10 Ways to Avoid Paying Search Fees

The easy performance improvements are over. As the hiring market recovers, corporate recruiting departments will be called upon to handle more work with fewer trained recruiters and with fewer good people applying. Recruiting managers who adjust for this imbalance now will be able to minimize the impact of a recovering labor market. I’m hearing from more and more third-party recruiters (TPRs) that business is coming back. Fees are being paid, and the corporate purse strings are loosening up again. If you run a corporate recruiting department, this is a leading indicator of more turmoil ahead. Companies shouldn’t be paying search fees ó except for isolated critical positions or to meet a one-time special need. Paying search fees for standard positions ó accountants, sales reps, engineers, developers, mid-level managers, etc. ó is an indication of inadequate planning or lack of focus. Now don’t get me wrong: I started as a TPR and still do a few searches when called upon. I like doing these searches for a big fee. However, I now believe that with the insourcing of the recruiting department, stronger management, new advances in technology, well-trained corporate recruiters, and better use of the Internet including job boards, companies no longer need to use outside recruiters to find their top talent. Below are 10 ways to avoid paying search fees. You might want to rank yourself on each using the following 1-5 scale to see how well you’re doing now and how much money you can save or lose. Moving your ranking up one point on each factor will save tens or hundreds of thousands of dollars. That’s what it’s costing you if you’re a 1 or 2 on any of these factors.

  • Exposed (1 pt.): Something not being done, and now suffering for it.
  • Marginal (2 pts.): Partially being done, but could be improved. Will hurt us as hiring demands increase.
  • Adequate (3 pts.): Doing this fairly well. Can handle modest increases in hiring.
  • Solid (4 pts.): Doing this extremely well. Can absorb some major increases in hiring.
  • A core asset (5 pts.): Highly flexible, forward-looking; can handle all major changes.

Here’s what you need to do. Again, rank yourself on your current ability to do each based on the scale above:

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  1. Take charge. Leadership is essential. You must not get behind the power curve. This is an instant loss in credibility. If you’re reacting to situations, doing too much firefighting, or hearing about information after the fact, you must do something dynamic to regain control. Leadership is the key to ensuring that progress is made. If the recruiting team can’t handle the hiring needs of your company, managers will go outside within a few weeks.
  2. Leverage your employee referral program. Your best employees know the best people you need to hire for 50-70% of your positions. Yet they won’t give them to you unless you proactively ask them for the names of the best people they’ve worked with in the past. Have your recruiters call these people, recruit them, and then network with them as well. This is what good TPRs do, but they don’t have the same access to your top people as your own recruiting team.
  3. Leverage your existing talent base. Increase internal mobility. Your best employees are now being called for other jobs by TPRs. You can increase retention and improve performance by making sure you can offer your internal staff members other opportunities within the company. This must be an aggressive and formal program championed by every manager. The biggest bottlenecks here are the hiring managers themselves refusing to release their own people. You must elevate this to the executive level and make internal transfers part of your company culture. Doing so will also help you hire more top outside people as they appreciate how aggressively you develop your existing team.
  4. Prepare a hiring manual now and strengthen the recruiting staff. Managers will go outside if recruiters can’t handle the work. Identify your critical needs as soon as you can, and assign your best recruiters to handle them. Backfill this with other recruiters to handle less important needs. Have contingency plans to bring on additional recruiters as necessary. Make sure you use a “best practices” manual so that all new recruiters do what they’re required to do. You can’t hire new recruiters and expect them to be productive unless they do what you want done. You can lose hiring manager credibility very quickly when success depends more on the quality of the new recruiter than on using a good process.
  5. Use more workforce planning to anticipate critical hiring needs. While this makes good business sense for a variety of reasons, you’ll also know when an open position is about to hit before the hiring manager can call his favorite outside recruiter. Recruiting managers must be in a position to rebalance their recruiting resources quickly to handle changing hiring needs.
  6. Insure effective ad processing and management. This is the simplest way to find more people and avoid paying unnecessary fees. Make sure your ads are visible and candidates can find them using a variety of techniques ó by keyword, company, geography, title, and function. Do not assume that your ads are easy to find. Use test candidates to check everything three times with three different people. Then simplify the application process to five minutes max. Design your filtering to bring the best to the top and call these people within 24 hours.
  7. Use more creative ads and compelling copy to attract top candidates. Employer branding and job branding are the two best ways to minimize the advantage companies have over TPRs. The best candidates apply for and accept jobs based on what they’ll do, learn, and become. TPRs sell this stuff vigorously. You can do the same thing in your ads, bypassing the need to pay fees.
  8. Find and fill the big gaps. Figure out where most of your outside fees go by position, and then make sure you can handle these needs in-house. This might require a strengthening of the recruiting team, a new sourcing channel strategy, or redeployment of resources.
  9. Increase user adoption of the ATS. If you don’t have at least a 75% utilization rate of your ATS, you’re losing candidates to outside search firms, aggravating hiring managers with lack of performance, and setting the stage for far more serious problems as hiring recovers. Below 50% is cause for immediate concern. Consider scaling down what’s being used and tracked in order to get higher adoption rates. A minimalist approach tied to best practices can get all recruiters online and productively using some of the basic features of the ATS. Work with your vendor on this. It will help with the reporting and allow the best candidates to be tracked properly. Losing an assignment to a TPR because the candidate couldn’t apply easily or couldn’t be tracked to a requisition will cost more than your monthly ATS license fee.
  10. Upgrade performance reporting. Shorten the timeframe on your reporting ó especially how much work is being assigned to outside search agencies. Don’t wait for cost per hire and time to fill to increase. Costs are guaranteed to go up as hiring managers use more outside search firms. Track this on a weekly basis, and intervene before the contract is signed or candidates are seen.

Now assess your own company on these 10 factors and the point scale above. With a maximum of 50, a score of 20 or less indicates a need for immediate corrective action, and something in the 20-30 ranges indicates that planning for change should start right away. The title of this article could have been “How to Build a Better Recruiting Department,” or “Is Now the Time to Clean Up Your Act?” or any number of more catchy titles. Whatever the title, the article would have had the same message: Get moving. Things will change quickly. Improve the way you’re now doing things. Work on the high exposure items first. Strengthen your recruiting team. If you delay, your costs will go up, candidate quality will decline, and you will be paying unnecessary search fees. Recruiting managers need to become more aggressive to meet their company’s hiring needs as the hiring market recovers. These 10 areas are a good place to start.

Lou Adler is the CEO and founder of The Adler Group – a training and search firm helping companies implement Performance-based Hiring℠. Adler is the author of the Amazon top-10 best-seller, Hire With Your Head (John Wiley & Sons, 3rd Edition, 2007). His most recent book has just been published, The Essential Guide for Hiring & Getting Hired (Workbench, 2013). He is also the author of the award-winning Nightingale-Conant audio program, Talent Rules! Using Performance-based Hiring to Build Great Teams (2007).

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31 Comments on “10 Ways to Avoid Paying Search Fees

  1. ‘The title of this article could have been ‘How to Build a Better Recruiting Department,’ or ‘Is Now the Time to Clean Up Your Act?’ or any number of more catchy titles.’

    Then it should have been…

    Using the same logic (avoid paying search fees), companies should abandon skunkwwork projects because these should be handled via the normal channels of product development.

    But if one wants to improve one’s recruiting function,sure, go crazy and rate yourself on these ten questions.

    Better yet, give the questions to your current slate of external search consultants and have them rate you.

    [heh heh]

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  2. Lou, I just finished reading your article mostly to have an understanding of why you feel corporate HR should be conducting their own recruiting. My firm works with companies in the plastics industry providing their top talent in engineering and mid to upper management positions. We work on these searches due to their complexity and because you need to have a strong understanding of the industry in order to know where to recruit. These are positions that should not be left to HR. I do agree that lower level positions can be done by HR using job boards and other forms of advertising, but for highly technical and managerial positions, you are not going to locate the best and brightest through those means.

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  3. Lou: In a perfect world, you may be correct but the recruitng department you envision is a utopian dream. You may want to refer to an article I wrote for CareerJournal.com which addresses the other side of this question: http://www.careerjournal.com/columnists/perspective/20040517-fmp.html. Here are the basics:

    WHY RECRUITERS ARE WORTH
    WHAT THEY CHARGE

    ‘When I need a heart by-pass, rest assured that I won’t select my surgeon on the basis of what they charge.’

    That’s what an ailing executive recently opined when he was informed by his doctor about his arterial blockage problems.
    Why then can corporate executives be so tightfisted when dealing with what is so commonly thought of as the ‘heartbeat’ of their companies . . . top-talent?
    When faced with brain drains, talent deficiencies or the need to replace an employee with a better one, their thoughts too often turn to parsimony. This Wal-mart men-tality belies and contradicts their stated objectives to ‘hire the best,’ especially at pecking order levels below the ‘big picture’ executive suite inhabitants.
    Recruiting fees can vary from firm to firm but, when they do, you will almost always find that those on the low side are sure to exclude some very key portions of the process. You get what you pay for.

    So why are recruiters worth what they charge? Just a few of the often unspoken reasons are:

    Expertise – Nobody knows the employment marketplace better than a professional recruiter . . . nobody! In-house human resourcers, no matter how effective, view the mar-ketplace through an imperfect prism and tunnel vision is an occupational hazard.
    Just as physicians are cautioned against treating members of their own families, so too is it folly for an in-house H/R professional to believe that they have an undistorted and unbiased picture of the employment landscape. They are vulnerable to the pressures of internal politics and cultural dimensions which do not hinder the outsider.
    Street-smart recruiters already know the neighbor-hood, including the unlisted addresses so often overlooked by the HR insiders.

    Cast a wider net – A professional fisherman will always have more to show than a weekend angler. Recruiters are in the marketplace day in and day out. They know the un-fished coves, reefs and inlets that are unknown to others. The job-hunter bookshelves are filled with lore about the ‘hidden job market.’ The same holds true for professional recruiters who have a detailed roadmap to the hidden talent sources which will never be accessed by newspaper ads, alumni associations, applicant databases, the Internet or any of the other more familiar sources of people.
    Someone inevitably wins the Publisher’s Clearinghouse Sweepstakes and non-recruiter sources can occasionally find a pearl but you have to shuck an awful loot of smelly oysters to find them.!

    Cost – There is a misconception among employers that the cost of a hire equals the cost of the ads run to attract the person hired. Try adding these to the true cost and you’ll see just how cost effective an outside recruiter can be:
    Companies rarely calculate the true metrics of a hire.

    Unbiased third party input – Contrary to what some be-lieve, recruiters don’t try to put square employees into round jobs. A recruiter’s stock-in-trade is their integrity and their reputation for finding someone better than a company could have found for themselves.
    For a mid-level to senior executive, the average recruiter may develop a ‘long list’ of a hundred or more possibilities. Each must be called and evaluated against the position specifications as well as the personality ‘fit’ with the company and the people with whom they will ulti-mately work. Once this is winnowed down to the ‘short list,’ an even more intensive interviewing process begins to narrow the search to a panel of finalists for review by the client.
    This process is not, as some believe, simply romping through the file cabinets, job boards or putting the job opening out to others on the recruiter’s network with crossed fingers that someone good will show up.
    It is highly unlikely that a professional recruiter will be plowing brand new ground with your opening. They deal within spheres of influence far more familiar with your needs than any internal recruiter and, more often than not, view the finalists as people who are competent to solve client problems rather than just fill an open slot in the organizational chart.

    Confidentiality – Advertising or otherwise publicly proclaiming an opening, aside from its cost and demonstrated ineffectiveness for sensitive senior level openings, often creates anxiety and apprehension among the advertiser’s current employees who wonder why they aren’t being considered or worry about newcomer transition problems. Just as often it alerts competitors to a current weakness or void within the company.

    Speed – The recruiting process is always faster through a search professional continually tapped into the talent mar-ketplace than one having to start the process from scratch. For every day that a key opening remains unfilled, a company’s other employees must grudgingly do double duty. And this doesn’t factor in the profit opportunities or competitive advantages lost to a company because a posi-tion remains unfilled or done on a part-time basis by others less qualified.

    Post-Hire Downtime – Not only is speed an essential part of the professional recruiter’s process, the ability to locate a person who can immediately ?hit the ground running? with a minimum of ?ramp-up time? saves time after the hire. All too often, a hire selected through less effective sources, offering a smaller talent pool, requires several months of expensive training and orientation.

    Reality – Professional recruiters often recognize and have a duty to inform clients that they may be mistaken as to the type of person sought, the salary required to attract them or the possibilities that the solution might just lie in areas outside the traditional target industries . . . something an internal recruiter is politically disinclined to do. Too many hirers fail to understand that a professional recruiter’s pri-mary function is not necessary to fill a slot but to provide the right candidate to solve a problem.

    Negotiation – As a buffer and informed intermediary, the professional recruiter is better able to negotiate the needs and wants of both parties to arrive at a mutually beneficial arrangement without the polarizing roadblocks which too frequently materialize in face-to-face dealings.

    Prioritizing company resources – It is often amazing to see how much of a company’s revenues are squandered on non-productive perks for existing high-level employees while they penny-pinch on what is every company’s life-blood . . . talent acquisition.
    Club memberships and the like may be fine, but no one with an IQ higher than room temperature believes that these expenditures contribute to a company’s profit margin. But one well-placed employee can be the cause of a company’s profits skyrocketing. And the fee for having hired these people pales in insignificance when compared to the contributions they make to the bottom line.

    The next time you think a recruiter’s fees are too high, put them in the proper perspective before asking for that bargain Blue Light special or spinning your wheels thrash-ing about trying to fill vital openings with less effective methods. Savvy executives learned long ago that the fee paid to a recruiter is a shrewd strategic investment, not an extraneous expense.

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  4. Sorry Steve, I don’t agree. Well-trained corporate recruiters with well-designed systems can duplicate 90% of what TPRs do now. Times are changing, and TPRs need to change with them. While there will be a future role for TPRs it will not be the one you describe. That’s not to say it’s a simple shift to bring the expertise in-house, but the shift is underway. Consider the centralization of the recruiting department, workforce planning, fourth generation ATS systems, and proactive employee referral programs.

    The first area to disappear will be TPRs earning fees presenting active candidates. Better ads, simplified application processing, and better back-end processing will soon eliminate this source of easy money for TPRs. You can only fight progress so long. You’re using old ideas and old logic to fight a new world. Those TPRs that will be successful will be offering a new range of services, but more on this in future articles.

    Best,

    Lou

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  5. How are recruiters different from other providers, other than in the obvious ways, as it pertains to ‘obsolecense’?

    Will companies soon handle 90% of their legal work in-house, and so there will be no need for law firms?

    Accounting firms?

    Will police crime labs do all their own analysis, and so external labs will go belly-up?

    Ad agencies?

    Will firms conduct 90% of their education and training in-house, so that external consultants and training gurus will go by the weighside?

    IT Security? Physical security?

    ==

    …Does this kind of thought automatically obviate the demise of external services providers? Must everyone in professional services change radically, or die tomorrow?

    Will every modern firm of the future radically cut the use of external help, and be a self-contained independant money-machine?

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  6. TT – you certainly missed the mark on this one. When service providers provide better service at lower lost they’ll survive. My contention – most TPRs don’t. This is the typical faulty logic I see espoused too often. Sadly, some people actually fall for it.

    Lou

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  7. Lou-

    First, I’m flattered that the ERE mistakenly used my name when posting a comment by the equally erudite Paul Hawkinson. LOL

    Second, saying that ‘well-trained corporate recruiters with well-designed systems can duplicate 90% of what TPRs do now’ opens you up to us measurement hounds and bedrock drillers…

    Which 90%? Is this 90% THE 90% that reaps results?

    How long does it take for a corporate recruiter to become well trained?

    What is well-trained?

    How long does it take for a well-designed system to be implemented and utilized to its optimal capacity?

    Without any doubt, there are in-house recruiters and TPRs (you might call them out-house recruiters) who aren’t worth the weight of their Redbook. On both sides of the tracks, there are mediocre and [egads!] even worse people masquerading as talent scouts.

    While I see improvements in the way organizations structure their recruiting function, 90% will require a major paradigm shift as far as a global implementation – it is a great goal. Perhaps the ‘leading’ organizations now have obviated the need for TPR consulting but that accounts for perhaps 4-6% of the companies out there – and I know I’m being generous with my estimate.

    TPRs will continue to thrive as long as in-house recruiting functions are guided by archaic modes of thinking (can we say cost-per-hire?). When in-house recruiting functions have the capacity (which I mean in the overhead sense) to conduct searches for their company’s suppliers, vendors, etc., then I’ll start believing some are approaching your 90% barrier. Until this radical organizational change takes place, in-housers and TPRs will just have to co-exist.

    Let the fur fly…

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  8. Steve, I totally agree with your last point. Corporate recruiters do have to function more as a line function rather than a staff function. With this change in mindset there is no doubt they could replace 90% of the work that TPRs now do. Will they make the shift is the big question. This is where I think TPRs have a two-fold future. One, helping them make the shift, and two, helping those that don’t.

    Best,

    Lou

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  9. Lou,
    you’re forgetting something,

    only 10% of the workforce is actively looking at any given time.

    The TPR brings in the top talent from the other 90%

    No technology, ATS system or corporate recruiter
    as far as my experience ever proactivlely identifies them.

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  10. Why is it that most service providers, lawyers, accountancies, etc, are actually more expensive, then? Shouldn’t that mean they shouldn’t exist?

    Maybe it’s because the internal accountants, or lawyers, or recruiters can’t or aren’t doing what needs to be done? Or they can’t see the forrest from the trees? Or there’s a political reason for using external resources? Or there’s a critical time factor and bandwidth doesn’t exist in-house? Or there’s specialized expertise out-house that simply doesn’t exist, in any useful concentration, internally?

    Recruiting: TPR’s: ‘Better service at lower cost.’ Does the cost have to be simply lower than hiring an internal recruiter, or does the service simply have to cost less than what the new high-performing employee will produce in value in one-fifth of a year?

    Don’t confuse all the question marks with disguised conclusions. They’re mostly actually just questions…

    Best,

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  11. Looks like Mr. T has given up his decaf.

    Anything IS possible – it’s possible that CEO’s will actually mean it when they say that people are their company’s greatest resource;

    It’s possible that CEOs and heads of HR will have a substantial part of their performance based upon quality-of-hire and turnover;

    It’s possible that HR people will actually sit at the business partner table rather than talking about it;

    It’s possible that more companies will realize that recruiting and organizational development do not make strange bedfellows – and that continuity between the two is the key to quality of hire and quality of retention;

    It’s possible that more in-house recruiters will have job descriptions that enable them to build relationships instead of interviewing to exclude;

    It’s possible that more in-house recruiters will develop a real killer instinct and knowledge of their industry to go along with the bliss of being a people-person;

    It’s possible that TPRs and recruiting consultants won’t have ants in their pants when reading anything by Lou Adler (did I really write that?);

    It’s possible that both in-house and TPRs will realize that recruiting is actually one of the most challenging roles in any organization and by working together, they might be able to figure out how to make it work for all.

    This isn’t middle of the road speak, this is reality.

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  12. Mark,

    I think the ATS and automation evangelistas ( ‘a’ on purpose ) think almost anything is possible: you can keep track of inactive people, data mine the aloof, have electronic conversations with the uninterested and overconfident.

    You can design surveys and forms, have the too-busy fill them out completely, get the overwhelmed and overpayed send you updates with little tiny details to fuel your weathervane, so you can assemble a TPR version of a little ‘carnivore’ living data web.

    I think what is forgotten about is people forget. They change their minds. They call you names, then next week they call you better names. The delete and then undelete. They blow off and then beg 5 months later. They say no when they mean maybe, and say maybe when there’s no hope.

    The ATS is dead. Long live the ATS!

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  13. So Lou Adler believes that companies can avoid paying search fees and he even predicts the end of Third Party Recruiting as we now know it! Pause, while I count to 10…..Without going into a long refute of his premise, allow me to just remind everyone how the computer was supposed to make each and everyone of our desks paperless and our lives less complicated!! Technology will remain a valuable tool but will never replace the human component. One must consider the messenger when reading this article…a consultant/recruiter who has a good message to sell to companies…NO FEES…boy will that bring in the business. By the way, here is a guy who is making a living going around the country with his ‘Tour’ speaking to recruiters about recruiting techniques…Talk about biting the hand the feeds you…All I know is I would like to compete against a company that automated their hiring…technolgy has its place but I personally contend that many companies will never be able to fill every position from within……Just as the internet was over-hyped so is the ATS’s and other technology. Our world is made up ‘diverse’ individuals and there will never be a computer program or system that will be able to measure all of the subtleties that distinguish top performers from bad hires…I guess there will be companies that take the McDonalds approach..if we can relate hiring in the Lou Adler world to food, prep….filling but not very good, however I prefer to eat at better resturants where quality is important, and I am willing to pay for that….

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  14. When a look at these respones two words pop into my head: the first word is circle….

    Fortunately all of the mentioned services / systems and people have a value, its the value thats created to the individual recruiter that is important, not the opinions of others.

    The person that posts their resume on a jobboard or is unemployed is (to many) a substandard candidate. When they are employed with their next company, or have a different job and no longer have their resume out on any internet site, they will again be a valuable member of the workforce, possibly a superstar.

    To many this is self evident, unfortunatley its flawed logic. Percentages are often mentioned, I wonder what the rotation of that percentage is..

    The Cicadas are here…

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  15. Here in the Northeast, our company is experiencing a FOUR FOLD increase in high-end exclusive, high quality search activity.

    This has resulted in about one million dollars of salaries (as measured in Job Position salary) per recruiter on a semi weekly basis with many bulk requests coming in for 300-$500k in open reqs simultaneously.

    My biggest problem is NOT FEE. My current problem is finding COMPETENT RECRUITING TALENT to hire into the IRES, Inc. team.

    I have scores of ads out on Monster and all the other web boards for recruiters we need ranging from Atlanta to Dallas, and Chicago to Boston but no luck.

    Now I’m taking a different approach and considering local executive secretaries who exhibit potential and train them from scratch instead.

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  16. Mark and all – whoever said that corporate recruiters were sourcing active candidates? This is the shift every one of you is missing. Corporate recruiters are now being trained to find less active and passive candiddate using networking. Corporations now buy more competitive intelligence then independent recruiting firms. Corporate recruiters are now getting the names of top performers through their employee referral programs and contacting and recruiting these people.

    Give it up guys – you’re not seeing the real world. It’s 2004, not 1994. By 2005-06 the shift will be even more obvious. Take steps now or you’ll be history.

    Lou

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  17. Hmmm….one thing I kept thinking:
    who is the first to get let go from the corporate offices when their is a downturn in hiring at a company:
    Corporate Recruiters…

    Many corporations do indeed have excellent internal recruiters. However, I have no fear of the need for third party recruiting ever going away. There will always be companies who prefer to handle recruitng in house..well kudos for them!

    Not to cheapen what we do, but I liken it to the fact that I rarely hire a mechanic for simple repairs on my car becuase my husband can do it.

    However, if he is swamped with other things, and the car needs some work, darn tooting I am going to shell out the cash.

    Even corporate recruiters at a lot of companies are allowed to work with outside agencies. I work with one company now that has some very excellent recruiters on board. They are top notch! But they know that I have more time to do the deep digging for appropriate candidates for their hard to fill positions.

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  18. Sherry,

    I think you said it…well enough to end this topic of us and them. Its simple, the need for executive search companies will never go away (I hope). But just realize that this has nothing to do with the abilities of internal recruiters or external recruiters, they all come up with junk and great candidates.

    Eamonn

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  19. We are one company that I think has found a good blend between what my corporate recruiters can do and what agencies can do for us. I put our recruiters on the jobs we fill most often and are more critical to our success. They know our culture like no agency ever can – on the other hand I think agencies are invaluable in that they can work on jobs we either don’t have the time or inclination to work on – niche jobs spring to mind. While we do fill many of our jobs internally I can’t see us doing without agency help in the near future.

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  20. It amazes me that I was first introduced to Lou Adler at my local association of personnel consultants. I have since bought and printed everything the man distributes. It took me a while to respond to this article as I feel like I have been betrayed by a mentor of mine! In my personal experience of placing Accounting and Finance professionals, I have taken a partnership role with HR recruiters, and helped explain basic accounting terminolgy and helped them make matches of their own. My degree is in Accounting and I can screen where so many smooth talkers can get through many HR individuals only to waste the hiring authorities time. This of course is not always the case and I do not mean to undervalue solid HR individuals, only to say that for me personally, I can’t be snowed by a smooth talker with an excellent presentation. Many HR indivuduals realize this and find great value in what I bring to their organization. I am in shock that I am actually defending my profession to Lou Adler, the man whom we paid 1000’s to hear his pitch to TPR’s. Luckily, I am on the local board and will make sure that they and our state chapter know what is going on. I know you TPR’s know what I am talking about…Don’t bite the hand that feeds you, and you do not ever pee where you eat.

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  21. Lou,

    I am not of the opinion that TPR’s are a dying breed that will wind up either helping the best companies eliminate the need for TPR’s or working with the worst companies who are not moving now to eliminate them.

    You said, ‘Consider the centralization of the recruiting department, workforce planning, fourth generation ATS systems, and proactive employee referral programs.’.

    Let’s consider those points:

    1. There are lot’s of companies with centalized recruiting departments whose still use TPR’s.

    2. Workforce planning? You still can find plenty of companies who practice ‘workforce planning’ and use TPR’s as part of that plan.

    3. 4th generation ATS: Wheren’t there people saying that 2nd, and then 3rd generation ATS were going to put TPR’s out of business? (Why do you suppose that 3 generations of ATS systems have not done it yet?)

    4. Same argument for companies who have proactive employee referral programs in place. They still use TPR’s

    One of the main points in this discussion that has been totally left out is: the fact that we exist in a free country that practices capitalism. That means there will always be bright people out there that figure out how to provide better service at a lower cost.

    For me, I think the outlook for TPR’s has never been brighter. The rising tide is lifting all boats!

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  22. Wow, I just read through this forum thread – and has Lou hit on a raw nerve or what?

    As an amateur futurist, regardless of whether you agree or disagree with Lou’s article, it seems to me that one needs to continually look at the competitive landscape or be left behind. No one wants to end up with a buggy whip franchise once Henry revs up his assembly line. It seems to me that Lou has succeeded in getting people to consider the future of our industry. Regardless of his motives (the sinister thoughts of many in this thread seem a little theatrical), this is a good thing. If you don’t think that internal recruiting organizations will replace the TPR world at some future point, at least a solid analysis of the possibility is warranted so that you don’t end up with a warehouse of implements that nobody wants.

    Just to weigh in on the topic, not too many years ago, I headed up an internal recruiting team that as a line function replaced TPR’s 99%. It can happen, is happening and will happen. It’s how we deal with this as vendors that will determine the future industry landscape. I’m very curious as to the content of Lou’s future articles on the subject (As a competitive TPR, I just wish that he would keep his ideas to himself)!!!

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  23. I have glanced through all these threads and here’s my input:

    If Lou is saying TPR is dying then (not sure this was his point) then Lou Adler is wrong.

    Dead wrong.

    Why? Because he need only apply HIS OWN FORMULA in reverse to prove himself wrong that TPR’s are a dying breed.

    I will try to explain:

    Lous’s own books preach the ‘Recruiting Sweet Spot’ The point in between Passive and Active candidates where the Semi Passive and Semi Active candidates represent the best targets both in terms of a recruiter’s ability to motivate such candidates as well as their likelyhood for placeability and accepting/entertianing another job.

    With me so far Lou and friends? Good.

    Now let’s use Lou’s OWN formula … and refocus it toward the direction of companies.

    THE Same thing applies!

    We have companies at one end of the spectrum which are TOO small to afford to use Recruiters and too unlikely to hire repeatedly enough each year to warrant the related expense. These are your ‘mom and pop shops’ with 2-4 employees or so.

    Such companies with less than 10 employees generating $5 million or so and under in annual revenue. The smalles of the small, are unlikely to need or can sorely afford our services.

    Now we proceed: Next comes larger-smaller companies. Those with 11-50 employees. Combined these two categories (small and larger-small) represent 85% of the companies where most Americans work … NOT LARGE Multi-Billion dollar Corporations … But small companies (bls.gov and NFIB will vouch for these stats).

    At the other end we have medium to large multi- billion dollar corporations. Such companies conduct the most frequent hiring on an annual basis and have the largest amoungt of open high paying jobs … but also have the largest resources in terms of internal recruiting staff (often located in many regional offices).

    So … At one end we have as recruiters the best prosepcts for working on large …juicy … six figure positions on a fairly routine basis. Trouble is this is where we can get ‘blind sided’ the most as well … by internal last minute candidates, shelving the search, promoting from within, other recruiters, the companies own HR dep’t … the list goes on and on. Once successful, our candidate may say no after long arduous months of recruiting …. highest risk … largest reward. I should know as 3 out of the last four such searches ended wasting extraordinary time on my staff’s part and myself all for naught.

    Therefore the RECRUITING SWEET SPOT are larger/small companies that are:

    A. Large enough o require hiring at mid five figure levels. (often having employees from 15 or 20 and greater)

    B. Small enough that they don’t yet require or can ill afford a full blown HR department much less one full time HR generalist.

    C. Therefore we have the best prospects for exclusive work arrangements where No HR can rear its head and surprise us … and quite often are provided direct acess to the top decision maker who is usually the president or co-founder.

    D. They have the resources to pay us (usually I look for companies with $15 million minimum annual revenue and upwards).

    E. If you don’t know the size visit the offices … if I see two or three lucury vehicles parked for the owners .. say maybe three Mercedes’ in a row … I know they can afford us (I call this the ‘parking lot evaluation method’ which works well when such companies are off D&B and other reporting agencies radar screens!)

    I’d like to say THANK YOU to Mr. Adler. Inadvertantly he helped my business recognize tens and hundreds of thousands in revenue last few months by teaching me his ‘Sweet Spot’ theory when I read it at the beginning of this year.

    Only thing is I decided to apply it in different direction than what he had intended !!!!!

    The Placement Sweet Spot = Small/medium sized companies growing rapidly who must focus on BUSINESS and have no time get bogged down reading resumes or prescreening. So look for:

    1. Companies with 15 employees to a few hundred

    2. Revenues of at least $10 Million up to $100 million or so

    3. No H.R.or a very weak HR department (No more than one HR Generalist or this is handled by an Exec Assistant that fills in with HR)

    4.Direct contact with top decision makers including President/CFO, VP operations, etc.

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  24. Some of this works in a job market where there is an abundance of candidates, such as now, and internal recruiters need only advertise on web sites or do a little networking. It all changes when the availability of ‘quality’ candidates becomes less. There are many dynamics at work here, but the bottom line, according to many economists/sociologists, is that in the near future these dynamics will converge and job openings will far exceed the number of people available to fill them. It is already happening in some industries, but is too subtle for general awareness. As that happens the need for those TPRs who know and understand how to locate AND sell potential candidates for open positions will increase. The fact is that some very astute companies, who have a vision of the future, are already positioning themselves with TRPs to whom they will outsource their future staffing, knowing full well that there are some significant differences between the approach and efficiency between TPRs and internal recruiters.

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  25. As a TPR and manager, I’ve encountered the news of our looming demise numerous times. Granted, many companies can eliminate their use of TPRs, but at indefensible cost to their companies, much of it hidden from the gaze of the CEO, COO or CFO. Closing the door to any source of talent is foolhardy for a company that depends on top people to achieve the mission.

    At some point, relying on a flawed recruiting model tends to dilute the quality of the staff, with the concomitant reduction of quality of the firm’s products or services. There are examples everywhere. I advise my clients to use every means available to them in their search for top talent: internal recruiters, employee referral programs, re-contacting previous employees and many others, including TPRs. Conversely, companies needing warm bodies alone should not use TPRs – it’s a waste of money for them, and a waste of ability for the TPR.

    Analogizing for a moment, consider that the hiring company is a commercial fishing boat, out on the water for tuna. After having used every technique they know to make a good catch with limited success, would they turn down the small ketch that pulls up alongside and offers one or two terrific fish at a reasonable price? I don’t think so. The best tuna don’t swim up to your boat just because you want them to.

    There will always be a market for the good TPR who offers value through creativity, persistence, and a high level of commitment to the client’s success. My advice? Search for candidates that are hard to find – anyone can catch the easy ones.

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  26. I am certain there will ALWAYS be a strong need for TPRs in the near term and especially in the future. Very soon there will be a critical shortage of workers in almost all industries. The greater the shortage of workers the less viable ATSs, advertising, job fairs, etc., etc. become. The most valuable skill a TPR can bring to the table is the ability to sell and close the candidate on their client’s company. Sure, future technology based recruiting systems will be able to source more candidates… but so what! The more technology ‘hits’ a candidate takes the less likely he/she will respond. A good TPR can influence the passive candidate far more than the typical corporate recruiter. As long as TPRs are better sales persons than corporate recruiters they will always be relevant. I was a headhunter for 16 years, Division Manager for a national staffing firm for two years, Corporate Recruiting Director twice in two different industries for five years, contract technical recruiter for four companies covering eight years. No matter how skilled and creative I was in the corporate recruitng departments we still used TPRs when confidentiality, political, time, diversity, limitations of staff, etc. etc. mandated that we needed to. Also, I cannot tell you the number of times that hiring managers used TPRs
    for no other reason than a skilled TPR called them to present a quality candidate. It drove me crazy as a corporate recruiter but I love it as a TPR.

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