Lessons of Failure
Humans + Software Development = Always Interesting

Nov/10

22

Why You Can’t Trust Recruiters

The recruiter's glorious promise...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.

Recruiters never quit...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.

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* 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.

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35 comments

  • Passing Through · November 22, 2010 at 9:02 am

    You have a slight spelling error in your title.

  • Author comment by Dave · November 22, 2010 at 9:10 am

    Damn my fast typing sometimes… :) Thanks for that, although I can’t tweak the slug without breaking every link I just posted…haha. Oh well. Fortunately, the post wasn’t about spelling and grammar.

  • Michael Kimsal · November 22, 2010 at 9:13 am

    What ‘real value’ would you suggest they add? Not a snarky question (might sound like one) – curious what you think could/should be value adds.

  • Mazen Harake · November 22, 2010 at 9:35 am

    Did you mean: “let’s say you bought the house for $100,000 so we can…”? Interesting read. Cheers.

  • Author comment by Dave · November 22, 2010 at 9:36 am

    Well, no, I didn’t. It was my fantasy transaction, so I thought I’d leave simple numbers there, but unrealistic on both sides. Houses in my area haven’t sold for $10,000 since the late 1950s.

  • FN · November 22, 2010 at 9:39 am

    I don’t agree that recruiters “don’t add any value,” but I do agree that their business model sometimes puts them at odds with their clients.

    I’m reminded of the problem the British had with sea captains transporting prisoners to Australia http://n.pr/9GHuqQ

    I think a fixed fee, retained search with carve-outs for certain scenarios (like hiring an internal candidate) eliminates a lot of the conflict of interest. Think of the case where you’re hiring for a CEO to replace an incumbent. It’s very hard to do that search without a recruiter.

  • Jake · November 22, 2010 at 9:45 am

    Can’t speak for everyone but I have a very good relationship with a few recruiters and they have benefited me tremendously.

    I’ve called up recruiters and asked them about current jobs that I am applying to and asked how does this job help me in the long run. All of them have taken the time to help me. By the way, all free. Everyone of the recruiters I talk to are very friendly and always answer the phone.

    One recruiter knows me so well, right now every job she forwards me I look at because it has things that I want to see.

    You have to know how to use recruiters and headhunters. For example I was curious about long term goal of possibly being a CTO, and the recruiter was very frank about not being familiar with how to help me get there. She did suggested other recruiters that deal with executive jobs.

    Treat recruiters like any other service. If they are unfriendly and seem shady, leave. But many are there to help you since in the long run it helps them build trust and obviously get more business from word of mouth.

  • Author comment by Dave · November 22, 2010 at 9:47 am

    CEO candidates may be hard to find outside of the recruiting process, but the 80% case here is filling bodies for more “common positions” like software engineer. That’s what I’m talking about, specifically. The fixed-fee model presents another problem, which is lack of motivation on the recruiter to get candidates for extremely picky clients. If they have to do 10x the work for Client A who rejects 99% of what you give them, but Client B only rejects 90% of what you give, who are you going to prefer? :) Unless I don’t understand your model, which is possible. Thanks for the link!

  • Author comment by Dave · November 22, 2010 at 9:49 am

    You are fortunate to have found a good recruiter…they seem to be as rare as pink diamonds.

  • Michael Notaro · November 22, 2010 at 9:54 am

    As someone in the recruitment market, I think that your fears and concerns are justified and your opinions are unfortunately fairly accurate, but not completely. A lot of recruiters who run their own businesses rely on getting people hired to put bread on their table. You also have to realize that most agency recruiters live on very little salary and rely primarily on commission to survive.

    Making a hire and closing a sale is the life blood for many and when it boils down, everything is just a numbers game. If I can place 20 candidates in front of a client and get 1 hire, that means I eat that month.

    I think it’s more about finding the ‘Right’ recruiter. Some of us care more than others, and it’s pretty easy to weed out the good from the bad. I can speak from personal experience and say that a lot of the people I’ve helped to find new careers and start new lives I’m still in contact with and have actually built friendships with.

    That’s not to say that every instance ended up that way, and there is a reason for that also. When you have to speak to so many people just to find the right one, you don’t always have the time hold the stronger candidates hand constantly.

    Buzz words are the tools we need to find the people we need. A lot of people settle into “comfortable” roles and despite not being happy, settle. If I can use the right keyword to find the right person, and introduce them to the things they’ve been looking for that will entirely change their lives, that makes me happy.

    It’s a shame more recruiters don’t express that “personal touch” and I’m sorry for the poor experiences you’ve had in the past, but life moves on, and in the end, regardless of how you found your next contract, being aware of opportunities and having even a 1% chance at advancing your career as a result of a recruiter should be enough to forgive something as trivial as annoying phone calls and emails.

    I know I always prep my candidates for their interviews, tailor their resumes, and make sure they know exactly what they need to do to land a role. If they don’t, than that’s on them, and I personally will extend myself to you and offer any career advice you might want without ever pitching a single role.

    Please feel free to email me and I’ll do my best to help.

    Cheers^^

    Mike
    zetsui@gmail.com

  • Author comment by Dave · November 22, 2010 at 9:59 am

    In the hopes you can help others who may be reading here, what geographical market(s) do you specialize in? And at what level do you typically do your slotting? (Engineers? C-level? Management?)

  • Scott · November 22, 2010 at 10:03 am

    I have to disagree with you on a few points.

    First, there is no one anywhere that will care about you (and what is right for you and what is not) as much as you. This is not limited to recruiters, or real estate agents. Lawyers, the waiter at the restaurant, even your best friend in the world – none of them are going to care as much as you should about what is right for you.

    So take some responsibility for your own career, don’t apply to every job you find, and do some research into the company and the role. You can’t blame recruiters if you get the job and it’s not a good fit for you. That’s not their job to determine.

    Second, the recruiter clearly does not work for you. You do not pay them. The recruiter works for the company with the open position. It’s their job to screen candidates, weed out the underqualified ones, and make the hiring managers life simpler.

    Third, as a contractor for more than 12 years, I have gotten EVERY job I had through a recruiter. There are good ones, and bad ones. I only work with the good ones.

    Lastly, think of the value you get. Your current unemployed salary = $0. A recruiter calls and gets your resume in front of a hiring manager without any work on your part. After a good interview, you get the job and your new salary = $100K. Total cost to you – nothing. Why close a potential job lead source down when it costs you nothing?

    Oh and for the bonus, a house may be 10 times easier to sell at $100K than $115K, and so for only an extra 10% in commission the agent needs to do 10x the work. So that’s a tremendous disincentive to list your house at a high price. It’s not “the same work” as you say.

  • Jeff L. · November 22, 2010 at 10:16 am

    Thanks for the post. I worked with a DREKSystems guy last winter who ended up being a real dick. After he started fishing around for crap jobs for me in place of the real position that was “going to take a while,” I had a contract fall in my lap (one that paid 3x the crap jobs). I told him I’d come back and talk to him near the end of three months when the contract was up–maybe a little after the other job was expected to shore up. He made a snide comment and refused to acknowledge any further emails.

    I’ve also been on the end of trying to hire guys through a recruiter. There are a few, rare good guys. Most are scum.

  • Author comment by Dave · November 22, 2010 at 10:25 am

    Fair enough. They, IMO, ought to be intelligent enough to match the right level of developer to the right job, they should pre-screen candidates to avoid wasting the hiring manager’s time (with actual technical questions on relevant topics, maybe a full tech test to determine aptitudes), understand the buzzwords enough to know what’s a good and bad match, taylor resumes to the employer, give interviewing tips to the candidate and maybe even pre-interview them to see how they perform.

    Those are just ones I could come up with in 2 minutes…but most recruiters can’t even get the buzzword matching right, so I feel like I’ve already set the bar way too high here.

  • Author comment by Dave · November 22, 2010 at 10:28 am

    Lastly, think of the value you get. Your current unemployed salary = $0. A recruiter calls and gets your resume in front of a hiring manager without any work on your part. After a good interview, you get the job and your new salary = $100K. Total cost to you – nothing. Why close a potential job lead source down when it costs you nothing?

    Here I think we’ll have to agree to disagree. I don’t usually go from no-contract to contract, I’m going from old to new. And sometimes, I’m waiting on the possible extension, so often it’s current contract to new contract at -10 to 20% of current contract because the recruiter is taking a serious cut and the employer’s rate goes through them. My beef is that they get huge cuts (I remember paying up to $15K to sign a new employee once and generally, it’s about 10-15% of my rate they get for 6-12 months. That’s not chump change by any stretch, all for what amounts to an introduction. I still have do the hard work (getting hired).

  • Lonny K · November 22, 2010 at 10:29 am

    I agree with the ‘buzzword bingo’ statement and I agree that it is not very helpful, but I think you missed an important fact in your article that is often overlooked. Both the real estate agent AND the recruiter are employed by YOU. They do NOT get paid unless YOU agree to the deal.

    From experience with recruiters you can define a pretty good job that you want and they will bring offers that match (or come close to matching) your request to you. That is their job. Your job is to determine if they are doing this and if you like the places you goto.

  • Doug W · November 22, 2010 at 11:08 am

    I know you were including Real Estate agents just to illustrate your point, but I think your analysis is flawed.

    1. The price that a real estate agent and you agree upon (the agent doesn’t set the price) is not the sales price, it’s the advertising price. It’s the price that gets as many potential buyers into your home as possible and to get you as many offers as possible.

    2. The actual sales price is set by you and the buyer pool agreeing on the home’s market value. This may be more or less than the advertised price, but it’s not impacted by the advertised price. The market value is what it is. As a seller, it’s in your best interest to have as many buyers as possible weighting in on the market value; if you only attract one or two the value will be biased by their opinions, which probably won’t be in your favor.

    3. The advertised price needs to be set to draw people who can actually afford to pay the market value, without scaring them away by being higher than advertised prices on similar homes. The low end of that price range is best; it draws the most buyers in to look at the home without drawing in too many who couldn’t afford it.

    A good agent will work for you and do a lot more than just telling you to clean up and have a firesale on your house. Higher prices are better for the agent too beyond the commission; they get your good will and referrals, and the sales prices of their homes feeds into their ratings/rankings.

    By the way, the agent only gets a portion of that commission. The broker takes a cut, the IRS takes a big cut, and as a self-employed business person the agent has to pay for many fixed expenses, plus the cost of marketing your home.

  • Ted · November 22, 2010 at 11:31 am

    You have some valid points there, but I also think part of the problem is with the companies that deal exclusively with recruiters. They believe there is some screening process, so that they’re getting a higher-quality employee. Instead it means higher costs for the hiring company (and less paperwork, or less complicated paperwork) and lower income for the employee. The biggest benefactor is the recruiter who gets a piece of the pie.

    Wouldn’t it be better to get a better employee and pay that person more for quality work?

    I’ve never been tested or very thoroughly reviewed by a recruiter, have had employees come from recruiters who were horrible, and have had to cut my fees because sometimes it was better to work for less than not work. Is it worth the ease in paperwork?

    This is not always, not everyone, but it seems as if this is a very old way of doing business. Instead I think companies should beef up their internal HR departments and avoid recruiters: Easier is not necessarily better.

    Then again, that’s just me, and I don’t own a big company.

  • Michael Marcos · November 22, 2010 at 11:33 am

    Someone’s read Freakonomics :)

  • Matt · November 22, 2010 at 11:36 am

    Spot on. I wrote a post on this a couple of years back, asking why programmers can’t have an agent system like that of actors: http://www.youell.com/matt/writing/?p=8

  • Author comment by Dave · November 22, 2010 at 11:37 am

    Ironically, I haven’t. But I will now.

  • Mark J. Landay · November 22, 2010 at 11:55 am

    A good recruiter adds tremendous value. One must remember that the recruiter in not an agent. The recruiter works for the company. There role is to marketing the opportunity and find qualified candidates for the role. I have practiced retained executive recruitment for near two decades and have had both clients(companies) and candidates endorse my work.

    Mark J. Landay
    mark@DynamicSynergy.com

  • Todd · November 22, 2010 at 11:56 am

    >Someone’s read Freakonomics

    Same thing I thought when I first read this article.

    Here’s the problem with your model, Dave, whether you’ve stumbled on a pink diamond or not: the commissions work differently for recruiters and for real estate agents.

    For permanent placements, the recruiter gets a fixed % based on the base salary. And that money comes from the employer, not out of the pocket of the job-seeker. So that extra 10k they can negotiate on behalf of the job-seeker, that’s money in the recruiter’s pocket AND the job-seeker’s pocket. Win-win.

    For contract placements, the recruiter gets paid hourly on top of the job-seeker. So the recruiter gets paid for every hour the person works. Which means, if the recruiter dicks the person over and leaves them unhappy (or in a position to be looking for another contract early), the recruiter is only punishing him/herself. An unhappy contractor means saying goodbye to that contractor; it’s in the recruiter’s interest to make that contractor as happy as possible. A good recruiter knows that an extra $2/hr can make a difference for a job-seeker, and will negotiate with an employer to get that for them.

    Fundamental economic difference.

  • Author comment by Dave · November 22, 2010 at 12:07 pm

    For contract placements, the recruiter gets paid hourly on top of the job-seeker.

    Yes, this is true. What you didn’t mention is that they will only offer you a rate that is employer rate minus that cut. Period. And it’s for multiple months of the engagement, which can be highly lucrative to the recruiter but ultimately takes away from what you could have made as a contractor. All for an introduction, essentially.

  • MysteryTroy · November 22, 2010 at 12:44 pm

    Awesome! I have something in my linkedin that says i do not respond to people who don’t have a @company their recruiting for’s email address.

    Cuts down on the spam tons!!!

    http://tech.rawsignal.com

  • Thomas Langston · November 22, 2010 at 12:52 pm

    You can trust recruiters (and real estate agents) fully to do their job, which is to find opportunities and push for speedy resolution. This lines up properly with their incentives. Time is money.

    It is your job to judge the opportunities according to merit. If you are picky, a good recruiter will be picky on what they send to you (otherwise it is wasted time). In your real estate example, you fail to mention the costs the agent assumes from a failed sale. Remember time is money.

    The rest of your post does not reflect my experience at all with recruiters. The recruiters I have spent time with have done an incredible amount to help me prepare. Several revisions of resumes, before and after interview reviews, and certifying my level of knowledge with decent in house testing were all provided.

  • jujubean · November 22, 2010 at 1:32 pm

    No, Dave wrong. Contractors often make more than the permanent employees as they have the Recruiter negotiating the salary. We are many times given parameters by our clients as to what they want the salary for the Contractor to be. The rate that is paid to the agency more often than not has NOTHING to do with the salary/wage the company is willing to offer the candidate. On the plus side, a Recruiter will most times get more money for the candidate than the candidate could get on their own.

    “All for an introduction”…You really know nothing about Recruiting do you…

  • Fat and Happy · November 22, 2010 at 1:41 pm

    Add one more mark to the “my experience disagrees” column.

    I dealt with a few recruiters before landing my first job. Each of them provided me with substantial feedback on my portfolio and resume, and basically conducted an interview to get a sense of what my skills were and how I would fit. They did not see my degree and spam every job offer that required a “BS in Comp. Eng. or equiv.”

    Perhaps I was lucky and found a few good apples. If you understand what value a recruiter can add (coaching, networking, context, and opportunity), then it becomes easy to avoid the ones that don’t.

  • Samantha · November 22, 2010 at 2:26 pm

    The roman philosopher Seneca stated, “If you judge…investigate.”

    My name is Samantha and I currently am an employee of a private recruiting firm. Ironically…I was forwarded this blog post from one of my friends who is a systems administrator that I met recently at a large Open Source conference in Atlanta due to the fact that it is this “stereotype” that I fight on a daily basis.

    How does the old adage go…”people are always more likely to remember the bad as opposed to the good.” Every part of your post had a nod and or acknowledgement on my part as to what I hear from either people that I have worked with, tried to contact and or my own experience before I became a part of the recruiting world myself.

    I find that the number 1 reason for the lack of trust and respect for recruiters is due (especially in the world of IT and Open Source) to their lack of knowledge. Clearly, some people have had bad experiences. But people have bad professional experiences all the time, and don’t go out of their way to create blogs denigrating entire professions (I am speaking about yours and countless others online). Where does this hate come from?

    I personally think it comes from the fact that a job change is an ultra-sensitive time in one’s life — a huge change — and any bad moments are thrown into especially high contrast. Fair enough.

    However, the real value that a TRUE recruiter provides is the relationship with the hiring company. To get that relationship, a recruiter has to be extremely thorough. When vetting a recruiter, look for someone who actually returns your calls/emails and asks you detailed questions about your background (including the uncomfortable ones like the true scope of your role on your last team, why you left your last job and detailed compensation), and isn’t afraid to tell you what you don’t want to hear. Chances are if they are this way with you, they will represent you very well to the hiring client.

    It is a small world and the best are always offered the highest and most sought after opportunities. If you are a job seeker…find the recruiting firms that are specialized in one area…a firm that prides itself of the relationships it has built and the continued growth that helps to develop a reputation that people trust and stand behind.

  • Eric Manis · November 22, 2010 at 6:55 pm

    Most external recruiters are simply doing the digging that your internal recruiters have no desire or interest to undertake.

    Why do external recruiters usually work better than an internal one ? Because they are motivated by the commission they will receive – nothing else.

  • Ben · November 22, 2010 at 9:48 pm

    The role of a recruiter is to filter candidates and get potential matches an interview at the companies that they represent. As a candidate you need to get your resume noticed, obtain interviews, and land a job. The effort to find companies and obtain the interview can be time consuming, demotivating, and takes away time from more valuable endeavours (e.g. interview practice). You likely won’t do a good job finding companies that are a good match or get your resume noticed – so don’t waste the time!

    I’ve had a lot of success by letting recruiters bring me opportunities. I’ve had weeks packed with interviews and multiple offers. When negotiations start, the recruiter is not involved except to convey the mood between parties to arrive at an offer. Their job is done and they should only monitor the situation to avoid bumps, but otherwise be uninvolved.

    Recruiters are great if you use them wisely. Treat them as an asset to get interviews, but nothing more.

  • Keith · November 22, 2010 at 11:43 pm

    I found your article via Reddit, so I don’t know your context. Perhaps when you say recruiter you are thinking of a different model than when I say “HeadHunter”.

    A HeadHunter works for nobody. He is an independent sales person. The company that hires you is his customer, and you are his product. Of course normal economics apply to this transaction, and his priorities will change with the movements of the economy.

    My philosophy has been to have my headhunter involved in every single job I land an interview for, not just the leads he brings to me. They are invaluable for many things in the hiring process. The company has a whole team of HR people working for it, so it has the upper hand in any negotiations. Why would you not have your own HR person to negotiate for you? In my experience, my Headhunter has always got me a much bigger jump in salary than I was expecting. They also help by being able to work with the HR of the hiring company on any issues that come up and need explaining. Also working out all of the details, such as arranging meetings and filling out the paperwork for you is quite nice.

    Perhaps my experience is unique, but it seems to me that you should find someone who specializes in a very narrow part of your industry, and maintain a good relationship with them through the years. That way no matter what happens you have very quick access to a new job when it is needed.

    So to sum it up:

    They do all the legwork (pre and post interview).

    They negotiate much more skillfully than I ever could.

    I pay them nothing.

    They always have opportunities for me.

    What could be better?

  • Giancarlo Frison · November 23, 2010 at 1:06 am

  • Ben · November 23, 2010 at 5:50 am

    From an earlier comment: “CEO candidates may be hard to find outside of the recruiting process…”

    I think you’ll find that TheLadders.com is trying to change that. They offer great services for executive-level placement.

  • Bay Area Coder · November 23, 2010 at 8:20 pm

    I don’t understand why the recruiter simply introducing the candidate to the client and then getting a cut for the lifetime of that contract is a bad thing. In California my programming friends do this all the time and after 30 – 90 days they simply call the recruiter and thank them for the placement and notifying them they are ending their relationship with the recruiter’s company. The next day the relationship is then between the programmer and the end-client and the programmer is paid the full rate (including whatever the recruiter took).

    Fortunately non-compete clauses are illegal in California, which makes the original contract void:

    http://en.wikipedia.org/wiki/Non-compete_clause#California

    Most recruiters add the illegal clause anyway as they don’t care about what is legal or not.

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