Searching For the New Recruiting Model

A few weeks ago I woke up in the middle of the night and it was obvious that something was weighing heavily on my mind. Actually, it was this free-to-fee recruiting business model that I read about on a LinkedIn group.

This new model appears very practical, it fulfilled a need, solves a career progression challenges and could possibly stimulate jobs growth and pull the economy out of this downward spiral.

But it was the perception and the lack of clarity on how to sell this particular service that I could not fully wrap my arms around.

A good recruiter uses proven search techniques to find people, information and solutions.

After coming to a dead-end searching the Internet for relevant information, I decided to approach it the old fashion way. I needed a different prospective, and I immediately thought of a fellow racquetball player. This guy is a real American hero. Vietnam veteran, strong family values, successful in business and still a formidable competitor on the racquetball court. Today he brands himself as an Author, Coach, Speaker, and Sales Trainer.

I had not seen him in quite awhile and as a coincidence, I went to the gym and guess who I saw? None other than the king!

To become a top recruiter one must be proficient in the art of sourcing (extracting needed information from anyone without that individual realizing your method or motive)

With my brain in sourcing mode, I quickly formulated the ideal time to engage him into a dialog, the specific subject matter to discuss and the exact phrasing of my question which should shift the conversation toward my subject matter.

Sensing the timing was right, I executed my question to direct his thoughts.

Me: I understand that you have been in sales your entire career so you might know the answer to this question; what method would you use to sell the same product or service for a fee that you have historically provided for free?

It was as if an alarm sounded inside his head. He stopped fumbling around in his gym bag, sat down and looked me square in the eyes!

Him: Are you asking me how to go about charging your candidates a fee to coach and help them find jobs? I know it is hard to find a decent job today and employers are no longer picking up the tab to find employees, is that what you are asking?

A good recruiter need to have the mentality of a professional poker player- even when you are truly taken off-guard (by a candidate, client, or gatekeeper) you maintain your focus, keep your emotions in check and quickly take back control of the situation.

Me: Why yes, that is very perceptive of you, how did you know that I was referring to the recruitment Industry?

Speaking in a slightly agitated voice and a faster tempo, he replied…

Him: A client that I coach, in the same Industry as you asked pretty much the same question! So I knew exactly what you were asking and why you asked. But what I don’t understand is why you guys continue to use the same business model that is no longer effective in today’s environment.

Recruiters has the same thought process that an attorney uses to cross examine a witness, they ask effective questions, remain silent and listen very intensively.

Me: Did I hear you say that you knew why I asked that question?

Him: Yes, because you haven’t even sold yourself on that business model, so you are seeking validation! Look, the business world has turned up-side down and it will not come back to business as usual. You need to understand that the people who were on-top will be on the bottom, people on the bottom will be on top. Things that are expensive will be cheap; things that are cheap will become expensive. Strategies that work yesterday won’t work tomorrow. All these websites like LinkedIn and Facebook that are giving away new things for free, they will start charging you a fee. Look around you, the world has changed and most of you are not sure how to respond to that change.

A good recruiter never argues with a client, candidate, gatekeeper or prospect regarding their opinion or to get his point across.

Me: Your client, did s/he mention the specific recruiting model : corporate, headhunter, retained, contract ,outplacement, temp-to-perm?

Him: Look, you are not the only Industry affected, everyone is affected. GM will be selling cars on eBay, YouTube will replace TV, no one reads newspapers or go to the post office anymore, they don’t even answer telephone anymore for Christ sake. If you were paying attention you would notice that all our jobs are being shipped overseas and they are not coming back. We are a service industry now and if you provide a service you need to define who your true clients are and how to deliver your service in a way that makes sense today. Listen, I came here to play racquetball, I don't have time to give away advice for free.

Good recruiters’ are master Interpreters; they are skilled in articulating thoughts and feelings of others.

It was clearly pointed out from someone outside of the Industry that headhunters are professionals who provide a valuable service in terms of motivating and coaching individuals in advancing their careers and becoming more productive in their chosen fields. They also strengthen organizations from a human capital perspective by supplying needed talent to make their clients more competitive in their Industry. However, their core value is being defined not as a strategic advisor or a partner, but as a vendor-simply a supplier of resumes not deserving of the fees that they are paid.

Recruitment as an Industry made its presence on the radar screen back in the dot com boon. Technology, since then has made it transparent with the perception that there is no longer a hidden job market and talent can be found everywhere by anyone.

The time has come for a leader to step forward and validate headhunters in redefining their roles as consultants; professionals who spend time with their clients to understand their needs and provide a service for a fee.

It shouldn’t matter if your client is the candidate or employer.

Comment by pam claughton on August 29, 2009 at 5:39pm: Ken,
What are you proposing? Are you looking to be a career coach, to help with long-term planning, resumes, etc.? Or are you looking to have candidates pay you for placing them?

Comment by Charles Van Heerden on September 3, 2009 at 5:03am: Interesting Ken, as I believe both the recruiting company and applicants are important stakeholders. Alternative models are: recruiter works for applicant and leverages contacts to earn a fee, paid by either new employer or candidate. For more senior roles, could feasibly be paid by candidate as a success fee.

In my view with technology the value of relationships are going to be increasingly more important - it is all about who you know!

Comment by Chuck Hudgins on September 3, 2009 at 11:08am: It seems to me that one of the effects of all of the free services mentioned in the conversation is that a) there is a lot more information available than there was before, and b) recruiters therefore have to become information managers of sorts. We have to stay on top of who needs what, when, where and why. The "who" of course can be companies AND candidates. We just have to be good at facilitating the flow of informaton from either direction, regardless of who is paying a fee.

Comment by Blake Moser on September 3, 2009 at 12:11pm: Ken, Good points. I think any intuitive recruiter is questioning the model of recruiting, and has for some time. Retained, contingency, temp-to-perm... candidate services, client services... We recruiters have held on to an old model for too long. I believe that your acquaintance is right; the job market is changing, it's all changing. We must change too.

Comment by Quality Certified Candidate on September 3, 2009 at 1:28pm: Hello,

I am reaching out to you personally to share something that everyone is finding quite amazing. As an HR specialist I'm sure you can appreciate the following observation...that the staffing and HR placement process has serious flaws causing serious overhead expenses to the client. What happens all to often is that a candidate is selected for a various role and after a short period of settling in either the client or the candidate is not a good fit. This candidate churn can cost upwards of 50k or more in just 3 months time leaving the client with lost production and another try at loosing more on the next candidate. With that said what if all companies and recruiting agencies could us a new tool that provided a quantified certification standard for a potential candidates previous work reputation? This data is collected and maintained for the candidate and for the client as a resource measurement point.

The future is for a client to request a Quality Certified Candidate(tm) score (Similar to a credit rating but associated to the candidates history of successful engagements, previous role alignment, Registered References(tm), as well as EQ, and IQ alignment. Our trademarked process aligns all these factors and more to generate a numerical score that can be requested with the candidates resume and skills assesment. By understanding that a client can request only candidates whos scores are above a particular quotient they know that the candidate has undergone a very deep dive of their history and has never failed on an engagement in the last 5 years. They know that the references have been collected and screened heavily with the candidates exclusive legal waiver allowing us to get more accurate references for each previous engagement.

This means a huge annual cost savings to each client by reducing candidate churn and alignment issues, improving client ROI for candidate resourcing, and also establishing the true quantitive value of the information provided with a candidate for any placement. No more dressed up resumes or embelished references. The scores cost less than $.019 per candidate hour for the next full year of placement. We maintain the data for the life of the candidate as well as allowing the data to be viewable to potential clients.

This score is the most important tool any company can use contact me for more information if you or someone you know may be interested in using this new industry standard.

Thank you,

Chris

Comment by Todd Kmiec on September 3, 2009 at 6:14pm: Chris, Nice Ad. I don't have the stamp, but maybe someone else can post it. No offense but that sounds like a seriously wasteful and flawed concept.

Ken, interesting thoughts and I'm not trying to be a grumpy guy but I have some counterpoints. First I'll say that if I'm wrong and the industry develops a new model, I don't have a problem with that. I think the picture is appropriate because it reminds me of the auto show where they always have concept cars. Concept cars, of course, are futuristic looks into models that are radically different than current reality and they never come to market. When times get tough (like now) it's natural for us to look for ways to change things, improve the system or model. Most of the time that is just grasping at straws because of the difficult conditions. Reality is that new models normally involve very minor changes over long periods of time, tweaking and tuning the system.

I don't think we need a new recruiting model at all. With the advance of techology and other tools like social networking (at least LinkedIn), the somewhat easy to find candidates are findable by many client willing to put the effort in, without third party help. That's the way it should be and if they can spend the time they should find those candidates without the cost. Many clients don't have the time or internal resources to do that. For them, many of those hires are worth paying for. The more difficult to find candidates are a whole different ballgame and they are worth paying for unless the client doesn't really need to make the hire. The great thing about this unregulated business is the market finds what is worth paying for and what isn't. So market conditions have made our industry smaller, as it should be. Some people spouted about the need to reduce fees because of technological advances etc......I've seen no evidence that there is a need to reduce fees. Clients are very comfortable with industry norms for fees when third party help is needed. On the recruiter's side, if we want to be paid for our efforts not just the results, there is a simple solution. Go retained. If our efforts are worth paying for, then clients will pay the retainer. The industry's current model was built and tested over time and it's really great IMHO.

Comment by Ken Forrester on September 4, 2009 at 10:07am: Todd, thanks for the input and I must say that you made some very good points.

I like your concept-car analogy and I also have not seen any of those exotic cars on the road that they promote in the auto shows.
Well not exactly, not on the outside. But on the inside, they certainly have delivered the “bells & whistles” in technologies that were advertised. Let’s take the GPS for example: Back in 2002 it cost an additional $3800 on a BMW; today you can get one at Wal-Mart for $150. Is it the same quality? Probably not! But I wouldn’t buy one today for $3800, based on my perception of a GPS. And that’s the problem with the current recruitment model. We have all bought into the perception of the “find the best talent faster and cheaper” recruiting model. Does such a model exist? It is very hard to dispute when both employers and TPR are concurrently advertising the same job description using the same job boards and in the same social networking groups. We need to change that preception!

You are correct to say that new models normally involve very minor changes over long periods of time, Quite frankly the changes in the recruiting model started pretty much the same year that you entered the recruiting business. That was also the subject of my very first blog post.

Here is something else to consider: hiring managers and high level executives have observed the internal bureaucracy, ineffectiveness of internal recruiters in delivering quality applicants and the overall management of the interview process within their own organizations; they are concerned about themselves having to go through a similar process should they pursue a potential opportunity. If a qualified applicant is willing to split the placement fee with the potential employer, is that applicant entitled to VIP treatment during the introductory and interview process?

One last thing, you mentioned in your last blog post that “there are models for success. Find those models and put their practices and processes to work for you” .....