Agencies

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In theory, you can contract out almost any part of your recruiting process to an external recruiter. This particular section is about working with recruiting agencies on a contingency basis, and less about retained or contracted recruiters, which we discuss in The Hiring Manager-Recruiter Partnership.

Contingency recruiters are recruiters employed by an agency who work to place a pool of candidates in open positions at one or more companies, and they receive payment only for successful placements. Placement fees for contingency recruiters are paid by the company where the recruiter places a candidate and calculated as a percentage of the candidate’s annual salary, with typical fees ranging from 15–25%.

​danger​Contingency recruiting can be fraught with mismatched incentives:

• The recruiter may be working with more than one company, and could be incentivized to push the candidate toward the company with the largest potential placement fee (not just in percentage, but also in potential volume of candidates).

• The recruiter may not properly represent your company or opportunity to the candidate. This might be due to lack of a deep understanding of your company or role. They might also oversell the fit in an attempt to win their placement fee.

• If the recruiter is really unskilled, they may send you candidates that are not a good fit at all, causing this channel to resemble an unfiltered inbound channel, and flooding your funnel with noise.

That said, a really good contingency recruiter will be focused on long-term relationships (with both candidates and companies) rather than chasing quick placement fees. They will have a healthy pipeline of candidates, and will put in the effort to find a match between the right candidate and the right company. Great contingency recruiters can be a valuable source of candidates. Jose Guardado has some great tips on choosing a contingency recruiter.

​caution​But in general, we recommend getting a trusted referral when selecting a contingency recruiter, and vetting both the agency and the individual recruiter (the quality of recruiters at a given agency might vary).

Filtering Candidates From Agencies

Candidates who come in through agencies tend to fall into two categories:

1. They look good on paper but have some tragic flaw you find later, after investing non-trivial resources to interview them.

2. Strong candidates who are much harder to close than similar candidates from other sources.

Market forces affect agencies. In this market, where strong candidates (or at least those who look strong on paper) have plenty of options, there’s not much incentive for them to work with agencies.

​candidate​ While agencies sound tempting at first—you have someone who knows more about which companies are out there than you do and can make recommendations, actually connect you to companies, and even schedule interviews—the reality is very different.

• In practice, agencies tend to add extra steps to the top of the funnel for candidates—now instead of just talking to company recruiters, they also have to have the same conversation with a slew of agency recruiters first.

• Moreover, despite positioning themselves as trusted advisors, agency recruiters typically don’t have much insider knowledge about the companies they hire for, often not being able to summarize the basic value proposition, much less speak cogently about the roadmap, projects, or market positioning. (Of course, there are always exceptions, and there are truly excellent agency recruiters, but they’re rare.)

Working with an agency does not add value for candidates, so when candidates choose to do it, it’s often out of desperation, because of their inability to gain access to an employer through other channels.

Additionally, very few agencies have the means to vet candidates at their disposal. As a result, they tend to focus almost exclusively on candidates who look good on paper (for the reason that employers usually won’t engage with them if they present nontraditional candidates), but those candidates, more often than not, tend to come with some tragic flaw. If they didn’t have one, they probably wouldn’t be working with agencies in the first place.

If you’re fortunate enough to talk to an agency candidate who isn’t flawed and does well in your process, you have one more hurdle in front of you—actually convincing the candidate to accept your offer. And you’ll find that doing so will be unreasonably difficult. Agency recruiters get paid when they make hires, so it’s in their interest to get their candidates to interview with as many companies as possible. As such, any candidate who is presented to you will likely be presented to as many as 10–20 other companies. You can do the math from there.

How to Effectively Engage with Agencies

While we advise avoiding agencies when possible, if you’re really struggling finding the right candidates, you may feel compelled to give agencies a chance. The most realistic (and probably ideal) setup is that they’re there to get candidates in the door, not to own the process, despite how much control they might want. Here’s how to find and vet decent agencies and make the relationship with them as productive as possible.

First off, ask around for recommendations from your network. Good agencies are so rare that they’re often a well-kept secret.

Once you find a promising agency, do a mock call with them and have them pitch you as though you were a candidate. Ask them a lot of questions about the company and the role. The goal here is to figure out whether this agency would reply with something like, “I’m not sure, but I can find out.” What you don’t want to hear is the agency making something up just to seem knowledgeable, or pivoting away from the question. Another good answer would be, “You should ask the hiring manager about that, whom I’d like to put you in touch with—they’d likely have a better sense than I would, and I don’t want to give you the wrong information.”

If you do start working with an agency, have them Bcc you on emails for quality control. Tell them you want to be conferenced in on mute for a call or two. Are they representing your brand well?

​caution​ Don’t give them roles that require very high-touch time management, as the best candidates are often off the market very quickly. They’re managing many clients, and unless you’re their cash cow, they’re probably not always going to optimize for you.

​caution​ Don’t give them roles that require complex selling. They aren’t embedded in a company’s culture, internal communications, and knowledge base, and will lack the ambient knowledge to be effective. Train them to defer to you on hard questions.