Leadership

Peer-to-Peer: Is a recruitment agency worth the expense?

Written by PROFIT-Xtra

Question

“I’m about to hire for a mid-level position. Of course I want to hire someone good, but I don’t want to spend hours and hours combing through dozens of resumés to come up with a short list of four or five candidates worth interviewing. My company doesn’t have an HR department, so I’m wondering whether it’s a good idea to hire a recruitment agency to handle this. Is it worth the expense.”

Submit a question.

Reader responses

Grant Robertson:

The answer to this question depends on the type of employee you are looking to hire and the stage of business growth your firm is currently in.

If you have a relatively young, small firm where cash flow is still tight, do it yourself as opposed to hiring a firm to do it for you. On the other hand, if your company is more mature, cash flow positive, and there is a significant opportunity cost to your own time, it MAY be wise to hire outside help despite the cost.

Regardless, I prefer to delegate the task to a responsible employee or manager who would directly oversee the new hire. This empowers your staff by making them feel involved in important decision making, especially decisions that directly influence them and their work environment. You can also retain some control by doing a final interview of the top two or three candidates.

Of course, there are some job positions that by their very nature are much more difficult to fill. Jobs requiring highly specialized training or experience may only attract a couple of qualified applicants, if any at all, through conventional job listing services. This is where a recruiter can really shine. The cost of hiring a headhunter, especially to pursue employees that may currently work for competitors, is well worth it. You will get a broader pool of applicants to choose from and avoid some of the potential pitfalls of soliciting employees from competing firms.

Maya Kotecha:

We found ourselves in a similar situation where we needed to evaluate the cost benefit of having some recruitment help from an outside agency. We decided to take a chance on a recruitment firm, and in the end it saved us a lot of wasted time and was worth the expense.

The main question you should ask yourself is: Are you looking for a particular type of hire? That is, are your job criteria very specific? If so, then a recruitment firm is definitely the way to go because they can screen candidates for you and ensure they only present you with what you are looking for.

Remember: Negotiate the fee, especially if this is your first time using a recruiter. Recruiters tend to give first-time clients a better deal so that they can prove themselves.

Rollie MacInnis, Invictus Consulting:

You must first ask yourself why you want to hire someone to help you to do this very important task. If you know what to do and how to do it, (i.e., define the position, search for candidates, screen, interview, select), but you just don’t have the time, then hiring someone (headhunter or not), may be necessary. If, on the other hand, you don’t know how to do some or all of these things, then getting expert help, i.e. a headhunter or consultant, is absolutely necessary.

The key to all of this is that you do your own thinking and deciding; that’s something you ought never to delegate. Key questions for you to answer are: What is the work to be done? What characteristics and capabilities do I want in the new hire? And, once some potential candidates are presented to you, what is the fit for the person?

Headhunting is pricey and prices vary, but for good ones, it is worth the cost. You may want to ask a knowledgeable and trusted advisor to help you choose the right employee.

Marnie Pertsinidis, Modis International Co.:

In most cases, the fee that you pay a headhunter is contingent on them finding a suitable candidate and so it costs nothing to see what types of candidates they can offer you. While the cost of using an agency may seem high, you need to evaluate the true cost to do it yourself. Newspaper advertising costs several thousand dollars for a decent size ad that will attract quality candidates. What is the hourly rate of the person who will be reading through the résumes, doing the telephone prescreen, initial interviews and reference checking? In most cases, you can expect to receive hundreds of résumes to a well-placed advertisement.

You also must ask yourself, how experienced is the in-house manager doing the hiring? Hiring is typically a very small part of a manager’s role, while a good recruiter has interviewed and screened thousands of candidates. The cost of replacing a candidate that doesn’t work out is very high, both in dollars and the impact on the morale of the other employees

Colleen Duffy:

I would have to say yes! Use a headhunter. An experienced, knowledgeable headhunter will save you time, productivity, sales, money and many sleepless nights. They will add value to your company. However, I do have some words of caution and a suggestion or two:

  • A referral is your best bet. Try the Chamber of Commerce in your area, a friend, a business associate or maybe a networking group you are connected to.
  • Do not use temporary/perm staffing agencies. They are generalists and as much as they try to sell and tell you that they can do the job, it is hit and miss.
  • Get a fair price. Hunters like to overcharge. Don’t be afraid to negotiate! The pricing structure will depend on many variables. The most sought after, wanted or hard to find person will cost the most.
  • Make sure you get a guarantee. The norm is 90 days and could beone replacement at no extra charge to your company and/or a portion of the money if you no longer wish to use the headhunting company and/or 100% money back. There are many ways you can work this out.
  • Have them give you two to three references of companies and two to three candidates they have found jobs for. This may be walking a fine line with PIPEDA (Personal Information Protection and Electronic Documents Act) now in place, but if the client and the candidates are happy with the hHeadhunting company they will be only too pleased to share their experiences. Make them work for you.
  • Take the time to think of what it would really cost you to hire this person yourself? You should, with the right headhunter save many sleepless nights

For her answer, Colleen Duffy will receive a copy of Business Diagnostics: Evaluate and grow your business by Richard Mimick and Michael Thompson.

Have a question for your fellow entrepreneurs? Send it to Peer-to-Peer.

Other questions.

Watch for another Peer-to-Peer Poll in the next PROFIT-Xtra.

Originally appeared on PROFITguide.com