The #1 mistake small recruitment agency owners make (and how to avoid it)

I’ve had many conversations with recruitment agency owners about the experienced recruiter they hired, who seemed great on paper but turned out to be a complete dud.

This is a painful occurrence for any recruitment agency owner but it’s especially so for a micro recruitment agency owner (a business with five, or fewer, employees).

This hiring mistake is the most common, and often expensive, mistake that micro recruitment agency owners make.

In hiring an experienced recruiter the micro owner commits to a guaranteed substantial and immediate increase in the company’s cost base without any such guaranteed effect on revenue. The cost of the experienced recruiter’s remuneration will, almost certainly, be the largest cost the owner will have added to the business since the agency commenced trading.

That’s just the financial side of the decision.

The cultural side of the decision is just as significant, if less obvious and considered.

The cultural impact of a hire that increases an agency’s headcount to ten is far less compared to the, say, third employee through the door.

The tenth employee has a marginal effect on the culture; the third employee has a major effect, simply by the numbers game (10% of headcount compared to 33%).

Naturally the micro agency owner wants an ‘experienced’ recruiter. Well, almost all agency owners would prefer an experienced recruiter however the micro owner has even more reason to hire one because:

  • There’s so much work on and ‘no time’ to train a rookie. An experienced recruiter can just get stuck in.
  • An experienced recruiter joins with an existing network (supposedly) which reduces the business development burden of the owner.
  • An experienced recruiter is more mature and requires less supervision and accountability compared to a rookie.
  • An experienced recruiter will be able to fill jobs more quickly hence bring revenue in sooner.
  • An experienced recruiter will be somewhat of a ‘kindred spirit’ who will empathise with the owner’s challenges, and hopefully provide some form of sounding board on occasion.

Often the micro owner feels like they are in the less advantageous position compared to any experienced recruiter they are interviewing. The experienced recruiter most likely has multiple job opportunities – the owner has many fewer candidate options.

This perception of power imbalance is often at the core of why a poor hiring decision is made: The owner minimises or ignores the important assessment and expectation components that are critical steps on the path to the right hiring decision.

Step 1 – Assessment: (Of course this could be relevant for any level of recruiter at any size of agency but it’s of particular importance to a micro owner who has far more to lose with a poor hiring decision compared to a larger agency).

What: Ask the experienced recruiter to write a one page 12 month business plan containing the basics of results, activities and details of their proposed target market. Also request a complete list of resources the recruiter wants.

Give them a deadline by which the task is to be completed and returned.

Why it’s important: 

a) Putting a relatively small hurdle in the recruitment process, one that is not very onerous or too time consuming yet requires some thought, research and care, is critical. This hurdle increases the experienced recruiter’s difficulty in obtaining an offer – they have to complete a piece of work that is commensurate with their experience. The micro owner is using the principle of scarcity (the harder things are to obtain the more we value them and the more we want them) to their advantage.

b) If the experienced recruiter does not complete the business plan to a high standard or meet the stated deadline, and is not bothered by either, then you have an insight into the recruiter’s lack of skill or lack of motivation, or both. A lack of skill is easier to fix compared to a lack of motivation. A lack of motivation in an experienced recruiter will most likely show up as insubordination once they are an employee. An employee’s insubordination can take many forms but in a recruitment agency it is most likely exhibited by an experienced recruiter as:

  • reports not being submitted,
  • activities not being logged on the database,
  • consistent timekeeping issues,
  • unexplained absences during the day
  • not responding to phone calls and emails from the owner
  • erratic fill rates and billings            

 

Step 2 – Expectations:

1) Resources: Asking the experienced recruiter for a list of resources they require to execute their business plan is relatively small, but important first step in the expectation component of the recruitment process. This list of resources brings into plain view assumptions that underpin the experienced recruiter’s business plan.

Examples of resources in the context of such a business plan are: advertising budget, client entertainment budget, LinkedIn Recruiter licence, laptop, mobile phone etc.

The owner also needs to have carefully considered this list of resources. Doing so enables the owner to calibrate what they are currently funding and what they are prepared to fund with the experienced recruiter’s expectations of what will be funded. If the experienced recruiter has not listed things the owner would expect to see (eg client entertainment budget) then a conversation can occur to align expectations with reality.

Coming from a larger agency an experienced recruiter will often take such a deep pool of resources for granted and not even consider the possibility that such resources are not readily available in a micro agency.

If the experienced recruiter has expectations of resources that are not readily available then its best to find out before any offer is made otherwise you can guarantee that ‘lack of resources’ will be the reason your experienced recruiter offers up for non-delivery of agreed results.

2) Behaviour: The micro owner’s assumption that an experienced recruiter knows how to conduct themselves is often misplaced. Even if the owner has previously worked with the experienced recruiter they are considering hiring it’s important that there is no room for misunderstanding.

Make a list of the professional standards, if such a list does not already exist, that are expected of all employees. Go through the list line by line and explain the standard then ask the experienced recruiter for their explicit commitment to each standard. This step may seem like overkill however the owner needs to send a very clear signal to the prospective hire that although the business may be small the standards are both high and non-negotiable.

Of course the assessment step and expectation steps are additional to, not substitutes for, the normal assessment activities that would be undertaken with any candidate, such as competency-based interviews and reference checks (which, of course, all agency owners undertake with every recruiter they hire, right……..?)

Starting a recruitment agency is massive investment of time, money and emotional capital. The experienced recruiter who turns out to be an expensive dud is one of the owner’s largest potential sinkholes of said time, money and emotional capital. For the micro owner it may be a sinkhole that sets the business back many months; a demoralising blow that often does more damage to the owner’s confidence than it does to their bank balance.

Don’t let it happen to you.

 

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3 Comments

  1. Phil Isard on 29/03/2019 at 9:45 am

    Great read Ross, and one that we are effected by at times.

    We’ve overlooked things, and failed to get a firmer plan in place. Only to find a few months in the “experienced recruiters” typically has a different view on expectations around KPI’s, Standards, and Behaviours. Expensive, waste of time and effort, and costly…

  2. Nicole Underwood on 29/03/2019 at 12:06 pm

    Excellent article RC – one that we can all relate to. I love your suggestions and will most certainly be implementing them if I go down an experienced Recruiter hire in the future.

  3. Dmitri Goloub on 01/04/2019 at 11:26 am

    Great article Ross, thanks for sharing! I think engaging a quality rec-to-rec would do much to ameliorate many of the problems raised. Without writing an essay, in short, a quality rec-to-rec will work to make sure the opportunity is a good fit and one where the Recruiter will succeed – because our reputation rests on that! For a ‘micro Recruitment Agency’, this means they will either get the right person on board, or miss out on an Experienced Recruiter who may seem alluring but would not have actually been a good fit for their business in the first place.

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