB Retinue.
The popularity of RPO continues to grow as HR teams seek to spend more of their time on strategic activities rather than the fluctuating needs of their employer to find and hire new staff.
Outsourced recruitment specialists also suit small organizations without the facilities to recruit. Typically, a formal contract for services is negotiated with a specialist recruitment consultancy. Recruitment process outsourcing may involve strategic consulting for talent acquisition, sourcing for select departments or skills, or total outsourcing of the recruiting function.
The solo headhunter
These are similar to retained search agencies, but work on their own. From a candidate’s point of view, they have a great deal to offer. Although they do not have the resources of a larger firm, they work on a small number of assignments at one time.
They may arrange a meeting or a formal interview between their client and the candidate and will usually prepare the candidate for the interview and help negotiate the final deal.
A good solo headhunter will expect to place around one in three of their candidates.
Strategic talent acquisition
This may sound like a load of jargon, but it’s a distinct category of specialised recruitment. The way this works is that these people aim to secure a team with specific skills from a competitor. They thus set out to acquire a complete team that enhances the value of the business, whilst reducing that of their rival(s).
Such people are often an integral part of a firm’s management team and are found in specialist areas such as financial trading, sales and technology. If you're currently unemployed, it’s unlikely you’d be targeted, but if you work in a high performing business in these sectors it’s a distinct possibility.
The success rates are also correspondingly high…congratulations, you’re in demand, so you are in the driving seat!
Temp agencies
Sometimes temp agencies are also called staffing agencies. They hire candidates to fill temporary positions. This may be due to seasonal increases or an employee leaving the organization on a temporary basis e.g. for maternity leave. Usually, the client pays an hourly rate for the candidate it hires. The temp agency will pay the candidate’s wages, benefits etc. and add this fee to the bill they send the client each week or month.
Only a minority of candidates will be interested in short-term contracts. So if you are willing to take up such a post, you’ll likely have fewer competitors than for a permanent position. And there’s a hidden bonus too… many part time hires end up becoming full time employees, either in the same post or another which opens up whilst they are on contract.
Niche recruiting agencies
Specialized niche recruiters seek staff with a narrow specialty. Because of their focus, these firms can very often produce superior results due to their ability to channel all of their resources into networking for a very specific skill set. This specialization allows them to offer more jobs for their specific demographic, which in turn attracts more specialized candidates from that specific demographic. These firms invest resources and time in building large candidate databases.
Therefore, if you have a specialised skill, then building a relationship with a niche recruiter is an excellent long-term career investment. These niche firms tend to be much more inclined to develop ongoing relationships with their candidates as it is very common for the same candidates to be placed by the same firm many times throughout their careers.
So there you have it. A five minute explanation of the world of recruiters for job seekers. They are not all the same and for good reason – they all work to different business models, ranging from the exploitative through the high volume number crunchers to the super-specialised and professional.
I hope that this post helps you know the right questions to ask next time the phone rings and the voice on the other end, says , ‘Hello, I’m a recruiter...’
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