Evolving with the market: Why we’re moving away from recruitment commission.

No Fee

This year marked the 5th anniversary for Neil’s Recruitment Company and my 10th anniversary recruiting into the market. We’ve had a good year – one of our best to date in fact, but we’ve definitely seen the recruitment market in digital start to shift. So we’ve decided to stay ahead of it.

Let me try and set the scene if I may…

The basic principles of recruitment are pretty simple. When taking a role on, you’ll either have the right person/people on the books already or you’ll need to go out and find them pro-actively. Dedicating time exclusively to a role is an effective way to resource, but exposes the recruiter to a greater degree of risk – in my opinion, this is one of several flaws in the contingent recruitment model. It’s the reason that many recruitment agencies will either deliver straight away, or struggle to deliver at all.

Internal recruitment teams are getting larger, and are becoming more effective too – especially within media agencies and similar businesses which require large volumes of talent with similar specialism. It’s one of the reasons it made sense for us (as a small recruitment business) to move away from the larger agency business, as I wrote in this blog earlier this year – it’s all about limiting the risk (ie. the dedicated time spent resourcing against opposing factors) we’re exposed to. I’m friends with people at several other agencies in our space and I know that we’re not alone in this.

Part of the recruitment problem is that recruitment fees are often just too expensive – they’re designed to protect agencies against risk, but they create a barrier, and their cost is the reason that in-house recruitment teams have evolved as they have.

A brief interlude & a short précis of the challenges to recruitment agencies in the current market…

  1. How do you compliment and reinforce a competent in-house recruitment team, rather than working against them?
  2. How do you limit the risk you’re exposed to and still make money?
  3. How can this work with the incentives of both parties and drive down recruitment cost?

I think the first point to recognise is the difference between accessing an existing candidate pool and having to proactively create one from scratch.

A bit about us if you don’t know us already.

We work by search method (mapping and network referrals) or by inbound recommendation or referral only – we can do this because we’re niche, we’ve been around for a while and we’ve racked up a decent reputation over the years. Whilst there’d be an argument that says it’s the 10 years in the market that has got us here, most of our live candidates are driven by our network and don’t require a lot of time or legwork to source.

Under the current model, the fees for these candidates is the same as the fee for spending hours/days/weeks sourcing a candidate from scratch. The former isn’t best for our clients and the latter isn’t best for us.

But we think there’s a better way, so we’re going to evolve.

We’re going to lower our fees. These will be set deliberately low to remove as many barriers as possible. For live candidates, it reflects the fact that a lot of the work has been done already.

In circumstances where our live pool doesn’t deliver, or where the role needs more of a search approach, we’re introducing the option to hire us on a day rate – allowing us to dedicate total focus to the role(s) and make a successful hire in less time. The accrued day rate would be offset against our usual (lower) fee for the placement. We’ll be providing more effective and more flexible recruitment solutions which complement and reinforce in-house recruitment teams rather than opposing. It’ll cost our clients less too.

We’ll make less money through recruitment this way, but we’ll be doing the bits that are genuinely useful to our clients whether they have an in-house recruitment team or not. Better still, we’ll get paid for what we do, and will be able to drive recruitment cost down significantly in the process. Good for us, good for our clients.

It’s not a solution, but we think it’s a step in the right direction. We’ll keep evolving our model so that longer-term we can move away from commission-driven recruitment altogether, and that’ll be better for everybody.