A couple of weeks back, the FOT crew did a point/counterpoint segment for Workforce Recruiting. The topic in play was whether a company can afford to do nothing but grow talent internally. As you might expect, everyone had an opinion, and Tim Tolan argued that companies owe it to everyone to look at outside talent at the same time they’re considering internal candidates.
Tim’s logic was compelling – even if you think you have a viable internal candidate in play, bring in
outside candidates so the leadership of the company can make the best call from a talent perspective.
Michael Homula pitched in on the topic, and pointed out that not considering outside candidates means you roll like Karl Marx. I liked the imagery….
So here’s my question. If two external recruiting experts both feel like it’s critical to look at outside candidates, and everyone agrees that in order to not lose time you should do that while you’re running internal candidates through the process, are any recruiters actually willing to work under those circumstances?
Work with me on this one. I like the idea of lining up externals to compare and contrast with internal candidates, but have a hard time believing the best recruiters would work with that contingency. Here’s how my call would go to Tim and Michael H.
"Hi <Tim/Michael>, wanted to let you know that we are running that search I talked to you about for a Director of Sales. Like I told you, the team here thinks we have one solid internal candidate, but we’d like to see some outside talent as well. Can you work this one on contingency and provide some deep outside talent knowing that it’s 50/50 at best that we’ll end up going outside?"
To be sure, I could put some skin in the game via a retainer, but candidly, I’ve never been in a situation where that was a possibility – don’t have the $$$. So, it’s back to the contingency game.
Here’s what I think happens. I go to folks like Tolan and Homula and give them the straight deal, at which time they rightfully defer because they can’t spend their cycle times on a "maybe". Then, to get some outside candidates in the mix, I farm the deal out to 3-4 contingency recruiters, most of them generalists and of widely varying experience, that I vaguely know and let the mosh pit begin. Maybe they’re actively sourcing, maybe they aren’t, and I don’t get the value play that Tim outlines in his original thoughtful post.
Not Tim, Michael or anyone else’s fault – they can’t blow cycle times without some form of insurance. Not my fault – I can’t do retainers. Then the whole cycle of contingency recruiters I barely know begins, which isn’t the relationship model we all want.
Complicated. Any thoughts from the street savvy pros out there? Just thinking aloud….
Hello,
Caryn
As I am VERY new to the recruiting arena as an outside vendor, I ask that you excuse my naivety. However, as I read this post the following comes to mind:
Is there not some element of relationship management that needs to be considered for all three parties. Kris, if your first stop is with these two service providers, is there not a quality/service/reliability that you count on, which, is in Tim and Michael’s best interest…and as I think about it, yours as well, to maintain. Although the chances of making a placement are diminished, is there not a different type of value in showing up for your client as well as giving a good vendor first crack?
Is it unheard of to give one or two vendors a time frame in which they can take a quick “look-see” from their existing relationships with candidates to see if someone fits the bill or devote some time to strategically looking.
The coach in me asks: “Who do we choose to BE” in our roles? How do we balance our standards, ethics and intentions with financial gain?
Hope this makes sense –
I have sent resumes to clients with a ‘no fee expected’ note. Sometimes my HR contact needs to be taken out of a bind but does not have the budget to pay my fee. And I know I will be the first person they call when the budget is there again. I see it more as a long-term investment rather than a per-sale transaction.
Kris:
I’ve been in retained executive search for some time and have commented on this issue before. I have not changed my view. You’re wasting your time with requests for external candidates on a contingent basis when there is an internal candidate in play. Tim and Michael are exactly right that companies should consider outside candidates when an internal candidate is in play. Even if the organization chooses the internal candidate, the hiring manager, and the organization can have complete confidence that they have selected the very best candidate avaibable. This is important when the costs of a bad hire are considered. Brad Smart in his book, Topgrading, estimates the cost of what he calls a mis-hire at 24 times the base salary when both direct and indirect factors are considered. The most conservative estimates you will find hover around 5 times base salary. Is it really worth counting pennies, and worrying about a search fee when there is so much at stake?
And this leads me to my defining point here.
The only way to effectively address this staffing issue from an organization point of view is to provide a consulting fee. Translation: use retained search. You can structure the terms to stop payment at any time if you decide that based on the external candidates you have seen that your internal candidate is indeed the best person available. But to expect quality candidates to be developed on a contingy basis is ludicrous. Oh you will get candidates, of course, but they will developed with all of the acumen of throwing paint against a wall. And then the hiring manager says, ” see I knew I had the right person internally”, and the whole ill conceived process starts again (to use contingent search to surface external candidates when there is a strong internal candidate in the cue.)
One final thought. If the hiring manager and the HR/staffing partner are not willing to pay (i.e. use retained search or pay a consulting fee) they are not serious about truly finding the best candidate. And these folks my friends are not who you want as clients.
Kris – to answer your first question – as a third party recruiter I’m definitely interested in working with clients who want to consider both internal and external candidates at the same time. But just as the people at the client company get paid to do what they do every day, I have to get paid for my services and expertise as well. Part of the service that I offer to clients is to lend that expertise to the process of finding the best candidate for their position. If that person ends up being an internal candidate, or a candidate referred by someone within the organization, then they are included in our interview and assessment process along with the candidates I source. That way, clients are able to take the information submitted and compare apples to apples. As Tim mentioned, in some cases it may mean that I end up being paid more of a “consulting fee”, and I’m o.k. with that. What I’m not o.k. with is spending time and energy on a search only to end up with nothing to show for it. I have to eat too, and I earn my income by providing value in the search process to my clients – not just candidates.
I get that you may not have a budget for retained search, but it sounds like paying a fee if a candidate is sourced on a contingency basis is an option, so the dollars must be there somewhere. As a former HR leader familiar with tight budgets, I hear you, but I can honestly say that now that I’m on the other side, I can see where partnering with a good search firm on a retained and/or consulting basis can save time, money and hiring manager/team frustrations that are costly as well.
Tim/Jennifer -
Thanks for checking in on the post. Most HR folks who are seeking “non-executive” candidates can’t do a retainer, it’s not in their culture. Part of the reason it’s not in their culture are the reasons I outline above. The masses of folks who will do it on contingency.
Love to pay you for your work. Rather than extracting a lump sum of cash via a retainer, are you willing to work for an hourly fee that transitions to a contingency placement fee if we place your candidate in the job? If no, why not?
The post above screams for a middle ground answer so folks like me can get the best recruiters involved.