As the markets in Asia Pacific continue to grow at rates from 6 – 23.5% (in the case of SG’s 1st Quarter 2011!) the ‘war for talent’ continues at a pace (this might happen to not be timely due to the recent makets activites but hey ho!). There are consequences for recruitment as a result of this growth which I will be discussing over the next few weeks – attraction, retention, services etc. however, one particular area of contention that needs addressing and understanding is what recruitment actually is (and not)…in any market. Recruitment is a SERVICE. Now this might seem an obvious statement but it actually needs realising and understanding in context.
One of the biggest disconnects in the recruitment industry and one of the reasons it often suffers in terms of reputation and is misunderstood re value is the fact that it is sold as a service but fundamentally, invoiced and guaranteed as a product. I have no idea where this legacy comes from (it was thoroughly entrenched when I came into the industry) but what I do know is that it makes it near on impossible to make clients understand what it is we do I.e. provide a service.
Now I understand the reason for both the a) fee model and the b) guarantee clause;
a) Paying a % of someone’s fixed salary or as a margin on a contract is an easy way to tie the amount to the value of your network and relationship. It should also be exactly relative to the value to the client of the person being hired.
b) The guarantee stops the less than ethical people of this world ramming home the wrong candidates and then buggering off with a fee and no care in the world. It also mitigates the client’s financial investment risk to some degree by making sure a replacement is found asap if the first candidate doesn’t work out.
However as they stand in recruitment, they are both in direct conflict with a service model and therefore fundamentally flawed. When you hire a lawyer for their services you pay them by the hour (well, 8 minute cycles in most cases actually) and they provide a good service if not a result. You wouldn’t ask 6 lawyers to provide their service, decide which service had the most attractive looking proposition and only pay that one and then after 3 months of working with them, ask for your money back (or to do it again free) when they don’t get you the result you were hoping for. And here its time for a disclaimer – I am not talking about low-level service lawyers or recruiters – I am talking about the competent professional levels of both groups – i.e. a like for like.
So there is a disconnect between what is provided and what is charged and misunderstanding of this from the Client side (and sometimes the recruiters!) and wherever there is confusion there is conflict and reputations suffer. This obviously needs to be dealt with and quickly (its been going on too long)
I am not proposing we get rid of a guarantee. However, I do think we need to look at how we charge and that the bulk of recruiters look at what is guaranteed and why.
Consultants and agencies as a whole need to understand this themselves and where their clients are coming from. They then need to be able to sell and justify their service i.e. understand their value proposition – both theirs and their companies. They need to provide training to their sales staff so that they can clearly articulate all this and educate clients.
Clients need to try to understand their service providers so there are no misaligned intentions. They also need to stop focusing on price and consider TRUE cost. They need to stop putting all the onus on recruiters if their Talent don’t stay and start focussing on employment branding, engagement and retention. Judge us on our service, not how you manage your Talent once on board!
Long term there needs to be an overhaul of the model. I have focussed on increasing our project and retained work which has gone from 0% to 64% as a result. This is a good stop-gap. It takes time, training and education to consultants and clients but is much more efficient for all concerned – recruiters, clients and candidates. There are other new and revolutionary solutions you will see coming from me soon. Its time to change!
Like the article - agree with all the points except would have to come up with another idea for terms of payment. I tied my guarantee into payment on my desk with x number of days - or else a default on the guarantee. I guess 99% of the time it works. I implemented it after getting fed up with managers leaving invoices around in their inboxes for weeks before approving..
Robert thanks for sharing this article. I find this article a very good reminder of what service providers should be able to do in general for clients.
I currently work for identified.com as a social media intern and I am also actively looking for a permanent position. Being an intern for identified employers solutions gives me the opportunity to learn more about the recruitment space and use that info for my job search.
I feel very strongly about ""Stop focusing on price and consider the TRUE cost of each service" because of my unique background.
I came across Branchout personally on Facebook when I was searching for a job. It was one of those days I tried to send out as many resume out as possible job searching days. I didn't really want to put way too much effort in creating a profile for each application and ATS. I came across a job posting powered by Branchout. I was like ok great another quick apply to meet my daily goal. It turned out I had to go through the whole profile creating process and be a member of Brachout before I got to apply to the position. As a job seeker, I found the whole process too time consuming plus I didn't want feel comfortable revealing my profile information to prospective employers on the Facebook. I ended up not applying to that job on Facebook and searching for the same position on the company's career page another time.
From an intern of a service provider stand point, I do not understand why Branchout would want to make job candidates to jump through many hoops before getting to the job application part. Quoting Chris Brablc 's 3 Ways to improve your Candidate Experience blog post, one way to improve candidates' experience is to shorten the application process. Having job seekers signing up for a Branchout profile is a brilliant move for Branchout to acquire more users. Basically what it does is to leverage its clients postings for user acquisition. "Gain for Branchout , lost for its clients." At the end of the day, it is about promoting Branchout first and then its clients job postings because as a job seeker I will never get to those job postings powered by Branchout without having a Branchout profile. This is another example for us to think about " the listed price and the TRUE cost".
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Thanks @ FREYJA P. I do this too but it still doesnt stop the "conflict" even if they do pay, which they still dont a lot of the time, especially when the candidate doesn't "work out". The fundamental is to change the way we tie our payment to our service.
Thanks @Dorothy Wong Although this was focussed on the client/agency service/financial relationship, I couldn't agree more with your points from a candidate perspective. I wrote a blog last week which talks a lot about this. You might want to have a read and let me know your thoughts there too. http://www.recruitingblogs.com/profiles/blogs/agency-recruiters-are...
Have a great day ahead!
Interesting article but not sure I agree. In my opinion it all comes down to value and ROI. If companies can see value with the service you provide and an ROI, then the cost is justifiable. It is the same as any outsourcing arrangement. If this wasn't the case then the recruitment industry would never have seen the massive growth over the last 20 years. Sure it needs to continue to evolve and there is room for new models but to suggest the traditional model is flawed is wrong.
Recruitment is a service but it ultimately ends up with the client taking a product so the fee needs to reflect both those things. I think most clients are happy to know upfront what the cost will be - I am not sure they would be keen to pay by the hour with no guarantee of the product being delivered. I have discussed this topic with the owner of a company called RecruitLoop who have a very different offering to the market place. Not wishing to direct attention away form the conversation on RBC but the points there are quite valid for this discussion http://lukecollard.blogspot.com/2011/11/blame-game.htm
Thanks for your comments @Luke Collard. I'm not sure we are disagreeing. I am not saying the cost is not justifiable and in fact in most cases I think our industry drops its pants on its fees to win business far too much which then effects quality and therefore delivery and reputation etc etc. I am merely saying there is a disconnect with how we service and bill. Pointing to the "growth" is not a reason to say thats its not flawed. Plenty of things grow organically because of need but not in the ideal way. As you say, it needs to evolve and we are at that stage. Payment on success is fine, gaurantees are fine but its how its mixed, sold, understood that is fundamentally flawed.
One thing we do disagree on though is "client taking a product". At no point do I ever consider my candidates as products. I deliver a service and that is what my clients buy. They then choose candidates to join their company from the service I provide. I am a consultant, an advisory and I can help improve all aspects of the process but I do not provide products
That link didnt seem to work so sorry I could comment on it.
@RobertFanshaw - " I am a consultant, an advisory and I can help improve all aspects of the process but I do not provide products "
Would you get paid a fee if you didn't place the person? It may not sound nice to call candidates products but at the end of the day that is what we are ultimately getting paid for -advising, consulting is all part of the service but means little without delivering the end goal. Good debate - enjoying the conversation
Try the link now
Thanks @Georgia. I certainly think the industry needs to get much much better at educating clients so there is a level of understanding of what the best way forward is in each individual case. We are solutions salespeople not product sales so we need to listen to our clients needs and provide services and solutions that meet those needs, whatever they are. In some cases it might well be using multiple agencies on a re-active contingent basis but in my humble opinion this is going to get less and less attractive for all concerned. It is REALLY inefficient for all parties, including the candidates. How we change across the industry, well we probably never will totally, but discussion and innovation and not status quo is certainly the right path to slowly evolve into better versions of ourselves.
Haha @Luke Collard loved the Dear John letter and that is exactly one of my main points. You delivered a great service AND result but they fell out and the client is unhappy with you...why?...because of the disconnects between education, cost, service and guarantee etc etc. Will you get your time back? No
Maybe Im being pedantic (and apologies if I am!) but I still disagree with the product point. "Would you get a fee.." Well know, but thats the point...you should get a fee for your service. My personal opinion for what its worth is the models will evolve towards "shared risk" for lower fees.