The 10% fee and why it doesn’t work.

Year after year, in challenging economic times, the mantra of cost down is bashed out across almost every business stream and the recruitment world is not immune from it. Those of us who have been around the block once or twice understand the need for businesses to cut costs but also see the number of times that it can actually do you a disservice.

In my best Max Bygraves; let me tell you a story.

Three years ago I won my first retained assignment from a client that I had been pursuing on and off for a couple of years. Good job and an interesting assignment to get my teeth into. As I approached finalising the shortlist they signed off a second role at a slightly reduced fee. I’ve no problem with as it makes sense, so much so that in fact I filled both roles and they recruited a third from the first shortlist. Hurrah!

However, last year as the sector tightened HR & Procurement decided to implement a European PSL and would only work with agencies/recruitment firms/search firms that would agree 10% success only fees.

I declined.

In December they signed off six roles in a new division which went out to their preferred agencies. Much to their surprise eight weeks later they hadn’t received a CV, let alone interviewed a candidate and senior management were jumping up and down on the line managers because the roles were still empty and the projects now really needed the staff.

So why has this situation happened?

Rightly or wrongly recruitment is seen as an overhead cost rather than an investment, with little or no understanding from the procurement and HR teams as to how the agencies operate.

The consultants in the agencies lead very regimented lives in the way that they work and are very heavily revenue targeted, which is why there is such a high turnover of staff in agencies.

Once you send them the 10% fee based job description they will work on it briefly until another client (maybe only hours later) asks them to work on a role with a 20% or more fee, so day by day your role slips remorselessly down the pecking order until quite frankly you’re forgotten in the desire to produce revenue and not be fired takes over. And then there is the other side of the equation. Let’s say that by chance the consultant does find a candidate who matches your brief; are you going to see the CV? Well not necessarily no. Why? Because the consultant’s manager will ask where the consultant is going to send “send out” the CV to and once again the need to satisfy revenue demands takes priority. The manager will ‘encourage’ the consultant to service the 20%+ fee clients rather than the 10% fee client.

Result? Eight weeks later the vacancy still hasn’t be serviced.

To return to my client: Eventually I agreed a 20% fee and in one month had the first three roles in order of priority at offer stage with a one role/one candidate success rate and yes they’re still waiting to hear from their agencies!

Not having people in place for key roles is as every bit, or more, expensive on the bottom lines as paying for the right recruitment firm to find those people.
Invest in expertise and specialist knowledge and it will deliver accordingly.

If you would like to talk with a Director or Consultant about how we can work with you then please contact us at www.chestertongray.com