It is best to understand that these principles are often in operation and to use them to create an optimium situation for everyone involved.

Cheers,

Keith Halperin
keithsrj@sbcglobal.net

In the 20 yrs that I’ve been in this industry, the demise of Search Firms has been predicted over & over (even before the Internet became a viable recruiting media and the pundits all thought that surely was the death knell for high search fees) … as if Search Firms are the evil empire that needs to be replaced with better advertising, sourcing, recruiting technology or anything anything to stop hiring managers from paying a fee to a headhunter.

News flash: The more things change, the more they stay the same.

The mix of tools & resources in the recruiters toolbox will change whether your a third-party recruiter or corporate employer – and you’ll always need the right mix of tools & resources to fill a particular job.

The reason why the agency world grew substantially over the last 5+ years is because of the outsourcing trend and benefits to non-organization competency reductions for economies of scale/cost, the entry barriers are so low that any recruiter can start an agency, and tight labor market leading to more “needle in the haystack” and longer search times – better to gain focus thru outsourcing. With declining economic conditions, we will rapidly see that non-profitable or underperforming agencies will disappear, overcapacity will weed out agencies, reduction of internal costs will lead to desire for internal efficiencies, a focus on training and process/workflow efficiency expertise, and an industry repositioning of firms.

There are big picture drivers for these things…I wouldn’t be over optimistic about agency growth, it is like any other business. Good, strong, effective and performing agencies will always survive and be needed, so will good strong internal corporate recruiting departments proving their value to the management.

Let me explain: My first job out of the service was as a Buyer for a very large 3rd Party Logistics/Grocery Retailer (I think it was #9 in size at the time). As a buyer, one of my key KPIs’ was ‘Service Level’ (range 0% to 100%). If I always had enough stock in the distribution center, I wouldn’t have a ‘lost sale’ when one of our stores ordered that product. So, a “perfect” Service Level was 100%, meaning I always had product in stock when stores ordered it.

However, Service Level wasn’t the whole story. Anyone who ordered far beyond what was necessary could maintain a 100% service level – but this would later present problems meeting minimum order requirements from vendors down the line. In a nutshell, if you over-ordered, you could hit that 100%.

Now, there was another counter-balancing metric that was also very important: ‘Overstock Inventory’. If you had product sit in the distribution center beyond a given point, it would become ‘overstock’. These numbers counted against us as well, so the perfect ‘Overstock Inventory’ number was $0. As you can see, achieving a 100% Service Level with a $0 Overstock Inventory was virtually impossible.

Here’s another irony: If you over-ordered, let’s not forget the additional costs. For example, the truckload would cost more, the handling costs would be higher (to put the product ‘away’), and the carrying costs would be higher. So, in the end, you would be operating in the red (or your purchased categories would) for your organization despite meeting a 100% Service Level with $0 Overstock Inventory over the short-run.

This begs the question: Assuming you cut your Exec Search spend to $0, what else gives? Is this the key metric some Internal Recruiters are using? What are the ramifications on business performance down the line?

I ask this because I can think of 2 distinct ways to cut Exec Search spend down to $0 immediately:

A. Hire 10 More Internal Recruiters (yeah, you’ll cut fees . . . but look at overall cost).

B. Relax Specifications and Hire All Job-Board Applicants (sure, this will further cut spend . . . but is there a long-term cost to the organization’s performance here?)

Some things for us to think through and discuss . . . .

Darrin Grella
darrin.grella@brulant.com
http://www.darringrella.blogspot.com

I think the biggest difference is not about the competencies of Corporate Recruiters vs. TPR’s, but more about the best use of time. I can only speak for my current recruiting team, but an average recruiter on my team will place 120 new hires at an average salary of $100K/hire – THAT WOULD BE $3M IN ANNUAL BILLINGS (Based upon 25% placement fee). I think that would make her a Top Biller in most TPR’s. TO pull this individual off of her normal work load to work 1 high level req would be at the detriment of 4 different multi-billion dollar projects.

The smart business decision is to utilize outside firms for these higher paying reqs that also have a long recruiting cycle.

And of course there are some key hires that require the secrecy that can only be provided by an outside agency.

I would hope that more & more TPR’s realize that not every Corporate Recruiter is incompetent and that Corporate Recruiters realize the value that some TPR’s can bring them.

Most of the internal teams I work with these days are quite good at recruiting. Just no doubt about it. Many of them are long term recruiters who have worked in agencies and/or other high volume type environments and definitely know what they are doing.

Smart companies use external recruiters for specialty/difficult roles, critical positions, out of the necessity of the volumes of people they need, or because they want the best possible candidate regardless of source (sometimes the managers (and CEO) and HR have a different view on that part). That doesn’t make their own internal staff any less qualified. The economic value of hiring the best vs. even the second best or leaving a position unfilled can be huge sometimes – which is why the fee may not matter to them.

Any 3rd party firm firm that takes an ‘us vs. them’ attitude just isn’t going to have as much success as a firm that truly acts as a team / extension of their customer’s internal staff.

Staffing firms aren’t going away. Good ones that understand it isn’t ‘us vs them’ won’t anyway.

So here’s the irony: Many chalk these articles up to an “us versus them” philosophy, yet its articles like these that drive progress in the first place. Some internal recruiters may take Harry’s suggestions defensively, while some will work to implement one or two. Some may even get angry, yet still implement a recommendation. As a result, however, the situation will improve. Again, to add balance, the truth is that many Exec Recruiters do not understand the full scope of activities the average Internal Recruiter must perform. Often times, the organization gets in its own way, and no, it’s not the Internal Recruiter’s fault. For the TPR, we can wash our hands and walk away, but the Internal Recruiter must fit into the current structure, yet slowly instigate change . . . and let’s be honest: Some don’t want to change. Truly, each side has its own unique challenges.

At the end of the day, however, look at the progress being made. It’s about more than educational levels of the Internal Recruiters, and it’s about more than having prior agency recruiters on staff in internal capacity. Everybody here knows that the typical exec search process is not only not necessary, but not feasible, for all roles. Would we want our middle-of-the-road positions that don’t equate much value to the bottom line to be handled in the same as a VP? Of course not.

In my estimation, progress is being driven by pain. We can do better; we can think on a higher level. I believe we’re doing that. Sure, maybe there are fruits tossed at each side during the conversation . . . but we’re all better for it. I mean, what fun is it to have a bunch of Stepford Wives that agree on every recruiting subject out there? Would that lead to progress? No way . . . so let’s have some fun, debate vigorously, and then shake hands and enjoy a drink afterward :)

But the harassing calls to passive employees makes the industry look unprofessional. But it shouldn’t be us VS,. them

I occasionally ask a potential client to determine what type of recruiter they need:
1) They are successfully meeting their needs – they should stay with internal recruiters/ resources.

2) They need one or two people that can’t cost-effectively be obtained through, or are extremely specialized, or are needed very quickly- use an external contingency or retained recruiter.

3) They have a period of ramp up in hiring, followed by a plateau- use a contract recruiter.

What clients SHOULDN’T do is to hire internal onsite recruiting staff to do anything that can be cost-effectively, eliminated, automated, or outsourced. This would have the added advantage of allowing the recruiting to staff to concentrate on higher-value functions such as have been mentioned in the article and commentaries.

Keith Halperin keithsrj@sbcglobal.net

As a Corporate Recruiter I see value in additional resources when needed and I appreciate those firms who truly represent our core values and respect all stakeholders in the hiring process.

Now with that said, what is not mentioned is the clean up involved on the Corporate Recruiter side as a result of the “bad and ugly” part. This includes multiple calls multiple times from agencies to hiring managers and myself, misquotes of salaries and benefits to potential candidates, or worse inaccurate details of the job. More times than not the due diligence part is glazed over.

My focus as a Corporate Recruiter is to bring on great talent while upholding the highest level of integrity. This means meeting the needs of the company, the candidate and our managers. In my opinion, no one can speak more true to this, I should know, I work here (:

Net staffing activity overall dwarfs the net activity of executive search, as Karen ably points out.

The mismatch in dollar value gives exeutive search more visibility, but it’s still a small niche in the great scheme.

Leif hits a key point directly; the greater the value of the talent involved, the more political the situation becomes.

Again to answer the original question; firms exist somewhat to buffer the politics (war by other means) of talent.

You do have some good points, but I can identify with what karen is saying as well. Having been in a Fortune Five recruiting department working with over 100 requisitions from hiring managers who:

* thought their requisition was the only one we had
* had no clue about job descriptions and KSA’s
* could not make up their minds from candidate to candidate about that they truly wanted for the position
* could not seem to make room on their calendars to interview
* changed the requirements of the job during the interviews with a candidate
* had no idea what EEOC and legal interviewing processes are
* made up their own salary offers because they really “liked the candidate”

At the end of the day, my team was evaluated on how long it took us to complete the hiring process. This was, of course, with no control over the hiring managers or the process.

On the other side of the desk, having been an executive recruiter, I have worked with some interesting internal recruiters who started out as an administrative assistant and was promoted based on skills required for the old job. These were not “bad” recruiters, but rather people who had been placed in a role with little or no training or support.

Finally, in an internal situation, recruiters are pulled away from their recruiting projects to perform so many other roles that sometimes things fall between the cracks.

The bottom line is we are all in field of recruiting because we care and we want to have success. In my business, I go into companies and help them understand the role of the recruiter and provide training to those folks who are trying so hard, but are swimming in a muddy river.

Let’s all help one another.

It seems that the difference is that external recruiters have the ability to perform on a project basis, while most internal recruiters are tied, by the nature of the position, to a process basis. We external recruiters can focus our whole attention on completing the search, while internal folks have a lot more varied things to be responsible for.

And when you need us, we will be there to help. Isn’t that what business partners do?