Why clients give out orders in competition… and why it’s wrong for everybody!

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There is an elephant in the room when it comes to the basic business model of our industry. People don’t talk about it much, yet it’s a fundamental flaw in the relationship between client and recruiter, and it drives poor service and lack of satisfaction for all parties.

Multi-listing of job orders across multiple agencies, and recruiters accepting briefs on a contingent and in-competition basis.

There are three primary reasons client multi-list job orders and expect recruiters to compete on the same order with a “winner take all” outcome for the agency that fills the role.

Clients live under the erroneous belief that by pitting several agencies against each other, they somehow “keep us honest” and will get better service because we will compete more aggressively.

Clients want to give the job out to several recruiters because this way they will “get a better spread of the candidates available”, and

The third reason is the most damning. Clients do it because most recruiters don’t have the knowledge or the courage to tell them why it is NOT in the clients’ best interest to give a job order to more than one recruiter.

This goes to the heart of being a ‘consultative ‘ recruiter. Unless you want to be a transactional beast of burden, you must be totally articulate in positioning why a client is doing themselves tremendous harm by getting recruiters to compete. By all means let recruiters compete for a client. No problems there. But not on the same job. That’s just dumb business by all parties.

Let’s look at the first two client reasons listed above and examine what is happening when a client gives a brief to say, four recruiters.

The client thinks they get better commitment from each recruiter. In fact quite the reverse is true. We have to be prepared to look a client in the eye and say “Mr. Client when you give an order to four recruiters, you are effectively giving each recruiter 25% of your commitment. What makes you think that any one of those will give you more than 25% of their commitment in return?

In fact what you are doing Mr. Client, is inviting us to approach your crucial hiring decision on the basis of speed – instead on the basis of who can do the best quality job”.

It’s a compelling argument and most clients can see the logic when they think it through. Far from getting more commitment when clients get recruiters to compete, they actually get less commitment and lower quality service. At best they can expect a flurry of activity as the recruiters first refer who immediately comes to mind. But when the hard work needs to be done in terms of sourcing hard to find talent, the recruiters will drop off and focus on clients who DO give them commitment.

Once this is explained to the client, then a skilled recruiter will go on to ask the client for a “window” of opportunity to handle his role exclusively so that you can give the role 100% of your commitment and bring all your resources to bear to ensure the best quality outcome.

Then let’s address the second client reason. “I want to get a better spread of candidates out there.” Again you need to have courage to face the client down on this.

Ask the client what percentage of people he thinks are available to move jobs (who are suitable for his job) who are currently registered with any recruiter at all. Latest research suggests this number is less than 5%. We need to explain the active vs. passive job market. Explain that you need time to winkle this person out of a job where they may be now. (Advertising, networking, headhunting, database search).

Passive candidates do not respond to advertisements.

If the client gives the job to four recruiters, he is just fishing in the same limited, active job-seeker talent pond – and no recruiter will be committed enough to invest time searching beyond that pond.

A great recruiter has the credibility and the confidence to secure the role on a retained basis or at least exclusively so he/she can have the time to put a full range of appropriate strategies in place to find the right person.

Paying a contingent fee for a multi-listed job is like paying a bounty hunter in the days of the Wild West.

And if you pay recruiters like you pay cowboys, you just might get cowboys.

Comment by Randy Levinson on November 2, 2009 at 3:07am: Greg,
You make excellent points here, great post. I would also add that the multi-agency strategy makes the client look bad, or at least indecisive. Once their postings hit the board from their internal efforts, and the multiple agency listings, they're SO out there that the position no longer seems real to anyone and some great candidates may actually back away because of the saturation. Recently I was contacted by no less than 3 agencies all vying for the same major opportunity to prove themselves to a 'really hot , High Tech, Fortune 100 company with household name brand recognition" I didn't have to do much to 'search' out who they were talking about if you get my drift. I was interested the first time I heard, I jumped through the prelim hoops, and then.....nothing. Once I got the other calls I knew they were just testing these agencies, seeing whose wheels would spin faster. Ultimate result - not interested! My point is simple. What you said, and be aware and mindful of your image Mr. Client.

Comment by Charles Van Heerden on November 2, 2009 at 8:39pm: Greg, I strong endorse all your points and as a corporate HR executive, would not use contingency recruitment, as you summed it up well: "and it drives poor service and lack of satisfaction for all parties"!

To me it is a lose - lose for all concerned:

(a) Let's assume the agency is not successful (and all the stats would support that scenario to be the most likely outcome). In the mind of the client the agency has strongly reinforced a negative perception and harmed building a positive future relationship . This is called being your own worst enemy!

(b) In the case of a successful placement, the agency has not secured any further regular work, but merely highlighted they had a lucky win. Often, they may have submitted several candidates, many not fitting the brief, which again works against them.

Comment by Marni Hockenberg on November 5, 2009 at 8:32am: Thanks for speaking the truth! I worked at a contingent firm for five years and when I left to start my own recruiting firm the first thing I did was switch to a retained business model. Hiring managers don't realize that the fees are the same in most instances. They think that retained is more expensive. They also don't realize that the level of customer service and the guaranteed results with retained search will actually save them money in the long run because they're not going to waste time interviewing candidates who are not qualified and the position won't sit open for longer than necessary.

I've talked to a lot of contingent recruiters who wish they could switch to a retained model because then they would get paid for their efforts (what a concept and a subject for another discussion). But they say that companies won't use retained recruiters because of unfounded fear and outdated corporate policy. So where does this leave us - with unhappy contingent recruiters and frustrated hiring managers. Sad.

Here's my proposition to contingent recruiters who would like to get paid for their work and who have a desire to raise the bar for better customer service and solidify a long-term relationship with your clients - start asking for a retainer and explain to your hiring manager why it's in their best interests. We need more recruiters to be brave and ask for what you want in order to change this outdated (in my opinion) contingent model. I know that it's not easy but in the long run you will be happier with guaranteed income (via retainers) and your clients will be happier with guarenteed results. It has to start sometime and why not now?

And don't forget the candidates who are frustrated with having their resumes shot all around town without their permission by contingent recruiters; or who interview on a job where they realize it's not a fit because the recruiter didn't have an indepth understanding of the job/client. Candidates are a vital part of our business equation and more and more of them don't want to work with contingent recruiters.

It's time to address this dysfunctional business model. Thank you Greg!