Tuesday, July 5

The Recruiting Industry

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The Recruiting Industry

Before the 1950's, recruiting was networking. Executives would ask friends if they knew anyone who could fill particular positions. The most common were bankers, lawyers and accountants. Firms began to establish consulting groups and thus began to form in North America.
At first these groups resisted expanding into England and Europe because of the differences in practices, then a few started opening large branches and began filling positions. After this, the industry grew and people started forming their own recruiting business.
The competition for candidates and clients increased and today many firms compete and establish offices countrywide. National firms compete with local firms, and several are multinational.
The Employment Agencies Act requires Ontario recruiting businesses to pay registration fees to be a licensed agency. There are similar laws all across Canada.
In the past, candidates would have to pay to register and then pay an additional charge when hired by a company. Candidates found the recruiters weren't marketing them and complained to the licensing legislation until charging candidates was barred. Now, recruiters only collect fees from hiring firms that hire these recruiters.
Types of Billing

  • Client: This always refers to the company contracting the recruiter. The candidate does not pay the recruiter.
  • Retainer Fees: Recruiters who work exclusively for the client and have exclusive rights to the job search. The client company pays 20-35% of the hired candidates first year's salary. Usually the client pays 1/3 up front, 1/3 when they are presented with the short list of candidates, and 1/3 upon hiring a candidate. With this arrangement, the recruiter gets paid whether they fill the position or not and it's estimated that about 25% go unfilled. A good recruiting firm will notify clients of positions that are difficult to fill and if they feel they won't be able to fill the position, will decline to work under the retainer.
  • Contingency Fees: Recruiters receive 20-35% of the first year's salary once they fill a position. Many operate on a scale, for example: positions between $25,000 and $40,000 may charge 20% while position over $40,000 will charge 25%. The scale is based on the amount of work required to fill a position. In this type of agreement, if the position isn't filled the recruiter isn't paid. Clients will more often use this for lower level positions where there are more candidates to fill the positions so very few searches are unsuccessful. As with Retainer Recruiting firms, a good recruiting firm will notify clients of positions that are difficult to fill and if they feel they won't be able to fill the position, will decline to work under the retainer.
  • Contingency Exclusive: Clients will use several contingency companies to perform searches and pay the firm that provides the candidate they hire. In this way, the searches are competitive. Mostly agencies will work on this type of search because the client requests it. How it works, is the client will go to one recruiter and have a tight deadline to produce a candidate. After that time the client company will give the opportunity to other firms to find a candidate.
  • Flexible Billing: More than 1100 recruiting firms offer both types of billing, the type chosen depends on the search.
Recruiter Specialization

  • Specialist: A specialist firm works only in certain industries and fill specific positions. These recruiters offer years of experience, know their niche extremely well, and have a network of clients and candidates in their field. They are usually successful because of their expertise.
  • Generalist: Generalist recruiting firms have several different people working in different industries and can fill various types of positions. Though they are general, they often have several clients in a few specific industries and can offer experts in all different types of areas.
  • Executive Search Generalist: Companies will contact these recruiters to fill very high-level positions. Oftentimes the Executive Search Generalist is an individual. This person will have proven methods in searching for qualified candidates and can do so discreetly. These recruiters work exclusively rather than on retainer.
  • Generalist Codes: GE means industry generalists while GN means position generalists.
Types of Recruiting Firms

  • Management Consultants: These consultants offer a variety of services, from outplacement and personnel to job description creation and recruiting. These companies are different from recruiting firms who earn money from recruiting fees alone. Clients have longstanding relationships with these consultants and work within the corporate culture to best know the proper fit between candidates and the company.
  • Executive Recruiters: These recruiters work with clients looking to fill senior management and Presidents with salaries of $75,000 or more a year. The recruiter usually works on a retainer basis and know they can invest a lot of time and not find the right person. Due to the diversity of companies, executive recruiters will also fill middle management positions.
  • Placement Companies: Placement companies fill positions in middle management and technical support positions and have specialists for major business sectors. The successful company is always busy filling positions, including short term and contract positions. The recruiter will have a face-to-face meeting with the client to get information on the business and working atmosphere to focus on types of candidates for the client. After that, most interaction is done on the phone.
  • Office Support or "Temp" Agencies: Clients depend on these agencies to fill positions quickly. Mostly they run from office administrators and secretaries to data entry clerks. Sometimes they may call at 4pm and need someone for 8:30am the next morning. The recruiter is expected to have someone fill the position.
  • Industrial Help Recruiters: These recruiters operate like temp agencies and fill positions for warehouses, general labor, truck drivers, etc. They offer 24-hour service, bill clients and pay candidates hourly rates.
  • Full Service Recruiters: These firms offer most services in one location. They have multiple experts working on different positions for the same company and is appealing to companies. Prior success is key to the success of recruiting firms so if someone found a good candidate previously, they'll have confidence for positions to be filled in the future. These full-service firms are available in most Canadian cities except Toronto.
The Recruiter Profile
Recruiters are excellent communicators as they spend many hours talking on the phone to clients and candidates. They also work later hours so they can call candidates when they will be home, at night. More senior recruiters train new Recruiters, and many come from their industry specialty before they begin recruiting.
These individuals are also strong in marketing and in the personnel field. They understand the needs of their clients and sometimes have a candidate on file in mind for a particular position while talking to a client. The recruiters also know the candidates in the workforce and have an overview of the industry.
When recruiters talk to candidates, some may seem distant if they don't have a position for them. Don't take this personally, as candidates are the commodities they sell and can be a valuable ally in a job search.
The Future of Recruiting
The flexibility of recruiting enables good recruiters to stay in business for years and thus have an excellent reputation. The number of jobs available is the driving factor of recruiting and so will always be a part of the hiring and job search process.
Most firms dealing with temporary and low salary positions see an expansion of national firms in most cities and can offer more services to clients. With this, associations will continue to grow and the local firms can use this to compete effectively. National firms have little effect in the middle market segment. Value to the clients is the relationship with individual recruiters and the quality of the candidates provided.
In the current economy, there will be more competition for fewer jobs and some firms will expand their offerings. For example, Executive Industry Firms will offer consulting services. Those who can adapt and append their services will survive.
All recruiters use computers as the software allows resumes to be placed in databases to be search on with keywords. The Internet is a popular way to advertise positions and recruiters will utilize this. Some operate a paperless office where resumes are delivered on a disk or through a modem.
Contract work is also becoming more popular. Companies will hire contractors for projects lasting three months to a year or more, and recruiters can have candidates on file and clients can request a specific contractor who worked with them before. Contract work is also more acceptable to job seekers, and is considered more to be a real job. It's diverse, they have control of their work, and they can receive a higher rate of pay.
Types of Non-Recruiting Firms

  • General: With the number and variety of employment-related firms, knowing what type of firm to contact can be confusing. Remember that the client company pays true recruiting firms and they fill positions with the right people. Outplacement, Career Counseling, Résumé / Internet Service Bureaus are paid by the candidate to help them find the right job. A rule of thumb is that recruiters will not charge candidates while non-recruiters will.
  • Outplacement Firms: These firms train people to gear up for a job search. Outplacement firms will bid to work with companies when they have a large amount of layoffs. The company pays the firm to work individually and is often part of the settlement between the company and the ex-employee. The work is usually high quality because they work with the company and many are associated with recruiting or management consulting companies.
  • Career Counseling: Counseling firms offer a similar service, the difference is the candidate pays the fees and doesn't have their former company supporting their experience. Candidates need to have a clear understanding on what services they'll receive.
  • Other Candidate Service Companies: There are some companies that charge candidates for services like resume writing or placing job requests on bulletin boards or the Internet.
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