Why are we still using recruitment fee arrangements from the year 2000?

I joined the recruitment industry in 2000 and there has not been much change in terms of how recruiting companies buy and recruitment companies sell recruitment services.

When we consider all of the advancements that the industry has seen in this time, it seems a little strange that recruitment relationships have not evolved along with them.

In this post, we need to consider 2 key areas

• Recruitment Models
• Operating Costs

Back in the day, the value of a Recruitment company was their database.  Each company would work hard to register as many candidates as they could as this was how they sold their value to recruiting companies.  Basically, we have the biggest database and so the best chance of finding you the right person.

The multi-agency contingency model was preferred by recruiting companies as there was a legitimate chance that the different recruitment companies could actually come up with unique candidates.

This fuelled recruitment agencies to become heavily KPI focussed, and these metrics were all about the quantity of activity.  They needed city centre offices so they could get the people into them to register. They needed to constantly build their database as this was their value and they needed non-fee-earning management teams to patrol the offices and police their consultants and ensure that the KPIs were hit.

This model required them to register as many jobs as they could, and then they needed to send as many CVs, in the quickest time possible.

Cover them off and then onto the next one.

It was the only way it could be, as you were not afforded the time to do a proper job.

Turnover of staff was crazy and so most of the time this work was done by people that had very little recruitment experience and who were basically thrown in at the deep end. Some managed to swim and build their experience, however, regardless of how much knowledge they gained, they were still having to operate within this flawed model.

Power hour and ten before ten, were some of the favourite BD activities. No mention of “let’s spend some quality time trying to find a really great candidate for our client”.  It was all about the quantity of activity as opposed to the quality of delivery.

When we consider the complaints about the recruitment industry, they are a result of this model.  When you focus on the quantity of activity, it leads to problems such as poor communication, badly screened CVs and a low level of candidate experience.

It’s amazing that this model is still favoured.  I can understand it back then, as there was not much alternative.  In today’s world, there are better ways of working.

If we fast forward to 2023, the recruitment landscape is very different.

LinkedIn has eradicated the ability of large recruitment companies to dine out on the size of their database.  It has developed into the largest recruitment database and everyone can have access to it.

When we couple this with all of the advancements in technology, the game has changed.

Many experienced Recruiters have realised that they no longer need to work for big recruitment companies.  They don’t have to sell their soul to hit KPIs that have little relevance to the delivery of a quality recruitment service to their clients and candidates.

They can set up on their own or join a boutique recruitment company that focuses on quality of service rather than quantity of activity.

The significant improvements in technology mean that operating costs are also wildly reduced.

You don’t need fancy city centre offices anymore, and you don’t need to have layers of non-fee earning management to prowl the sales floor and scrutinise the KPI board.

And most importantly, you as a recruiting client, don’t need to pay for this with fee levels of 25/30%.

Instead, you can work with a highly experienced recruiter who will operate as a true recruitment partner, engaging quality candidates and working hard to protect your employer brand.

These experienced Recruiters will fully understand the negative aspects of the multi-agency model and will look to have exclusivity in their recruitment relationships. 

They will understand that their fill rates will rise to 90%+ as opposed to the c25% experienced when working to the multi-agency model. 

This means that they are more likely to get paid for the work that they do and that they will have a much more enjoyable relationship with the people that they are working with.

When you combine this increased fill rate, with much lower operating costs, it makes sense that they can offer a more attractive fee arrangement.

I am one of those recruiters that champion exclusivity in my relationships and have very clear terms of business to demonstrate the cost-benefit of doing so.

It is better for me and better for all of the people I work.

A proper win-win.

If you want to improve your relationship with external recruiters, then I would strongly advise that you embrace exclusivity and choose a supplier who will represent you in the best possible light.

Go exclusive.  Trust me, it’s the way forward.

If I do not operate in an area where you need assistance, then let me know as I am sure I will be able to refer you to someone that has the experience to manage your assignment effectively for you.