12 years of leading in the recruiting business has demonstrated to me three things very clearly; one, no matter how good a recruiter you are, clients are rarely if ever satisfied (why is this?), two, the contingency recruitment business model actually promotes bad behaviour (no wonder clients are rarely happy), three, corporate clients have been looking for a better solution than contingency recruiters since the day I started in this business July of 2006 (I feel terrible for the great recruiters, who keep getting pushed out by the very clients they serve).
Who Cares? Why Does It Matter & What can we do about it?
It all starts with what we use as the gold standard for professional profiling being totally inadequate. A resume is a self proclaimed, often embellished, sometimes outright fabricated two page document crafted exclusively to impress a potential employer. It became common place in 1950 and unbelievably, even though industries have revolutionized themselves 100 times over, resumes are exactly the same as they were 70 years ago; two pages of skills and experience. Sometimes, if a professional is working with a good recruiter, the recruiter will coach them to add quantifiable accomplishments, but more often than not, resumes become a sea of useless words in a email@example.com inbox that go nowhere. And as far as I’m concerned, that’s exactly where they should stay.
Contingency recruiters are an incredible breed of people; their skin often thicker than a rhinoceros. If anyone is to blame in the myriad of friction points and bottlenecks in a recruitment based search, it will be the recruiter who takes the hit for everyone else in the process. That means for the managers who delay the process or are not reachable, HR professionals who can’t seem to effectively coordinate interview times, or executives who have put the new hire as a lesser priority. Recruiters have it all on their shoulders.
For those of you who are not familiar with the term “contingency”, it means that this sorry lot of professionals only get paid if they place the winning candidate in a job. It’s literally an all or nothing business model. Having had more than 50 recruiters work for me over the last 7 years, I would estimate that most good contingency recruiters work on 150 job orders per year, they will screen roughly 10 candidates for those roles and reach out to close to double that. Here’s a staggering statistic for you. Out of those 3000 candidate discussions, how many candidates do you think a good contingency recruiter places per year?... wait for it….. 30!. That means that this group of professionals essentially has a 1% success rate in their job. Are you starting to feel some empathy for your friendly neighbourhood recruiter? You should. They are superheros as far as I’m concerned. Who can last in a job where you fail 99% of the time? Couple that beat down with your own clients competing with you and often 1 or 2 other agencies on the search who don’t necessarily “play fair” (I will explain in a second) and you’ve got a business that as far as I’m concerned needs a total reboot.
Let’s talk about “playing fair” and how the motivators for success in the contingency recruitment industry actually contravene ethical behaviour and reduce a positive come for the employer. Okay, so we remember that contingency is an all or nothing model, but what many may not know is just how BIG “all” is. Agencies who put the shingles over recruiters typically bill 20% of a base salary to their corporate clients. When we do the math on a $100,000 base salary, that recruiter is competing for a $10,000 commission on one single placement after she or he has paid the house. Agencies typically take 50% of what a recruiter makes on their commissions. Isn’t this a little much? I remember when I started in the business. I got a phone, a desk, a computer and a list of do not touch house accounts. That was about it… “now go and make some money”. That sh*t wouldn’t fly these days, but you get the point. Essentially recruiters pay the agency for a brand to sit under, hopefully a good backend support team and some marketing… but 50%?
Here’s where it gets ugly and why recruiters have such a bad wrap. Let me ask you two things; one, if you are competing against 2 other recruiters and the ONLY final variable for you getting paid is that you get the winning resume into the hands of the client first, are you going to be motivated to take your time to screen the resumes and interview the candidates thoroughly? The answer is no. I’ve seen it a thousand times. Some of my best recruiters will get a job order on Monday, will set up interviews with great candidates on Wednesday and Thursday, will submit 3 or 4 of these in person or video interviewed candidates on Friday and guess what? Another recruiter had sent in the resume on Monday? How is that even possible? Well, we’re not playing for chicken feed here, this is $10,000 and if a recruiter sees a resume that he thinks is a good match then maybe he will hurl it over the fence to get his pole position, site unseen. Outlandish? Not at all, because the stakes are so high and the pressure of time and competition so great, the business actually motivates these dishonest behaviors. Now, when my good guy recruiters go back and ask the candidates that they interviewed if she or he knew about the job, the candidates answers “nope, never even knew about it until you told me about it”. The candidate was never even contacted by the competing recruiter. Sometimes the recruiter culprit will leave a message, but is that what the client is paying $20,000 for? Ouch.
Let me throw this out there. Wouldn’t it be nice if there was an option, where we could cut a lot of this waste and dishonesty out of the recruitment business entirely? Hmmm. Maybe we could even save enough money in the process to not only reduce the spend of corporate clients by 80%, but the savings were so immense, that we could leverage some of the additional savings and pay it forward to the professional themselves. Maybe we can motivate better behavior, more trustful interactions and better outcome?
There is a second bad behavior that the contingency business promotes that we need to illuminate. Because we often have recruiters working on a search for 2 or 3 months, literally weeks of solid work and billable hours, what happens to a recruiters’ thinking when the client is unsure that the candidate is exactly what the company needs, but comes to this conclusion at the final stage of the interviewing process, like 10 weeks in? Do you think the recruiter is motivated to look out for the best interest of the client and say, you’re right… let me negate the last 2.5 months of work I put into this project and start the search again from scratch for your for free? Or… will the recruiter be wrongly motivated to push the candidate through the process to get their all or nothing payout? It’s wrong, but it’s what happens all the time and that’s why placements often don’t work out, why recruiters have a relatively bad rap overall and now must have 6 month guarantees on their searches to try and lock in some integrity into the business model. You can’t blame the recruiters, it’s the business that perpetuates the behavior. As they say … “don’t hate the playa, hate the game” And I mean it, the business of contingency recruiting is not effective at getting to the core of what will make someone effective in a work environment. A good recruiter who has worked with a client for a while and knows their culture, can certainly screen well for a manager or HR professional, but the other elements of the business almost always cloud that success in some way.
This article is just straight talk, no corporate lingo dryness or professionally acceptable editing to soften the blows. Just the way I see it. It may ruffle some feathers, but if you like this approach, let me know and share away.
Next article, I will be talking about the ABL road show, what it’s like to be 100% immersed in the crypto-blockchain space for the last 5 weeks non-stop in Singapore, Japan, Korea, San Francisco, NYC, Santa Monica, L.A and Puerto Rico. I might even provide some insight into the unbelievable world of HRTech solutions that are coming out of the decentralized blockchain economy.
Erik Simins, CEO_ABL