Comments

It is far far too simplistic a conversation, and irrespective of whether it may be believed to be the case or not, there are nuances, and of those many. It may be that a very large and in fact the majority of agencies working on basis like you describe Mitch, but I happen to currently be working with 3 agents that a l l are working on a contingency basis and a l l doing a sterling job, knowing their candidates inside out, their industries and what may or may not make the candidates a match for needs. I am not saying that the model overall not broken and that there are many that should never be in business, only that there are nuances.

Jacob, are you agreeing with me or disagreeing with me?

You can’t do both.

Let me restate my point.  A contingency service cannot be sold properly because a contingency service (regardless of sector) is, by its very definition, something that is uncertain.

You can’t sell someone on the fact that something might happen.  You can only sell something that is definitely going to happen.

And yes, there are some very good contingency recruiters like the ones you’re currently dealing with.  But they won’t be very good contingency recruiters for long because the grind of wasted effort and weak conversion ratios will eventually drive them towards either a management role, an inhouse role or a senior search role - all of which offer much stronger guarantees of income.

Mitch
Let us get clear about what constitute sustainable recruitment and what I am seeing from the three agents I am currently dealing with.
1. We engage them to help with multiple roles, in total around 20, divided into two categories
2.We use all agencies in parallel and treat them the same

To date single of these agents have produced around 25 shortlisted candidates, 20 interviewed and each having around 3 hires that are the results of these shortlists.

On average the fee received per hire and for work going over 3 months is £20-25.000 (20% fee for approx £100K roles)

Does that stack up, is that sustainable does such a model work?
Yes and no I would say and dependent on whether dealing with one off roles or multiple roles,  what your cost as an agency are, there may be big financial wins or not so big wins.

We can discuss if the contingency model works and overall the answer is likely no, however there is a thriving industry out there that operate on this basis and do make a living.

I cannot declare my support to either side, this is as said before much more nuanced and has to be seen in that context.

You get some leads but suppose none closed. There was no guarantee not like the bag of chips. You did get the marketing but not the results you hope for. No guarantees in life I guess.

But could you hire a better marketing agency?  What if you hired the cheapest marketing agency?  What if you only paid that marketing agency if revenues increased.  Do you think they’d be lining up around the corner to take the work on.  Do you think they put their best people on it?  Do you think they give a toss?

Where does pitching for a place on a PSL list come in your model? Is that sales?

Jacob, you’re talking about a different argument.

This one is about if or what agencies sell.  My argument is that they don’t.  They may influence, promote and cajole, but they don’t sell.  In the same way retailers don’t sell, they help people occasionally buy.

Agencies are the retailers of the HR services world.  And the people they get to cold-call are those poor bastards standing outside the shop wearing a sandwich board.

Spot on, Jim.

No Darryl.

That’s like begging for a seat at a blackjack table.

I am not sure what happened to the first past of my earlier message - but hey.

Here’s something I have been working on.  It is an attempt to outline the problem a little more by standing further back.

It seems that buyers within businesses are in a crisis because of the way that business itself is organised.

The business and it’s leaders have become risk averse and so they buy services in a risk averse manner.  This manifests itself in many ways. Procurement processes, ten pages RFIS, PSL’s, tissue meetings, 3 part pitches, 3 part interviews we have all seen it, agreed? etc.  They are trying to mitigate risk.

The problem is the reward for risk is profit and they don’t want to take any and so…

We live in risk averse times politically, culturally and economically.  The problem is that being risk free and playing it safe be it with money, ideas or personnel leads to a downwards spiral I fear. A race to mediocrity.

In their risk averse system they reason they might as well buy free (contingency) or cheap.  Then they wonder why they aren’t making profits and then they do it all over again.

It is the same for the sellers of b2b services they’d rather join in with the buyers risk adverse methods than risk standing out by establish a fee for their value.  And so on it goes.

Interesting. 

How about the scenario where a contingency recruiter cold calls you because they have market intelligence around your business.  They have done the research and know that you, say have a data vault project and you are short on architecture talent.  They are a specialist in this area and they work locally, hold meet up groups and are known.  They know you have a pain point and call you up referencing the fact they do a fair bit of work in fin services (your domain) and are working closely with a specialist in that area who is open to a coffee (passive) and will consider a move if we tailor the conversation appropriately. 

That is how I was trained.  Pretty sure that is not overselling.  Still contingent recruitment.  Only your fairly inexperienced recruiter would call without a reason. 

You are skimming the surface.  Plus the title is click bait.  Anyway, maybe I should write a blog called “Why recruiters shouldn’t blog”.  But that would be ironic.

I think you are simplifying the definition of sales also.  Sales & Marketing go hand in hand and it would be another blog to detail the relationship.

Also the difference between selling a service and a product, etc etc.

Calling and canvassing for a job without a good business case is the false refuge of the desperate.  “vast majority of ... agencies”, I don’t actually believe it.  Otherwise they wouldn’t last 12 months.  Also the fill ratio is down to many reasons down the sales funnel.

JT, what you describe in your opening paragraph is a good example of a more considered and intelligent way to begin to build a relationship with a company so you can access some of their vacancies and make some placements.  But it’s only really cataloguing the ‘prospecting’ stage of the sales process.

What happens when the potential client reveals that they have a vacancy that needs filling.  What do you do then?

The fact remains that if you’re working contingency, as you say you are, you’re still only delivering a solution on an occasional basis, given that the company is invariably also asking other agencies to do the same thing, some of whom will also sometimes find the right candidate.

So regardless of the way the business was nurtured, your service is still going to be lumped-in with all the other agencies, in that the client will view your service as ad-hoc and difficult to predict.

I’m not saying doing business this way is wrong - just that it’s inefficient and doesn’t require a sale to made, either by way of an upfront contract or by closing the hiring company on a particular candidate.

If anyone is doing any selling in many agency/client transactions, it’s the successful candidate, not the agency.

Forgive me for skimming the surface.  I was going to write this by covering every single agency permutation that might exist, but figured that might be a little arduous, timewise.

Interesting blog discovered 2 years too late. Click bait and wallpapering being the definite trend.

  The business model of employment and recruitment agencies on average is very poor in ethics to both potential candidate and employer. Algorithms are and will drive out the intermediaries.  Digital interviews now being the norm via main employers is also resulting intermediaries waffle being eliminated as well as the cost. Technology/ robotics will be very much cheaper in the employment chain.It’s all a question of investment.

Tom W