Another Tired Entry In The Search Firms Suck Category

There's a new blogger on the scene, a rabble rouser from D.C. whose marketing plan seems to be tearing down recruiters as the scum of the earth. How very unique and original!

The Staffing Advisor, who is a search firm owner in D.C. has a new business model - well, he has a business model where he pays a salary instead of commission and charges only 8% a search, including a policy where a company can hire as many people as they want from submittals and still only pay the original fee.

His blog would be classified as hate speech in much of Canada and Europe, if recruiters were a protected class, but we have to cut him some slack, as he actually has a background in recruiting, and isn't just someone off the street with a new model.

He also writes well, and covers topics that are fair to address. But, he is an ass, or to be more correct, his writing is asstastic, which makes it more of a pleasure read than a chance to connect with someone and share best practices.

Bob Corlett is his name, and he's a member of Recruiting Blogs. Bob, why do you hate us so?

Setting aside your bombastic rhetoric, which is only fair, because I've been known to engage in hyperbole myself, what exactly would drive you to insult your fellow recruiters? If your firm really is the wave of the future, and not another gimmicky business model that rewards the owner at the price of the employees, then results should speak for themselves. It's a well known maxim that if you have to tear down your competitors, you probably are hiding your own weaknesses. All that is missing in your blog is a video of you pounding your shoe on your desk. Hmmm - I think I'll make such a video.

Find more videos like this on RecruitingBlogs.com

Companies may complain about recruiters, but they continue to use us. Making the claim that we all suck is very broad - so perhaps you'd like to name names? As you won't - the complaints, however close they may be to your real feelings, are indeed a gimmick.

So let's go down the route one more time of why lowering fees isn't a long-term successful business model for the rest of the industry.

70-150K salaries is what Bob specializes in so we'll say an even 100K is the average salary of a candidate he places. So we're looking at an $8000 fee per search, not per candidate. If this were a commission structure, four hands would go into the pie. Owner, cost, recruiter, salesperson. Counting it up equally, we're looking at between 25-50% per placement (if the recruiter does double desk). So $2-4K a placement, which is about a quarter to a half what you would make at a national staffing firm per 100K placement, would take you 25-50 hires a year to make 100,000 for yourself, versus 12 for the public staffing firm. That's quite a lot of volume to make up. And considering that if you made 25 placements for the PSF, you'd make $200,000, twice as much, with only half the hires.

Hmmm. Now Bob isn't commission based - it's a salary, and we don't know what those salaries are - but unless he uses bonuses or a rising salary per hire, you'd frozen at a level of effort. I know there are people out there that like to work hard for the sake of it, but why would you work for half or a quarter of the money? Why put out more effort for less? You wouldn't - which is why the model is effective in the sense that it encourages performers who can't make good money elsewhere to settle into an easier, less confrontational recruiting style.

Bob has fallen for the third classic blunder (the first being land war in Asia, and the second being never go against a Sicilian with death on the line) - which is to look at the recruiting industry and assume it exists from greed, rather than necessity. Bob doesn't trust markets, and thus doesn't understand that lowering prices increases the work on your staff. His profits may be rising, but ultimately he's counting on his employees to not want more out of life.

So with that in mind, let the games begin. Is Bob the wave of the future, or just another guy beating up on recruiters to make a buck?

originally posted at StlRecruiting.com

Comment by Jim Durbin on January 21, 2009 at 11:00pm: Bob has responded with keen intelligence and a robust defense of his blog at the StlRecruiting site - accessible through that link above.

Comment by 01. Lonnie McRorey on January 22, 2009 at 8:36am: Excellent post Jim. Met quite of few of these types. I could understand if it was high-volume lower level roles but the example given it would be very difficult to motivate team in the long run. This could work if one was hiring junior people... (Lowered skills-less experience - lowered quality)

Comment by Joshua Letourneau on January 22, 2009 at 9:01am: Jim, thanks for turning me onto this and Kudos for a job well done through integrating video. I'm impressed.

Ok, onto my thoughts here, I looked at the first 4 posts or so on the blog above, and the owner appears to be simply positioning. This is Marketing 101 stuff. For example, in his "Cold Call Recruiting = Spam" post, he opines with the following posturing: "When you pay fees to old-school, traditional search firms, you are paying them to cold call."

Outside of the positioning statements, I have a major concern with their business model, however I admit saying for quite a while that the stale, contingency model is being reinvented beyond retained search. My major concern is how you would be able to recruit superstar recruiters (squash that, I mean superstar headhunters, as there IS a difference) on a 'cruise-control' base salary. I can name you many recruiters who would give up commission and go for a guaranteed base (such as going the Internal Recruitment route) . . . but they're typically not true & consistent producers as External Recruiters. No offense to anyone with that statement, and if the shoe doesn't fit, please don't wear it.

Anyway, we have several 'Cheap Charlie' firms in the Atlanta area - some charge 15% on contingency, some charge 5% - 7% per search with half the fee up-front. I remember discussing this with Jerry Albright on chat here when I mentioned that I have a friend at a 5% - 7% firm that was locking down $250k search contracts (3 - 12 month deals) to fill a multitude of like-positions (i.e. manning a call center or a new sales team, etc.) I was trying to explain how there are economies of scale and efficiencies gained if you have a recruiting team behind you working on like-positions. Yes, you give up on the margin-per-search, but you gain in overall revenue to your firm. One firm, in particular, hires entry-level college grads to bang out 120 calls per day to potential candidates . . . but this wouldn't be the firm you mention above because 'cold calling' is seen as unsolicited spam.

What I see some firms doing is taking on a slate of like-positions with a portion of the guaranteed contract up front. In all sincerity, I can see the merits of such a value proposition to Clients (one central point of contact, a consistent process, a deeper partnership, etc.) As I am an Executive Recruiter, I prefer to work at a % or fixed fee on the higher-level, tough-to-fill positions . . . but then again, I don't have a huge team behind me to leverage for large-scale contracts such as what I've mentioned here.

So, I do agree that disparaging other Recruiting Firms is not the 'right' way to go about positioning . . . however I've also taken notice that, in our industry, many Internal Organizations already think (or believe) what the blog author here is stating. Basically, he's feeding the wolves what they want to eat . . . instead of trying to raise the profession. In the end, I continue to be amazed by our industry because of its paradoxical blend of infighting and gang-like activity, while also being one of the only industries in which helpful information is shared so openly and freely.

Comment by Ben Gotkin on January 22, 2009 at 9:36am: Jim - I'm a bit shocked by this post. I have known Bob Corlett personally for several years now, and I can state with full confidence that Bob does not hate recruiters. In fact, I'm trying to find anything on his blog (which I have read since it's launch) that would constitute hateful speech about recruiters. Does simply offering a different business model imply hate? Hate is a very strong, harsh word, and unless you know Bob, and what he has done in support of the DC Area recruiting community, you should consider retracting your harsh rhetoric.

Bob is a kind, generous and caring person. For the past several years, on his own time and dime, Bob has hosted Project SAME, a networking group for Maryland-based recruiters with monthly meetings and a newsletter. Bob has gone to great lengths to facilitate collaboration and knowledge sharing in the local HR and recruiting community, and if nothing has made a great impact in raising the recruiting profession, not tearing down as you and others her infer.

If anything, maybe you have taken Bob's blog out of context. Bob's company is not just set up to do search, but to help mostly small organizations improve their internal recruiting capabilities related to job postings, interviewing, social media, etc. Bob does not hate third-party recruiters, in fact he has many friends who are third-party recruiters. I know because I see them at his monthly Project SAME meetings. Although I personally believe that third-party recruiters are necessary in certain circumstances, I do agree strongly with his statement that "cold call recruiting is phenomenally inefficient and very hard to do every day."

Jim, just because you disagree with Bob, that does not justify your angry response. I think it would benefit you to get to know Bob better, and once you do, I believe you will find that you owe him an apology.

Comment by Jim Durbin on January 22, 2009 at 4:05pm: Ben, I appreciate your defense of Bob, and can assure you that we continued our conversation at my blog.

I reviewed his blog on the context of what he wrote, not based on him as a person - and I actually agree with a lot of what he said about staffing models - I simply felt his attacks on recruiters were unjustified.

As for hate speech - calling someone a spammer in this space is a bit like insulting an Italian's mother - you're asking for it. My comment was much more of a dig at European thought crimes, which is why I said recruiters would have to be a protected class. I also pointed out that Bob wasn't a johnny-come-lately, but a search firm pro who wrote intelligently and covered topics we should be thinking about.

Bob understood where I was coming from, and we had a spirited debate. If my blogpost comes across as to harsh, that's my failure as a writer. I guess you could say that I was guilty of the same thing that Bob was - attacking a business model without regard to the individual worth of the people involved.

I do appreciate your comments, and promise not to make a Chris Crocker video of you defending him. :0

Comment by Steve Levy on January 22, 2009 at 4:42pm: All- Weren't we saying this (and continue to do so) when BountyJobs came on the scene?

Comment by Bob Corlett on January 22, 2009 at 10:31pm: Hey Josh,

I thnk we "elevate the profession" when we find better ways to meet our clients' needs. After 20 years working in various business models in the recruiting biz, I made a decision. I'd rather give my clients what they want than defend (apologize for) an obsolete business model that does not.

Careful about those potential customers your demean as "wolves" they might have something to teach you about how you could serve them better. Of course you might have to give up some of your assumptions and revise some of your business practices to do that... And as he noted, Jim and I had a very civil discussion on his site about that.

Gents a final question for you. Is this forum supposed to challenge our thinking and help us learn from each other, engage in a productive dialogue, or is it a place to heckle and shout down people with new business models and new approaches? 'Cause nobody has asked me a question yet here. You all assumed you knew. I didn't set out to insult you, heck my blog post didnt even appear here, it was on my site.

Yeah, my blog post was edgy and I knew it would stir things up a bit, but remember I was challenging a business model and a tactic (cold calling) not you guys personally. . .I wish you every success.