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The Logistics of the Recruitment Process

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Obviously, for any industry to thrive as the recruiting industry has, there must be a significant demand for its product. Without going into a lengthy, historical account of the rise of employment services, let's simply note that, in some form or another, they have been around for the better part of this century. Professional-oriented search firms, or headhunters, as opposed to industrial labor or administrative agencies, have become significant players in the employment world since WWII. With the technology- and information- "ages" upon them, corporations have found it necessary to have outside recruiters fill their needs. Of course, the services of professional recruiters are, like anything else, subject to the laws of supply and demand: when the economy is strong, headhunters are utilized more heavily than when it's weak. Yet, with the drift toward in- house Human Resource (HR) departments becoming more administrative in nature (payroll and benefits administration, worker's compensation administration, employee relations, etc.), there has been a growing trend in these departments to out-source their recruiting function regardless of the state of the economy. Other functional departments have followed HR's lead: if it's an Accounting department, they must focus on accounting; Sales on selling; Engineering needs to be engineering-none of these is geared for recruiting and resumes. Thus, the growth of outside recruiters.

For those who don't know exactly how the search industry operates, a basic description of its relation to HR and other hiring departments may help. As mentioned above, most HR departments, though initially created to oversee hiring and firing within corporate structures, have become much more administrative. They remain involved in terminations, due to potential legal liability, yet their ability to handle all aspects of hiring is quite limited. God bless them, but by the time all their other departmental duties are completed, there is little time left for anything else. HR is, essentially, an overhead department: it generates little that can be seen on the bottom line and, yet, costs a great deal to run. Therefore, there is rarely sufficient staff in HR departments to deal with all of the legally mandated functions, much less to handle every aspect of new employee recruitment. A company may run ads in newspapers or on the Internet, but often doesn't have the manpower to address and respond to those ads promptly. ENTER: The Recruiter!

The crux of what the recruiter offers is a dedicated pair of eyes and ears for a company's hiring needs. A headhunter is not bogged down with the administrative functions of HR or other hiring departments. At its core, a search firm is a sales organization. They sell information. They sell contacts. They broker relationships. The result is putting the right candidate in front of the right employer.

Due to this focus, a headhunter can be single-minded- like a laser-finding those candidate attributes that fit a company's expressed need. Recruiters may also run employment ads in various media, but are better able to respond quickly when they see what they are looking for. Basically, it comes down to eating: an HR professional is going to get a paycheck every two weeks regardless, whereas a headhunter eats (gets paid) only when they place someone. There have even been occasions when, after getting the go-ahead from the candidate, I presented someone who had already submitted a resume to the same company and wound up making the placement simply because the company was unaware that they had it! However, another important function that a recruiter serves, which has had some companies pay me a fee even when they knew they had already seen a candidate's resume, is called seeing beyond the paper.

A good recruiter does not simply send resumes to clients. Outside the industry, those who do are lovingly called paper-pushers or flesh-peddlers. At a minimum, if a candidate fits one or more of a headhunter's current search assignments; he will spend some time with that candidate either in person or on the phone. Not only does he need to know much more than what is generally spelled out in the resume-reasons for leaving jobs, salary history, salary expectations, positions and industries desired, etc.-but the recruiter also needs to get a feel for the person's verbal presentation and personality. Some resumes simply don't look right for a position whereas, when connecting personally with a candidate and gathering more information, sometimes a possible fit can be seen. It's what I call "seeing beyond the paper." Though headhunters can't afford to see past the paper-resumes must bear some relevance to their openings-they may explore deeper when there's a glimmer of hope. This is part of the "value-added" service they provide to hiring companies. HR and other departments rarely manage to contact even highly desirable candidates from the resumes received, much less have time to see beyond the paper on others. With so little time, hiring managers often make split decisions based only on what they see in black and white. But resumes are impersonal billboards-they have no heart and soul.

Although there is pressure on corporate departments to cut costs by cutting recruitment fees, there is a basic need of HR and other hiring managers to connect with people. Since they can't speak personally to every candidate, they are prone to connect with a trusted headhunter who can tell them about a great person. By getting the heart and soul of a candidate vicariously through interaction with a recruiter, a hiring manager connects with a person in a way that can't happen through a resume alone. Therefore, having someone "present" you to a company can be incredibly valuable, and the personality and quality of the recruiter through whom your information flows is a critical factor of success. In Part II, we'll talk more about this very important aspect of choosing the right recruiter: finding one that has earned the trust of major corporate organizations and is simply liked by clients.

The logistics of the recruitment process are rather straightforward:
  • client describes a specific hiring need to recruiter
  • they work out a fee arrangement for recruiter's services (contingency, retainer, or a middle-ground called "container")
  • recruiter conducts a candidate search to fill that need
  • after interviewing potential players, recruiter presents appropriate candidates to client
  • client interviews candidates for possible employment
  • if client hires a candidate presented by recruiter, a fee is paid
The fee is usually based on a percentage of the candidate's first-year compensation, though it doesn't come out of that compensation. For example, a 30% contingency fee means a company pays the recruiter a fee equal to 30% of a hired candidate's first-year earnings. A candidate hired at a salary of $60,000 with a $10,000 guaranteed bonus will net a recruiter $21,000 ($70,000 x 30%). Occasionally, the fee is computed solely on the "base" salary, or may even be a "flat fee" (e.g., $7,500 per Sales Rep hired). Compensation is the benchmark for determining the fee. Generally, placing higher-level, higher-priced professionals requires more work and expertise on the part of the headhunter and, therefore, commands a higher fee. There are other arrangements such as container and full-retainer agreements whereby a recruiter is paid some or all of the fee up-front, prior to beginning a search.
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