Archive for November 2010
Have you ever tried going through a recruiter to get hired? Or even worse, have you had to use one to hire other people? If you did, you’ve been subject to what I call the Lack-Of-Value Middleman*.
Before you write this off as being too harsh on recruiters in general, consider the following math problem about buying real estate.
Suppose you’re trying to sell your house and you hire a real estate agent to broker the transaction. They tell you they’ll take 3% of the transaction for their efforts and you agree. After a grueling inspection, the agent tells you your house is worth $100,000 in this market climate. The agent suggests pricing the house right at the suggested market value for a quick sale. You, of course, would prefer to price the house at $115,000, because after all, you did that neat stereo upgrade in the basement, your hardwood floors are hand-installed cherry, and your flower garden is the envy of the neighborhood. And you’d like a little price negotiating room so you can actually get the “market value” out of it, right?
So let’s consider three scenarios, your profit and the relative commission generated for the real estate agent. For the sake of argument, let’s say you bought the house for $10,000 so we can factor net profit into the (highly oversimplified**) equation.
Scenario 1: Sell at the Agent’s price
- Sale Price: $100,000
- Agent commission: $3,000
- Your Profit: $87,000 ($100K – $10K -$3K)
Scenario 2: Sell at your price, minus negotiation
- Sale Price: $110,000 (after a $5K negotiation with the buyer)
- Agent commission: $3,300
- Your profit: $96,700 ($110K – $10K – $3.3K)
Scenario 3: Price is too high for market
- Sale Price: $0
- Agent commission: $0
- Your profit: $-10,000
The difference between these three scenarios highlights why real estate agents aren’t motivated to get you the best price, but only to sell your house at any price. If the agent pushes the house out at a “highly desirable price”, they get $3,000. If they push it at a less desirable price and it never sells, they get $0. If they push it at a slightly higher price, they get a measly $300 more than if they just got rid of it at a lower price, at the same amount of work. But your profit margin is HUGELY different, depending on the outcome.
This, my friends, is why you can’t trust real estate agents or recruiters. Because recruiters are under exactly the same set of motivations as real estate agents, but with far less to add into the deal.
A recruiter’s main job is to put you in front of any employer who will hire you. Not necessarily the best employer. Or the best company. Or even the right job. Any job will do, as long as the recruiter gets paid.
Your salary negotiation with a recruiter follows the same path as the house pricing scenario–the recruiter wants to make the deal happen at a reasonable price, but without upsetting the potential employer (scenario 3 is bad for everyone, so the recruiter will claim to be “on your side”). The reality is that anything that seals a deal between you and the employer is “good enough” for the recruiter. But good enough for the recruiter may be not be the best deal for you. This is why you can’t trust recruiters.
A good real estate agent can actually add some value to the house-buying transaction. They can suggest ways to help you dress up a house to get the best deal, negotiate tricky points of a contract when issues arise, and generally smooth the transaction over when things get rough. Bad real estate agents merely shove your house on the market to get it sold and ignore you (I’ve had both).
Recruiters–good or bad, on the other hand, rarely offer more value than the introduction itself. They play buzzword bingo with your resumes and the employers job description in an attempt to pawn you off quickly. They will almost never suggest any way to write your resume more “attractively” and will offer few, if any, tips for interviewing.
As a hiring manager, I can’t tell you how much sewage in the form of badly matched resumes crossed my desk (and continue to do so). As a contractor, I can’t name a single instance of a contract I ever got through a recruiter. Not for lack of trying, because they hound me and most of my developer friends via LinkedIn contact information or our marketing websites.
My message to recruiters is simple: The Dot Com days are long gone, so why are you still using the same tired tactics? Shoving resumes under people’s noses after playing buzzword bingo isn’t working and no one likes it. Why don’t you try to add some real value to the transaction? The hiring managers and contractors of the world are not buying it anymore.
* In all fairness, I get harassed by as many female recruiters as I do male. But Middleperson sounds like someone who might sell to Hobbits.
** If you’ve ever bought a house, you know my model is gratuitously oversimplified, but it serves as a reasonable example, even if it doesn’t take into account all the useless fees charged by the bank, the agents, and everyone in between.