When my friend first approached me about jumping into the recruiting world with him, I balked. At the time, I worked for a large company and was moving quickly up the ranks. Any experiences I had had with recruiters were mostly negative. Headhunters? They’re like real estate agents, only worse! Nearly four years later, as the primary owner of a recruiting firm, I’d have to say my original opinions about the industry are still the same.
My wife encouraged me to take a closer look at what my friend was proposing. It didn’t take long to realize he had identified a market inefficiency and needed someone to drive the opportunity. What I didn’t know at the time is that usually, when a company hires a headhunter to help them fill a position, they end up paying out a fee between 20-30% of the new hires’ annual first-year salary. Ouch. This is closer to 40% for c-suite placements. Yikes. I remember the first time I sold a home and realized we would be paying out 6% in commissions to realtors for opening a few doors and taking some pictures. I felt sick. There is a reason that companies like Trelora, Redfin, and others are charging 1%. There is a market inefficiency.