There's a new blogger on the scene, a rabble rouser from D.C. whose marketing plan seems to be tearing down recruiters as the scum of the earth. How very unique and original!
The Staffing Advisor, who is a search firm owner in D.C. has a new business model - well, he has a business model where he pays a salary instead of commission and charges only 8% a search, including a policy where a company can hire as many people as they want from submittals and still only pay the original fee.His blog would be classified as hate speech in much of Canada and Europe, if recruiters were a protected class, but we have to cut him some slack, as he actually has a background in recruiting, and isn't just someone off the street with a new model. He also writes well, and covers topics that are fair to address. But, he is an ass, or to be more correct, his writing is asstastic, which makes it more of a pleasure read than a chance to connect with someone and share best practices.
Bob Corlett is his name, and he's a member of Recruiting Blogs. Bob, why do you hate us so? Let me address Bob directly.
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Companies may complain about recruiters, but they continue to use us. Making the claim that we all suck is very broad - so perhaps you'd like to name names? As you won't - the complaints, however close they may be to your real feelings, are indeed a gimmick."
So let's go down the route one more time of why lowering fees isn't a long-term successful business model for the rest of the industry.
70-150K salaries is what Bob specializes in so we'll say an even 100K is the average salary of a candidate he places. So we're looking at an $8000 fee per search, not per candidate. If this were a commission structure, four hands would go into the pie. Owner, cost, recruiter, salesperson. Counting it up equally, we're looking at between 25-50% per placement (if the recruiter does double desk). So $2-4K a placement, which is about a quarter to a half what you would make at a national staffing firm per 100K placement, would take you 25-50 hires a year to make 100,000 for yourself, versus 12 for the public staffing firm. That's quite a lot of volume to make up. And considering that if you made 25 placements for the PSF, you'd make $200,000, twice as much, with only half the hires.
Hmmm. Now Bob isn't commission based - it's a salary, and we don't know what those salaries are - but unless he uses bonuses or a rising salary per hire, you're frozen at a level of effort. I know there are people out there that who like to work hard for the sake of it, but why would you work for half or a quarter of the money? Why put out more effort for less? You wouldn't - which is why the model is effective in the sense that it encourages performers who can't make good money elsewhere to settle into an easier, less confrontational recruiting style.
Bob has fallen for the third classic blunder (the first being land war in Asia, and the second being never go against a Sicilian with death on the line) - which is to look at the recruiting industry and assume it exists from greed, rather than necessity. Bob doesn't trust markets, and thus doesn't understand that lowering prices increases the work on your staff. His profits may be rising, but ultimately he's counting on his employees to not want more out of life.
So with that in mind, let the games begin. Is Bob the wave of the future, or just another guy beating up on recruiters to make a buck?