Why ‘agency recruitment’ is totally screwed

The recruitment agency business model is grotesquely dysfunctional.

It is broken.

Yes. It. Is.

Certainly for permanent recruitment.

We are just so used to it, have it so imbued in our psyche, that we don’t appreciated how farcical and damaging it is.

For everybody.

Multi-listed, contingent job-orders benefit no-one.

Clients, naively thinking they get a better service because they get agencies to compete, actually get a far worse service because they are actively encouraging recruiters to work on speed, instead of quality.

Recruiters suffer because even if we want to, we can’t really ‘partner’ or ‘consult’, or ‘value-add’, and in the end we only fill one out of five jobs, if we are lucky, destroying profit in many cases, and the careers of recruiters too, who simply burn out, chasing rainbows.

And, the often ignored fact, candidates suffer the most because they do not get service or due care from third party recruiters, who are too busy chasing mythical job orders in competition with five other recruiters, to actually focus on the candidates needs. That’s right. If recruitment worked like accountants, or lawyers, or doctors, or even real estate agents, where the service provider is not working on each case in competition… our recruiters would work on 20% of the orders they currently do, but fill 300% more! And who would benefit the most? Candidates! Yes candidates, who would no longer be treated like cattle, but rather like crucial partners, as they should.

No wonder candidates are increasingly avoiding job-boards, and recruiters, and transferring their job search energy to web-searching, social media, and other tactics.

Yes, that’s a screwed system all right.

But it is getting worse as recruitment evolves.

Have a look at my wizz-bang chart below (Yes, agreed, I am not a PowerPoint expert. But I did this at my desk at home, late at night after my third bottle of Boags, and trust me, it may not look pretty – but what it represents is uglier still.)

Look at the left circle. It represents all the candidates available for recruiters to place in jobs. Look at the little segment on the right of that circle. That shows the tiny proportion of suitable candidates that recruiters actually access. To this day, most recruiters focus on so called ‘active’ candidates, those that come from job boards, or who are already on the database. There is nothing wrong with these candidates per se, except that they represent only a tiny percentage of the available people. What is more, because they are actively job-searching, they will in all likelihood be working with other recruiters already, or possibly well down another recruitment process.

Which means that you are not likely to place them. You understand that don’t you? It’s not only jobs that are ‘in competition’. It’s candidates too. And in a candidate tight market, a good talent that you have exclusively is a walk-in placement. Do you even think like that? Do you know who you have exclusively? Do you ask? Do you seek to find these people?

Look on my chart at the massive pool of candidates most recruiters do not access. There is your opportunity!

Now look at the right circle. This represents the majority of clients’ commitment to actually filling the job. We all know that most clients do not give their agency recruiter full commitment. That is what the shaded segment represents. Tiny commitment. In fact, many use third-party recruiters as an afterthought, or in competition. The vast majority of the commitment clients give to filling roles, goes somewhere else, such as the internal recruitment team, or using LinkedIn, or their own recruitment strategies.

So right there you have an incredibly dysfunctional situation.

The majority of recruiters access only a tiny percentage of the good candidates, and what’s more, secure only a fraction of the clients’ commitment to filling the job.

What other professional would deal with the customers on such a flimsy premise? Who else would invest the time and resources, that we recruiters do, on the tiny off-chance that a fee might be generated? But it gets a lot worse.

Not only do most recruiters run their businesses on the same basis as someone playing a lottery, they do it in competition with five other agencies. This is ridiculous. Some very significant recruitment companies with massive turnover, still can’t make any profit because such a huge percentage of their staff time is spent on fruitless work that results in no return. In fact many such businesses are now going bust. Their cost base is too high for their income generation ability. And this is why! Their business model is screwed.

And it’s a vicious cycle of discontent. Clients get increasingly irritated because they are dealing with low-level recruiters, who don’t do a thorough job. Ironically the fault for this lies with the client, who asks recruiters to compete on the same job, thereby dumbing down the process. Recruiters get disillusioned, desperate, burnt-out, and take shortcuts, which continues the cycle. And of course worst of all, candidates suffer.

But it’s not all doom and gloom. In the chart above lies tremendous opportunity, if you look for it. The prize goes to the recruiter who can develop strategies to access those candidates in the segment of the circle that are not active. The skill of bringing top hidden talent, that clients can’t find themselves, to the hiring table. That is the Nirvana we should all be seeking.

That is where the fun and the money is. And of course those recruiters who can blend technology with the craft of recruitment, and who can secure a greater percentage of the clients commitment, via retainers, exclusivity, or other partnership arrangements, will differentiate right now, and into the future.

So, the winners will be those recruiters who recognise that the way we work now is terminally dysfunctional, and who act to access the parts of my circles that most recruiters do not.

Excellent! Got that off my chest. Time for another Boags…

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If you enjoy ‘The Savage Truth’, connect with Greg Savage on LinkedIn.

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Comment by Alasdair Murray on March 21, 2014 at 11:57am: Thanks for the explanation Paul. Appreciated.

Comment by PAUL FOREL on March 21, 2014 at 12:18pm: I'm with you, Pam.

"Serving their needs" can relate to when contingency recruiters/employment agencies are 'marketing' someone; hoping that by making enough phone calls they will find a paying client willing to hire our person.

In that scenario, the candidate being marketed is calling the shots by virtue of the fact the recruiter's call plan is guided by the spoken desires of that candidate.

The recruiter is endeavoring to find an opportunity that matches that candidate's wish list.

Nonetheless, in my case, no matter the scenario, I insist candidates I am rep'ing allow me to run the call program.

Comment by PAUL FOREL on March 21, 2014 at 12:24pm: Well, Alasdair, it is not really 'my' explanation...I am following proper guidelines on how to manage a relationship between myself and my recruit.

Since I am the 'expert', I need to be the Driver.

I will listen to you (I'd better- many 'deals' are lost because a recruiter did not take seriously a candidate's input) and I will be sure we have a match for you with our client but I really need to be respected in that with my experience it can reasonably be expected I know the road.

Anyway,

Thanks, Alasdair and I hope you are sincere and that was not some dry British humour.

Paul

Comment by PAUL FOREL on March 21, 2014 at 12:34pm: Alasdair....

I sound, I'm sure, arrogant to some. Sorry.

Naturally, it is important not to rub this 'candidate control' conversation in a candidate's face. That is counter-productive.

I simply lay out at the first how I do my work and explain how and when the candidate can comment and/or make requests and suggestions.

So on the surface it appears as though we are partners but it must be understood that although I will not demean the candidate/recruit....it is necessary to the process that I be allowed to call the shots.

I am, after all, the catalyst to what will be happening next and my training and experience suggests it only makes sense for me to be the team captain.

Done right, all this exists without either party having to live in this conversation.

Comment by Drue De Angelis on March 21, 2014 at 1:27pm: Greg, First, you're exactly right on every point. Anyone who argues against you simply doesn't understand. Second, you are a glutton for punishment by posting your blog on a site teaming with the kind of recruiters who love the business that they're in and can't or won't admit that it is tragically flawed.

Thanks for what you are doing to improve the industry!

Kindest regards,

Drue

Comment by Pamela Witzig on March 21, 2014 at 4:53pm: The model he describes is definitely flawed. Back to true headhunting.

More discussion at Noel Cocca's Linkedin post.

https://www.linkedin.com/groupAnswers?viewQuestionAndAnswers=&d...

Comment by PAUL FOREL on March 21, 2014 at 8:22pm: Drue,

These 'flaws' are background conditions that have existed in the Employment Agency and to a degree, the contingency Executive Search since I started in Executive Search.

Since I see no 'flaws' in my practice and in fact have candidates near-literally wrapped around my fingers I leave flaws to those who like to write about them.

In the meantime, I will be lighting up another Partagas while I overlook your snide remark.

Work your desk, Drue and I'll work mine.

Now, back to Executive Search.

Comment by PAUL FOREL on March 24, 2014 at 11:51am: Drue De Angelis...

Since I have arrived here at Recruiting Blogs I have seen a few blogs about how the 'recruitment system' is broken or as you said, "flawed".

I addressed just this on the first page of comments here and I noticed that even though I made some specific suggestions for Change, Mr. Savage chose not to respond.

I assumed this is because he is not prepared to address certain issues with what he probably considers to be his peer group here.

Then I notice your post above where you assert vigorously the system is "...tragically flawed...' but make no suggestions for change nor do you offer to initiate any systems that could improve the system.

Instead you made snide remarks about my participation in this blog....even though I directly addressed the issue of using RecrutingBlogs as a platform for education and improvement in operations on the first page of comments here.

What is it about your posting smart remarks but not wanting to get your hands dirty by actually turning the spotlight on the membership and taking my suggestion that members be put through a 'higher barrier to entry' to RecruitingBlogs?

People here, I notice, like to blog about issues that 'concern them' but not one person here so far has suggested that RecruitingBlogs become a premier body of recruiters by elevating membership requirements as a step in the right direction.

Take another look at my points on the first page of comments here where I point out, for example, a blog that reeked of ignorance but was allowed to be posted with no sense of Quality Control by RecruitingBlogs.

As long as you and the others here continue to post 'about' issues without taking ownership, nothing will change.

I think it is particularly haughty of you to make remarks about those of us who posted here while at the same time not volunteering to take an active part in fixing that which you emphatically characterize as "tragically flawed".

Merely 'talking about' issues as if that will make a difference is not self policing and does not effect change.

Just what are you guys waiting for?

I've made some suggestions. Just when are you going to step up and show some integrity by taking a leadership role in creating change?

Just saying the emperor is wearing no clothes does not change anything.

But it does give you guys plenty to blog about.

Maybe you just don't want your rice bowls broken?

Comment by PAUL FOREL on March 24, 2014 at 12:19pm: California used to require anyone entering the Employment Agency business apply for a license and take a written exam.

The license was easy to get and the exam did not require much more than a minimum of effort to know the laws pertinent to the Employment Agency business.

Unfortunately, the state dropped the entire requirement for licensing which made it even easier for newbies to start their business and anyone doing so knew in advance there was 'no one' looking over their shoulder to be sure they were operating in a professional and lawful manner.

So, it would appear the business does not self-police but that is not entirely true:

There are professional organizations that are representative of the Employment Agency business:

California Staffing Professionals

https://netforum.avectra.com/eweb/StartPage.aspx?Logoff=Yes&Sit...

The National Association of Personnel Services (NAPC)

http://www.recruitinglife.com/aboutnaps/

So, Drue, why is that RecruitingBlogs does not affiliate with one or more national associations whose charter it is to instill professionalism in its ranks?

Why is it that if you are so ill at ease with the state of conditions that you are not leading a movement to link RecruitingBlogs with formal guidelines for excellence?

Stopping by and looking down you nose at me will not effect change.

Nor will it by merely acknowledging another blog that describes industry breakdowns but does not leverage membership to effect change.

Talk, Talk, Talk.

Comment by Greg Savage on March 24, 2014 at 11:59pm: @PaulI believe I answered your original comment in point form, addressing every issue. Why do you say I did not respond.? You did post a follow up which, speaking frankly made little sense to me, and I was not sure it was even aimed at me as it seems a fairly arbitrary diatribe, deviating at one point to criticise Recruiting Blogs for lack of quality control, and at another making reference to "Sara with the hat". We are all busy I am sure but seriously, you expect me to try and decipher all that garbled stuff? . As a classic example, you claim that my comment, "Change will come from within" will not happen, but then you go on to say, several times "Physician, heal thyself". This is directly contradictory. You are saying what I am saying, but you are also saying I am wrong, which is essentially saying YOU are wrong. You got all that? No, me neither. Let it rest now Paul. This is tedious