The recruitment Industry in Australia - Caveat Emptor
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