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Are recruiters worth the time and investment?

The interests don't really seem to be aligned. Recruiters get around 20% of the 1st year salary. I wonder if that makes them do some shady stuff to secure jobs for candidates that are not qualified. If I should avoid the recruiter route would you recommend another way around it?

10 Replies

Dennis Teichmann
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Dennis Teichmann Entrepreneur
Chairman | Head Marketing & Product
Yes! Do Recruiting on your own way.
This saves you money and you enhance the quality of your hires.

If you combine this with a recruiting software (web-based), you will not have much effort to manage these processes!
Chris Benskey
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Chris Benskey Entrepreneur
CEO & Founder
Learn how to hire. It is the most important thing you can do if you want to build a company.
Steve Owens
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Steve Owens Entrepreneur • Advisor
Finish Line - A Better Way for Small Companies to Develop Products
Hiring the wrong person is going to cost a lot of money - much more than the 20%. A good recruiter will improves the odds that you get great employees. Focusing on what you do best and finding other to help is a greatstrategy that will serve you well.


I never like the "20% model". It does not provide for the right kinds of incentives. I pay my recruiter by the hour.

However, the important point is to always work with the best - employee, vendor, customer, etc. Focus on finding quality first, price second and terms last.
Ben Littauer
2
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Ben Littauer Advisor
Angel Investor and Management Consultant
I've just invested in edivvy.com, a new recruiting platform. It's not specifically geared toward startups, but if you're planning on doing a lot of hiring it could save you a lot of time and money. Edivvy is
Dennis Teichmann
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Dennis Teichmann Entrepreneur
Chairman | Head Marketing & Product
Edivvy is nothing new.
I could also my company's name here (HR SaaS) and with our product you get both, reduced cost and maintain of recruiting control.
Jeff Brittain
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Jeff Brittain Advisor
VP of Information Technology at Intelligent Medical Solutions
20% has never worked for me and my organizations. The best model I have found is a retainer model. I pay fixed amount per month or by thenumber of positions to be filled. They know what they are getting paid for their work and we can bring people in and out with no additional fees. I know a lot of recruiters and it is a turn and burn game. They say the work for you, but even if you have an exchange program, what will that cost you if they just keep throwing you bodies. Truth is, you know who you want and if you have a lot of positionsto fill, it will be cheaper to hire someone in house to do the same thing.
Duane Roberts
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Duane Roberts Entrepreneur • Advisor
Executive Recruiter at KA Search Partners Inc
Good recruiters are worth the investment. You will need to find a recruiter or firm that is willing to partner with you and learn about your hiring needs, help to formulate a hiring strategy and commit to executing on those plans. If they aren't willing to do this at a minimum, don't waste your time.
 Rob Mallery
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Rob Mallery Advisor
VP of Talent at Originate
The question posed cannot really be answered with a "Yes, you should!" or "No, you shouldn't!" although that seems to be the common thread here.

Just the nature of the question makes me assume that you have very little background in hiring and whether you are working with a recruiter or doing it on your own, there is a ton of learning that will need to happen in order to get really good at hiring the right folks and building an awesome team.

If you are going to make mistakes (and you will), it would certainly make more sense to do that without a big price tag attached to the mistake. Bad recruiters have certainly been known to make deals happen and do shady things to get deals done, but for the most part, they can only do that if you don't know what you are doing with regard to hiring the right people.

That being said, if you find a great recruiter (and they do exist) who can help you navigate the difficulties and intricacies of hiring your first key people, the insight and learning that could be taken would certainly be worth the large price tag. Kinda like having a professional painter take you through the process of painting a couple rooms before you do the rest of the house. Sure, you can do it cheaper on your own, but you can just as easily screw things up in a way that costs you more in the long-run.

Hiring well is one of the most difficult things all entrepreneurs must learn to do.

The best option is to probably have a mentor or someone who is really good at team-building/recruiting help you through the process. This is probably not a recruiter in your case (unless he/she is a friend). And if you have a recruiter friend who is still going to charge you 20%, you should probably make a new friend :-)


Tricia Tomlinson
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T Squared Consulting, Inc.
Sofia, I spent many years as the head of Human Resources for my companies and was always faced with how to find the best recruiting resources for the company. While there are diligent, competent and high integrity contingencyrecruiters (people you pay only if they find you a candidate that you hire), you are correct that their incentives are not completely aligned with yours. The faster they can fill a job and at the highest price they can get, the better. Often, they will just throw resumes at you to see what sticks and will not work very hard to get your candidates at reasonable "price". I have had contingency recruiters try to get me into bidding wars with other clients for the same candidate. You end up doing most of their job and then paying them a hefty fee (20% is very low - 25-30% is more the norm). You also hope they don't stop working hard for you if their initial batch of candidates don't stick. (Can you tell I don't like contingency firms??) However, if you only need 1-2 mid level hires, this might be the way to go. Just make sure you find a good one. I usually use contract recruiters (1099 types). You pay them by the hour, so you pay even if they don't hire anyone. But, they will work hard to fill your jobs, digging through sources and screening candidates in order to find the right and qualified candidates to present to you. They also make sure the candidates fit within your compensation schemes and try hard to help you avoid making hiring mistakes. If you have lots of jobs to fill, this approach is actually more cost effective because the recruiter's cost is amortized over several jobs. And you can build a pipeline for future jobs. For very senior or very hard to find candidates, you can also use a retained search, i.e. Spencer Stuart, Howard Fischer, etc. Again, you pay their fee even if they don't find someone, which is usually about a third of the first year's compensation. But they really are the way to go for very important, high level roles. I hope this helps. Feel free to reach out if you have more questions. Best,Tricia TomlinsonT Squared Consulting, Inc.
AKBAR JAFFER
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AKBAR JAFFER Entrepreneur
Enterprise Software Product Marketing and Marketing Technology Executive
Sofia, just post your jobs on here. Recommendations that come from here would be much better than any recruiter. UNLESS you have a recruiter you have worked with for many years. I have 2 recruiters I have worked with for 20 years. Outside of those two, I rely on personal network.
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