Saturday, October 10, 2009

The Challenge With Contingency Recruiting

Contingency recruiting - an employer paying a fee to a third party recruiter only upon a successful hire - has some challenges. When an employer is paying only for results, they have no "skin in the game". All of the financial risk in a contingency recruiting search is shifted from the employer to the contingency recruiter. This is not good, although there isn't necessarily a better option in some cases.

An employer can collaborate with as many recruiters on a contingency basis as desired.

I know a guy, let's call him Joe, who does foreign language translation on a contract basis for law firms. Whenever a law firm needs a translator in San Francisco, they call about 6 different recruiting agencies. Those 6 different recruiting agencies all call Joe. Joe submits his resume to all 6 agencies, and whichever agency moves fastest to submit Joe to the law firm wins. 1 winner, 5 losers. That's not a good system.

Employers will often waste recruiters' time, maybe not intentionally, but they're accustomed to getting service for free. Sure, they have to pay a big fee for a hire, but they get a large pool of recruiters to access a wide variety of networks and can get the benefits of hundreds of hours of work for free. When anyone can get lots and lots of help for free, this is bad. It encourages waste big time.

A common complaint about recruiters is that they initiate contact with job seekers with an employment opportunity, get the job seeker to apply, and then never follow up. This is because the recruiter isn't being paid for their time, only results. No results = no follow up (and no respect).

I propose we collectively ban contingency recruiting. If a system encourages wasteful spending of time, eliminate it. Force employers to look at hiring realistically and spend real dollars to get what they need. Instead of paying a $25,000 recruiting fee, how about a $25,000 signing bonus? Instead of creating a ridiculously difficult job description and having a position sit open for a year, how about hiring a bright person and training them? Instead of not being accountable for wasting other people's time, how about creating a system that encourages employers, recruiters, and job seekers to work together?

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