The Recruiting Industry Is A Racket!

Yes, I meant to say that! I have seen first-hand how disconnected the recruiting industry is from the employers and job seekers it serves.

In order to understand why I make such a bold claim, you have to understand the basic business model of the industry. Now, to be fair, (if I must), not all recruiting firms use this model; however, it is the basis for most firms out there.

To start, most firms are contingency-based which seems like a great idea on the surface, if you are the employer because there is no fee unless you choose to hire the presented candidate – no risk, right?

The second critical thing to know is recruiters are most often paid 100% commission on the roles they fill and are also responsible for “bringing in the business”. This is considered a hybrid sales/recruiter. They only get paid if they successfully find a client and fill the role.

This combination sets up the recruiter to care about one main thing – filling the role as fast as possible; otherwise, it is famine for them. In fact, it is a very high-pressure job with a high burn-out rate and, ironically, a very high turn-over rate. Their motivation is not about finding the employer the best possible employee, but to fill it as fast as they can so they can feed themselves and their families.

At the surface this may not seem that bad, so why do I think this is such a terrible approach?

Because what this really does is it treats human beings, the job seekers, as commodities – putting profit before what is best for the humans involved.

The other way in which the industry is a racket is the exorbitant fees charged by these firms. Typically, the fee is between 20% – 35% of the annual salary of the new hire. The reason for these fees is due to the high failure rate in which the losses have to be built into the fee.

And again, since the recruiter needs to fill the role as fast as possible, they often spend no more than 15-30 minutes with the job seeker, only asking about skills and experience. They typically spend about the same amount of time with the employer, getting a basic understanding of the role, salary, and skills requirements.

What is left out is culture fit, which is the #1 predictor of successful retention of a new hire. At Zephyr, we believe culture fit includes at least these main factors:

• Core values
• Personality
• Mindset and Attitude
• Strengths
• Weaknesses
• Goals
• Team Dynamics

I tried to locate data on the retention rate of employees hired through recruiting firms and have found nothing. Sometimes the absence of data is as profound as the data itself. My assumption is this information is not shared for a reason. What I can say is that every single one of our clients who have used a traditional recruiting firm have had no luck with the hires sticking around and working out. They paid often times between $15,000 – $30,000 PER HIRE just to lose them within 6 months!! Now THAT is a racket!

By the way, I am not trying to paint a negative picture of the recruiters themselves. They are often victims to this model and rarely last. It is the standard industry business model I am attacking.

Human beings are NOT commodities. They are partners, teammates, friends and THE only reason any business can provide its service or products to its customers. Without employees a business cannot exist.

Recruiting support from an outside source needs to be a service that balances the value of bringing on a UNIQUE FIT™ employee with the time it takes to do this important work. Recruiting should be akin to matchmaking, finding the UNIQUE FIT™ for both the job seeker and employer.

Recruiters should not be paid only if they fill a role, but for the work they do. This will allow them to be committed to quality work, not quantity work. The pressure to fill roles fast should be removed allowing the recruiter to cater to both the employer AND the job seeker. The recruiter can then focus on finding the right match while giving the job seeker the time, attention, and respect they deserve throughout the recruiting process.

Recruiters should not be the salesperson, responsible for bringing in the revenue. This creates a conflict of interest no matter how you slice it.

At Zephyr we created this framework because it is the right thing to do – we deeply believe everyone deserves to love their job and every employer deserves to love their team.