How To Hire A Recruitment Agency: Q&A with Margaux Macgregor
Agency insider Margaux Macgregor reveals what questions you should ask before hiring a recruiting agency and how to negotiate a fair services agreement.
Photo: Recruiting Social
Margaux Macgregor is the business development manager at Recruiting Social’s Los Angeles office. As a recruitment sales professional, she knows the ins and outs of negotiating service agreements between agencies and companies that are hiring. Margaux agreed to reveal her insider insights, so we sat down to discuss tips and tricks that could help hiring managers and talent leaders choose the right recruitment agency and secure the best-possible service deal.
“What does their culture look like? It needs to align with yours.”
What are the most common recruitment services that agencies offer?
The most traditional service is contingency recruitment. It’s lower risk because the agency submits resumes and candidates go through the interview process at no charge to the employer. Only once you make a job offer that gets accepted do you get charged, typically a salary-based fee from 20 percent to 25 percent.
There’s retained search, where you pay an up-front fee for the agency to help you find a hire – typically an executive-level hire who will earn well into the six figures.
Finally, on-demand recruiting is a newer service model that’s growing in popularity. It allows you to “rent” a recruiter on an hourly basis to act as an extension of your team. On-demand recruiting is highly favorable to well-funded startups because it’s both scalable and flexible. You could use it anywhere from 40 to 160 hours a month, for one month, or three months, or even longer. You can adjust upwards or downwards as needed because your hiring needs might fluctuate throughout the year.
Is there anything you need to do to prepare before you open discussions with a recruitment agency?
There are a number of questions you should ask yourself and try to understand before going in:
First, really understand your biggest, most immediate needs. What positions need to be filled soonest? How long have the positions been open? When do they absolutely need to be filled?
Know what challenges those roles pose. Have you already tried filling them? Have they proven difficult to fill? If so, why? What activities have you or your in-house recruiting team been doing to try to fill them? What’s worked, and what hasn’t?
Understand your budget. What resources do you have available for hiring? Are salaries in line with the current market trends? What are you currently spending on hiring processes, and what are you willing to invest? What are those open roles costing you?
You also need to understand your company’s selling points. What makes you guys different? What’s the culture like? Have you received any positive, helpful press lately?
Having a grasp on these things will help you communicate with the agency’s salesperson or account executive exactly what you need from them.
What questions should you ask recruitment agencies before agreeing to work with them?
Ask what types of positions they specialize in, and get a grasp on how well they understand your space. Ask: What kind of experience do you have in our industry? What types of roles have you filled in our industry? What trends do you see in our industry?
Ask how they pipeline candidates. Ask: Do you attend industry events? Do you use job boards? Are you searching through LinkedIn and Dice, or are you also using more advanced sourcing techniques?
And this is critical: make sure to ask for proof of results. Ask them: What are your success stories? Do you have case studies or testimonials from other companies in our industry?
Are there any potential warning signs or you should be listening out for?
If an account executive is promising multiple, quick hires at a super-low fee – anything below 18 percent for contingency – that’s a red flag. If they sound like a used car salesman, if they’re using an overly-aggressive technique or pressure tactics, be wary. It could be that they are under tremendous pressure to sign clients. It could be that they are a full-desk recruiter, juggling both sales and recruiting. And unfortunately, there are a lot of recruitment hustle shops. I’ve heard from so many hiring managers that they’ve been burned by recruitment agencies – it’s way too common. That’s why it’s key to understand who your point of contact is, what their role is, and ask for proof of results – case studies, or referrals from past clients.
It’s important to think: working with a recruitment agency or services company means they are representing you. They will be – they should be – your trusted partner, not your competitor. So what does their culture look like? It needs to align with yours. Ask questions like: What is your workplace culture like? What are your corporate values? How do you train and develop your recruiters? And, if their salesy approach has left you skeptical, you can even ask: What’s your turnover rate? The answer could be very revealing.
“Get at least three case studies or referrals to verify the agency can deliver what they say they can.”
What parts of recruitment services contracts are usually the most negotiable?
With contingency recruitment services, you can ask for a volume discount. So if you fill more than one role, the agency might drop the fee from say 22.5 percent to 20 percent. If you develop a longer-term partnership and continue using the recruitment company’s services – it becomes more than just a one-time deal, and you’ve developed a trusting relationship – you can also ask for a lower fee.
With on-demand recruiting, as you spend more time working with your service partner and as they get to know your company better, you can look to them to help you with more: planning recruitment events, selecting and implementing a new applicant tracking system, or training your internal recruiting team with new sourcing techniques, for example.
What sort of protections should you make sure are in the service agreement, so you don’t get burned?
With contingency contracts, you want to make sure you’re protected if a hire doesn’t work out. Typically, credible agencies offer a 90-day guarantee; if the hire doesn’t work out in the first 90 days, they are replaced at no extra cost.
With on-demand recruiting, the recruiter will work on as many roles as you need. Make sure the service agreement states that you own the candidate pipeline and have access to it even after the project ends.
If there’s one thing a hiring manager or talent-team member should absolutely make sure to do when negotiating with a recruitment agency, to make sure they get the best possible deal, what would it be?
Ask for proven results. Get at least three case studies or referrals to verify the agency can deliver what they say they can. Past success is the best predictor of future success.
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