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Stop recruiting Bad Candidates – Risk Reward Recruitment Fees

Before you consider working with a recruitment agency, have you already considered whether you can find this person through your own network or if your team can recommend suitable candidates?

You may decide to work with an agency if you can’t find suitable candidates easily and you probably hope that working with an agency will enable you to meet your requirements and source the best candidate for the job.

If every time you recruited someone, they turned out to be the best candidate for the job, then paying an agency fee would represent good value. However, working with a recruitment agency doesn’t guarantee that you will find the best possible candidate, and before you start recruiting, you need to consider how you engage with your agencies to get the best results and how you will structure the fees. When considering your options, you need to ensure that appropriate parties are motivated, that they conduct a comprehensive search and that you cover your risk.

Often, companies reward their agencies on a contingency basis – meaning your company only pays a fee when one of your suppliers makes a placement. However, this approach can sometimes be where it starts to go wrong as the quality of their work can be compromised.

Competition is great

Companies want a thorough search of the market and from the outset, many line managers feel a way to achieve this is by sharing their requirement with several agencies; after all you only pay a fee to the company that makes the placement, so it seems logical to instruct several companies to work on your behalf.

You might also share a requirement with lots of agencies due to urgency. If you engage with 3 or more suppliers, you can expect to receive as many as 10 CVs, which is a good number. Assuming you are working with specialist providers, then you will feel you are well-positioned to source a strong talent pool of suitable candidates.

You may take the view that putting agencies into competition with one another will lead them to work harder and faster, which should result in them sharing candidates quicker, which in turn will enable you to start interviewing sooner. This is all great if you can outline a collaborative strategy which everyone works to.

To deliver success, you will need to set KPIs and manage them accordingly to have a good chance of finding people – if you don’t have a cohesive approach you run the risk of exposing yourself to recruiting mediocre candidates.

Competition can have a negative impact!

A challenge that companies may not consider when putting agencies into direct competition with each other is that suppliers can become even more determined to share CVs quickly and unfortunately, this will often compromise the quality of candidates they share.

Rather than agencies conducting a thorough search of the market, they often just provide the candidates that they’re working with, which is fine if all the candidates are excellent, but the reality is that just because someone is actively looking, it doesn’t make them the best candidate.

So, whilst agencies might begin the search with the right intentions, the temptation to contact candidates who are actively looking is huge, as contacting mediocre candidates can be a quick win. This also safeguards their personal gain in making a placement with you, because if they don’t approach all the candidates, then they run the risk that another agency will, and consequently they miss out on making the placement.

Agencies contacting mediocre candidates is wrong, and most recruiters know when they are working with a strong candidate and when they’re not. Due to the fact that they are working on a ‘no win, no fee’ basis, it might mean they are tempted to disregard their assessment and submit candidates who they perceive to be less than an excellent match.

A significant downside to putting recruiters in a competitive environment can sometimes mean that their integrity goes amiss, but companies are to blame too.

Companies want results quickly and are often happy to progress as soon as they have a few ideal CVs. By having a clear recruitment strategy from the start, and by being patient, it will give them a well-informed and thorough view of the market.  The more time and care they invest in recruitment, the better results they’ll have in the future.

How do you Assess a Recruiter’s Integrity?

Working on ‘no win, no fee’ terms will make it hard to assess your recruiter in the short term. Ultimately, you will need to go through the recruitment process and assess the candidate’s tenure at your company, but even then, the recruiter can’t be held accountable for the success or failure of the candidate.

However, you can test a recruiter’s merit and values by asking them to agree to terms on a risk and reward basis. There’s a saying ‘put your money where you mouth is’; well this can be applied to how you structure your terms and if done in the right way, then both parties can prosper.

From a delivery point of view, if a company’s recruitment partner conducts market research, they can provide competitive insight and with clear metrics, this can be useful now and in the future. This exercise helps from a recruitment point of view and companies are also able to learn valuable information about their market. For example, they can discover who the top employers are, what salaries people earn and other valuable information. All this data can help your company to retain staff and help you to become an employer of choice. Once word gets around about your company, you will soon have people actively seeking out your company wishing to work for you.

Your recruitment partner may be able to share information about people in the market by providing a long list, allowing you to make well-informed decisions when it comes to recruitment. You can engage with these candidates now and you can also revisit in the future.

Risk Reward Recruitment Fees

When structuring terms, you may want to consider several aspects. Firstly, how much research you require up-front, and how much time this is going to take. What are the targets and how is the recruiter going to present this information to you?

This will be billable work, so only request the information that you really need.

Concerning the fee, in line with traditional search companies, you should pay a proportion of the fee when the candidate starts and align that payment to a rebate scale, should the person leave. However, you should retain a percentage of the fee and align it to the success of the candidate which you may wish to consider if the person is working for the company after the first year & if they hit their targets.

By working in this way, it instils integrity in the recruiter, you will get better value for money and you will be building strong foundations for long-standing partnerships, and improving your chances of genuinely recruiting the very best candidates in your market.

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