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Effectively Using Third Party Recruiting Firms To Attract Talent

by Len Adams, C.P.C., President and Chief Executive Officer | ACG Resources 
with Comments by Dr Philip Wegner  Expertalis, Germany

Whether your business is small (and seeking start up staff) or large (and seeking to replace key executives), there are many methods of identifying and attracting qualified staff, including running ads, Web postings on the company web site, job boards, Linked In, Utilizing Internal recruiting staff, asking for recommendations from existing staff, “networking,” or just depending word of mouth candidates.

All of these are fine, but recruiting firms, when used properly, can be one of the most effective methods of making quality hires. How do you find and use recruiting firms as an effective staffing option? Here are some details on why, when, and how to use them.

Varied situations. Whether the position becomes available because of termination, resignation, retirement, or addition to staff, the key reasons for retaining a recruiting firm are:

  • Particularly when expanding your staff or when replacing an employee, you may not want your competitors or other employees to know your plans. So a posting on the web may be out of the But you can conduct your search in confidence through a recruiter: Since the recruiting firm’s most valuable asset is information, it won’t reveal its clients. All preliminary approaches are completed without identifying the client organizations. Only when there’s sufficient interest in setting up an interview is the client revealed.
  • Cost effectiveness. When searching for qualified candidates, there are cost factors that need to be considered. For example, the cost of posting on a job board varies. While it can be quite inexpensive on the surface, the ease to apply can cause a massive number of responses to be received, the time and cost involved in processing responses and interviewing applicants can be overwhelming – and may not reap a qualified candidate. A recruiting firm, on the other hand, saves both time and money simply because they handles the preliminary screening and interviewing. Thus, the client interviews only those candidates who fit their criteria.
  • Ability to tap the market. Some of the best candidates do not respond to job board postings or may not even see them. A recruiting firm can reach those candidates who are not actively seeking new jobs. Further, a recruiting firm may be able to attract candidates from within your industry without compromising your firm’s reputation.
  • Ability to attract talent. A recruiting firm that’s active in a particular industry generally has developed relationships with “up and coming” candidates. Such a firm may be able to reach high-caliber individuals who may not be approachable otherwise.

Don’t consider using a recruiting firm until you’ve completed an unsuccessful internal search, are convinced that using a recruiter would be your most cost-efficient option, and are ready to cooperate fully with the firm.
Types of Recruiters
Contingency search firms and retained search firms work for the employer. Fes are paid by the employer and are based on a percentage of the candidate’s estimated first year’s compensation – generally

Contingency search firms receive their fees when the candidate begins work with the client; fees paid to a retained search firm are delivered on a set schedule (usually one-third when retained, another third after 30 days, and the final payment when the candidate begins work). Retained search firms also bill additionally for expenses. Guarantee periods vary from 30 days to 90 days, with full or partial credits

Tools of the Search
After you’ve selected a particular recruiting firm, it’s important to provide it as much information as possible about your company and the open position,

To educate the recruiter about the company, you should furnish the details of your main business line, operating units, asset/capitalization size, and benefits. An annual report and organizational chart, if available, are also helpful.

Supplying information about the available position is imperative. This should include: the exact functional/operational title; education, experience, and expertise requirements; salary range; why the position is open, how long it’s been open, and whether in-house candidates have been considered; background of employee currently holding position; personality factors, including traits needed for job success and the personality of the position’s supervisor (a meeting with the recruiter is advisable); competitors or other companies where a candidate is likely to be found (and companies that shouldn’t be tapped); and your interviewing and hiring procedures. A written position description is generally helpful.

Services Provided
When a recruiting firm, whether contingency or retainer, accepts an assignment, it doesn’t just “empty its database” (send numerous candidates or resumes to a client, hoping one will be a match). Rather, the firm begins a comprehensive process, which consists of researching, data base searching, networking, recruiting, prescreening, preliminary interviewing, in-depth interviewing, reference checking, negotiating, and closing the placement. Note that part of the firm’s role in this process is to participate in salary and benefits negotiations and to assist the client in determining the candidate’s motivation for making a move.

Recruiting firms can be a valuable source of information, too. Most will provide; as a service— up- to-date surveys and information regarding salaries, benefits, and availability of candidates in any particular location or category. Recruiting firms can also help employers troubleshoot turnover problems or difficulties attracting staff. With the recent enactment of laws in several states banning  salary inquiries, a recruiting firm can be invaluable in providing market intelligence relative to compensation ranges

Finding a Recruiter
Recruiting firms range from small, independent operations to large public companies and subsidiaries of international firms. How do you choose? Ask around. Check references on prospective recruiting firms just as you would a prospective candidate. Rely on the recommendations of colleagues and business acquaintances. Recruiter industry associations also tend to be excellent sources of recommendations. Specialist firms’ often are members of professional or industry associations, which can also be helpful in finding a recruiter.

Because recruiting firms strive hard to build their reputations, it’s not too difficult to identify the reputable firms in any given location or specialization. Be sure, however, not to confuse reputation with visibility or public relations image. Evaluate firms on their track records and methods of operation.

To establish a recruiting firm’s ability, require them to provide lists of its current clients and recently completed assignments. What are the firm’s procedures? Who in the firm will handle recruiting, interviewing, and dealing with you? Is the firm able to attract candidates from other areas of the country? How much time will it need to fill the position? Also find out about fees, expenses, and payment schedules.

After you get this information, consider that the recruiting firm you choose will be representing your company to prospective employees.  You should feel comfortable with the firm. If the chemistry isn’t right, it will be very difficult to work well together. ESTABLISH EXPECTATIONS UP FRONT

Other Considerations
Large or small firm? A small firm may be able to offer more personalized service and have a smaller “hands-off list” (employers with whom the firm does business and therefore can’t use as recruiting sources). However, a large firm may have greater resources available but may have a larger hands-off list, thus limiting the companies from which it may recruit. More important to your choice should be the firm’s reputation, professionalism, and ability to produce viable candidates.

Contingency or Retainer? Both types operate using substantially the same methods. The basic difference is that the retainer firm is compensated for a portion of the fee at the beginning of the search. Thus, retainer firms have more of a reporting responsibility to the client.

Specialist or generalist? For a position requiring special knowledge or technical expertise, a specialist firm is the preferred type. For positions of a general nature, a generalist firm will suffice. Bear in mind, however, that if a recruiting firm is worth its salt, it can recruit for any job, given adequate information. Firms will generally turn down assignments they can’t handle.

Negotiating Fees
If the recruiter’s fee seems steep, remember that it isn’t payment for finding just one individual, but payment for the range of professional services rendered in recruiting that individual. A recruiter’s overhead and expenses are comparable to those of any other business.

Provide the recruiter as complete information as possible about your business and the position or positions to be filled. This information serves as a road map for the recruiter. Also be sure to provide the recruiter with feedback – both positive and negative. If the firm is on the right track, let it know. If the firm is moving in the wrong direction or if some aspect of the position changes, alert it. And listen to the firm’s advice and evaluate it on its merits.

If the firm is working on a contingency basis, consider giving them an exclusive. Granting an “exclusive” to one recruiting firm could facilitate results. Nothing motivates a recruiting firm more than knowing that a client has faith in its ability. It doesn’t make sense to engage 15 recruiting firms to fill one position. Such action will sabotage your search. For example, if a potential candidate is approached by 15 recruiters about one position, that person will probably think there is something wrong with the position or your firm.

Be Realistic

Your criteria for the job candidate, the salary for the position, and the deadline for filling the opening should be obtainable. For example, asking a recruiter to find a candidate at a salary that’s 30% less than the position and experience level warrant is a tremendous waste of time and effort.

What should you know, hiring a recruiting firm for/in Germany.

A short supplement by Dr. Philip Wenger, Managing Partner of expertalis GmbH, FMA Member of the Board:

A lot of US-facts mentioned by my dear FMA Partner Len Adams, also correspondent to the German market. To summarize:

  • The labor market: extremely tight. Almost full employment nationwide, especially in the south and in the disciplines of Engineering (machinery, electronics), IT, Tax and Sales as well as specialists from all disciplines. As a result of this all of the best candidates are already working, do not have to search job boards and, for the most part, have little interest when approached by a headhunter in the workplace. The current labor market situation also makes it expensive for the employer, because, in order to attract the right specialist/executive a substantial pay rise is acquired – in many cases the raise of 20% is the norm.
  • The recruiting firms market: extremely varied. There are thousands of recruiters in Germany, varying from one man shows to middle sized headhunting boutiques to the universally known multinational big players. Working on contingency or retainer, starting from 20% up to 33%.

Tip: As in the US, with so many recruiters to choose from, I is important to find the right fit. Perhaps invite the consultant for an appointment to find out his philosophy, work ethic, references and conditions. If the chemistry doesn’t fit, choose another one!

There are however pitfalls for international employers looking for personnel in Germany:

  • Salaries in Germany are high, at least compared to most other European countries. Only Swiss wages are known to be higher! But the salaries can also depend on the number of suitable candidates for a specialized position, on the industry and the region.
  • Notice periods are long. German workers tend to have much longer notice periods than their international counterparts. However, within the first 6 months of employment (probation) notice periods are quite moderate with just two weeks on either side. After probation a notice period of 3 months (to the end of the month or to the end of a quarter) is normal.

Tip: Have this in mind, when you think about filling a position. If you estimate that a search takes 3 to 6 months, depending on the difficulty, it could take another 3+ months, until the chosen candidate starts to work at your company.

  • Job references are important and a world of its own. When receiving applications from candidates, they will send you not just the CV (a photo included) and a cover letter (often with the indication of notice period and salary expectation) but also a file of a complete selection of job references from former employers plus all acquired certificates from schools and universities and from further training e.g. language or IT qualifications.

Tip: While certificates with a degree as Bachelor, Master, MBA, SAP-Consultant etc. look quite the same to the international standard, job references from former employments are often several pages long and contain a detailed description of the job contents but also of the personal competencies and behavior as an employee. What makes it tricky to read and to interpret job references properly is the fact, that there has developed some „jargon” over the years. This means, that statements which at first site look positive, can turn out to indeed be negative. Sometimes it is even difficult for German HR professionals to interpret the references. You have to know the keywords.

  • Traditionally labor law plays a big role in German employment contracts. As a result of this one finds that many HR Managers and Directors come from a legal background.

Tip: Although all this may sound a little complicated and daunting, there are also a positives to hiring personnel in Germany. Once employed and attached to a company, German employees tend to be very loyal, have a reputation of being highly motivated, disciplined and effective.

Compliments of  ACG Resources , a member of the EACCNY