Getting the Most Out of A Recruiting Firm

Recruiting or search firms are a resource for small businesses that is hard to beat.  Besides the traditional search and hiring functions of screening candidates, negotiating compensation and acting as your company's agent, they can be a repository of industry and market information.  What is the best way to work with a recruiting firm to get the most out of the relationship?

Types of Search Firms
Search firms come in a variety of flavors.  There are firms that specialize in functional recruiting - placements for accounting and tax, creative and design, engineering, sales and marketing positions are examples.  There are others who specialize in hires within a specific industry.  Either type of firm can provide you with a significant amount of information on HR issues such as compensation levels and plans, what company the top trained new hires might come from, the best schools for certain types of education and other administrative information.  Industry firms can be particularly helpful in providing such information as market trends, identifying new marketing partners or introducing new distribution channels.

How to Optimize the Relationship
Recruiting firms get paid the bulk of their compensation in contingency fees.  These fees are generally a percentage of the annual compensation paid to a new hire.  They range between 15% and 35%, depending on such variables as anticipated compensation, exclusivity of the engagement and the availability of retainer fees.  In fact, like any professional service firm paid on success, retainer fees are important to the recruiter's monthly cash flow.  And while many firms cannot be engaged without one, they will lower or reduce the contingency fee based on the amount of the retainer.

As far as your company is concerned, retainers can be the key to a successful recruiting engagement.  You need the professional recruiter's attention throughout the assignment and the retainer is the best way to do just that.  Depending on the services to be provided or the difficulty of the hire, limit the retainer by paying it for several months with an option to renew the agreement.  If there has been no progress in the primary portion of the assignment, hiring that new employee, you may not want to continue the assignment.  Don't forget to cover in an agreement all services to be provided by the recruiter, as well as the other terms and conditions of the engagement. 

Confidentiality
When dealing with top professional recruitment officers, don't ask for specific data on competitors.  Even if they have not signed non-disclosure agreements with their industry clients, professional recruiters are careful about giving away confidential information.  And you wouldn't have it any other way or they might be sharing your information with outsiders!

Find the recruiting firm that can handle your next new hire assignment by deciding in advance what you are looking for in a search firm.  Spend time interviewing each firm to find out how much they know about your industry and businesses like yours.  Then work with them to get the most out of the recruiting assignment.