Why pay more when it comes to Cheap Vs Premium Recruiters? If you can get the same candidate from a recruiter who charges less, why pay more to a different recruiter? What’s the benefit in paying more? Is it just a sales pitch? Where’s the value for money?
Rather than start with a predictable and cliched sales pitch I will answer this from a reasonable viewpoint. Yes, you’ll already be able to predict the outcome. I’ll conclude by claiming that you should pay more for a better recruiter. No prizes for that prediction. However, I want to explain why you should and the benefit to you.
Cost Vs Quality
It’s easy to gauge the cost vs quality when it comes to a physical product. It doesn’t take a genius to see the reason why a brand new Rolls Royce is worth more than a clapped out Austin Allegro. But Recruitment is a Service and its value is seen in the best candidate it can supply. I use the term best candidate, as opposed to candidates, because typically a client will have one vacancy for each candidate. The simple objective is to find the best person for the job. A recruiter is purely a man or woman in the middle who matches candidate and client together.
Where is the value in paying more then?
Firstly, and annoyingly, I have to admit that a cheap recruiter can on occasion source a great candidate. In the same way that buying 1 raffle ticket can win a prize. The difference is that buying 10 raffle tickets dramatically increases your chances of winning though.
Why not just use ten cheap recruiters then?
To answer that you have to consider why they are cheap in the first place. If you can charge a premium for your service, it means that customers are prepared to pay for the results you deliver. If you’re in business, recruitment or otherwise, you’ll want to make as much profit as possible. You won’t want to lose money.
Therefore, costs are being cut somewhere to be able to justify a cheaper price whilst still being able to turn a profit. And unlike getting a bargain at the local market, we aren’t talking pounds and pence here. This can be thousands of pounds worth of difference in fees. Where are those costs being cut though?
The largest costs in recruitment are going to be wages, advertising and systems.
If you cut costs on wages, you get lesser quality people. In your own business judge for yourself what you’d expect from a results, quality and expertise basis comparing how much you’d pay an expert and how much you’d pay an amateur.
You’ve also got to bear in mind that if you are good at your job with a great track record are you really going to want to work for a low paying firm? On the flip side if you’re either useless, a novice or simply have a poor record for results; beggars can’t be choosers.
If you cut costs on advertising and candidate attraction, that’s your supply chain limited. As a client you’ll want the best person for the job, but if the recruiter only has the ability to explore 1/5th of the resource pool that a premium recruiter would have, you’d likely be missing out on 4/5th’s of the possible candidates. In a tight or niche industry this is compounded by skill shortages. You need a wide net, not a narrower one.
As for cutting on systems that’s your equipment to produce results. If you have poor systems you’ll be less efficient, less productive and less able to work at pace. Take into account that the same candidates your company will be looking for, your competitors will also be looking for.
Do you want to be getting to those candidates when it’s too late or ahead of the competition?
Does that really justify paying a huge fee though?
The market is currently candidate led. There are less candidates than the demand from the market place. I wrote a post previously detailing this:
Sure, you might get lucky with a cheap recruiter sending you someone across, but any results will be sporadic, inconsistent and unreliable. If you wanted to ensure you caught a great fish when you cast your net, do you want to be fishing in a stagnant lake or a packed salmon stream in mating season? I’ve really got into these fishing related analogies in this post, haven’t I?
The price is the price for a reason. The best companies hiring the same people you are looking for are prepared to pay a premium to get the best results and that is where the value lies. In the nicest way you get what you pay for. Sure, a bargain comes along every now and again, but if you want regular, assured and objective results premium is the way forward.
You can be the judge of quality when you interview them though?
Let’s presume you have seen people at interview before, consider yourself a good judge of character and after all you won’t pay a recruiter unless you agree to hire one of their candidates anyway. What’s there to lose by trying cheap recruiters first? Why not just try 20 recruiters and see what one gets results? That’s casting your net wide, right?
Fair point and it makes sense. But let’s put that tactic into context. Cheap recruiters cut costs somewhere to still be able to make a profit. They’ll have to. But, in the same way a discount retailer cuts costs using the “stack em high, sell em cheap” model, you’ll get the same treatment. They won’t be able to justify sifting through the hoards of time wasters, job hoppers, money grabbers, shysters, counter offer seekers and something to hide types. It’ll cost them time and money. And at the fees they are working at they can’t afford to waste those.
Add to that when you work cheap, you’ll have loads of competition. True quality has little competition when you think about it. Do Apple worry that there are hundreds of competitors out there when they decide to charge £1000 for a phone? Are Nike concerned that their trainers can cost 5 times what other shoes can cost? No. Why not? Because they champion quality. They champion being the best. They champion setting benchmarks that don’t consider competition as the basis of their ethos. It’s about changing their industries, innovating, pushing boundaries etc.
Although, using the likes of Apple and Nike to justify costs when they are global brands may seem a bit dramatic it serves a valid point. The best recruiters don’t compete on price. They compete on quality.
The harsh reality that no cheap recruiter will want to admit is that maybe, just maybe they’ll ping you any old CV in the hope that by chucking the proverbial S**t at a wall, some of it will stick.
Do you want crumbs or cake?
By cutting costs, you cut time and you cut quality out of the equation. Yes, by trying 20 recruiters you may get a good candidate and yes, you won’t have to pay unless you decide to hire that candidate anyway.
But good recruiters don’t want 20 competitors to work against. And the best companies don’t use 20 recruitment agencies either.
If you’re a recruiter who does the job properly you will assess a client’s need, evaluate the whole spectrum of the market and sift down to the handful of correct candidates. If in the meantime you have a load of other agencies you’re up against pinging over every CV that they can grab like it’s the crystal maze dome, your wasting your time. You probably won’t work with that company again. Inevitably the best recruiters won’t want to work with you. You’ll get lumped with the corner cutters.
If you’re a great company and are looking for the best people you’ll find the best agencies, narrow down to the best few and then continue to work with them moving forward.
How do you work out who the best agencies are though?
Due to the industry being a huge minefield and 90% of the industry being consultancy size, it’s a real challenge. You need to gauge whether they know what they are talking about, can get results and look the part.
You’ll probably need to look about, but the agency who’s website this belongs to is a good start…
There is always someone that can do the job for cheaper. But what is the real cost of taking the cheaper option? If the companies that are the best in the industry make sure they budget to use the best agencies because people are the lifeblood of any business, should this really be an area you yourself should cut costs on? You get what you pay for.
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