Why Use a Recruitment Agency: Evaluating the Pros and Cons

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<h2>Key Takeaways</h2>
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<li>Recruitment agencies can save time and provide access to a wide pool of applicants.</li>
<li>Maintain clear communication and provide detailed guidance to ensure the best results.</li>
<li>Use them if your need is urgent, you’re trying to fill a sensitive, confidential or unusual role, you’re entering an international market or you need political cover in the case of a delicate recruitment situation.</li>
<li>Contingency recruiters may send more unsuitable applicants compared to retained and executive search.</li>
<li>Follow my tips for getting the best experience with recruitment agencies, including: find a salesperson you’re happy with who’ll manage the whole process, make sure that the agency understands your company, and let them know what you want.</li>
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Recruitment agencies, also known as staffing agencies, employment agencies, or headhunters, help employers find suitable candidates for their job vacancies. They handle advertising, candidate communications, selection, interview coordination, and job offers. Using a recruitment agency can save employers significant time and effort, allowing them to focus on their core responsibilities.

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The Elephant in the Room

Recruitment agencies have a poor reputation. A common joke is that “recruitment agencies were invented to make estate agents look good”, and many true words are spoken in jest. Jokes aside, the majority of the “bad apples” are working in contingency recruitment agencies, rather than retained or executive search, and are a victim of their work environment. Let’s look at each type, to help understand why certain recruitment agencies can be extremely valuable to your business.

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Types of Recruitment Agencies

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Contingency Recruitment Agencies

• Payment structure: Contingency recruiters get their name because their charge is contingent on successfully introducing a candidate. This allows employers to use multiple recruitment agencies and only pay the successful agency - but it can have some significant drawbacks that give the recruitment industry a bad reputation. The charge is usually calculated as a percentage of the candidate’s annual salary and they may offer a guarantee if the candidate leaves within a short period.
• Misplaced priorities: A contingency recruiter has to sell and compete, rather than carefully recruit your ideal candidate. Crucially the contingency recruiter is less committed as they’re essentially working for free, and at any stage the employer could fill their vacancy internally or walk away.
• Negative knock-on effect: Employers using multiple agencies, may cause a rushed and competitive environment.
• Common use: Suitable for generalist jobs that are relatively easy to fill.

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Retained Recruitment Agencies

• Payment structure: Retained recruiters get their name because they charge an employer a retainer to start an assignment and work exclusively on the vacancy. The overall charge is usually calculated as a percentage of the candidate’s annual salary and they may offer a guarantee if the candidate leaves within a short period of time.
• Commitment: You’ll pay the same recruitment fee as a contingency agency, but the initial financial commitment you make by paying an amount upfront demonstrates you want to work in partnership. This allows the retained recruiter to commit to a robust and professional search, delivering the best candidates available in the market at that time.
• Professional: Retained recruiters are trained in proper search and selection techniques, preferring to get their business from recommendation and repeat customers.
• Common use: Suitable for a wide range of roles, from senior level vacancies to support roles. Ideal if you are seeking a long-term partnership for ongoing recruitment needs.

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Executive Search and Selection (aka Headhunters)

• Payment structure: The overall charge is usually calculated as a percentage of the successful candidate’s annual salary. However, employers often pay one-third retainer to start the assignment, one-third when interviews start, and the final-third on offer. Crucially no guarantees are offered, you are paying for a professional to undertake a process that will identify the best candidates available in the market at that time.
• Experienced: Often very experienced recruiters are promoted to work on an executive search basis.
• Passive candidates: Focus on identifying passive applicants, crucial for senior or specialist roles.
• Common use: Ideal for filling high-level positions. 

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When to Use a Recruitment Agency

Employers should consider using recruitment agencies in the following scenarios:

• When you are too busy!: If there aren’t enough hours in the day and internal resources are insufficient to manage recruitment effectively, use a recruitment agency.
• Specialist vacancies: When seeking applicants with specific expertise or for senior-level positions, particularly passive applicants.
• Confidential / urgent roles: Agencies can maintain discretion for sensitive hires. They can quickly provide candidates for immediate staffing needs.
• Temporary workers: Uniquely, recruitment agencies can find and manage “temps”. These can be a great way to manage peaks in demand, or to test if a job adds value.

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How to Choose & Work Effectively with a Recruitment Agency

• Ask for recommendations: Do your colleagues or industry peers have any insight into the best ones to use? Avoid “Top 100” listicles online as agencies can pay for inclusion, rather than the list being based on merit.
• Evaluate the introductory call: Assess the agency’s understanding of your needs and their approach to fulfilling them. How long do they take discussing your exact requirements (a good retained or executive search will want lots of information) vs. giving them a job title and them wanting to get started straight away (contingency recruiters have a race against the clock to send applicants before any competitors do)?
• Shortlist individual consultants: The quality of the salesperson is more important than which agency they’re with. If you like them, make sure that you’ll be dealing with them through the entire recruitment process.
• Make sure the consultant understands your company: The recruitment consultant is representing you, so make sure that their conduct reflects well on you and that they’re communicating accurately and honestly to jobseekers about your job and company. Ideally, the salesperson should properly get to know your organisation by visiting your offices, not just talking to you over the phone (however, most recruitment agencies are now online, so this shouldn’t be a deal breaker).
• Don’t hire agencies who are contractually constrained: Avoid agencies who might be contractually unable to approach staff working for competitors because they already recruit for them. But also make sure that they won’t try to poach your own staff!
• Take references from their customers: Don’t work with the agency if they’re reluctant to facilitate this.
• Industry accreditation doesn’t mean quality: Being a member of an industry body and displaying their certification rarely indicates quality.
• Negotiate – but prudently: Try to get a good deal, but strike a balance here: agencies send their best applicants to their best (ie. highest paying) customers and, especially if you’re a new customer, a reduced price might mean reduced service. One good tactic is to first negotiate a longer guarantee period, and when you’re a more established customer try to get a fee discount.

When you are happy with your choice of recruitment consultant, you’ll need to work closely with them for optimised results. This is a two-way relationship. Give them your Great Performance Profile and any screening questions you want them to use. Give them clear feedback on the applicants they send you to help them refine their search. (If they don’t engage in these, then go elsewhere.) 

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Advantages of Using Recruitment Agencies

• Time-saving: Recruitment can be a time-consuming process involving advertising jobs, sorting through applications, conducting preliminary interviews, and employment reference checks. Recruitment agencies take on these tasks, freeing up the organisation’s internal resources and allowing them to focus on their core business activities.
• Access to a larger talent pool: Recruitment agencies often have extensive networks and databases of potential candidates. This allows them to quickly identify individuals with the specific skills and experience needed, including passive candidates who, though not actively seeking new employment, may be open to opportunities.
• Market knowledge: Recruitment consultants often have knowledge of the sectors they recruit for, including salary rates, career expectations, available skill sets, and current hiring complexities.
• Screening: Recruitment consultants typically conduct preliminary telephone calls and checks, ensuring that only suitable applicants are forwarded to the employer.
• Flexibility and speed: Recruitment agencies can provide temporary or contract workers at short notice, which is particularly beneficial for covering unexpected staff shortages or peaks in demand.
• Reduced risk: Many recruitment agencies offer guarantees if a new employee does not work out within a specified period, reducing the risk to the employer. 
• Confidentiality: For sensitive roles, such as replacing a current employee or hiring in a competitive environment, agencies can manage the recruitment process discreetly.
• Negotiation assistance: Recruitment consultants can assist in salary negotiations, but they will often endeavour to get a higher salary because it leads to a higher commission.
• Long-term relationship building: Establishing a long-term relationship with a recruitment consultant can be beneficial for future hiring needs. Becoming more familiar with the company’s culture and requirements can improve the effectiveness of their service.

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Disadvantages of Using Recruitment Agencies

• Cost: One of the most significant drawbacks is the expense. Recruitment agencies typically charge a percentage of the hired candidate’s annual salary, which can be substantial, especially for high-salary roles.
• Quality and relevance of candidates: Contingency recruitment consultants might prioritise quantity and speed over quality, sending many candidates in the hope that one will be suitable rather than carefully matching candidates to the job’s specific requirements.
• Limited understanding of company culture: In the past, recruitment consultants visited employers to understand the organisation’s culture. But this is rarely the case now, which can lead to candidates who are a poor cultural fit despite having the necessary skills and experience. An in-person relationship used to be one of the benefits of using a local recruitment agency, but that has sadly been lost now that the service is primarily online.
• Potential conflict of interest: Since contingency recruitment consultants earn their commission when a candidate is placed, their primary motive can sometimes be to fill a position rather than find the ideal candidate.
• Dependence and lack of control: Relying on recruitment agencies can lead to a lack of control over the recruitment process, with employers having to trust the recruitment agency’s judgement in screening and selecting candidates. 
• Risk of misrepresentation: A recruitment consultant may oversell a position to a candidate or a candidate to an employer, leading to mismatched expectations and potential dissatisfaction on both sides.
• Negative impact on employer reputation: If a recruitment consultant uses aggressive or unsavoury tactics, or applicants have a negative experience with the agency, it can reflect poorly on the employer’s brand.‍
• Potential for overlap and confusion: If multiple contingency recruitment agencies are used, there can be overlap, with several agencies presenting the same candidate, leading to confusion and administrative complications.

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Additional Resources

• Recruiting Book: The Secrets of Great Recruitment: How to Recruit Great Employees.
• Downloadable PDF guide; The Truth About Recruitment Agencies: Choose the Right Type.
• Article; Recruitment Agencies: The Hidden Truth Behind the Sales Pitch!
• Article; How do Recruitent Agencies Make Money?
• Article; Advantages & Disadvantages of Using Recruitment Agencies for Recruiting Staff.
• Article; Headhunters: Are They Truly Worth Their Hefty Price Tag?
• Article; Advantages & Disadvantages of Using Headhunters for Recruiting Staff.
• Article; How Do Recruitment Agencies Work? A Guide for Employers.