using independent recruiters to locate top talent

Executive White Paper

Using Independent Recruitersto Locate Top TalentAdvantages and Disadvantages of

Popular Recruitment Models

Copyright © NPAWorldwide.com www.TPISearch.com

By reading this paper you willlearn:

• Reasons to use an independentrecruiter

• Different types of recruiters

• Common fee structures

• How recruiters can help HRprofessionals

• How much a vacancy really costs

• Costs associated with poor hiringdecisions

Executive SummaryWith demographics and improving global business conditionsheating up the war for talent, employers are finding it morechallenging to find and retain top talent. Since the use ofrecruiting services is a common method for talentidentification, a review of some common recruitment modelsand methods is in order. Finding the right talent is part art, partscience. Success requires more than just a good job openingand solid employer; it requires teamwork from key players towork closely with and support the hiring manager. This whitepaper serves as an introduction of how various recruitmentmethodologies can support a talent management plan.

http://www.tpisearch.com

Good recruiters can access a larger poolof qualified talent.

5 Reasons to Find Talent via RecruitersThere are multiple reasons1 why recruiters should be used tofind candi dates:

1. Right candidate. Given the experience and exposure,recruiters are generally good at hiring an individual whocan do the job, not just an individual who does well on theinterviews.

2. Larger pool of talent. A good recruiter can access abroader range of qualified and interested candidates thanother sources. This includes active, non-active, and passivejob seekers.

3. Acceptance of offer. Having a good recruiter involved inthe process will greatly increase the likelihood that thecandidate selected will accept the job offer.

4. Define and describe the position. The use of professionalrecruiters will assist and guide the company2 to know whatthey are looking for. A recruiter knows what is out thereand can coach the company on the realism of your positiondescription, the availability of talent, and the cost of thetalent required.

5. Save staff time and cost. Not only will a search for anemployee distract managers and leaders, it may also costthe company more money than a search turned over to anindependent recruiter.

1. Source: https://www.recruitersconnection.com/pages/recruiters/resources.php?Resld=342. Source: http://www.theladders.com/career-advice/why-employers-use-executive-recruiters


https://www.recruitersconnection.com/pages/recruiters/resources.php?Resld=34

http://www.theladders.com/career-advice/why-employers-use-executive-recruiters


Popular Recruitment ModelsThere are four popular recruitment models; each has itsadvantages and disadvantages. In this white paper we willexplore:• In-house/corporate recruiters• Multinational recruiting & staffing firms• Online services• Independent recruiters

In-house / Corporate RecruitersAn internal, in-house or corporate recruiter is the mostcommon3 type of recruiter. Internal recruiters are usuallyemployees of the company for which they hire and sourceemployees. They are paid a salary and benefits just like anyother employee. Corporate recruiters may do more than recruit.If they are functioning in an HR role, they may also beresponsible for insurance, benefits, company policies, disputesand complaints, etc. Corporate recruiters get the benefit ofmeeting directly and frequently with the hiring manager todetermine actual requirements.

Advantages:In–house recruiters know your business and culture.

• Operational benefits. In-house recruitment can offerorganizations more control over the recruitment process.The organization can develop a process that works best forits culture and allows that process to be implementedconsistently.

• Flexibility4. There is often little flexibility to adapt toshort-term shifts in regulation, changes in communityexpectations, or shifts in skill requirements – and this iswhere in-sourcing has fundamental advantages.

• Dynamic adaptation based on marketplace. Offerscontrol over the types and numbers of people recruited, theability to change as the marketplace and organizationchanges and flexible training and development processes.

• Faster, streamlined process. In-house recruiters canpotentially streamline the attraction process if it is arepetitive process. Good process design will deliver fewerpoor-match candidates and save recruitment time.

In-house recruiters often have otherduties and responsibilities.

3. Source: http://www.oncontracting.com/article/the-5-different-types-of-recruiters.html


http://www.oncontracting.com/article/the-5-types-of-recruiters.html


Disadvantages:

• Market knowledge. In-house recruiters typically have lessknowledge of the overall market.

• Extended reach. Some candidates are hard to find. Theymay be passive or they may be selective. If they aren’tresponding to the job advertisement, they don’t seethemselves as part of the ‘talent pool.’ Most in-houserecruiters do not spend time building a network of contactsand potential candidates for future hiring needs.

Multinational recruitment and staffing firmsBig companies, chain operations or outplacement agenciesprovide resume and interviewing assistance, career counseling,etc. Several of these companies are divisions of larger staffingcompanies.

Advantages:

• Knowledge of the market. The best recruiters4 will havetheir finger on the pulse of their specialist markets, and cangive the hiring team insight into what is happening.

• Extended reach. Some candidates are hard to find. Theymay be passive or they may be selective to a specialty.Recruiters from large, multinational firms have theresources to build large databases of potential candidates.

• Help with employer brand. Large companies invest a lotof time and money in developing and marketing theiremployer brand, but many SME (Small medium enterprise)and smaller businesses don’t have the same resources.

Disadvantages:

• Focus on deals, not relationships. Large recruitmentfirms may experience high turnover and lowaccountability. Additionally, clients may work with juniorstaff with a very transactional approach to business.

• High fees. For permanent recruitment5, you will have topay a one-time placement fee to the agency, which usuallyis based on a percentage of the employee’s annual salary.

• Short-term goals don’t match long-term strategy. Somebig company recruiters may focus more on theircommission than on your long-term, strategic hiring plans.

Larger firms may have more resourcesto deploy on a search.

Do you have the attention of seniormanagement?

4. Source: http://info.broadbean.com/blog/6-advantages-of-hiring-through-a-recruitment-agency5. Source: https://www.nibusinessinfo.co.uk/content/using-employment-agencies-find-staff


http://info.broadbean.com/blog/6-advantages-of-hiring-through-a-recruitment-agency

https://www.nibusinessinfo.co.uk/content/using-employment-agencies-find-staff


Online ServicesOnline recruitment, e-recruitment or web based recruitment isthe use of online technology or the internet to attract candidatesand aid the recruitment process. For most recruiters, thisusually means using one’s own company website, a third-partyjob site or job board, a CV database, social media or searchengine marketing as part of the recruitment process.

Advantages:• Low cost, high impact. Online recruitment is cost-effective. Putting a job vacancy on your own companywebsite costs you nothing, and many job boards offerreasonably-priced posting options.

• Speed. Online recruitment is quick. A vacancy can be puton a job site in the morning, the first applications arrive bylunchtime, and a candidate interviewed by the end of theday. Of course, it isn’t always like this. But the fact thatsuch things can happen so quickly gives an indication ofjust how immediate recruiting online can be.

Disadvantages:• Quality vs. quantity. Too many candidates can be treatedas candidate spam, leading to HR managers dealing withinappropriate, irrelevant and bad candidates.

• Selective success. Not every job vacancy posted can orwill be filled online. There will always be difficult-to-filljobs that can only be filled by recruitment consultants,headhunters or in other ways.

• There is a mismatch between resumes and ApplicantTracking Systems. Resumes that do not contain the“correct” keywords are easily overlooked in an automatedsystem.

• The best candidates do not always have an onlinepresence. You can’t find something that doesn’t existwhere you’re looking.

• Many online career sites are not mobile-friendly. Greatcandidates are increasingly leaving career sites that offer apoor mobile experience, and the odds diminish that theywill later return to those sites via desktop. And, career siteswith a poor mobile experience are not being returned byGoogle in mobile search results, which means companiesmay not even be reaching the full pool of potential jobseekers.

Job boards continue to be affordable,but results can be bogged down withlow-quality applicants.

Is your career site optimized for a mobileenvironment?



Independent RecruitersIndependent recruiters are a group of talented andentrepreneurial professionals. These ‘third party recruiters’work6 on a contingency or retained search basis. Independentrecruiters are able to network, cold call, scan and reviewresumes from many more resources and networks and reachout to affiliates to get help finding the perfect candidate.

Advantages:• Better insight. Independent recruiters usually work “bothsides of the desk”7 (locating candidates and generating newclients with hiring needs). This helps them fully understandthe role.

• Reliable source of candidates. Independent recruiterstypically rely on networks to get training, support, bestpractices and tools they need to be in business. Thisgenerally leads to better candidates, resources, and reach.

Disadvantages:• Scalability. Independent recruiters may work alone or in asmall office and can occasionally reach capacity on theamount of jobs or candidates they can take on withoutjeopardizing the quality of service.

Small agencies and solo practitionersare limited in the number of searchesthey can perform at a given time.

6. Source: http://www.recruitingblogs.com/profiles/blogs/what-kind-of-a-recruiter-are7. Source: http://www.recruitingblogs.com/profiles/blogs/what-kind-of-a-recruiter-are


http://www.recruitingblogs.com/profiles/blogs/what-kind-of-a-recruiter-are

http://www.recruitingblogs.com/profiles/blogs/what-kind-of-a-recruiter-are


Fee StructureGenerally speaking, there are three types8 of outsourcedrecruiters, and their differences rest in the fee arrangement:

• Contingent. A recruiter working on contingency is paid nomoney until the job is filled. For contingency searches,fees are based on a percentage of a candidate’s first-yearcompensation. That typically ranges from 20-30 percent,but it’s rising as the talent shortage creates scarcity inmany professions.

Advantage: Pure performance-based fee structure. Nopayment until a position is filled.

Disadvantage: Contingent firms typically work on a largenumber of job orders at once. There is no guaranteeregarding the amount of focus your job will receive.

• Retained. Client pays the recruiter an upfront fee based onthe salary level of the position they are trying to fill. Theyusually pay a retainer at the beginning, a progress paymentat an agreed-upon landmark in the process (often when ashortlist of candidates is presented), and the remainderwhen the candidate is hired.Advantages: Recruiter is committed to completing thesearch and filling the position. The best candidates likeretained searches because they know the employer isserious about filling the position.

• Contract. These recruiters work on a straight hourly rate.This approach, also called “rent-a-recruiter,” can becomeexpensive if you don’t place controls and constraints on thenumber of hours. Contract recruiters usually charge anhourly rate ranging from US $75 to $150 per hour.Contract recruiters claim that this hourly billingarrangement usually costs much less (closer to 15 percentof first-year compensation) than other types of searches. Itis important to clarify exactly what activities the recruiterwill be performing, since the lower rate will not typicallyinclude the same services as a full fee search.

While fees may seem higher, it’s likelymore economical to pay a third partythan paying salary, benefits, andoverhead for an in-house recruiter.

8. Source: http://www.allbusiness.com/how-much-should-you-expect-to-pay-a-recruiter-7606468-1.html


http://www.allbusiness.com/how-much-should-you-expect-to-pay-a-recruiter-7606468-1.html


How Independent Recruiters Can AssistHRFor most businesses, the hiring manager often a very good ideaof the requirement of the job, although there are several areasof hiring where a recruiter is the better option, armed with theirknowledge and experience. These are:

• Understanding the customer’s hiring requirements.From real-life experiences of several recruiters, it’s clearthat many times what HR asks for in a candidate isn’t whatthe hiring manager actually wants. Skilled recruiters won’tgo looking for candidates until they take a little time to diginto what their client really wants.

• Broader skillset. A good recruiter can access a broaderrange9 of qualified and interested candidates than any otherresource. This includes: (a) Active–these are the candidateswho are engaged in an active job search. (b) Semi-Active–these candidates are currently employed but have made adecision to change jobs. (c) Non-Active– these individualsare not seeking a change. They are currently employed andtotally unaware that a better opportunity may exist forthem with another employer.

• Low withdrawals. The process a good recruiter executeson behalf of their client will dramatically decrease thelikelihood of qualified and interested candidateswithdrawing themselves from consideration. In turn, it willalso greatly increase the likelihood that the candidateselected will accept the job offer.

• Always close the loop. Too many companies just letcandidates fade away rather than doing them the courtesyof turning them down, leaving a sour taste.

• Counteroffers. A good recruiter, through theimplementation of a customized transition strategy, willminimize the possibility that the candidate selected willaccept a counter offer or change their decision after thefact.

• Sounding board. Good independent recruiters can providea valuable sounding board for their clients during thehiring process.

Skilled recruiters help you remainfocused, and can also offer coaching onthe realities of the talent pool.

9. Source: https://www.recruitersconnection.com/pages/recruiters/resources.php?ResId=34


https://www.recruitersconnection.com/pages/recruiters/resources.php?Resld=34


• Industry knowledge.While most hiring managers knowtheir own company inside out10, they may have a less-clearpicture of their industry as a whole both geographicallyand in terms of talent pool.

• Specific knowledge. Specialist recruiters and externalsearch firms know their industry and can bring a lot ofspecialized knowlege to the table.

Independent recruiters have extensive networks to call upon,and are able to quickly identify the top candidates regardless ifthey are openly looking to move on or not. Some search firmsalso have specialists for each type of role (technical, marketing,sales, etc.), whereas it is unlikely an internal team could affordthat level of specialism, except perhaps at the largestorganization.

HowMuch Does A Vacancy Cost?There are numerous costs11 associated with an unfilled positionin any company. Many of these costs are difficult to quantify,but nonetheless are very real and can be very costly. Theunfilled jobs cost to the US labor market according theLondon-based center for Economic Research, D’Arcy is morethan $13 billion12 a month, or roughly $160 billion a year.

According to CSR Talent, many firms calculate the cost of avacancy, which can be significant; anywhere from $7,000dollars per day to $50,000 per day for an engineering position.Key leadership positions may cost as much as a million dollarsper week. Couple these amounts with the fact that the length ofmany vacancies often exceeds 100 days, and you are talkingabout some serious financial impacts ($7,000 x 100 days =$700k).

According to Deb Tompkins13, North Consulting, “Byassuming that each current employee has a positive revenueimpact (which they should), it is easy to calculate an averageminimum baseline cost of each of your open positions.

Do your hiring needs require specialistknowledge of a particular niche?

Unfilled vacancies can cost a business3-5 times (or more) the annual salaryfor the vacant role.

10. Source: http://emerald-technology.com/headhunters-over-inhouse-recruiters/11. Source: http://www.csrtalent.com/pdfs/costofanopening.pdf12. Source: http://fortune.com/2014/11/18/unfilled-jobs-us-economy/13. Source: https://www.linkedin.com/pulse/20140611030426-10805757-the-cost-of-unfilled-positions


https://emerald-technology.com/headhunters-over-inhouse-recruiters/

https://www.csrtalent.com/pdfs/costofanopening.pdf

https://fortune.com/2014/11/18/unfilled-jobs-us-economy/

https://www.linkedin.com/pulse/20140611030426-10805757-the-cost-of-unfilled-positions


Use the following values in the 2-step calculation below:R=Annual company Revenue, E=Number of Employees.1. Step 1: Calculate Revenue per Employee• R/E = Revenue per Employee

2. Step 2: Calculate Daily Revenue per Employee• Revenue per Employee/365 = Daily Revenue perEmployee

Using the above calculation for 5 mid-level employees, theCost of Vacancy (CoV) can be $12,500 in just 5 days.

According to Keenan, President as A Sales Guy Inc., “An opensales position with a yearly quota of $800,000 dollars, thattakes 30 days to hire for and 60 days to ramp up (bothtraditionally short periods of time) costs a company $2,100 perday and over $197,000 for the 90 days it takes to get the newrep hired, trained and producing.”

Similarly, based on a new survey from CareerBuilder,employers estimate that, on average, they lose more than$14,000 for every job that stays vacant for three months orlonger, and 1 in 6 companies say they lose $25,000 or more.

Do you know howmuch your openpositions are costing your business?



Costs of Making a Hiring MistakeWhile there are certainly costs associated with a vacancy, someexperts believe that the cost of a bad hire can be as much asthree times14 the person’s annual salary. The amount of newhires that don’t work out is frightening—in fact a study byleadership IQ15 across a range of industries and job roles foundthat up to 48% of new hires fail within 18 months. It’s aproblem that’s estimated to cost UK business over 4 billionpounds (approximately $6.3 billion) a year.

Bradford Smart estimates16 the cost of a mishire to beanywhere from four times an annual salary for supervisors allthe way up to 15 times the annual salary for vice presidents andexecutives. Smart’s book further explains that hiring the wrongsales representative can cost up to $527,87017, broken down asfollows:• Hiring costs $22,008• Compensation $141,416• Maintenance $13,112• Severance $23,420• Opportunity Costs $234,132• Disruption Costs $93,672

This may be an extreme example, but it’s not just the financialcosts businesses should be concerned about. The truth is that abad hiring decision can result in a number of painful and costlyoutcomes, and some of those can be much harder to put a priceon than others. Those outcomes may include any of thefollowing:

• Attrition and wasted hiring budgets• Theft or embezzlement• Damaged employee relations and morale• Endangerment of employees, client and business associates• Lost productivity• Litigation• Public scandals and negative publicity• Loss of other employees

What are the soft costs associated witha bad hire?

14. Source: http://www.csrtalent.com/pdfs/costofanopening.pdf15. Source: http://blog.executivesonline.co.uk/blog/the-true-cost-of-a-bad-executive-hire-infographic16. Source: Bradford Smart, Topgrading 201: How to Avoid Costly Mis-Hires. (Top Grading, Inc. 2012).PG. 3417. Source: https://www.linkedin.com/pulse/20140611030426-10805757-the-cost-of-unfilled-positions


https://www.csrtalent.com/pdfs/costofanopening.pdf

http://blog.executivesonline.co.uk/blog/the-true-cost-of-a-bad-executive-hire-infographic

https://www.linkedin.com/pulse/20140611030426-10805757-the-cost-of-unfilled-positions


ConclusionOver 37,000 employers in 42 countries and territoriesparticipated in Manpower Group’s ninth annual TalentShortage Survey18. Thirty-six percent of employers reportdifficulty filling jobs—the highest number since 2007.

This implies that most growing companies are constantlylooking for qualified candidates. As stated early, these openpositions are costing the US economy roughly $160 billion peryear. An open leadership position can cost up to $700,000 injust 100 days.

Hiring the wrong talent or otherwise making a bad hire canhave even steeper consequences. CSR Talent estimates the costof poor hires to be three times the annual salary of the openposition. These costs can increase from 4-15 times the annualsalary for executive-level roles. Therefore, it is critical thatcompanies make the best hire for their business.

Using a skilled independent recruiter increases a company’srole of finding the best talent in the market while lowering thechances of the candidate withdrawing from the interviewingprocess, accepting a counteroffer, or turning down an offer.

More than 1/3 of employers globallyreport difficulty filling open roles.

18. Source: http://www.manpowergroup.com/talent-shortage-explorer/#.VZv1v_lJZxh


http://www.manpowergroup.com/talent-shortage-explorer/#.VZv1v_IJZxh


Independent recruitment offices that belong to a formalnetwork are able to provide both a further reach and an abilityto fulfill unique talent searches. The major advantages of usingindependent recruiters include:

• Able to find and attract the best people• Keep clients focused• Save staff time and expense• Know where to look for talent• Know how to attract talent• Less apt to lose the best candidates• Offer a method for continuous improvement

While every hiring situation does not call for the use of aqualified independent recruiter, employers are wise to considerthis option for all critical roles. Recruiters spend most of theirtime interacting with candidates and hiring managers to ensurethe right person is hired for the job.

They find the best candidate for the job, and ensure that personis hired and successfully brought on board19.

Consider using a skilled independentrecruiter for critical hiring needs.

19. Source: http://hirevue.com/blog/what-is-the-real-purpose-of-a-recruiter

23110 State Road 54 #262, Lutz, FL 33549813-475-5525 (office) 727-804-3839 (cell)

Mitch VigevenoPresident & [email protected]

Debra GrierVice [email protected]


http://hirevue.com/blog/what-is-the-real-purpose-of-a-recruiter


using independent recruiters to locate top talent

Recruiting & HR