The problem with recruitment agents

First, let me say that I am a frequent consumer of services from recruitment agencies. I run a fast growing business and without them, my job would be made far more difficult. I love them… but I hate them.

Other than getting five cold calls per day from different recruiters – which can be annoying, it is their pricing model that fills me with such disdain.

Here’s why:

Fifteen/twenty years ago, recruitment agents worked for their money. They advertised for positions, collected and sorted cvs/resumes, and actually spoke with – mostly interviewing – the candidates before putting them forward to their clients. They had to advertise in expensive industry magazines such as Computing, Computer Weekly, Advertising Age, etc. The fees they charged could be justified because of the investment of time and money that they put into recruiting staff for their clients.

During the dot-com boom, everything accelerated. Their was a supply and demand issue and clients (myself included) could not get enough cvs/resumes to maintain staffing levels – let alone grow. There was no time for the recruitment agencies to fully interview as the candidate would be gone. We were at or near full employment during that time – both here in the UK and in the States.

The standard of service that recruitment agents offered dropped considerably during this time.. but the fees they charged did not. There wasn’t a lot of choice for the customer – we needed staff. And so we let them do it.

Furthermore, during this period, online recruitment sites / job boards such as Monster.com emerged. It meant that recruitment agents could advertise more cheaply and actually search for candidates with certain skills in a cv/resume database. Admittedly this was at a cost to them, but any cost savings compared with print/display advertising were never passed on to the client.

We are now in a different market once again. Depending on the industry, there are plenty of people looking for work. We are not in the dot com boom, we are in recession. Recruitment agencies rarely actually take out expensive print advertising. They use online resources almost exclusively now (all using the same ones). They might speak with a candidate before putting them forward – but they certainly do not interview them.

Despite all this, the billing model for agents hasn’t changed. They still expect anywhere from 20%-25% of the new hires salary (I have never really understood the logic why you should pay a higher percentage of a higher salary). But this is what bugs me about this industry – they have reduced their costs dramatically and are putting in decreasing levels of effort yet expect a premium price. I can’t think of any other industry where this has occurred.

So let me give you some advice. Stop paying the premium rate! Every recruiter will cut their fee – because they know that they will still make healthy margins at half the rate. They only ask for the higher rate because they always have. I have never come across a company that won’t do this – and you know, if they won’t – there’s another twenty recruiters who will be happy to take their place. So it is down to us – the customer to change this behaviour.. at least until the next boom and the feeding frenzy resumes.

3 Comments

  1. Hi Matt, I’m currently doing a Masters degree and I have decided to develop an online recruitment agency to address this precise problem.  Seems to me that the employer is just as able to screen the employees based on a “tick box” approach to skill sets, and that an employer would be happy to pay an annual subscription rather than a megachunk of money in one go.  As part of my research into the justification for this project, I came across this article and would like to cite you in my introduction if that’s ok?
    Regards, Gordon

  2. I agree.

    I wish I could fully support the recruiting agencies. but in my experience, they haven’t been doing a good job from a candidate/employer’s point of view. They have spread over nations like a curse. In some countries they have taken control of at least 80% of the open positions being advertised and they don’t care that much about the candidate they gonna send over to the employer…let alone that the candidate is very likely to be a contact and not just a random candidate that went through the evaluation process with success. It is just ridiculous that we allowed these companies to expand so much. And once they blacklist you as a candidate, then you stand no chance in the job market. In my mind, I picture it like the “Empire” (see Stars Wars) of the job market.

    Think about another thing now…there are cases that these recruiting companies demand a 20% of the candidate’s future salary under a period of 6 months. How much happy+productive do you think that this candidate is going to be when he compares his/her job output with his colleague’s and see that he/she does an even better job that him/her, while at the same time being only a temporary employee? Companies need satisfied employees!!!! Most of the candidates being sent over by recruiting companies are desperate, they have less rights at the workplace (though they have camouflaged this holes in the contract, but are still there) and are being checked by the recruiting firm constantly (if they bother to check) which also makes them nervous.

    Keywords: lower salary, lower motivation, much stress, less employee rights, exploitation, etc.

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