Why we stopped recruiting for agencies.

I’ve recruited into this market for nearly nine years now and have worked heavily with agencies for most of that time. There are many great agencies which are filled with great people, but at the beginning of this year, we made a decision not to recruit for any of them any more. Why have we done this?

stop-sign

First, a quick look at the recruitment model.

Not wishing to bore you, but to answer that question properly, we need to first look at the contingency recruitment model – ie. how companies like mine actually make their money. Recruitment works on a risk/reward model – it’s basically no-win-no-fee, to put it crudely. We get paid when we introduce someone who is hired by the business.

As a recruiter, part of my job is to put the appropriate level of work behind a job in order to get a result (and get paid). In order to do this, we’ll look at a number of factors – the number of other recruitment agencies who have been instructed on the brief, what our current candidate pool is like, how strong our database and network is in that area and for the level, where the role is based, also factoring generic business factors – how busy we are, whether we have other briefs on at a similar level – that sort of thing.

In-house recruitment teams.

Most agencies have invested in building in-house recruitment teams to one extent or another and this makes a lot of sense. Agencies grow quickly and the market has high staff-turnover across the board – they demand volume and the sort of attention you’ll only get from dedicated in-house staff. I have friends in several of these sorts of set-ups (including former NRCoers Nic and Nik), and these sorts of teams are made up of experienced recruiters who know what they’re doing.

Demand in the market.

I can remember a time (not-too-long ago) when I spent my hours crane-lifting people from one agency role to another. The market heavily leant towards agencies, with lots of growth and differentiation – excitement in the market. Agency roles were fairly varied, and as a candidate in fields like search, you didn’t have a great deal of other options.

As I explored in this earlier rant, there’s been a humongous surge in the number of people wanting to move out of agencies. It’s extremely difficult for agencies to find strong candidates for like-for-like replacements (ie. an Account Manager moving into a similar Account Manager role). Part of the problem is that the roles themselves no longer differ enough, or at least they’re not perceived to differ enough. A lot of the time, it results in mercenary moves. One solution to the shortfall has been over-promotion (explored in yet another rant here).

The difference it makes.

The difference this makes is pretty simple when you boil it down – in order to fill agency roles, you need to to talk to people. A LOT of people. Agency recruitment has become even more of a volume-game and put simply it’s not one we’re good at playing. Quality and quantity seldom mix and as a business which works by referral-only, the market has moved away from us.

Recruiting for in-house roles.

We’ve been weaning off our agency client base for three or four years now. We were fortunate to have been heavily involved with the build out of a sizeable in-house performance team back then, and subsequently referred to other businesses who were doing the same. The balance between agency and in-house has been gradually shifting for us and we’ve got a point where it makes sense for us to focus 100% on helping to set up in-house teams.

In-house, we tend to work as sole-agency or as one of a few specialists, so the level of risk we’re exposed to is much lower. Thanks to demand from the market for in-house roles, we can also work roles more efficiently. Focus on quality rather than quantity.

Agencies will always have a place in our heart, just not our balance sheet.

For more information on moving in-house, read our collection of blogs here.