But I am not so sure that a contract recruiter should want to be an employee. While the functions that HR performs may be essential, they don’t necessarily have to be performed by an employee. Organizations are realizing that they have more employees than they need — and very often in the wrong place. Why should any organization spend salary, development, and retention dollars on employees who do not generate new products or revenue? What does a recruiter contribute that an contractor could not? There are already hundreds of companies that have replaced their recruiting team with contractors and third-party recruiters and have had success. Unfortunately, most HR professionals are convinced that their organization could not function without them as employees, but I think they are wrong.

Given what is happening in business strategy, HR is about to undergo the biggest reduction in workforce it has ever seen.

In an article written just a few days ago, Cowan analyst Peter Goldmacher says “. . . large companies will outsource an increasing amount of HR functions. . .” and raised his predictions for Kenexa stock. The Human Resource Outsourcing Association’s membership is growing rapidly, and more organizations are finding that they can successfully outsource large portions of the HR function and enjoy good service with lower costs. Over the next decade, outsourcing and automation will accelerate and other administrative functions such as IT, finance, and legal will also be outsourced. I am fairly certain that over the next decade, self-service, automation, and outsourced services will replace the majority of HR jobs within corporations.

That puts any independent professional in a good position. Outsourcing firms as well as corporations will be looking for people willing to work on fixed contracts with performance clauses. This will panic many HR professionals, but recruiters are in a good place. Except for the ATS, they are able to perform with little other internal support. Sure it will require recruiters to develop marketing skills, invest in some branding, and learn to negotiate, but it will pay back with many dividends.

Here are seven reasons that being a contract recruiter is better than being an internal employee.

Reason #1: Job Security. There is no job security working as an employee. I think anyone in a job that does not generate revenue, invent new products or services, or interact with customers in a strategic way is in jeopardy of being laid off in the next year or so, as I indicated above. There is no better security than that you create for yourself. If you build the networks, skills and put aside the resources to weather the downtimes, you will find much greater security in working for yourself.

Reason #2: You Do More and Do it Better. As an entrepreneurial recruiter, you will have to develop more cost-effective, and efficient recruiting methods, lower costs, and improve customer satisfaction. These have been elusive goals for corporate recruiters, who struggle with internal bureaucracy, an HR leadership team that does not understand or appreciate what a recruiting function needs to be successful, and few dollars for investment. There is almost no benefit to a corporate recruiter in being more efficient or cost effective. If they try to do so, they will lose budget dollars and staff. Contract recruiters can make prompt decisions and invest where they need to and therefore better serve their customers, and reap the greater profits.

Reason #3: You get more respect. As an independent professional you automatically get more respect from clients. If your demeanor and attitude are also professional, you will be listened to and hiring managers will take your advice. Contrary to the experience of many corporate recruiters, managers will solicit your opinions and market knowledge. The expert contract recruiter understands the labor market and can explain it to hiring managers. They can give examples of what other clients are doing and can apply the best practices of many. These are benefits that are hard for a corporate recruiter to offer.

Reason #4: You are rewarded for your performance. No one keeps a contract recruiter because they are nice people or because they have been loyal. Contract recruiters are rewarded for performing well — no matter the circumstances. You are always paid the amount you convince and show managers that you are worth. That’s why internal recruiters are often jealous of contract recruiters: they are only paid according to some general HR pay scale that has very little or nothing to be with how well they perform.

Reason #5: You can have more fun and be more flexible. Being on your own is scary at times, but it has its rewards. You get to take on the work that excites you and interests you. You can say no. You work where you want, you work your own hours, and you take vacations when they suit you. You can adjust your work load to match your energy levels, abilities, and motivation. This flexibility and freedom to enter new markets can be enough reason to go independent.

Reason #6: Candidates and employers will trust you more. Independence is associated with neutrality. Providing you give honest opinions and represent both employers and candidates fairly, you will gain a reputation as someone who fairly assesses candidates and employers. Candidates value that above almost anything else, in my experience. If you can let a candidate know that they are not a good fit for a particular employer, both appreciate it. Hiring managers often turn to outside recruiters when they wish to keep searches private and when they are seeking the widest reach and most objectivity. These are powerful assets for a contract recruiter.

Reason #7: You are cheaper. No matter what your hourly rate, assuming it is market competitive, you cost an organization less than the loaded salary of an employee. You also do not require internal promotions and you pay for your own training. There are no pension requirements or expectations of continued employment.

It is challenging to learn new behaviors. Working for corporations is a very established way of behavior that takes time to “unlearn.” Over the past decade the number of independent workers has grown faster than any other type and lots of people who were laid off in past recessions have learned to love being independent.

You may be asking what the difference is between a contract recruiter and a head hunter? It’s really about how you work and market yourself. Contract recruiters usually work for a particular corporation or other recruiting firm and do not own their own business. It’s a fine line and you may decide to become a third-party recruiter. Either way, you maintain your independence.

The time you spend looking for a new job can probably be better used to develop the marketing, selling, and negotiating skills that you will need as an independent. Hopefully these are challenges that you are willing to face. Even though you must face the consequences of your choices, nothing is better than being free to make those choices.

“It’s a really unique situation where you have someone who is at a crossroads personally and professionally.” — Elliot Wilson

If living and working in this economy of disappearing jobs, tiny budgets, and little recruiting is getting a bit old, then perhaps you have arrived at your own personal crossroads. This metaphorical location is the intersecting point where what used to work for you in the past ends and what you will need to change in order to be successful in the future begins. As I see it, you have only two options:

1. You can continue to do what you are doing and wait for the economy to “get back to normal.”
2. You can make some fundamental changes to your core assumptions of how businesses that survive will operate so you might survive as well.

Personally, I have grave concerns about Option 1 because no one knows exactly what the new “normal” might be, and for all we know, this aberration might be the new “normal” and will remain such for years to come. If you share my concerns, please consider the following thoughts:

Expect Less. It matters little if you work as a contractor, agency, or corporate person. The face and very composition of work is changing radically. As such, the rewards normally tied to work will probably change as well. Consider the work-a-day existence of your past and acknowledge that it is probably going to remain in your past. Perhaps benefits will disappear. Perhaps the concept of “full time” will be based upon organizational need as opposed to “employee” legal standing. Perhaps you will trade value for money to be paid every Friday with both parties reevaluating the relationship every few months. Either way, expect less and smile.

Expect More. This is an opportunity for the cream of the crop to do great things. (It is also an opportunity for those who are not yet the cream to get there.) Regardless of what our flat, highly politicized world becomes, capitalists and entrepreneurs will always need to build great organizations in order to do great things. Those who effectively traffic in the procurement of human capital will always be paid for the talent they bring to the table because that is real value. Can’t get a job with one company? How about 60 hours a week with three or four companies? The time to get creative is now.

Don’t Freak on the Politics. I read a post on ERE saying that if the site went political, “I am out of here.” This thinking will not help your cause, your career, or your wallet. Show me something that affects your profession/business today and I will show you something that was political yesterday. The time to become aware and involved is now, because you can’t benefit from the political aspects of business with an “I-am-just-a-recruiter” mentality. Don’t get me wrong: I hate long, lunatic pointless ranting posts that blame all of this misery on one party/person/group or the other. The time for blame is over, and the time for awareness and action has arrived. Exactly how you do that is your decision, but pointing out the importance of being politically aware is mine. (In all of my years, I have never seen a recruiter with a copy of the Wall Street Journal. Why is that?)

They Told You They Have No Money? Are you an agency or a sourcer or some other vendor selling peripheral recruiting services? If so, let me tell you a little secret; all organizations have money. When they say that they have no money, they mean they have no money for you. That means, that they do not see real value in what you are selling, because if they did, they would find the money; they would stay up nights looking for it. I strongly suggest that all of us dramatically increase our value proposition. How? For openers, lower your price, because as cost goes down, value goes up. As an example, If I were in the agency business, I would reduce my fees. Most agency people hate this thinking for endless reasons but doing placements at 15% a pop is more sensible then non-stop conversations with clients about why your candidates are worth 30%. Those individuals who allow money to stand in the way of doing business are making a grave mistake.

Paradigm Shifts Are Good. Use Them. Many years ago, the Swiss owned the watch industry. Then the Japanese began to make watches using cheapo quartz innards that were far more accurate as opposed to expensive Swiss movements. That was a paradigm shift and all paradigm shifts bring the marketplace back to zero as the race begins again! The Japanese made bazillions of these watches and decimated Swiss domination. The Japanese found a better way, and the world bought. The lesson here? The future of recruiting is up for grabs. Radical new ideas in conjunction with creative, global, and scalable solutions will change everything! If you have an idea, shoot for the moon now or spend your life wishing that you did.

Leave Recruiting. Shocked? You shouldn’t be. Please remember that recruiting has no bar to entry. If and when recruiting “comes back,” regardless of how good you might be, your competition will be every 24-year-old kid with capped teeth and greased hair looking to make a buck. What’s that you say? They will recognize your years of experience and talent? Hmmm … Some will, but more will not, as their lower pricing will be a strong lure. Tired of being part of an industry that gets squished ever five or so years? Are you an agency person who is beginning to hate the grind and 75 cold calls a day? A corporate person who despises the politics and the games? If so, perhaps now is the time to realize that recruiting does not have to be a life sentence. Good recruiters have terrific skills and they can do so many other things. As an example, about three or four years ago, I was with Dave Lefkow doing a presentation in NYC for a fortune 100 client. Look at Dave now. Who knew? Hopefully, you can see there is more then one way to bring home the bacon.

These ideas are but the tip of the iceberg in looking at new ways to think, act, and do business. I do not see any real option to making these changes, because either business will adjust to you, or you will adjust to business. Which one do you think will happen?

(Hanging around Minnesota this Friday? See Howard Adamsky speak at Best Buy headquarters in Richfield. The presentation is entitled “Brave New World/The Emerging Role of Tomorrow’s Recruiters.” Cost is $12,500 per person but it’s free if you mention Howard’s name. Donuts included of course. Register at http://www.mntrn.org/ )

“How do they do it and what can be done to prevent them from doing it to us?” is a question many corporate recruiting leaders are asking. The underlying premise here is that if corporate recruiting departments could be organized and run like contingency recruiters and executive search firms, lots of money would be saved.

Despite the promise of the objective, very few companies have been able to successfully pull it off.

There are a variety of reasons for the this. Following are the most obvious:

1. The hunter vs. farmer issue. External recruiters are more hunter-types, drawn to the challenge of commission sales. Corporate recruiters are farmer-like, cultivating relationships, seeking more security, and focusing on activity.
2. Compensation vs. security. The best third-party recruiters make tons of money and the pretty good ones do OK. These recruiters are driven by the compensation, just like any top salesperson, so if the pay isn’t comparable, you’ll attract a different person with different motives and achieve different results.
3. The ability to cherry-pick assignments. The best contingency recruiters select the jobs they want to work on, and the best always have enough assignments. They also can walk away from those that turn out to be too time-consuming. Executive search recruiters are known to be industry specialists and seek out assignments that match their interests and abilities. Corporate recruiters just can’t say no.
4. The ability to select hiring managers. The best external recruiters develop long-term relationships with their hiring manager clients. This increases their influence, they hear about potential openings before the reqs are formalized, and they are more influential at every step in the process. This matching isn’t so easy for corporate recruiters who are assigned to work with hiring managers.
5. Workload differences. It’s much easier to develop and maintain client and candidate relationships when a recruiter is working on fewer assignments. Most retained recruiters handle 3-4 assignments at any one time with the help of researchers. Most contingency recruiters handle 8-10 assignments, but only focus on the easiest three or four. This is far less than most corporate recruiters.
6. Multi- vs. single-company focus. External recruiters — again I’m only referring to the best here — tend to be subject-matter experts and represent similar jobs with different companies. This is a real advantage to a candidate, since he or she can leverage her efforts by dealing with fewer recruiters and be exposed to more opportunities. This advantage doesn’t exist for a corporate recruiter who only represents one company and probably a smaller range of job opportunities.
7. Continuous vs. long-term candidate relationships. Good external recruiters have access to more jobs in the short run, and are more likely to be someone whom the candidate will work with again in the future. Corporate recruiters tend to be more transactional, filling jobs and moving on. This is huge disadvantage for corporate recruiters, since they also lose the ability to network and get as many top referrals.
8. Speed vs. bureaucracy. Good active candidates are easy to place. Just call up three to four companies and present your candidate, and bingo — a placement. It’s very likely that one of the companies called will have an instant need for a strong person. Corporate recruiters are tied to the pace of their company, which is usually slow and methodical.

Most of the differences noted above are organizational and compensation-based, and not easy for a large corporation to emulate, but all is not lost. Much of the competitive advantage external contingency recruiters have is speed of execution — finding the best first and getting them out on interviews quickly.

With this in mind, here are some ideas on how corporate recruiters can close this time gap and get to the best people quicker:

1. Be found first. Getting top people as soon as they enter the job-hunting marketing is a huge competitive advantage. A well-connected third-party contingency recruiter can present a top person to multiple clients within days. By the time a corporate recruiter finds this same candidate, it’s often too late. The person has either already accepted another position or is too involved to be interested. External recruiters work very hard at getting candidates to call them first, either through aggressive advertising or word-of-mouth networking. To offset this, corporations need to develop early-bird sourcing programs to compete on this level. This includes compelling advertising, search engine marketing programs, and the use of talent hubs.
2. Leverage your employee referral program. While each individual corporate recruiter is unlikely to be able to develop a deep network of potential prospects, a company’s employees are. To get this going, have your employees reach out to every great person they’ve worked with in the past using LinkedIn or something equivalent to establish the connection. Make the program formal, with regular emails, having your employees tell their contacts to contact them first, whenever they want to consider leaving their current company. This way, you’ll increase your odds that you’ll have a crack at attracting the best before everyone else.
3. Build a pipeline of prospects. Over many years, you should be able to build a huge prospect database filled with leads, business card info, and resumes. Some of the newest and more robust CRM systems can help you nurture this database and reach out with compelling emails when an opportunity arises. RSS feeds, agents, and Twitter job feeds are also good ways to stay in touch. The key is to be compelling and be regular. This is a great way to build your brand and attract good candidates before they’ve thought of looking on the open market.

As part of all this, you must provide prospects you find early in their job hunt an opportunity to learn more about the job on a non-committal, exploratory basis. Too many corporate recruiters, reinforced by their hiring systems, force candidates to commit before they’re ready. This means you need to allow these prospects to talk with or IM recruiters or managers, rather than send a resume or fill in an application. Finding candidates first is important, but if you push too hard you’ll turn the best off, so a balance is required during these initial discussions.

Even if you get the person first, the real work now begins. You’ll need to offer a compelling job that rivals everything else out there. As part of this, your corporate recruiters must be great negotiators and be able to fight off their external rivals who are aggressively trying to place your great catch before you make an offer. It’s important to think through the hiring process end-to-end including how job descriptions are written, the professionalism of the interviewing process, and how offers are presented and closed. It won’t much matter how soon you find these stars if the back-end falls apart.

It’s not possible to create an external search firm environment within a corporate structure. Regardless, there are things recruiting leaders can do to at least be in the hunt and minimize their reliance on external firms. But whatever you do, expect these external firms to do something better, different, and sooner, in response.

Only first names were to be used, and nothing was to be put in writing. Even though I was the head of recruiting and staffing for a large, multi-national company, I was putting my team in serious jeopardy just by having this conversation. Fortunately, the liaison was successful — we were not caught that day, and so far no one has discovered that we met together.

What am I describing? An international spy ring? The sale of competitive intelligence?

No, it was something much more serious. I was talking with a vendor … without a representative from the Procurement department present.

This will doubtless be remembered as a bumpy year for those of us in this profession. While finding talent in a market that has been turned upside-down represents a major challenge, it’s the secondary effects of this economic downturn that will truly test those of us in Talent Acquisition. I recently wrote about the likely increase in “executive referrals” resulting from current economic conditions. Other secondary effects could include anything from a reduced talent pool in the coming years (as families struggle to justify the return-on-investment of a college education), to an almost certain delay in the migration of the Baby Boomers to the Happy Hunting Ground of retirement.

While these effects are years away, there is another implication that you’ve probably already encountered — the increased influence of Procurement and Purchasing departments in the Recruiting function. And with so much renewed emphasis on spending, I predict you’ll see Procurement play an even greater role in the coming months.

No matter which side of the recruiting aisle you sit on (corporate or vendor), you’ve doubtless encountered Procurement departments by now. They’re the group that coordinates RFPs, negotiates prices, and even gets involved in managing vendor “performance.” It’s becoming more and more difficult to spend a single dollar on a product or service without their involvement nowadays. How are people reacting? Some enjoy leaving the “negotiating” to the experts; others feel like involving strangers interferes with trust-based vendor relations that have in many cases been built over a period of years. Regardless of your opinion, however, this model is here to stay.

How did this happen? When companies decided to get “leaner” back in the 1980s, they started buying raw materials more strategically. As a result, they began seeing huge improvements in cost-of-goods-sold as trained professionals scanned the markets for price, managed supply-chains of goods, leveraged the trade-offs between volume and price, and generally took a long-term approach to raw materials purchase. With subsequent enhancements in technology, it became even easier for companies to begin purchasing from a global market.

Another interesting change then began to take place: in addition to purchasing bulk commodities like iron ore and precious metals, Procurement departments began getting involved with large national contracts to purchase office supplies, technology, rental car contracts, and even started establishing preferred airlines for their organizations.

This was nearly always great for the company. It increased efficiency, and drove costs down. The challenge that we’ve all started encountering is that such a cold and impersonal approach can have its limits, particularly when it comes to people. Let me first state that I am completely in favor of running businesses as efficiently as possible. I support the work Procurement does, and sleep better knowing companies are paying the true market price for steel and corn oil. However, a process that was developed to purchase bulk quantities of material, ship it in container vessels, and store it for months until needed has some rather interesting implications for the acquisition of top talent.

Take my secret meeting, for example. I was talking with a trusted vendor with whom I’d worked for years. Things were pretty simple in the past — a company would have an open position, I’d ask my vendor-partner to work on the job, and they’d fill it.

Now, my fairly-straightforward relationship suddenly becomes very complicated. For example, I must first get my trusted vendor on the Approved Vendor list. In the most common scenario, the Master Service Provider determines the bill rate or the mark-up that can be charged (which usually must also cover a 2%-3% fee for them). My trusted vendor might not be able or willing to work at those rates. As such, the “approved vendor list” I ultimately end up with might consist of untried and/or undifferentiated firms who were chosen based on price alone.

The second hurdle is how to efficiently communicate with the third-party vendors who are actually recruiting for my position. Third-party vendors are often prohibited from speaking directly to me by contract; instead I must enter my requirements in the Master Vendor’s system. Questions regarding my position are asked and answered in writing. Third-party vendor phone calls are made to vendor managers, who are then supposed to capture feedback and communicate it back.

My research leads me to conclude these processes often seem cumbersome and arbitrary to vendors. Measures that are important from a traditional procurement perspective (quick turnaround times, low fees, and long contract periods) are not necessarily the same measures that create an environment for finding top niche talent, but vendors are measured only on these key metrics.

Clever vendors know where to pay their tribute. I’ve had my Procurement department inform me that they’d had extensive meetings with a job board, and were about to sign a major contract. Not only did I know nothing of the conversations, but I had rejected this particular tool months before. So why was procurement so anxious to sign? Because they’d negotiated a great rate, of course.

Procurement as a corporate function is here to stay. However, there are a few things you can do to make your relationship thrive.

Figure out who they are: Find out who comprises your Procurement department. Schedule time to meet with key leaders, and engage them before the next RFP. You have more in common with this department than anyone else; after all, you’re responsible for procuring a raw material every bit as important as printer paper. You’re responsible for procuring Talent!

Establish yourself as the decision-maker: Like any service function, Procurement wants to help you. They really do. As we’ve already seen, though, the prime measure of success is cost. And in 10 years of recruiting, I’ve never met a single hiring manager who told me that cost was the most important thing to them, and you probably haven’t either. Ultimately, you own the relationships you have with your vendors. Make sure Procurement understands that you are the decision-maker.

Find a way to work together: With the current emphasis on cost, you’re likely to see Procurement involved in nearly anything that involves paying an invoice. This year they may oversee your temporary labor contract, but next year look for them to become involved with retained searches and career fair giveaways. The point is that they have a job to do, and you do too. Invest in whatever is necessary to ensure you’re sharing information and working together.

Advocate for your customers: While learning to work together will necessarily involve compromise, never forget who you are ultimately there to represent: the job-seeker. Contracts that may seem advantageous to your company because they’ve resulted in huge rate reductions may end up costing you in the long run as vendors choose to simply not work with you, or not to send along their best candidates. I spoke with several vendors as I researched this article who said that they have been in situations where they were “asked” to accept maximum bill rates that were a third less than the amount of some candidates’ actual pay rate! While this looks great on a “vendor scorecard,” it means those companies never even get to see top candidates.

Share successes publicly: Chances are, you can learn a lot from your Procurement colleagues. And they can learn from you. Once you have that first shared victory together, be sure to publicize it. Executives love hearing how the company attracted top talent, but they love hearing how money was saved even more! Setting a public example of how to engage Procurement effectively is a great way to build your own organization’s brand as well.

Some people say good times are just around the corner; others say more bad times are ahead. In either case, companies are sure to continue using Procurement professionals to keep costs down. Learn what these colleagues do, and learn to work with them. If you do, it will mean getting the right talent into your organization at the right price. And that beats secret meetings any day of the week!

Can you hear that sound? It is the groaning reverberation of a deep and protracted recession. It is the sound of layoffs and loss. Of homes foreclosed, 401(k)s decimated, and of violent shifts in the professional and financial worlds. It is the sound of unsinkable companies … disappearing. It is deep and it is wide and it is ugly, and it has either already affected you or it will. No matter; Les Brown said it best. “It does not matter what happens to you. All that matters is; what are you going to do about it?”

So let me ask? What are you going to do about it?

I will tell you what most recruiters I am communicating with are currently doing. They are putting one foot in front of the other and existing each day with the hope that tomorrow will be a better day. They are scraping together bits of work and hustling like never before in order to make things happen. They are hanging tight and surviving, creating what are sure to be a breed of some very tough, street-savvy recruiters who will do well when things get better. Very well.

What will you do when things get better, and more importantly, what will be expected of you when the business of recruiting returns full force? What new breed of recruiter will evolve from this misery and what will they bring to the table to meet the still undefined future all of us must face? What gritty strengths and skills will be required to jump in with both feet in order to stake your claim to be successful?

• Ability to search for passive candidates? (I think not)
• Experience with applicant tracking systems? (Nice but not a big deal.)
• Number of connections on social networking systems? (Jury is out)
• Your blog? (Don’t hold your breath)
• Use of video in recruiting? (Possible, but not of staggering importance)
• Metrics and branding? (To a degree. Lets say yes and no…)

Here is what I think you will have to master/do/become in order to be in the first wave to return to full capacity and more importantly, to stay there: To paraphrase Kenny Moore, “Those specializing in the impossible will do well.”

Do more then understand what the client wants; Grok it. It will no longer be enough to simply understand the requirements a candidate must possess. You will have to amass a deep understanding of the subtitles, nuances, and specific content knowledge necessary to make a candidate successful. As such, you will have to develop much tighter relationships with hiring managers in order to ask enough of the appropriate qualifying questions to develop an unmistakable picture of exactly what the client is expecting you to deliver. Gone are the days of 10-minute chats about what a manager requires.

Say goodbye to political correctness. Your services are not being used to be politically correct. The promotion of fairness is a fool’s errand. You client is depending on you to support the acquisition of the very best candidate. End of story. Discriminate with passionate abandon against anyone who is not qualified to do the job and let HR sweat the numbers. Do this one thing and you can rest assured that you are doing your job.

You will have to become a political animal. Most recruiters, present company included, are not all that good at the politics of the workplace. (I can assure you that my disinhibition has made some see me as less then charming.) Politics is not a dirty word; it is a reality of businesses everywhere. Taking advantage of organizational politics is an opportunity to do what you have to do in order to do what you need to do in order to be successful. Hold your nose and play the game; successful recruiting is worth that effort.

You will have to pick up the phone. We must never lose sight of the fact that recruiting is a gregarious and rollicking business of people relating to and engaging other people. Social networks, talent pools, and other pockets of potential ability are wonderful but until you pick up the phone and drive the candidate side of the process, it is all pixels and IMs. When it is person-to-person contact you need, the experience of picking up the phone can be magical.

You will have to drive and execute the deal. It is imperative that we take charge and set the recruiting process in motion, keep it moving, and manage the overall dance. Drive the client to action, move the candidate towards acceptance, and close the deal. This is easier said then done, as so much is an art as well as a science. My advice is to be bold, take risks, and do whatever is required to create an intelligent hire that will benefit the organization as well as the candidate.

Are these five points the end all in terms of what recruiters must become? No, but let us begin there. When hiring commences in earnest again, we must not come back as the same people we were. We must pounce on talent and claim it as our own. (If you do not know what this means, you have never worked for an agency.) I feel strongly about this because if you do not think that organizations can engineer recruiters out of their existence, you are very sadly mistaken.

One more thing. Be nice. You will be interfacing with a desperate, angry job market. Every call and e-mail you do not return is linked directly to a real person just like you. Keep a kind and encouraging word for those still lost and frightened.

Once again referrals have turned out to be the leading source of external hires in the annual CareerXroads source of hire survey. In 2008, 27.3 percent of the external hires made by the 45 large employers who completed the survey came from referrals made primarily by employees, but also by alumni, vendors, and others.

Corporate web sites — a destination and not an actual “source,” insists the report — was second with 20.1 percent of the external hires coming from there. Rounding out the top three were job boards, which accounted for 12.3 percent of the hires.

No big news in those results. For the last several years the survey that CareerXroads principals Gerry Crispin and Mark Mehler conduct every January has consistently found referrals accounting for about 3 of every 10  external hires made by the participating companies.

What is different this year is that 38.8 percent of all openings were filled by internal transfers and promotions.

“We found that very interesting, ” says Crispin. “That’s the highest number since we started this survey eight years ago.”

His explanation is that despite hiring freezes, critical openings still have to be filled. But, now that’s being done internally and the  jobs the transfers leave are simply being absorbed by the remaining staff.

In the report, Crispin and Mehler put it this way:

“… the significant increase in the proportion of internal to external fills in 2008 versus 2007 (28%) is at least partially due to the deteriorating economic climate during 2008. We think this conclusion is further supported by the survey respondents’ estimate that the number of contingent workers employed by their respective firms decreased from 18% in 2007 to 10% in 2008. Clearly the data reflects a shift in emphasis to filling internally and squeezing external hires.”

The report also notes that some of the surveyed companies are filling almost half their vacancies by internal promotions and transfers. That’s something those companies should report on their career sites, Crispin and Mehler say, since it evidences their commitment to career development.

The survey report also identifies a few new trends and strengthens trends first noticed in previous years. Most notably:

1. Third party recruiters and agencies as a source of hires have been in decline since their zenith in 2005 when the survey indicated 5.2 percent of hires came from there. In 2008 that number had fallen to 2.7 percent, a decline exacerbated by the overall drop in hiring.

   “Don’t place your bet on this side of the market having much of an upside when the economic climate reverses. It won’t,” the report says.

2. CareerBuilder has overtaken Monster among the job boards (28.9 percent vs. 23 percent of the total hires coming from job boards), but the report calls it a pyrrhic victory. “We believe this SOH has indeed peaked and predict it will diminish in the future.” However, the report suggests that all of the big, national boards are losing share to the niche sites, which collectively accounted for 36.2 percent of the hires coming from job boards.
3. Perhaps not surprisingly, not one of the surveyed companies said it planned to increase hiring in 2009. Showing the depths of the downturn, the companies collectively expect to hire 15.7 percent fewer employees this year than last.

Recruiters have come to regard the annual CareerXroads Source of Hire Study as a sort of guide by which to measure their own company’s sourcing. However, Crispin and Mehler caution that, “we seek to stimulate discussion about staffing issues rather than encourage blind acceptance of data at face value.”

The report is compiled from data reported by 45 firms (out of more than 200 invited to participate) who collectively filled 309,600 openings last year.

Note: The chart accompanying this post has been updated to include two categories omitted from the previous version.

From her post:

Oh, what a month! The U.S. lost 533,000 jobs in November, the highest rate in 34 years (since 1974). This moves the nation’s unemployment rate to 6.7%; it was 6.5% in October.

According to fresh Labor Department data, economists had actually predicted a 6.8% unemployment rate for November — yet they only predicted that 320,000 jobs would be slashed.

Either way, this is bad news across the board: construction employment was down by 82,000 over the month; retail trade employment fell by 91,000 in November, with the largest job loss among automobile dealers (-24,000); and leisure and hospitality employment lost 76,000 jobs in November.

For me, the most disturbing part of the report was this:

Employment also declined throughout the service-providing
sector.  The largest loss (-101,000) was in employment services,
which includes temporary help agencies.  Employment services has
lost 495,000 jobs so far in 2008.

Employment is usually thought of as a lagging indicator of the economy — companies only slash jobs after they realize that sales are going south. But temporary help is more of an indicator of things to come, since it’s easier to adjust the number of temporary workers than it is to hire and lay off permanent employees.

Buckle up, folks. This isn’t over, and it’s going to continue to be a wild ride.

• Corporate recruiters have access to tens of thousands of active candidates via job boards and specialized career sites.
• Corporate recruiters have access to information about tens of thousands of inactive candidates via a variety of Web tools ranging from Google to ZoomInfo to LinkedIn.
• Thousands of corporate recruiters have been certified in advanced sourcing techniques from firms like AIRS and the Adler Group.
• ATS and hiring management systems not only house customized resume databases, but they also enable recruitment processes to be streamlined so that recruiters are able to spend less time on operational details and more time delivering value-added services to hiring managers.
• Once the sole resource of search firms, research, and sourcing firms provide rapid candidate generation services to corporate recruiters at affordable prices.

…Why aren’t search firms out of business?

Out of Business? Search is Thriving!

In the face of all of this, the executive search Industry is not only nowhere near close to going under, it’s thriving. (The current economic downturn will temporarily halt this, but overall growth in the search industry has been explosive over the last 10 years.)

Consider this:

• Kennedy Information reports that the global market for executive search services is $6-8 billion annually, and that growth in that industry since 1990 has been “staggering.”
• Korn/Ferry produced record revenues and earnings in Fiscal Year 2008 ($790 million/38%), an increase of just under 50% from 2006.
• The average placement fee at Heidrick & Struggles reached $114,900 in 2007, up from 2003’s average of $81,100. That, coupled with growth in total search assignments, created 2007 revenues that increased 95% from 2003.
• According to ExecuNet, search firm recruiting assignments rose 24% in 2007, and 25% were adding staff at the end of last year.
• Average compensation for a search consultant can range between $200-$600,000+ annually.

That the search industry has been growing may not be surprising, but the speed at which it is skyrocketing is, especially in the face of all the investment made over that same period into internal recruiting functions.

After all, it wasn’t too many years ago that staffing industry pundits were predicting the demise of the search industry, in the same manner that real estate brokers and stock brokers were supposed to disappear, thanks to the power of the Internet and its open access to information. After all, who needs a third party when all of their previously proprietary information is available for free or inexpensively on the Web?

Don’t Shoot the Messenger

There is an old axiom in the search business about competition that goes like this: “Other search firms aren’t our competition — competent internal recruiting functions are.”

When an internal function is competent and able to fill openings effectively, there’s no need to hire external firms. Therefore, as internal competence grows, more and more difficult positions are serviced in-house and fewer (or no) roles require external assistance. As a result, the market for external search shrinks as fewer positions make their way to external firms.

But this is in fact the opposite of what has happened: the demand for external firms has increased exponentially. This phenomenal growth in the search business tell us that search firms do a better job, or at least that they are perceived to do a better job, by the executives who choose to engage them over their own internal recruiting group.

Now before you pummel me with negative commentary, understand that I wish there were another conclusion to draw. But there really isn’t, and facing our shortfalls is the first step toward fixing the problem.

The recruiting service that is perceived to be the most valuable by executives is recruiting the top roles. This is easily proven by looking at the high fees executives are willing to pay for a single hire. The average search fee of $110,000 for one hire is more than most corporate recruiters make in an entire year.

The reason that executives are willing to pay high fees for search services — and worse, to not even consider giving search assignments to many internal functions — is because they perceive the external provider to be a more credible, capable, and more reliable source of talent. Why is this so?

It’s All About the Methods

There are several key differentiators for search firms that clearly distinguish them from the typical internal recruiting function. Although there are more, here are the top five that internal recruiting functions can adapt that will improve their outcomes dramatically. And, these can be integrated into most recruiting functions quickly and easily:

Run the assignment like a project and dictate methods

The first thing that search firms do differently from most corporate functions is to take absolute control of the project. This includes a documented project plan, timelines, and crystal-clear delineations of roles, responsibilities, and mutual deliverables.

It also includes getting the client to agree to follow the search firm’s project methodology, not the client’s. A critical mistake we often see corporate recruiting teams make is asking higher-ranking leaders how they would like to see the project unfold. Expert service providers dictate methods so that they can guarantee the results. Insisting on following the correct methodology is a key step that is too often missed by internal teams.

Force the client to define their hiring requirement in light of market realities

A good search consultant will excel at making sure the hiring requirement is specific, realistic, and actionable in the talent market.

This can be challenging since managers often provide requirements that read more like a wish list rather than a carefully considered formula for success. We have observed internal recruiters accepting assignments that contain so many hiring requirements that they cannot be fulfilled in the market.

Recruiters should take an active role in helping to build the hiring requirement right from the outset. It may be necessary to challenge the hiring manager on unrealistic requirements, too many requirements, or too broad a requirements set.

Secure the proper level of project funding

Why do we fund search firms with high fees, while internal organizations are forced to continually drive down the costs of recruiting to lower levels?

In some ways, internal organizations themselves are to blame because they have positioned their value equation in terms of cost reductions. They brag about reducing cost-per-hire and total recruiting spend. Yet, the reality is that some positions will cost more — and perhaps dramatically more — to fill than the average.

No search firm would accept an assignment for less than the cost of delivery. Internal teams shouldn’t either. To gain approvals for higher levels of funding, make the value of the service crystal clear and avoid focusing on the cost of the service.

Hire top recruiters with deep industry experience/subject-matter expertise

The most clearly visible difference between search firms and internal functions is the level of recruiter working in each.

In the course of our consulting work, we’ve met plenty of excellent internal recruiters. Unfortunately, we have met many more who really aren’t qualified for recruiting roles. Worse, we’ve meet some recruiting leaders who really don’t have much of a background in recruiting.

To really excel at recruiting, internal functions should take a lesson in staffing their recruiting functions with strong, industry-savvy recruiters who possess foundation knowledge in recruiting as a profession. Start by hiring a seasoned recruitment leader who understands talent markets, marketing principles, selling, internal consulting, and knowledge transfer. Select staff members who have been trained in the recruiting industry at some point in their careers and have enjoyed success in contingent/search roles but also understand the realities and limitations of internal recruiting functions.

Continually work a database of industry contacts/potential future hires

This is straight out of Recruiting 101, but let’s face it; search firms do a better job of building and maintaining recruiting networks than internal functions.

Part of the reason, of course, is that fees give them ample funding to do so. But another large part is that they are serious about recruiting for the long haul, and internal organizations are serious about recruiting to fill the open req in front of them.

This difference in focus changes everything about their behavior. When recruiters are pressured to fill today’s openings, they have little time to focus on cultivating tomorrow’s potential hires.

Most companies have plenty of resumes in the ATS/hiring management systems but have not built the capability or the know-how to stay abreast of who’s who and who’s where in the target talent markets critical to their growth. Building a robust database of key talent targets, engaging those targets in meaningful dialogue, and nursing relationships over time will pay big recruiting dividends over the long haul.

If corporate recruiting functions were truly great at recruiting and had the credibility they seek with top executives, then there would be limited need for third-party search firms. Realistically, there will always be a need for competent search firms. But the accelerated growth of this industry over the last 5-10 years indicates that internal functions are failing to deliver the most critical, and arguably the most valuable, recruiting services in a way that puts internal functions on equal footing with our external counterparts.

It’s time we took a hard look at why.

Monster and CareerBuilder- Do You Need Both?

Interesting…this was actually a topic of discussion at this month’s ERE happy hour in Atlanta. Matt Faskamp wants to know if his company can save costs by using only one job board subscription instead of two. Do Monster and CareerBuilder really have unique visitors? Mike Jenkins says you only need one but not to forget to add Yahoo! Hot Jobs to that list. He recommends looking at your companies’ specific needs (i.e., international capabilities, board that provides more candidates for critical positions, user feedback, and capabilities of your ATS). Chandra Bodapati is the first to recommend Internet search instead. Kristin Gissaro and Sam Morse agree that Matt might want to take a different approach and turn toward niche boards and social networking sites. Kelly Dingee wisely advises Matt to run stats from his ATS and ask candidates what they use. She has personally had success with all three big boards…it depends on the reqs. She agrees with others that Matt should consider niche boards, Internet search, and social networking sites. Good luck, Matt. Let us know what you decide to do!

Is Outsourcing Outrageous or the Natural Way of Things?

This topic first posted by Maureen Sharib on July 15 continues to dominate the ERE discussion boards a week later. Maureen addresses the “biggest boogeyman” in today’s campaigns…outsourcing. More specifically Maureen argues that U.S. companies are motivated to outsource their call centers because of worker productivity and efficiency not necessarily lower costs. One reason might be that these employees receive a defined career path with opportunities not available for U.S. call centers. T Tallis believes that “part of the problem is unions.” Charles Hillman disagrees, defending unions, and focusing on the negative impact outsourcing has on American workers, families, and the economy. Amanda Blazo can sympathize with both sides having managed operations for two offshore Internet research centers. Whether offshoring or not, Amanda says it boils down to the fact that “some companies do certain jobs better than others.” I am not sure Jeff Weidner would agree; he believes these efficiencies are a result of the low cost-to-hire allowing for more employees to work on one job. Mike Johnson refers to a study by Booz Allen Hamilton and Duke University reminding us that “off-shoring high-skilled functions does not replace jobs offshore.” Joshua Letourneau also refers to an article he wrote that “takes a deeper dive into the globalization and commoditization of names sourcing today,” including issues with telephone name generation training and competition. Deborah Jones agrees with Amanda that outsourcing is not outrageous but natural since these centers in the Philippines and India offer more opportunitites and agrees with T Tallis that unions are to blame. She draws a parallel to the automotive industry. Maureen Sharib shares the news the GM has cut health care benefits for its employees. Joshua Letourneau and Paul Davenport empathize with employees but defend GM’s position. Joshua reminds us that “the point of a publicly traded company is to create shareholder value — nothing more, nothing less.”

The conversation has continued to heat up this week…you might want to check it out!

5 Recession-Proof Jobs

Sam Medalie includes Research Business Analysts, Administrative Assistants, Accounting/Finance Executives, and Sales Representatives/Business Development on his list from CNBC.com. I questioned these jobs since I have read several articles stating Energy, Environment, Health Care, Education, and Security are the five recession-resilient industries. Sam was clear when arguing that the jobs on his list are necessary for companies to grow, not going anywhere, and can help drive revenue. David Rees questioned the list of five industries, particularly security and energy. Energy — because in the 1980’s the price of oil in Alaska was so low and families had to relocate. Security — because it is too broad of a topic. “The common denominator is that demand for those services is less volatile and based on needs that we have very little control over.”

Monday’s Question of the Day

I wanted to know if corporate recruiters care more about OFCCP compliance than TPRs. If so, why? Manoj Tiwari is not a recruiter but understands this debate from an OFCCP compliance point of view. According to Manoj, corporations are responsible for compliance so it doesn’t matter WHO does the hiring; it just matters that it follows the guidelines. The cost to the organization is huge, both financially and in branding and reputation. “Not necessarily a good practice but TPRs are not affected beyond losing one business and hardly ever mentioned anywhere in the media or public forum.” OFCCP also is not concerned with where you collect the data as long as it is documented. I also posted this discussion on the Fordyce Letter.

Niche vs. Generalist Recruiting

Shawn Schantz works in the Pharmaceutical and Medical Device industry and wants to rebrand the recruiting model for niche recruiters instead of generalists. Does anyone have advice? Nick Cobb warns recruiters that they are expendable and when moving to this model, the best thing a recruiter can do is to “know everything about every industry and description they can” in order to survive. Kevin O’Malley warns Shawn to inform his recruiters that change is around the corner and that recruiters could suffer from boredom as niche recruiters and leave the company. Steve Myers is more optimistic. He supports this model but suggests a strong marketing plan to back it up. According to Steve, Shawn should not be concerned with hiring recruiters because “newbies” are easier to train. Bob Thompson agrees. I’m curious to see how this plays out…

Becoming Independent

Katie Bielke left a full-time position for a large staffing company, moved to a contract position for a small staffing company, and now wants to go independent. Does she need to get funding or can she start right away. Katie rethought this post and before anyone responded, decided that she did need to plan first but wanted to hear feedback and advice. Pam Claughton recommended 6 to 12 months of saved living expenses first so Katie can focus on the business without stressing out about cashflow. Joseph Ray agrees and advises Katie to take her time when investing in her website, ATS, job boards, and computer expenses. Becoming independent is “more complicated than most expect.” Sam McCord had success going independent with no additional funds and sought guidance from trainers like Doug Beabout, an attorney, CPA, and business consultant. Good luck, Katie!

I listed six below and wanted to hear from you on #7. Let me know what you think, add a comment to one of these groups, and tell me your suggestion on the final discussion.

1. Late Fees… Dianne Luecke worked as a TPR for 3 years with no late fees…until now. She wants to know if she can add finance charges after the 30 days included in the agreement. Judging by the number of responses, it sounds like Dianne was lucky — late fees are common. Ken Salinas summed it up best by advising Dianne to be patient, stay positive, and keep constant communication with her client. Wendy Rixon explained how things work in the UK with her clients and and Robert Stein recommended offering a discount for fees paid on time, bill in advance of each period and offer a credit card processing option (PayPal). Joe Ray advised Dianne to rethink the charge if they are a big client…these things take time.

You might also want to check out the Law Suit Fee Agreement started on 6/19…

2. Monday’s Question of the Day…After reading an article on non-compete agreements, I asked if they keep potential candidates from joining an organization. Willie Finch agrees that they need to be well-written to be effective and believes that the priority should be on protecting the organization, not the new employee. Maureen Sharib added that these agreements should be reasonable. David Rees addressed the negative impact of non-compete agreements on the workplace and the economy. Kenneth Greenwood received some advice from others on protecting his database and if a non-compete was his best option.

3. Facebook and MySpace for Business… Susan Nickerson is seeking advice on creating a corporate branding page on these sites. Manoj Tiwari turned the discussion in another direction by asking the tough question…Are people really using these sites for employment purposes? This lead to a greater discussion about generational differences. Steve G works closely with Millenials and claims that they do not use these sites for job seeking or employment references. Jeff Altman writes that these sites and younger job seekers are not looking for the “J-O-B” but for a corporate culture that meets their needs. Kelly Dingee advises us to skip the advertising and go directly to Indeed or SimplyHired.com for job seekers and recruiters; sourcers should use XRaying and FlipSearching.

4. Help/Suggestion…Mark Will faced a challenge when a hiring manager posted the wrong salary range and the candidate after receiving the lower salary offer was tempted to pursue another job interview that would offer more money. Nick Cobb, David Hafernik, and Jaymie Spencer warned against giving salary ranges and managing expectations from both parties from the beginning. Peter Kempton and Scott Stuckey offered advice on negotiating with both the hiring manager and candidate. Marc Beacon recommended checking the cost of living index (www.bestplaces.net) and Jay Lowry recommended asking for a sign-on bonus.

Good news! On 7/3, Mark’s candidate accepted the offer.

5. Do Passive Candidates Become More Passive in Bad Economic Times?…Sam Medalie did his research, asking managers their opinions on finding passive candidates in today’s economy. Sadly, the majority of responses indicate “yes.” Most candidates feel that it is too risky to make a job change. Trevor Brooks went from an average of 50 resumes a week in 2007 to 15-20/week today. John Kennedy reminded us that this downturn is different since we are not seeing a large number of layoffs.

6. Friday’s Question of the Day … I was talking to a friend of mine who is a corporate recruiter and works closely with several third-party recruiters. She recently set up an interview with a candidate recommended by one of the TPRs, only to find out that the candidate had applied directly through her organization. I asked for advice and the overall response was to check the ATS. Geno Zertuche suggested reviewing the TPR agreement and Ash Devane shared the clause his TPR firm uses in these situations. Tanya Edmonds simply stated if the candidate applied less than a year ago, no fee. If the candidate applied over a year ago, the fee should go to the TPR.

7. What did I miss?….

How is it possible that some companies’ human resources departments can act with such indifference that they actually behave in a manner that is inhumane and unresourceful?

In some circles and industries, an increasing trend is taking hold where recruiting departments have resorted to crafting lengthy recruiting contracts issued by newly centralized recruiting departments. In these examples, the departments have gone well beyond centralization and have engaged in a practice and approach best described as militarization.

Before I go on, let me state that I thoroughly understand the need to consolidate recruiting activity, as well as monitor recruiting expenses and costs from one single, centralized function. This is especially true when such companies are no longer medium-sized and have joined the ranks of the Fortune 500 and particularly publicly traded companies that operate under the watchful eye of multiple government agencies.

But when reading the language and clauses of “recruiting agreements” put forth by these emboldened “militarized” recruiting departments, one is left to question the real intentions of such an agreement.

Is it to promote recruiting partnerships? Or, are these contracts being created to confound the search firm from recruiting at all? More of these militarized recruiting agreements seem to point to the latter.

Some of the “recruiting vendor contracts” that have become a by-product of the overall centralization/militarization efforts indicate that the company would actually prefer if you (the external recruiter) fail at delivering candidates rather than succeed in filling openings!

My law classes remind me that bilateral contracts require several key components, which include the following:

• Lack of duress (both physical and economic).
• Both parties are of legal age.
• The contract consisting of lawful activity (you can’t contract a hit man, for example).
• Consideration exchanged for service/goods provided (this consummates the contract).
• Absence of being overly one-sided.
• Good faith/intentions (varying implications depending on industries/types of contracts).

If you sign a contract under duress (e.g., “sign or some harm will come to you!”), that could invalidate the contract. Such harm can be physical or economic.

I know something about economic duress, as I used the economic-duress defense 15 years ago to win a dispute against a New Jersey company that settled out of court in our favor after a judge let it be known which way things were heading.

Deciphering Confusing Terms

Some of these contracts contain baffling phrasing involving non-solicitation clauses; fines for reverse recruiting; are overly heavy-handed, possess lengthy non-compete periods; and impose severe restrictions on communication with management. Some contain clauses that extend too-great authority to the client company with regard to duplicate candidate submissions.

A few creative, clever companies got around point No. 4 by taking the contract wording one step further. Since you can not hold a recruiting firm liable for reverse recruiting under a contract with no business transaction or compensation ? one clause I reviewed for this article demanded that the search firm pay a $10 “consideration” fee in order to become an approved vendor. Now that took some big Chicken McNuggets on the company’s side to put into wording.

To put this into perspective, could you imagine demanding that your landscaping contractor pay you $10 before he could set foot on your property for the privilege of submitting a price quote for a new patio?

Where in this country would you find a contractor or any business professional worth a dime (licensed/bonded/insured/with references) who would pay you for the privilege of providing a quote? The good ones I know will charge me, the homeowner, $350 just for an initial site design (equivalent to being paid to produce a recruiting plan in our industry).

Our recruiting industry takes such abuse on the chin and seems to enjoy the punishment, which no other similar service industry would ever tolerate. When I try to draw parallels with service-based professionals working on a fee/contingency basis, I come up with this list as one example:

• Travel agents.
• Contingency lawyers.
• Real estate sales professionals.
• Insurance producers/sales reps.

Off this short list, I find contingency lawyers and real estate professionals are the closest cousins to the search industry. No attorney would work on your case on contingency, knowing you are “cheating” while using two other attorneys. That would create chaos if the case went to court. Same goes for competent real-estate marketers.

Now let’s look at the real estate industry for a moment. Realtors have to be trained like recruiters. They have to be licensed like recruiters (in most states). They can go on to acquire additional certifications, like recruiters.

Stop and imagine a Realtor entering into a home marketing agreement and then letting you sign two or three other Realtor listing agreements simultaneously. Would that happen?

Absolutely not!

No Realtor would put up with the idea of your using multiple realtors while they invested thousands of dollars of their own monies to bankroll marketing, advertising, attending/hosting open houses, posting Internet features, etc. to drive traffic to your home.

Yet our search industry puts up with this daily. We allow a client to sign a contract. And just as we begin work, that same client is probably racing to get two or three more recruiters involved on the same “search party” simultaneously!

It’s a disgrace to both the companies and recruiters that engage in this type of charade.

We get what we deserve. We treat ourselves cheaply and as a dispensable commodity, and we are now getting the treatment we’ve come to ask for from militarized recruiting departments forced to close the gaps for those in our industry who do not engage in self-regulation and self-discipline.

Some of these agreements are getting too ridiculous and insulting to our profession. Too many militarized recruiting agreements reek of false pretenses that have nothing to do with establishing a recruiting protocol.

From Contract Confusion to Contract Reality

While many centralized agreements are honorable and prepared with good-faith intentions, a number of agreements are apparently designed to create the illusion that recruiting alliances would continue with chosen search partners.

However, these agreements instead seem to place greater value on other concessions buried within the contract.

So what is it these companies are after if it is not recruiting services?

Why use these agreements if they truly never intend on using your services, or plan to issue searches under impossible constraints?

I spoke with employment specialist attorneys around the country on this subject, as well as several national recruiting trainers and speaking gurus I consider esteemed colleagues and reliable sources. The consensus was unanimous that a growing number of “newly revised” militarized recruiting contracts written by battalions of in-house lawyers are dubious in nature. Although I am not an attorney (please consult your attorney for all contract-related questions), I find that the real hidden value contained in these contracts include:

• Non-employee solicitation clauses. This is probably the most valuable benefit the company might derive from an otherwise useless contract.
• Non-communication clauses. If communication is restricted to the appointed recruiter, he or she can stonewall all day about job-search status and you will never know better.
• Illusion. The “illusion” of continuing a recruiting relationship to invoke the above two clauses.
• Fear. If they can intimidate you into believing there is hope you will not raid their company.

Actual Contract Language Revealed

Consider some of these real-world examples:

“? No communication or dialogue is to occur with any hiring manager ?”

Funny.

If it were not for the hiring manager’s knowledge of the search firm’s abilities, human resources would never have known of the firm to begin with. I can count on one hand when human resources actually reached out to any recruiter without being cattle-prodded by management.

If you do not trust the search firm, do not hire them. If you trust them, let them do their job, which is to fill your company’s positions. This process requires constant communication with decision-makers and not middle-person interpreters, translators, or revisionists. If you must stay in the loop, then participate in conference calls.

” … Payment in the amount equal to one-year’s salary is required for any recruitment of company’s existing employees ?”

In this case the “fine” for reverse recruiting (poaching) would be the value of the recruited candidate’s first-year salary. You can’t blame the company, as case laws around the United States have favored search firms when poaching did take place while the said search firm was attempting to place a candidate with the simultaneously poached client.

Some of this raises more issues, such as who is a client, and how long is a client considered a client after no activity? At IRES, we abide by NAPS ethics and guidelines in the absence of a client-specified statement on client status. That period is one year.

One recruiting representative of a financial-services firm based in the Northeast stated:

” … I don’t care what vice presidents may be in charge of. Regardless of the title on the business card, I’m in charge of determining who interviews which candidate and which location gets to interview. I run this company, not our VPs; they just think they do …”

That person was a low-level recruiter earning in the mid-fifties range yet felt he exerted more authority than vice presidents. Ouch!

This is an example of militarized recruiting. I forwarded this email to the actual VP, who was astonished to discover the manner his centralized recruiter used when speaking to other business partners.

Here’s another:

” ? In the event of multiple resume submissions, the company shall make the sole and final determination as to which recruiting vendor has earned the fee ?”

Very endearing language, isn’t it? And here I thought as president of my search firm that such decisions rested upon my shoulders.

Final Thoughts

The only time a company needs more than one recruiter is when the first engaged recruiter turns out to be incompetent. Period.

The company is setting itself up for failure when you invite search-party tactics.

If you are using five recruiters, they must all stink or you wouldn’t need so many. Either that, or your company stinks and you have an impossible position to fill.

The companies we have the greatest consistent success with and have decades of ongoing relationships with are those that allow us to work as the experienced, competent, professionals we are. The successful companies allow us to interact harmoniously with decision-making managers whereby executive recruiting consultants and internal recruiting are all being treated as equals.

There is no animosity. No tension. No hidden agenda. And no struggle for the protection of internal fiefdoms or job-security juxtapositioning by internal HR.

Many newly formed centralized recruiting departments were designed quite well and avoid the troublesome issues outlined in this article. Most permit necessary management dialogues necessary to perform a quality professional service.

To be fair, not all centralized recruiting departments micro-manage, exhibit insecurities, or constrict the ability to perform the very recruiting services that were requested. This is, after all, the way it should be for any professional to deliver professional results.

The next time you are confronted with a newly militarized human resource contract, consider it more carefully and read between the lines to find the true hidden meaning before you sign. Consider the repercussions to your industry and whether your value and integrity is worth compromising to corporate arm-twisting.

The decision of whether or not to hire additional recruiters can be a struggle. During hectic times, the workload can be overwhelming. It can seem like an easy solution to increase the flow of resumes by opening up positions to numerous agencies. However, it is important to educate these staffing firms on the details of the job, the process, and the environment. Without this knowledge, they won’t have the information they need to deliver quality candidates. Using third parties can be a valuable strategy. But, being proactive and communicating with them every step of the way takes time. Without these extra conversations, positions won’t necessarily be filled more quickly.

Traditional Staffing Firms

Working with a staffing service, particularly one that specializes in an industry, can be a vital resource for a company. An open door allowing them to talk with hiring managers about each job helps them understand your culture and company goals. Even if these solid relationships are built, turnover internally within a staffing firm can have an effect on timeliness and the understanding of your needs.

When dealing with a small talent pool, there can be plenty of debate over who owns a candidate and for how long. To eliminate issues in the future, make a few agreements with agencies in advance. Since they often use some of the same resources a company may already be paying for, be clear upfront about the sources from which candidates will be accepted. If two agencies present the same candidate, you may want to decide in advance who would get the fee. It could be the one to present the opportunity to the candidate for their approval first or the one to present the candidate to you first. Third parties also need to know if the organization is willing to consider paying a fee for a former employee. If your head spins thinking about the groundwork and ongoing issues, why not change the way you work with third parties?

Make Staffing Firms Part of the Team

Rather than only relying upon third parties as a resume supplier, use them as a trusted contract recruiter that enlarges the department without a permanent hire. As an employer working with third parties, Brown Shoe Company has built a unique partnership with The Grapevine Group. An offsite representative of Grapevine acts as a Brown Shoe recruiting team member in all aspects of the hiring cycle. This adopted team member is trained on the internal processes and has access to all our systems. Just like staff recruiters, this person does everything from open to close for assigned positions. Working with hiring managers, this representative learns the needed skills and the department fit. Job assignments are in all departments and levels within the organization.

In addition, Grapevine’s staff completes various projects such as competitor organizational-chart building, sourcing for targeted searches, and scheduling interviews with downsizing companies. The amount of time this outside firm is used fluctuates based on recruiting needs. Grapevine employees have also conducted training at team meetings and have contributed ideas by providing a non-bias outside viewpoint.

Partnership Has Payoff

Your favorite staffing firm may be open to this model since an agreed upon, guaranteed hourly fee can be charged. To weigh the benefits of this type of relationship, determine the time and money spent within the traditional staffing firm model. Calculate the amount of hours your staff spends with agencies (they discuss the position details, your culture, and how your organization works, as well as communicate about resumes and serve as the go-between for scheduling and offers.) Add to this the 15% to 30% fee if someone hired was sourced by the agency. Compare this total to the hourly cost of a contract recruiter, who is actually filling positions without ongoing internal staff involvement.

There are additional benefits for the third party that include job satisfaction and retention within their own staff since they get to see the result of their work in a different way. They also get a true view of your company by being a relied-upon partner. Traditional third parties build and maintain strong pipelines and often have more time and experience with cold calling than many corporate recruiting teams. They succeed in filling difficult openings and can also do an outstanding job of being the go-between for the company and the candidate. However, there is no denying the extra time and communication needed to get everything scheduled, explain the process, and get to the offer stage.

At times, corporate recruiters need the extra help traditional staffing firms can provide by digging into the market for access to more candidates. But when you have an increase in workload, consider using third-party sources as an extension of your talent acquisition team.

This article originally appeared January 17, 2007.

Agency folks tend to see the corporate world as bureaucratic and slow to make decisions; more specifically, they see most corporate recruiters as lacking the requisite skills and bare-knuckle tactics required to make things happen.

On the other hand, corporate recruiters tend to see agency people as mercenary, often unable to be trusted, and as slick salespeople who just want to close the deal.

As someone who has been on both sides, I smile as I write this, as I can assure you that both perceptions are, to a great degree, correct.

Many corporate recruiters want to compete with their agency brethren, but this lofty achievement is akin to losing weight; so very optimistic for the first few days but ultimately not doable because losing weight is so very hard to do.

Sadly, so is competing with agency recruiters, because you have to think differently if you want to be different, and most corporate recruiters will have to be very different to make this transition.

For openers, I urge you to consider the following concept as it relates to money, the ultimate driver of our behavior. If it makes you shiver to the bone, consider it your introduction to the agency way of thinking and doing business.

Forget the comfortable paycheck. There is no meaningful check to speak of, so let’s think on terms of a pay-cut to the tune of 75%. You must close deals to get paid, because you are no longer in the business of trying to make hires; you are in the business of getting it done, because that’s how agencies make money. No deals equals no money; no money equals no food. (See “Eat What You Kill: Using the Sales Model to Improve Your Recruiting” for further insight.)

Now that compensation is out of the way, consider the following tenets, presented as two categories, Attitude/Mindset and Action/Task, as tools for the change required if you really want to make this transition to more effective recruiting:

Attitude/Mindset: Change How You Think

• Push hard. If you want to compete, come to work on fire every day and be the driving force behind moving every deal forward as far as possible; every? single? day because a deal that sits is a deal that dies. If you are not making a hiring manager a bit crazy, you are probably not pushing hard enough. (Believe me, they will not fire you for getting people hired, but they just might if you don’t! Agency people make placements first and friends second! If hiring managers are not responsive, see “8 Secrets to Dealing with Non-Responsive Hiring Managers”.)
• Reject “I don’t know.” Hiring managers must know, because you can’t do your job of getting people hired without their direction. An “I don’t know” means no forward progress, and that is not good. If you want to compete, find out what the candidate is thinking as fast as possible, and then do the same with the hiring manager. Catch them both right after the interview; they are busy but so are you. I often wonder why recruiters act as though the time of the hiring manager is more important then their own. (See “Recruiters as Business Builders”.) Ask the hiring manager, “Can the candidate do the job?” If the candidate can do the job, you should be talking with the hiring manager about moving forward. If the candidate can’t do the job, determine why and adjust your recruiting as it relates to future candidates.
• Turn “I don’t know” into “I do know.” Some hiring managers simply do not know and never will until it is too late, so these folks need your help. (Ever have one come to you a few weeks after a candidate has practically died of old age asking if they can make them an offer?) Not knowing is incongruous with the reality of business, as they are managers and as such they are running a business and making decisions is part of their job. (Think Gates or Jobs can make decisions, or do you think they just mull things over for a few weeks?) However, if they really do not know, help them. Use the line I use: “Ok, let’s go through this together.” Sit with them for awhile and go over the requirements they laid out in the position profile, asking whether that person has that skill and to what degree. Next, look at the experience they requested and go over the candidate’s background from that perspective, one type of experience at a time. Lead the hiring manager in this way and you will help them to think things through in terms of what they really need, and help them to come to a decision on what to do with that candidate. Don’t be surprised if you end up with a totally different search profile, but do not be disturbed either, as it might be the first time anyone helped the manager to think through what they really need in the candidate you are trying to locate.
• No sleeping. The answer, “I just need to sleep on it for a few days” makes me nuts. There’s little to gain from sleeping on it. On the other hand, if the hiring manager needs more information to make a decision, that’s acceptable. Have they used JAVA Beans in financial applications? Did they design comp packages in a team or alone? Can they speak Chinese? What version of SAP do they use? It does not matter what they need to know; get it and get it fast. Before you run out the door, ask the hiring manager, “When I get you this information, will you be prepared to make a decision as to a next step?” If the answer is yes, get the information. If the answer is no, ask the hiring manager, “What other information do you need such that when I come back from my conversation with the candidate, you will be able to make a decision on the next step?”
• When talking to candidates, understand that “no” simply means “maybe.” This bullet alone can fill multiple articles and most books on sales will back up my statement. No is a normal reaction to the unexpected call from the recruiter. No is simply what the candidate says when they have no idea what else to say. Frankly, no is not a word I can relate to. How can you decline if you do not even know what you are saying no to in the first place? “No” is an invitation to listen, probe, and continue the conversation. Getting to “yes” is part of every salesperson’s job and the first “no” is just the starting point in the process of meaningful dialogue and the presentation of a great opportunity.

Action/Task: Change What You Do

• Ask pointed questions. It is the job of an agency person, after an interview, to find out whether the candidate is “up” or “down.” Up is ready for the next step; down is no longer under consideration. Let’s assume that the interview is over, you have spoken to the candidate, and they are interested in moving forward. That means the candidate has made a decision and now it is the responsibility of the hiring manager to do the same. To determine the next step as it relates to the candidate, ask about their reaction, the next step, and what you should tell the candidate. If they do not have the answers right after the interview, that is okay, but they need to have them within a day or two. John F. Kennedy once said, “Not to decide is to decide.” Please do not let this be your fate.
• Play take-a-way. At times, the managers will simply not be able to make a decision, and as a result, you are stuck. To get unstuck, tell the hiring manager, “I have an idea: let me give the candidate a call and tell them you are not interested.” Then get up and head to the nearest phone. If the manager agrees, you have saved a ton of time and grief. If the manager balks, there is your decision. It may be forcing a decision, but at times, it simply must be done.
• Send fewer but better candidates. In my days in the agency business, you sent three qualified candidates. More is not better, because the hiring manager begins to forget which candidate did what and loses the ability to put a face with a name. Give a hiring manager 20 great candidates and it will be a long time before you see a decision or a placement. Provide three great candidates who can do the job, and be done with it.
• Get on the phone. I know you’re tired of hearing how in the old days we had no shoes and ate catsup sandwiches without bread. But trust me, there was no Internet and no computers. As a result, we became great on the phone or we left the business. Agency recruiters are running and gunning all day long, and the phone is a big part of how to make things happen. You connect on the phone, form relationships, share a laugh, convey urgency, and establish trust. Your phone line is your life line and link to the candidates you need to reach. That will never happen in an email.
• Learn to source passive candidates. It is hard to get on the phone if you have no one to call so I strongly suggest you take a workshop to become a Certified Internet Recruiter.
• No more meetings (almost). In my days in the agency business, aside from weekly training, we had two meetings per week totaling approximately 60 minutes. First, we met Monday mornings to discuss who on the team was going after what new accounts. Then, on Wednesday afternoon, we discussed candidates in play and next-step strategies. (Heaven help the agent who had nothing new to report.) Of course, it is good to spend time with hiring managers in short meetings, but the rule of the day is simple: if the time spent in the meeting does not support coaching on recruiting issues or closing deals, you should be using your time on things that support filling positions.
• Do a great interview. Read “10 Things Recruiters Should Know About Every Candidate They Interview”. The more you know about the candidate you are representing, the more things will fall into place.
• Forget active or passive candidates. Learn to think in terms of candidates who are qualified or not qualified. Your job is to find the best candidate for the job and close the deal; great candidates come from many different places.
• Give great service. I tell clients they can call me anytime, and I do mean anytime. Respond instantly to hiring managers, always knowing the when and what of the next step in the process. Then, make that next step happen.
• Know the process or develop one. Everything goes better if there is a process in place because it removes the unknown for the candidate, gives the hiring manager a road map to follow, and helps you maintain some degree of control. According to Scott Weston, author of HR Excellence, “Having and articulating a hiring process means the recruiter needs to act as a project manager; be able to establish a rough timeline with a series of milestones for each stage of the process. This makes the process clear for everyone involved, sets reasonable expectations, and encourages joint accountability with hiring managers.”
• Sell the company. Agents start selling the opportunity and company as soon as they see that the candidate is viable. You need to do the same because if you do not create a dramatic value proposition, there is no reason for the candidate to change jobs. Read “Selling the Company” for more information.
• Be up on changes in the candidate’s life. If you think that the candidate will always volunteer this information because you have a “great relationship” with them, you are in for a surprise. Read “What Has Changed Since Last We Spoke?” for more information.
• Control the offer. Pre-close the candidate before the offer is made, and do all that you can to be the one to make the offer. If you can’t actually make the offer, try to understand what the offer is before it is made. Hiring managers will, for reasons that are all over the board, do things such as lowball candidates or change titles. This might not bother you, but to those who are sensitive to these considerations, it can kill the deal really quickly. You have probably worked far too hard to lose a deal in the 11th hour. Control the offer and you increase your chances of a successful placement. (See “Close the Deal and Land the Candidate” for added insight.)
• Prepare for counteroffers. There are few things more painful than getting that phone call on a Sunday night from the candidate declining the offer. It is even worse when you know that you did not fully prepare for the counteroffer. Honestly, it is a debilitating event that can send you spinning. Read “What Great Recruiters Do to Prevent Counteroffers” to get the full story.
• Say you’re sorry. If you are as successful as the best agency people, you will at times step on some toes in your attempt to make things happen. In the event that anyone might be miffed, tell them you are sorry if you drove them crazy. Explain that making hires can be stressful. Soon, the new candidate you hired will begin to do great work and make the hiring manager so happy they had you to make this hire happen. Bottom line? They will get over it.

The reality is that not all corporate recruiters will be able to make all of these changes. If I were not an agency recruiter in the days when my kids needed shoes, I might not be able to do it either.

However, all of us can become better to one degree or another, and I do believe it is worth a try if you really want to compete with those in the agency business. Besides, if you get good at this, you can always go over to the agency side and at times, double your income.

Regardless of where your career takes you, it is nice to know you can compete at a higher and more effective level.

Two recruiters called me last month to offer recruiting assistance on a particular project they heard my company was working on. This was a routine search in the $50,000 to $60,000 range that we had filled hundreds of times before. In this particular instance, however, we were caught in a backlog.

The recruiters were right about the period of time being longer than usual. Since both were esteemed individuals I’ve known and respected for well over 10 years, I decided to invest about a half hour with each to fully explain the search.

I should emphasize that both of these individuals travel through recruiting associations, attend conferences, keep their skills sharp, and represent that single-digit minority I would entrust sensitive projects to.

You could understand why I was frustrated when both said, “We’ll get right on this” but proceeded to not call back for one week. Then two weeks. Then three weeks.

Sadly, this is the manner in which many recruiters treat their clients. This type of behavior is not limited to recruiter-versus-recruiter relationships alone. And this is why most clients and hiring managers develop a disdain for recruiters.

At the very least, one could have called back after two weeks and stated something along the lines of, “You know, Frank, I really worked hard on this but could not find anyone suitable to refer.”

Or something such as, “I’ve had some other commitments come up and can’t work on this. I wanted to get back to you rather than leave you with no follow up communication.”

There’s nothing worse to a hiring manager (I consider myself a hiring manager as well as a recruiter) than long periods of dead silence after a recruiter is enthusiastic about helping you out.

It would be best had you not called at all. Now not only did you not perform up to your expectations, but you actually fell short of your previous image and brand you created.

The Grace Period

Is there such a thing as an appropriate “sound of silence” timeframe? And if so, is it one week? Two weeks? One call per month?

I say it depends on the level of a search and specificity of the industry and skill set.

For a few exceptions, when you are dealing with positions in the under-$75,000 per year range, there’s no reason why you shouldn’t call your client and provide feedback on a semi-weekly basis.

I have one account that demands we conference every Friday. We did just that until there was an ample pipeline of candidates and the conferences were no longer needed.

I like clients who demand action, because I usually get reaction in return for our efforts.

In my real-life experience, whenever I have actually called a client and “fessed up” that their search is proving to be more time and effort than what we had anticipated, they have always appreciated the information. This is especially true if there are particulars that go with it.

Sometimes by providing feedback, the client relaxes criteria or increases salary. Other times they have decided to rearrange the retainer so as to not have my firm walk away.

But to not call back at all is inexcusable, unprofessional, and a complete waste of valuable business time. I’m just as mad as any client would be not hearing back from a recruiter for three weeks after being promised action!

The Missing Recruiters

As it turns out, our organization finally found the “right candidate” within the next week or so after sharing this search on a split arrangement with my two trusted colleagues. So the subcontracted assistance was thankfully no longer needed.

Trouble is, they don’t know that due to their own inadequacies.

You see, I decided to call them to notify them of our success. Just in case they were working late into the evenings making dozens of calls and foregoing golfing on weekends on my account, I decided to advise them their services were no longer needed and that our candidate had been selected.

And the real punch line to this story? When I called and left a message, they still did not call back!

This tells me that they:

• never took the search seriously.
• lacked respect for my time.
• probably never spent more than one hour once they got off the phone with me.
• probably treat their clients the same way.
• have little regard for their image.

In a recent Fordyce Letter column, more than a few recruiters from around the country reported they had no qualms “walking away from difficult clients” if the search proved to be no longer worth the effort.

Walk away? Just like that? And leave another client scratching his head as to what’s wrong with our industry?

To walk away with no explanation tarnishes the search industry. To walk away and explain why this is necessary is a much better choice.

Please don’t give the rest of us a bad name through your long periods of silence! Call your clients. Call them weekly or semi-weekly. But please let them know something rather than handing them long periods containing nothing but the sounds of silence.

It has been debated many times, but the question of whether recruitment is best done with internal or external resources can only be answered at an organizational level, based upon a cost-benefit analysis.

When doing this analysis, consider which method of recruitment scores higher on the following metrics:

1. Quality of hire
2. Time to fill
3. Culture fit
4. Candidate experience/impact on EVP
5. Cost

It’s time to take a close inspection of each of these areas.

Quality of Hire

Most internal recruiters, at least in medium- to large-sized companies, rely on Web-based systems to do the initial screening and culling of applicants. They lack incentives, and also lack penalties, for how well they recruit. With external recruiters, there are often no metrics in place at all, other than time to fill. If metrics for quality of hire are clearly tracked and compared between internal and external recruiters, it can help identify the best recruitment model for your business because you will be able to tell who is providing the highest-quality candidates.

Linking recruiter pay to quality of hire is a critical step in ensuring that recruiters make solid recommendations to line managers, who ultimately make the hiring decision. Agency recruiters can be measured based on client feedback and the number of times roles have to be re-filled at no charge to the client, which can happen if the wrong hire is made and if the client organization does not have a formal way to measure its recruitment suppliers on this metric.

If you use a hybrid model, consider measuring and comparing both your internal and external recruiters on the quality of new hires. After implementing such a metric, measure them upon their first placement, at six and 12 weeks, again at six months, and then at regular intervals.

Time to Fill

Jobs can often be filled faster by using agencies (particularly within specialized industries) because they have large applicant pools. Good recruiters will always have warm candidates they keep in touch with.

Often, when external recruiters are pre-screening and presenting candidates, it’s internal recruiting teams that hold the process up. It’s not necessarily their fault, as priorities sometimes change, putting recruitment on hold, or as role requirements are revised, but it speaks to a core challenge facing the recruitment community today.

One key reason recruitment is delayed is that budget for a role has not been approved prior to beginning the search process. As everyone knows, you shouldn’t go to market until you’re certain you need to fill a role and that money is available to do so. It seems that many companies still retain search firms, spend money on advertising positions, and start seeing candidates without a confirmed internal agreement. This has a decidedly negative impact on both the brand and the relationship with any candidates you have engaged if you withdraw from the process.

A second reason for delaying the process often has to do with how companies operate internally. While a new role may be budgeted, conflicting schedules, agendas, or priorities can mean delays in seeing candidates, or extending the number of interviews or assessments beyond what was originally planned.

Not only does this increase cost and time to fill the role, it also antagonizes candidates and may mean you secure the runner-up instead of your preferred applicant, or worse, you’re left with no suitable candidate at all, forcing you to begin the process anew.

If you’re using agencies that have pre-screened candidates for you, move those candidates through the internal process, make decisions about individual applicants, and follow up quickly. Given the shortage of candidates in the market, this should be a given.

The need for speed in recruitment, to manage costs and to fill roles, especially empty ones, must be balanced with the need to find the best candidate for the role, considering all aspects, including culture fit.

Culture Fit

Internal recruiters will be able to articulate and respond to questions about what it’s really like to work in your company in a way that external parties won’t. External recruiters will never know your business as well as your own staff, try as they may, because they don’t work in the organization on a day-to-day basis, experiencing all its nuances and political challenges. As a result, many organizations think that recruitment can be done better by an in-house team who know and live the corporate culture and understand stakeholders best.

In the model where external recruiters are placed on-site, they work with your teams every day, but they are still removed from the employee experience to a large degree. For them to hire for culture fit is a particularly difficult task.

One way to track success in this area is to measure culture fit, and there are a number of ways to do that. Compare success rates between your internal and external recruiters to see who is making better assessments of culture fit.

Candidate Experience/Impact on EVP

Every time you go to market under your own brand or someone else’s, you send messages about your organization to potential candidates. How you do this could impact the way your firm is perceived by candidates, so understanding the impact of what you do is important.

If you use blind ads through a recruitment firm, you won’t build or add to your own brand recognition. Any external agency efforts to co-brand or represent your business must be handled correctly or the brand can be damaged. For example, if external recruiters don’t respond to candidates, or not quickly enough, people will forever tie that response to your brand, leaving a negative image in their minds about your company.

Pointing would-be employees to agencies through your careers website makes an impression on candidates about your organization, good or bad. Investments in a career website are better realized if you make the effort to engage with candidates directly at some level. This direct communication puts you in control of your candidate pool and is particularly helpful when there are jobs in the pipeline that haven’t been advertised yet.

Cost

An important cost consideration is related to the number of recruits. If you don’t hire a lot of people each year, it’s probably not worth having in-house recruitment staff. If you do, it’s worth measuring the cost effectiveness of outsourcing against the cost of having an in-house team and a well-developed career site with a front- and back-end recruitment system.

Using external recruiters can be expensive if you are a small company and do a large number of hires per year. Invest in some sort of recruitment technology, as well as a good recruiter or two on site who know your business, your brand, and your culture.

Whichever method you choose, or if you use both internal and external recruiters, the most important things to remember are that you need great people for your company, you need them now, and you want to spend as little as possible to get them.

Great candidates don’t need your job. Making the process as smooth as possible will go a long way to building relationships with candidates for the long term. Star candidates often have multiple offers, and will move on if you can’t make decisions quickly enough, even if they would rather have worked for your firm.

By delaying the process, cancelling searches, and not replying at all, you are sure to damage your employer brand and your reputation in the market.

Not only is this a great career, but it saves me lots of money on cable movie-channel subscriptions, as nothing can be as entertaining as the fits and starts, about-faces, shenanigans, internal conflicts, behavior irregularities, lies, deceit, and manipulation our sometimes prospective clients and candidates endear us with.

Here are three of my most notable stories, which are funny looking back 10 years later, but they were not quite so funny at the time:

First Story: Will a Job Offer Get Me Promoted?

A managerial candidate from a familiar company called, desperately seeking help to get out of her current situation. After meeting with her to determine that she was committed and not just having a “blue” day, I took on the project of representing her to a select group of presidents I knew would have interest.

She had a professional appearance, solid resume, and articulate demeanor, but I had that little voice deep inside that cautioned me, as she was too perfect in some aspects and a bit too scripted.

In about four weeks we had an interview, which led to a second and third meeting and to an eventual six-figure offer with a multi-thousand dollar sign-on bonus. Everything came in precisely at the price point she had stated she required on multiple occasions to accept the offer.

She accepted and resigned. My first “red flag” was when I found out she gave a five-week resignation notice. Five weeks! And no she wasn’t quite that important in her current role.

On the Tuesday after the Monday she was to begin her new job, I received a call from the president’s office of the new employer. “We assume you’ve heard what happened?”

I replied sarcastically and said, “No. Why would anyone think of informing me of anything?”

“She called here Friday,” the company manager said, “leaving a confusing message about a counteroffer and that she’d call back, but she never called back and never showed up yesterday.”

In calling the candidate, I found out this was not her first counteroffer acceptance. But she did not reveal this. I had a co-worker reveal her past history to me.

In fact, it was not the second counteroffer acceptance.

I discovered this was the third time she accepted a counteroffer with the same employer within the five-year period she was working there! She received significant salary increases, a larger office, and enhanced staff and working conditions or a combination thereof each and every time!

This was one of those rare cases where the company loved being manipulated and this person had the process down to a science.

I know what you must be thinking: Frank didn’t prep his candidate.

No, we actually went through this discussion ad nauseum just as Byrne, Bruno, Finkel, and all the great recruiting trainers have taught us to do. I even became sick of hearing myself enforce the “counteroffer pitfalls” to the candidate during her resignation period.

It turns out the employer in this instance, contrary to the majority of cases that contribute to the statistics, actually raised this person’s salary and enhanced her job duties each and every time she resigned!

The candidate had utter control over the company and knew exactly when to manipulate her employer repeatedly to her personal advantage. I was clearly duped and taken advantage of when I discovered I had been exploited to benefit someone’s current financial status. (I did get some revenge later in due time, but that’s another story.)

Second Story: Should I Have Resigned?

Every now and then we come across a client who loves our first candidate so much that they decide to take over the entire finalization of the interview process. These are the guys or gals that feel “they know darn well” how to extend an offer and no longer need us.

Ahem.

This is not so bad if it’s a professional, well-trained, and knowledgeable corporation completing the hiring process. It’s also not bad if you’re on retainer and it doesn’t matter how the second interview/offer is handled, as you get paid regardless.

It does matter if your license is on the line, you’re working in a state with high Errors and Omissions insurance premiums (like New Jersey), and the company is an entrepreneurial firm that needs to be monitored closely so as to protect the candidate from prematurely resigning without having a written official offer in hand.

Such was the case when I found out on a Friday a few years ago that the candidate I had sent in the Friday before was invited back in for a second interview the following Wednesday (without my knowledge or notification) and offered the job on the spot by the president.

Great, I thought. Less work for me and the same fee rate.

I called the president’s executive assistant to find out what the official start date was for final billing.

She could not tell me. “Why’s that?” I asked.

“Because the candidate is getting back to us next week after working things out with her current company.”

After multiple calls to the candidate’s cell and home number I began getting worried when by the following Wednesday, one week after she supposedly received her offer, I still could not reach her. This was a case of overindulgence in arrogance and self-confidence where both candidate and employer felt they had everything under control.

They didn’t.

I finally called her at work, which I was instructed to not do, but I had no other choice.

That morning the president of the company stated that if she could not start in two weeks, he would rescind the offer.

I nearly blew a gasket and scolded him for circumventing our services and extending the verbal offer directly without my guidance and consulting. I explained that had he clued me in to the intended verbal offer I would have advised her to not resign until we both knew she could accommodate the start-date requirements.

Had we been included in the decision-making process, I would have avoided this problem by making sure she had a written offer letter first before resigning and that we had pre-anticipated potential start dates before reaching this point.

Here we had a candidate who resigned from her job a week ago, and still did not know which Monday she’d be able to start (whether she needed two weeks or had to wait until the third week to begin the new job).

The president was not pleased, as he was traveling to Europe on the third week and insisted the candidate start in two weeks flat and not in three weeks.

Obviously, we were not fond of doing business with this particular company again so we sent in a new contract with substantially higher rates so as to curtail having to hear from them unless it became well worth it.

This candidate was almost caught in job limbo as she decided on her own to resign based on a wishy-washy verbal offer that lacked a firm start date agreement. Had she come to us for guidance and advised us of the second interview (the company is also to blame) we would have consulted otherwise.

We now use this story repeatedly to impress upon candidates why it is imperative for them to have the company deal with us and not accept direct offers. We now convince them that we have their interests at mind and not just the company’s.

Third Story: Why Did I Even Quit?

It was around the year 2000 when a certain insurance industry person came to me to assist with his new job search. As usual, I waved my magic wand, called industry hiring contacts, and within a month or so had him on interviews that led to the job he described as his “dream” job.

Great.

He started on a Monday. The department manager called late Friday afternoon.

“Frank, might you know what happened to Joe? He told us he was leaving for lunch around noon and we never heard back from him. If he quit, which is what it’s starting to look like, we were wondering if he had at least informed you as to what happened.”

I made calls that day. I made calls the rest of the following week.

“Joe” (name changed to protect and conceal his extraordinary stupidity and lack of business etiquette) never called.

About two months went by when I decided to call his former employer. Joe had gone back to his previous employer.

For the next few years, the inside joke was, “You’re not sending us another ‘Joe,’ are you, Frank?” when referring to the experience of this vanished candidate.

After four years, Joe had the audacity and block-headedness to actually call me back. He sent his resume stating “he was having a tough time with his divorce” and noted “other personal problems.”

Having been suckered into these games before, I told him “Sorry, Joe, but you only get one chance with my firm, and you had yours.”

I’m glad I passed on him.

He then contacted a recruiter of ours in our Albany location. And yet another recruiter in Philadelphia. I sent a mass email out so everyone representing our company knew to not represent Joe and why.

We found out weeks later that he was under investigation for possessing a handgun and working in the insurance industry forging coverage and selling policies without proper licensing.

We never heard back from Joe again.

His legacy spread from coast to coast, and when in need of a laugh, or when someone feels like sticking it to my ribs, to this day they bring up old “Joe.”

How have third-party agencies fared over the past five years with the rise of Internet recruiting? Are there more of them or fewer? Are they doing what they did five years ago? How have they changed? What is going to happen to employment agencies over the next few years?

Agency owners and users, from Europe to Australia, constantly ask me such questions during my travels. Everyone agrees that times are changing and the role of agencies along with them. While there will always be a handful of agencies that remain similar to those we have today, most will undergo major evolution.

The employment agency will survive but will clearly have to provide more services and of a different type than they do now. Many will become more of a talent agency that provides their client organizations with strategy advice and employment-related consulting and their candidates with career assessment and guidance.

The new charter is, simply, to provide firms with much better qualified and screened candidates than is typical today. Some of this vision already exists in the exclusive executive search firms where candidate coaching and career guidance has been common for years.

However, this has only really applied to executives and very senior technical staff. I see this spreading to most professions over the next few years. And even the consulting I mention is not new, but it will be much more widespread and more commonly offered than it is now.

These are the trends that I see occurring:

1. Agencies will become more niched and specialized. They will seek candidates in a narrow range of skill sets and become very knowledgeable about everyone in that profession in a particular geography. For example, they might focus on Java programmers for e-commerce firms. Large firms may be able to encompass several professions, but each will be treated in a unique way. A big part of the new agency’s role will be competitive intelligence work and candidate pool development. Only the largest of corporations will be able to afford to do this on their own, and therefore the market is ripe for agencies. Agencies will charge a transaction fee for the research they do and the names they supply. Or they could offer to do a full recruiting process at a fixed fee or on a percentage basis as they do today.
2. They will have in-depth knowledge of the people in a particular niche. They will have knowledge of all the e-commerce Java programmers in the San Francisco Bay Area, for example. And, they will have a sense of their abilities and even, perhaps, have those abilities ranked. They will know each programmer’s accomplishments and past employment history and who they would most like to work for. This knowledge, too, can be sold and packaged for clients. One agency could provide their information and services to another agency.
3. They will build strong relationships with candidates, act as talent managers for many of them, and collect fees from the candidates for career management. I see the best agencies becoming much like sports talent agents, coaching and guiding candidates to the best jobs and even helping them negotiate salaries and compensation packages. They will offer career coaching on an ongoing basis and even provide additional training or skills development, if they think that will enhance the total “worth” of the candidate to a client. They may recommend certain kinds of development for a candidate or give them feedback on previous performance. I envision this looking much like the arrangement many of us have with a financial advisor. For an annual fee or for a percentage of the portfolio, they will manage your account and provide you with advice and education on financial and tax matters. No wise agency will recruit candidates from current employers, but may provide career advice. There will have to be some procedures developed to protect both clients and candidates.
4. Candidates will be guaranteed placement. The agencies will not only guarantee a candidate to a client, but also a position to the candidate. As part of this newly emerging career management service, I see a two-way relationship. Because of this, agencies will be much more careful about the candidates they take on and about the quality of their skills.
5. Agency fees will increase, but only when the value-added is also clear and increasing.

   By doing this intensive knowledge gathering and screening, they will be able to add great value to the firms they service. They will provide very well-screened candidates ready to go to work immediately. The more they can provide, the more they can earn. Some fees may come from transactions, others from commissions or other fees. Whatever emerges will be far more complex and multifaceted than what we find in today’s market. Many small fees may be accumulated via transactions rather than receiving a single commission charge.

6. Agencies will represent a variety of clients: permanent (regular), temporary, part-time, and contracted. Many employers will want a mix of all these types for different purposes. Some agencies will be placing project teams with specific contracted job durations and scope. The best agencies will handle all of this in, again in a specialized area. They may actively help employees decide to change status and may coach both managers and candidates on how to work together more effectively. Each of these activities may involve fees, albeit small ones.

Firms large and small are already outsourcing much, if not all, of their recruiting to well-qualified recruitment process outsourcing agencies. However, I think there will be decreasing desire for agencies that try to provide candidates for all professions and do not bother to really understand the firms they are placing people in or the people they are placing.

In all my research and discussions, employers want more customized and personal relationships and are seeking more perceived value from the agencies than they are getting now.

Agencies are going to have to develop more flexible pricing and add value beyond simply sourcing and lightly screening candidates. The ultimate path may be in offering consulting and taking over the entire process for clients.

The non-profit Recruitment Process Outsourcing Association has already begun defining standards for this emerging area of recruiting and is setting itself up to be the forum for discussion and for improving the quality and standards of recruiting firms.

The success stories will be about those agencies that can develop a value-added process that benefits both the employers and the job seeker. In doing this there will be great wealth.

Some years back I was made to realize that even the highest-level corporate chieftains can find themselves at a loss when it comes to knowing which questions they should ask a recruiting firm.

There I was, sitting face to face with a well-known chairman of a significant public corporation seated behind his expensive mahogany desk. The CFO was to my right; the HR executive vice president to my left. The conversation was going well until I was thrown a curve ball.

“What kind of information technology background do you have, Frank?” the chairman asked.

Ouch. How could I answer that without sending the dialogue into a downward spiral?

During the next few seconds, the following chess moves were rapidly played out in my mind:

If I replied “I have no experience in IT,” that might send the wrong message and portray my firm as one that lacks experience required to recruit for the job. At that time, I had 15 years’ experience filling such V.P.-level positions. Still, it would not sound right to say I had no experience.

I could not say “I have experience in IT,” because I really did not, at least not to any modern level of a company of this size that made a difference.

I realized I was at an impasse no matter how I replied.

It then hit me: My trouble was due to the flaw within the question itself. Within seconds, I replied back:

“The question you ask is a good one if I were the candidate you were considering to hire. But in all fairness, the question you are asking does not address what my firm’s recruiting track record consists of. You are hiring me to recruit and not to manage your IT department. Therefore, it is my organization’s track record and ability to recruit that you might be more interested in. Would it not be more informative for you to know of our success in filling executive-level positions?”

Since his facial expression did not signal resistance to my closing question, I immediately followed through with references I had prepared in hand.

As I spread the laminated “Thank You” letters in front of him, each of which was a full color copy with recognizable corporate logos imprinted on them, he raised his hand and asked me to stop.

He was satisfied. Our firm received the retainer and we filled the position within 90 days. But it was a close call that I was ill-prepared for.

Over the years since then, I compiled a list of the six most critical questions a hiring manager should ask.

Each week my questions quickly expose those who are amateurs from the real McCoys as I use these same questions when receiving countless “cold calls” from recruiters who don’t know I’m a recruiter here at my own office.

These questions quickly expose those who have failed to invest in their business and those whose business practices are ill-conceived or simply inadequately trained:

1. Are you able to supply references? Anyone with a few years’ experience under their belt would be proud to share references. Some corporate CEOs may not want to be bothered, or there may be confidentiality issues. In such cases, candidate references ought to be available in lieu of client references at the very least. If they can’t supply references, find out why. This could be a red flag.
2. Where is your firm headquartered, and are you licensed? Every week I receive unsolicited “cold calls” from recruiters located from Florida to Nevada. Many firms seem clueless that a license is even required for placing here in New Jersey! To be fair, licensing for professional-level direct hires (where the fees are paid only by hiring companies) is not required in some states. It also doesn’t accomplish much, as in 19 years I’ve only had two surprise audits from state officials. Still, some oversight is better than none. According to Robert Style, legal counsel for the National Association of Personnel Services, the states that require licensing as of December 2006 are as follows:
   

   “District of Columbia, Hawaii, Indiana, Nevada, New Jersey, New York (if you place people at $20,000 per year or less), South Carolina, Utah, West Virginia, Wyoming. The following states require registration: Connecticut, Massachusetts, North Carolina, Wisconsin. Only New Jersey specifically requires licensing (registration) of out-of-state recruiters who make placements to firms located within the state.”

   Any recruiter who possesses pride in the execution of their services will at least know where they fit into the state and federal regulatory puzzle when it comes to such mandates. If they’re not familiar with state regulations, imagine what knowledge they may lack about more important federal guidelines and laws?

3. Do you carry adequate insurance? Is E&O included? Any recruiter placing executive-level IT or finance professionals is playing Russian Roulette when it comes to the fiduciary responsibilities such placed employees carry within the organizational structure. These high-level individuals have exposure, passwords, and user IDs to some of the most sensitive information a company has. Eventually, even the best screening and referral methods will fail. In those instances, you may have comfort knowing the firm you’re dealing with can name you as a co-insured for Errors or Omissions. Some national corporations demand to see insurance certificates each year before retaining for mid-level management positions responsible for multi-hundred-million dollar divisions and branches.
4. Are you a member of any professional trade association? If so, which ones? Many of the best recruiters are genetically predisposed to abhor memberships and associations with just about anyone. These are maverick-type individuals. They are fiercely independent and pride themselves of being untethered to any corporation and surviving as a financially independent entity. While this can strike you as cocky, such are the very traits you want in a recruiter if you anticipate success. Despite this bipolar love/hate relationship with associations, a smart recruiter will affiliate with some association, if not for professional development then at least for candidate pipeline development. Are they a member of the National Association of Personnel Services or other similar organization such as AESC or NAER? While my preference has always been the NAPS organization, any affiliation is better than none, as such membership stipulate codes of conduct one must abide by. The absence of such affiliation does not mean you should not use the firm, only that you should look at this information in context of the other factors I’ve outlined. Some very successful recruiters are consistently able to pull rare rabbits out of the proverbial recruiting hat for their clients, with not one conference, membership, or trade show attended in decades. They might even tell you they can’t afford to waste such time at these events due to their high success level remaining at their desk.
5. How many positions do you fill monthly and at what levels? This is self-explanatory. The reply should be realistic and credible. Four to five positions a month is achievable at staff level functions and disciplines. At management tiers, one or two per month can be considered high performance due to the extra time requirements. Climb up a notch to VP levels and even one complete search per month or quarter can be considered outstanding.
6. How long have you been recruiting? It’s no secret the recruiting profession is an easy-entry profession. Ease of entry, however, does not translate to long-term success, which is an entirely different matter. Many search firm owners consider “the hump” to be somewhere between 24 and 36 months, during which a recruiter advances from apprentice to industry specialist. Determine whether the person you are speaking to will actually recruit, or if another researcher will support him/her behind the scenes. Some companies use their most polished recruiters to “sell” to corporations and then switch the search work to a lesser-skilled apprentice. Find out who will remain accountable during the search.

Google the Recruiter’s Name

One final piece of advice, in addition to the six questions to ask, is to take research tasks into your own hands. For example, anyone who is visible within a certain network should have left some digital footprints in cyberspace that will come up in a Google search.

Simply place the recruiter’s name in Google and see what you find. You might be surprised. If you find nothing whatsoever, you may have some due diligence on the preceding questions to follow up on. Ask, “How come I see nothing about you when I Google your name?”

One thing you will notice by the above list is that previous corporate experience within a specific discipline is not important. I have hired recruiter trainees from the ranks of director to executive vice president from the corporate world.

Despite their “black books,” decades of seasoned tenure, and Rolodex of names, most of these recruiter-trainees failed miserably within the first year despite intense training.

Having a network is useless if you don’t possess the soft skills of massaging and nurturing such network contacts and transforming them into a consistent candidate pipeline.

This career requires a personality make-up that is at the opposite end of the spectrum from that of the classic corporate citizen. If someone excelled in the corporate world, they most likely will have difficulty recruiting, which demands intense entrepreneurial resourcefulness. It calls for a completely different genetic brain composition.

Don’t be impressed with previous experience in a particular corporate function, as this presents little correlation with current recruiting and placement success.

Recruiters should be truthful, resourceful, and trustworthy. Employers should be reasonable and accessible. Read on for invaluable advice for both sides.

For Employers

Be loyal. If you find a productive search consultant, stick with them. Don’t be a fair-weather client. When you need their services, call them. Don’t re-educate a new consultant for every new opening you have. Constantly looking for a new consultant every time an opening occurs is like a one-night stand…dangerous and counterproductive to developing beneficial and meaningful relationships.

Be truthful. If you don’t work with placers or recruiters, or if you only work with a select few, say so. Don’t lead them on. If you do decide to work with a placer or recruiter, give them all the details of the assignment. If you turn a candidate down, tell your consultant the real reason why unless you want to keep looking at misfits. Time is too precious to waste…for both of you.

Be reasonable. Overstating needed qualifications or understating the salary dollars available just muddies up the waters. Don’t require a Master’s degree for a job needing a trade-school graduate.

Be accessible. Return phone calls promptly. Failure to do so can cost you a shot at the “perfect” candidate. Ignoring phone calls is a gambit reserved for dolts and egomaniacs. You never know when you may need a favor (or a job).

Don’t over-control. Allow your consultants reasonable access to hiring managers. Departmental culture can only be discerned by direct contact with hiring supervisors or managers. Unless you know every job as well as your own (an impossibility), recognize that your consultant may have a better handle on the real qualifications than you do. After all, it should be you and your consultant against the problem: the unfilled opening which is costing your company money.

Don’t be a tire-kicker. Don’t give out speculative job openings or use consultants to supply you with sources of competitive market or salary information from candidates you have no intention of hiring.

Don?t be a bargain-hunter. If you feel the fee for the service is too high or the guarantee period is too short, use another hiring alternative. You’ll probably end up paying about the same with a lot more lost time and you won’t get any tenure guarantee for a hire through the newspaper. “Blue-light specials” only exist at Kmart. A consultant’s time and expertise is all they have to offer. If you find one who’s willing to work for less, you can expect to get less of their time, and their expertise is probably second-rate.

Respect your consultant. No one knows more about the job market than a personnel consultant. No one! If your consultant tells you your candidate wish-list is unrealistic, he or she is probably right on target.

Be ethical. Attempting to avoid or evade a fee you owe can have devastatingly expensive repercussions. The last thing you or your company needs is to be on the target list of every recruiter in town.

For Recruiters and Placers

Respect your client. Don’t think that you have a God-given right to every opening the client has. Let’s face it: some openings can be filled less expensively through alternative methods of hiring. And every opening doesn’t require a superstar. Some just need a warm body, whether the client realizes it or not.

Don’t negotiate away your fees. Discounting from your normal fee schedule requires that you provide less than full-service. It also implies that you’re charging too much to begin with. If a client company demands a bargain basement fee, be truthful about those vital things you won’t be able to do during the assignment. And be willing to walk away if they persist. Leave the grief to someone else.

Be truthful. Hyperbole has no place in the placement process. If the candidate lacks the reasonable minimum requirements for the job, don’t give them a degree they don’t have or the years of employment they haven’t worked. Client wish-lists can be frivolous at times, but they are the result of committee decisions that are hard to adjust.

Be resourceful. Companies are not interested in warmed over file-dwellers, net-surfers, or ad-answerers. They can get them on their own. Recruit the talent necessary to fill the opening. Be inventive and enterprising. Water-walkers occasionally surface through advertising or the Internet, but your most talented candidates don’t know you exist until you call them.

Be reasonable. If a company representative has a rational procedure for the hiring process, try to follow it. If it is unreasonable or unjustifiable, find a new client to work with. Unwarranted guidelines are promulgated to keep you at bay with a company who really doesn’t want to work with you anyway

Be tenacious. Remember that being pushy is not the same as being persistent. Recognize the difference.

Be trustworthy. Ethics and principles are their own rewards. Sharp-shooting and corner-cutting carry a heavy price for you and the industry you represent. Before moving into a gray area, think about how your actions would look as the headline for tomorrow’s newspaper.

Recognize your limits. If you aren’t skilled in the specialty needed, don’t fake it. Better to be up-front about it than to live with a botched reputation for failing to level with the hirer or the candidate. Over-promising is for amateurs. Stick to what you know.

Be proud of what you do. You are part of an admirable and honorable calling. Acting otherwise demeans you and your profession.