As a former Chief Executive Officer qualified in Human Resource Management, Employee Relations and Accounting it has often been my question as to what place the recruitment industry plays today's marketplace and to whether they give value for money or not.

Releasing my companys hard earnt dollars I was recently parted with $36,000 for two employees with salary packages of less than $100,000 I reflected on the cheque I had just signed going out the door. Who in their right mind would pay this extortionate amount of money.

What has become increasingly apparent over the last 10 years is the gap between what the recruitment industry espouses and their ability to deliver.

While this may be perceived as personal bias, I speak from experience having worked in a recruitment agency for a period of time and have seen and heard what goes on.

It's a jungle out there.

And their fees 10% to 25% of total package represents almost madness.and amount was not lost on my superiors overseas who were not amused.

A high profile Director in the recruitment industry recently shared with me that most new starts last 18 months and either burn out or move on to the next offer, firm or change careers.

Indeed many former senior recruiters are now leaving the industry and setting up their own boutique company's offering attractive alternatives, These attractive alternatives include experience, mobility, industry understanding and vast personal networks, some globally.

However, there are some good operators operating within the framework of the recruitment industry and I have come across several really wonderful people in my business career. The common denominator in all of these people was that they previously held management positions and had personally run businesses.

On one such occasion I requested that a recruitment agency search out a paramedical sales person in Victoria and New South Wales and have them on a very tight timeframe. The agency delivered and the candidates were offered positions. But this is rare in my experience and the manager had operated real world businesses before recruiting.

Problems

Churn

There is a nasty little practise that goes often unnoticed in the industry but is alive and well, I have observed it first hand.

Its called CHURN. This is where an agency puts a very good candidate into your business and some months later comes back with a better offer in another company. The candidate moves on, the agency gets it's fee and gets to replace the person who moved on, or should I say they encouraged to move on.

There are some high profile agencies known to engage regularly in this nasty little practise. Certainly a very nice little gravy train but totally without ethics or morality.

Fees

Who in their right mind would pay out 10% to 25% to place a candidate in their business. There is no empirical evidence to suggest a better outcome from an agency than throwing a dart at a pile of resumes sent to you.

Ordinary businessmen and women are being taken to the cash flow cleaners for the privilege. Money is burning and have you read the fine print, pay our invoice in 14 days or no replacement guarantee.

From my experience many recruitment people are in fact not service providers but sales people and have never run a business or held a real job.

Ask the question and find out for yourself. Ask what companies and entities have you managed.

Don't get me wrong there are some good operators out there but you need to know whom and what questions to ask.

How to protect yourself

1.If you wish to outsource ask the agency what business management responsibilities have you held in other industries,

2. Ask, have you managed a business,

3. Can you give me a two-year replacement guarantee to get my business without fine print. There are agencies that will guarantee this to get your business and honour that request. Ensure that this is placed in writing,

4. Negotiate the fee, if they don't negotiate do not give them your business. Of course they will use impressive sounding words, but we all know words are cheap,

5. Pay no more than 10% unless it is for a specialised and highly competitive field, eg nursing unit manager for adolescent mental health,

6. Ask them about the CHURN practise and tell them you are aware that it goes on,

7. Go with your gut instinct, why is it that women often tell their partners, be wary of him or her and they are later found to be right. Men learn from this,

FINALLY

There are some good operators in agencies but from my experience in the marketplace they are in the minority. So do your sums and ask the questions.

Caveat Emptor, let the buyer beware.

Copyright of author Philip Lye

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