The biggest cost of agency recruitment is that agency recruiters add no real value…..
An insider job
We’ve heard it a thousand times; recruitment agencies are expensive. But most recruiters will be quick to tell you they add value. They’ll say to you “you’ll get access to our network” or “oh we have a large database of highly qualified candidates” blah blah blah, cough cough bullshit.
How do I know this? Because I was one for nine years!
I came into tech recruitment literally not knowing anything about IT. If you’d have said C# to me, I probably would have thought you were referring to a guitar chord.
I remember being paid $20,000 for a candidate, I placed early in my career and thinking, what have I just walked into? This CBD office with 60 recruiters on the floor is what I imagined a stockbroking floor to be. I used to think how crazy it was on the 17th floor looking over the city and all the people on this floor were making $20–30K per month for the business (that was expected), and my head was spinning thinking about how companies pay these fees to us for talking on the phone.
When I told my friends and family, they asked me, do companies REALLY pay you to do that? When I told them what companies were really paying, they nearly fell over.
A flawed and outdated process.
For the last three years, I’ve had this constant internal struggle with the fees agency recruiters charge clients for what was being delivered. I started to question the ‘value’ recruiters really offer and here were my findings.
Full disclosure, my training was at the biggest recruitment company in the world, known for the best training in the industry and having the highest quality assurance and a robust process and framework to follow.
The process I followed there and in my own business, once a client gave me a job, was this:-
- Advertise (Job Board, Social etc.)
- Resource (looking for candidates)
- Longlist or Selection
- Phone Interview or Screening
- Face to face interview
- Send shortlist to the client
- Reference check
- Follow up or Aftercare
This process is not too dissimilar to most recruitment agencies; in fact, some are probably missing a number of those steps; some may add a couple more in there.
It just doesn’t add up!
Now, this doesn’t include the business development calls, the meeting clients for coffee or taking a brief from a client over the phone, but I accounted for that below as well.
I got thinking about what value and time I was giving in exchange for what I was being paid per placement I was making.
Tech recruitment has been my thing, and I would say an average fee is around $15000 (yeah you read right). When I broke that down to the time I spent doing all of the above, including meeting for coffee, I worked out that at absolute most, I was spending 20 hours (and that is at the absolute most) filling a role for a client or:-
$750 PER HOUR!
How is that value? I am not even qualified, and someone is paying me $750/hr to hire people for them. I started to struggle in my head about what other recruiters and I offered and the value attached to it and that when my agency career took a turn. Don’t get me wrong, I am good at what I do, but am I worth $750 an hour? The answer was no.
The thing is, most of the recruiters in the industry have minimal experience, if any, recruiting the roles they recruit for and being paid a specialist doctors hourly rate to do it! I had nearly ten years of experience, but I still couldn’t justify it. I want to think I can add a little more ‘value’ than just finding people and placing them, but even still, was I worth $750 an hour?
What you have to realise is that agency recruiters are salespeople. They will come up with sneaky tactics, crafty stories and pitches, bullshit sales strategies and tell you they provide value. The real truth here is, they give minimal cost, and most wouldn’t be able to tell you what ‘value’ they provide in any case.
How do they get away with it?
In my experience, a lot of companies don’t know how to hire, have the time or resources to hire and these ‘salespeople’ take advantage of that. There are supposed industry leaders spreading the message that a ‘ client in pain is a very good thing’. These companies need people, and these ‘salespeople’ are there lurking in the wings for when they have the ‘fuck it’ moment and engage them.
But I have noticed that it is changing. Businesses are waking up, and I am glad they are finally pushing back on the fees these recruitment companies are charging because what they provide vs the cost doesn’t add up.
So next time a recruiter tells you they offer value, call them out, question them on it. Ask them to define that value and how that justifies their 15,17 or 20% fee.
My guess is they’ll drop that coffee they wanted to so urgently meet you for and run out of that coffee shop quicker than they’ll fleece you for their fee!
There is no value in agency recruitment fees, and that’s the real cost of using a recruitment agency to hire for you!