Why are more and more forward-thinking employers ditching recruiting firms that produce, to put it bluntly crap. Most firms that have spent the time to really investigate the search marketplace have learned that Contingency, RPOs, and traditional retained search firms need to be ditched in favor of the 21st century success based recruitment?
In a 3.5% unemployment rate, most Hiring Managers know the undisciplined, inexperienced, and average “C players” are predominant on job boards. In addition, with job aggregators, job openings get overexposure to the point the company suffers in public relations and branding. same goes for RPOS and contingency search firms – the more they re-post the same job posting, the worst candidates are revealed.
Ditching Recruiting Firms that Fail to Produce
You have certain objectives you want a new hire to meet, for most C-level executives there is not a cookie cutter template to be applied to their position. Your target market are passive candidates, those that would never read job postings that have been picked over by every Tom, Dick and Harry, they simply are not actively looking, What interests passive candidates? A new challenge, a different product or service portfolio, location, company size, and more. A typical job posting showcasing responsibilities and requirements is a no enthusiasm road map. It is in reality a robotic drone of words strung together that entices only the unemployed or average active job seeker.
Even the traditional retained search model, which does produce much better candidates, is going by the wayside. More and more companies are ditching recruiting firms that are traditional retained search models.
While employers understand the deposit to initiate a search, they expect results. Most have a 90 day to 6 month replacement guarantee. But they collect all the fees within 90 days regardless of outcomes.
‘The new paradigm, which NextGen Global Executive Search has used for a decade, is a search should be success based in regards to the recruitment fees. Also known as a performance based search, after the deposit (which is a very reasonable percentage of the overall cost) the 2nd invoice is due upon acceptance of the shortlist and in-person interviews are scheduled. The final invoice is due upon the hire being completed.
Ditching Recruiting Firms with Compensation Based Fees
In addition, success based search fees should be a flat fee and not based on compensation. The reason is simple, in that compensation based fees can cause an increase in the overall recruitment fees during offer negotiations which is an inherent conflict of interest. As stated earlier the 3rd and final invoice occurs on the hire and is backed by a 24 to 36 months replacement guarantee.
The end result is both the employer and recruiter have skin in the game and the employer is confident that the majority of the fee is based on the recruiting firm meeting the objectives and a solid new hire. To read further on why companies are ditching recruiting firms and comparisons between contingency, RPO, traditional retained search, and success based retained search, download the PDF.