THE TRUTH ABOUT RECRUITING
by Matt Thomas
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.
The problem isn’t that so many placements are terrible and don’t work out. The problem is that most of them are just okay–B and C players with minimal upside.
To be clear, a good realtor is worth every single penny. The problem is that there are not a lot of good realtors. The same is true in recruiting. A good headhunter is worth every cent. How much would you pay to lock in a new hire that could forever change your business? Or how about for a business development rep that can double your revenue in two years? It’s not difficult to justify the fee when it’s an A+ hire. The problem isn’t that so many placements are terrible and don’t work out. The problem is that most of them are just okay–B and C players with minimal upside. All because there just aren’t that many good recruiters.
(This is where I really want to go on a fairly long rant about how the big box recruiting firms that shall not be named actually just move people from job to job in their networks every couple years, collecting exorbitant commissions, and occasionally cutting the candidate in on the fee. But we won’t go there. For now, at least.)
Back to the market inefficiency my friend identified. Like most good ideas, he came up with it on a boat with friends, a few beers in him, and with all of his other ideas having pretty much cratered. What if he charged a flat monthly fee for a predetermined minimum placement total each month? He could target companies in need of multiple hires, work on retainer, lower their cost per hire, and maybe even get to know them a little bit so he could match the culture! Within a few days, he had his first client. Turns out businesses like paying significantly less for comparable or better service. I’ll be honest with you, when I finally understood the back story there was one piece of the equation that really caught my attention: monthly recurring revenue (MRR). Anyone who has started or owned a business knows how sweet it is to have your primary revenue stream MRR. So we brought on an investor, bought the IP and current accounts, and formed a new entity, Core Ventures LLC.
(Another quick tangent…why lay out our value proposition and secret sauce in public for anyone to steal? It’s because headhunters like their big placement fees too much to switch things up. Hopefully, that stays true until it’s too late for them, and we take their business.)
Recruiting is not rocket science. It’s matchmaking on steroids. Instead of asking two people to go on a first date, we’re asking them to get married right out of the gate.
Recruiting is not rocket science. It’s matchmaking on steroids. Instead of asking two people to go on a first date, we’re asking them to get married right out of the gate. It’s a big ask. It took about six months before I realized that every once in a while, we get to facilitate something really incredible. The impact a good job in a healthy organization has on a human and their loved ones is monumental. A good hire immediately takes a business up a notch. When our Staffing Consultants find a competent, high character individual who matches the culture of our client’s organization, it’s a special thing. We get better and better at it every day, every search, and every year. Our clients save a bunch of money, our team members love their work, and we get to present opportunities that will have a ripple effect that extends into homes and communities. Business owners can sleep at night, spouses breathe a sigh of relief, children are excited to welcome their parents home from work because they walk in with something left to give instead of drained by another day of monotony or worse.
Our clients save a bunch of money, our team members love their work, and we get to present opportunities that will have a ripple effect that extends into homes and communities.
I don’t hire people who have experience headhunting or working with recruiting firms. Unfortunately, there are too many bad habits we have to dismantle, and it’s not worth the time and effort. Headhunters are primarily motivated by the big fee they’ll collect after successfully landing a butt in a seat. The good ones care about the client and the candidate but most only care about their second and third homes. We bring on intelligent, competitive, self-motivated, emotionally intelligent leaders with character and integrity bolted to the ground. That’s the recipe, and so far, it’s working. We have plenty of room to grow, and I’d be lying if I said we always hit home runs. Sometimes we swing and miss, but we’re motivated to find great people for our clients, and get better at it every single day. We choose our clients carefully because, at the end of the day, we need to be able to get genuinely excited about the opportunities their businesses are offering. It is rewarding work.
If you are a candidate working with a headhunter who seems to be in a big hurry and less interested in getting to know you then they are making sure you have the core competencies and relevant experience, don’t waste your time. You are a skin they can’t wait to put on the wall. If you are a client working with a headhunter who only asked for the job description and salary range then seems to throw candidates against the wall to see what sticks, maybe even pressuring you to increase the comp in order to land the “unicorn,” tell them to get lost. They don’t care about your company and they don’t care about the candidate. They want a check. If you need help looking for a new opportunity let us know. Our Staffing Consultants would love to get to know you and see if we have a fit with one of our clients. If you are a hiring manager tired of wasting time recruiting instead of doing your job we’d love to see if we can help. You’ll get our best, and we love what we do.
Right now, we’re going head to head with one of the biggest recruiting firms in the world. It’s too early to know how we stack up, but in 90 days we’ll either be celebrating or focused on getting better….hopefully, both!