This time of year, we get flooded with phone calls in our office. Parents are calling because their kids are about to graduate from college and somebody — either the graduating senior or the parent — is getting anxious about the post-graduation job hunt. People who vowed to get out of a bad job in 2014 call us, too. Very often, they ask questions like these:
“Can you put me in touch with a good recruiter in my town? I want to get out of teaching and into sales.”
“Can you recommend a headhunter to represent me? I graduated with my MBA last May and I haven’t found a job yet.”
“Do you guys know any good search firms in New York? I want to break into online marketing and social media.”
There is a lot of confusion about working with third-party recruiters, also known as search professionals or headhunters. The three questions above illustrate that confusion.
Recruiters are hired by employers to find picture-perfect candidates to fill those employers’ open positions. They’re called third-party recruiters when they don’t work for the employer organization itself, but rather work for themselves or for an independent recruiting firm. The vast majority of recruiters work on a contingency basis. That means they only get paid if they fill a job for one of their client organizations. Think about that – imagine that you only got paid when you made a sale. Some contingency recruiters collect a base salary or a monthly draw from the firms they work for, but lots of them don’t. If they don’t place any new employees for their clients in a given month, they don’t get paid at all.
That takes nerve – and mojo! The standard commission for a contingency search professional is twenty-five percent of the new hire’s first-year cash compensation. Cash compensation includes base salary and any bonus plan, but doesn’t include benefits. If a contingency recruiter, Wiley, finds the perfect Office Manager for his client Acme Explosives and if the Office Manager gets paid sixty thousand dollars per year, then Wiley’s commission is fifteen thousand dollars.
Good deal for Wiley, you might be thinking — sure, but what about all the times when Wiley had fantastic candidates in the pipeline but his clients (employers) hired other people? In those cases, Wiley might not have been paid at all. On top of that, Wiley had to tell his candidates “I’m sorry, Acme hired someone else.” A lot of people think it’s easy to make big money as a contingency recruiter, and certainly a lot of those folks make very good money, but it is anything but easy work.
As in any profession, there are some tremendous contingency recruiters — I have written about some of the folks I’ve worked with in my HR career, in previous columns – and some people who are not so great at what they do, and who mess up the reputation of contingency recruiters for everyone.
A much smaller percentage of search professionals work on a retained basis. That means that employers hire them or hire their firms to fill important positions on a contractual basis. Retained search firms typically get paid thirty-three percent of the new hire’s first-year cash compensation. Rather than getting their full search fee when the position is filled, retained search firms normally get paid one-third of their fee when the search begins, one-third after thirty days and the final one-third of their fee when the job is filled.
Why would companies work with a contingency recruiter or a retained search firm? If you’re hiring a VP of Engineering and you want to work through a search with one dedicated firm, knowing that you’ll be in close communication and that the firm will be able to support you throughout the process (by virtue of the fact that you’re paying them to do that, rather than expecting them to lob resumes at you in hopes that you hire one of their VP candidates) you’re likely to choose a retained search firm. That’s why retained firms generally work on $100K+ positions. Retained searches are always exclusive. That means there is only one retained search firm working on a given assignment.
Let’s look at contingency and retained search firms again, from the candidate’s perspective. If you’re being represented by a contingency recruiter, your search guy might have other candidates in the pipeline for the same job you’re applying for. We can’t blame him for that.
He has to get paid, and if he has more than one qualified candidate, we can’t expect him to say “No, I want to advance your resume, so my other qualified candidate will have to drop out of the running for this opening.” That’s crazy. That’s not fair to the other candidate or to the employer. So, if you’re job-hunting and working with a contingency recruiter, please don’t get your feelings bruised if your recruiter suggests that you are not his only duck in the race.
When you’re being represented by a retained search firm, there are guaranteed to be other candidates in the mix and all of them were sent to the employer by the same retained search firm. Recruiters call that group of candidates a ‘slate.’ They put a slate in front of the hiring manager and other hiring authorities in the employer, and see which person the organization wants to hire.
So, as a job-seeker, as flattering as it is to be represented by a Super Lofty Retained Search Firm that Only Handles Highly Placed Candidates, there is a downside. If you’re working with a retained search firm your odds (on a probability basis) of getting the job may be lower than if you were working with a contingency firm!
This conversation should help illustrate that:
JOE, the client: So Anita, how are you doing on my Release engineer opening?
ANITA, a contingency search person: You know what Joe, I’m excited. I met a guy you have to meet.
JOE: Who is he?
ANITA: His name is Allen, and he’s very talented and a terrific guy — I think he may be just the person you’re looking for.
JOE: When can I meet him?
Joe, the hiring manager, is in a hurry to fill this job. Why should Anita go out and beat the bushes for additional candidates if Joe is excited to meet Allen, the first candidate Anita suggests? If Joe and Allen click, then Anita’s task is done, she gets paid, Joe is happy and Allen is over the moon.
Contrast this scenario with the retained-search ‘slate’ idea. A slate might have four to seven candidates in it. If you’re one of those candidates, you’ll have your chance to interview, but the whole process is set up as a comparison between the bunch of you in the slate.
Which process would you rather be part of?
The three callers we mentioned at the beginning of this column — the three people who called our office looking for search firm referrals — were all confused about another aspect of the third-party recruiting business. They didn’t understand that search professionals don’t typically represent new grads (even new grads with MBAs, unless their education or past experience is highly specialized and in demand) or career-changers.
Remember who pays a recruiter — an employer does. That employer isn’t going to pay a twenty-five percent fee to a recruiter who brings them a candidate they could have found on their own.
Recruiters are charged with doing the impossible, which is to say making a fanciful-bordering-on-delusional hiring manager’s fantasy new hire come to life in the form of a living, breathing candidate. That’s a monumental task. That’s why recruiters specialize in people who look on paper and in person as though they were raised in a petri dish to perform the very job they’re interviewing for. They have to be nearly perfect fits to work with a recruiter. Hiring managers won’t pay search people to find candidates who don’t fit the spec exactly.
That’s why we are forced to tell the parents of new college grads, the graduates themselves, and mid-life career-changers that headhunters may not be the best, or even a viable, channel in their job-search strategy.
If you are a career-changer or a new grad, a third-party recruiter is likely not your best job search channel either. That’s okay — there are lots of other good channels for you. You can send Pain Letters and Human-Voiced Resumes directly to hiring managers. That’s our favorite channel. We call that process STOP! Don’t Send that Resume.
You can use your network to find a job, and you can use LinkedIn to make connections. There are lots of ways to get a job without working with a recruiter, but if you are a recruiter-suited candidate, by all means add a search friend or two to your job-search channel array!
If you don’t know any search people, ask your friends for recommendations and use LinkedIn to find headhunters in your part of the world. Don’t be offended if the search people you contact don’t gush and coo over your background and your resume. They are busy. They are paid to fill openings for clients, not to provide free career counseling. They do what they can.
Don’t be upset if a recruiter doesn’t offer to represent you. Imagine that your recruiter is a Broadway talent agent. The talent agent might say to you “Look, you’re very talented and I love your singing voice, but we just don’t get a lot of calls for your type of performer.” It’s not personal. The recruiter is not going to be able to spend time with you unless s/he thinks s/he can place you in a job relatively soon.
Don’t be afraid to reach out to recruiters, but don’t kid yourself about what recruiters can and can’t do for you. Remember that your price tag goes up by twenty-five percent when you get a job through a recruiter, versus your own approach to the employing organization. If your recruiter has a solid relationship with the client firm and has placed people inside it before, that could be golden for you. If not, you could actually lose out on a great opportunity because your connection with the recruiter prices you out of contention.
Keep your eyes open, trust your gut and vet any recruiter you meet just as dispassionately as he or she is vetting you. Remember that people who don’t get you don’t deserve you, and don’t forget to fan your flame!
by Liz Ryan
CEO and Founder, Human Workplace