Say you need just the right person for a key executive position, so you bring in a recruiting firm for the first time. But the result is a small, inferior candidate pool and/or the new hire jumps ship after three months. The process takes longer than it should and you overpay for inefficient service.
Such mistakes happen every day to HR professionals, especially to those with little or no experience in choosing recruiting firms and bargaining with them.
Advice: If you must hire a recruiting firm, avoid these common mistakes:
1. Choosing a firm just because it’s big. Large firms typically charge more, but they usually have a bigger pool of potential candidates. Small firms tend to offer personalized service, specialize in niches and charge less.
Find the firm with the best networks and expertise in the area that you need, whether it’s large or small. Check with HR colleagues for recommendations.
2. Neglecting to check references. Ask for references from clients who requested job searches in the same areas that you need filled. Also, ask about the workload of the person who will handle your search. How much time can that person dedicate to the search?
3. Accepting a replacement guarantee in the contract. A replacement guarantee calls for the search firm to find another candidate if the person hired leaves the job after a certain period, usually 90 days.
Search firms prefer replacement guarantees instead of money-back guarantees, which allow you to receive a refund if the employee leaves. A money-back guarantee provides the option to start the search again with another firm. That’s an option you usually want.
4. Negotiating the fee down too low. Fees generally range from 15% to 35% of the employee’s first-year salary. Organizations that negotiate fees in the 15% range shouldn’t expect to receive the same quality of candidates as companies paying 25% to 30%.
Be cost-conscious but not cheap. Pay enough to allow the firm to succeed. Don’t fall for recruiters that quote a high percentage and say, “That’s the industry average.” Negotiate.
Final tip: Hire firms with a reputation for fully engaging in searches. Favor recruiters that ask to meet several managers and executives to get a feel for.