You’re wrong if you think all search firms are the same!

Anyone who has embarked on a career in the staffing industry surely has come across the objection of: “We don’t use outside recruiters, we have our own internally.”  In my experience just about every company that I have ever worked with has their own internal recruiters.  Often times a company’s internal recruiters feel threatened by working with a recruiting agency because they sometimes feel like they are in essence, competing with you.  From the surface there are some reasons to validate that perception, but in the grand scheme of things you should always want to do what is best for your company and not what is best for you.  Industry research consistently shows that a company suffers immensely by having a position open for long periods of time.  When a position is open for too long people start to turn into panic mode and they often settle on someone they know is no more than a “B” or “C” player.  The costs of hiring the wrong person have been estimated to cost a company two and a half times the annual salary of said former employee.  Furthermore, hiring the wrong person can significantly damage the business while the person is still employed.  Replacing someone can cost companies an average of 6-12 months of salary when recruitment costs, training, and losses in productivity for the individual as well as the superiors they report to are factored in.  So it begs the question; Why are some companies so defiant to partner up with recruiting agencies that can get the job done?  Here are a few reasons that come to mind.

Why do some companies attempt to avoid working with recruiting agencies?

  • Some internal recruiters feel threatened that hiring an outside agency will only slight them or challenge their current role. In my experience this couldn’t be farther from the truth.  We want to act as an extension of your internal recruiting team.  We are not looking to replace you.  Perhaps a good comparison is that internal recruiters are the Army, and recruiting agencies act as the Special Forces.  We are all on the same team, however each of us has different missions and skill sets.  We are a unified front in support of one thing, success for the company!
  • 2)  Some companies only see the cost of what an agency would charge them and aren’t aware of the actual numbers of how significantly it positively impacts revenue and gross profit, and negatively impacts their company by having the position vacant, or worse, making a ‘bad hire’!

3)They have had a negative experience in the past with a recruiting agency

4) They make the severely incorrect assumption that all recruiting firms are the same.

5) They just don’t know the numbers about how huge of an impact high level sales professionals have on their company.  They are wrongly hung up on the fee and not the actual ROI their company will experience by the production of the hire.  More on that below…….

 Would you hire your family doctor to do your intricate heart surgery, or would you retain the services of a heart specialist whose full time job is to do these types of surgeries? 

Do your homework!  If you are considering the notion of partnering up with a recruiting agency, make sure they are what they say they are!  Too many recruiting agencies simply forward on resumes from job boards.  They send you who is available, and not who is necessarily right for the position.  Ask precise qualifying questions like the ones listed below to determine if it is worth your time to partner up.  Keep in mind that if you embark on a journey with a recruiting agency it will require some of your time.  Your time is precious and you don’t want to waste 3 months working with a recruiting firm that isn’t very effective and cannot fulfill your human capital needs.

Qualifying questions to ask a recruiting firm before engaging in their services:

  • What are your recruiting methods of sourcing high quality candidates? What is your method of targeting and delivering passive candidates?
  • What percentage of the requisitions your company works on are filled? What is your search firm doing to make that number more favorable?
  • What are your send out or interview to placement ratios?
  • Do you use any kind of job boards in your recruiting strategies? If so, what percentage of the candidates that you present come from some sort of job board?
  • Ask for client references. You should always ask for references to speak with other companies that the search firm has worked with.
  • Walk me through what your recruiting campaign would look like for our company
  • Reach out to former employees of that search firm and see what their experience was while working at that search firm. You can obtain a tremendous amount of valuable information by talking to these people!
  •  So why not bring in the experts? 
  • The numbers don’t lie when it comes to recruiting and hiring the right people.  As the old saying goes, “It is better to go into battle with 5 lions than 500 sheep!”  The sheep may cost you less, but in the grand scheme of things when you hire sheep you greatly amplify the chances of that person hurting your company significantly in the long run.  In my experience there is no clearer example of when you should use a specialized recruiting firm than when it comes to sales recruiting.  The formula is simple to justify this:  What is the revenue and gross profit goal for a new hire sales professional for your company in year 1?    Here is a quick example of first year revenue and gross profit goals in the Enterprise Storage space.  A senior level storage sales professional has a revenue goal of 6-10 million in year 1.  Their gross profit goal ranges from 600k-1.5 million in year one of employment.  The average fee for a senior sales professional in this space is approximately 20k.  Let’s say on the low end of that spectrum the sales rep produces 750k in gross profit in year 1.  Of that 750k in gp, let’s say that sales professional made a total of 200k when you factor in salary and commissions.  That means the company profited 550k in year 1 of employment from that sales professional.  So in CFO terms, that means the company profited 500k on a 20k investment with a search firm.  The ROI is 2500%in this case, and that doesn’t even factor in what that sales professional produces in years 2 and beyond!  Is it worth it to pay a recruiter a fee in return for a consistent pipeline of high quality sales professionals that have displayed a proven and verifiable track record of hitting and exceeding their sales goals?

The proof is in the pudding:  I recently conducted a 3 year business review with a client of ours that has spent $390,000.00 in fees with Vortex Staffing.  During that time the sales professionals that were hired through our recruiting efforts contributed to producing 50 million in revenue and 5 million in gross profit for that company.  The ROI on that transaction is unheard of, but entirely true, verifiable, and common!  The company made 4.6 million dollars on a $390,000.00 investment in our services!  That’s a 1180% ROI on that investment!  Warren Buffet doesn’t even see returns like this!

These cartoonish examples are commonplace in the sales recruiting arena if you are genuinely good at what you do.  The trick is educating your prospects and customers to view your services from a different perspective.  Many companies see your services simply as a fee for something they can potentially find on their own for free.  What they are missing is the difference between hiring someone off a job board or someone that is struggling at their current company, versus a search firm that has the ability to provide a consistent pipeline of quota smashing A-level talent.  There truly are some great recruiting firms out there, but you have to be able to read through the façade and really select your recruiting partners wisely.  Is it better to pay for a pride of lions to join you in battle, or to settle for a herd of sheep that didn’t cost you a fee?