Interview: ITeego Chief Discusses Fee Structure in Recruiting (Part 2)

December 10, 2009 – Kevin Jenkins is the CEO and principle IT recruiter at ITeego, a national web technology recruiting firm based in Austin, Texas. Mr. Jenkins has been recruiting in the web technology space for nearly a decade. In addition to recruiting, he is an entrepreneur and investor in a number of internet start-ups aimed at the human resources and staffing industry. In the following interview, Mr. Jenkins discusses the economy’s impact on fee structure at recruiting firms.

Is fee discounting bad for the recruiting business long term or do you expect pressure on fees from the buy side will ease as the economy improves?

Fee discounting is a contingency recruiter tactic. Top retained search recruiters don’t discount their fees. They know what they’re worth and they know how to sell their value. And they always have clients who gladly pay the fees they charge. If a recruiter is discounting fees instead of selling value to gain business, they won’t be in business long. And frankly, that’s a good thing. The deplorable practice of discounting aside, I don’t think low fees in general are necessarily a bad thing for the recruiting industry. The reality is that some recruiters are not worth more than 10 percent because they simply don’t (or can’t) offer the business acumen, discipline and process needed to deliver great results. We shouldn’t expect companies to pay them the same amount they would pay a top recruiter who brings immense value to the table. I think there’s always a place for cheaper products and services. There should always be a wide spectrum of products and services to choose from which fit the needs and budget of a businesses. I think Job Board Recruiters is an excellent case in point. For 5.8 percent they will monitor the job board candidates for you. This service offers excellent value for businesses which need skills that are commoditized and widely available. Such a service provides great value to companies that want to compete for job board candidates but don't want to pay high recruiter fees or allocate internal resources to monitor job boards or recruit candidates themselves. Now, will a service like Job Board Recruiters disrupt the business model of traditional contingency recruiting? Most definitely. Will it disrupt the business model of retained search firms? Not at all. Which type of search is right for you? You can that answer that question by asking yourself how strategically important the position you're hiring for is. If you need a help desk support analyst, Job Board Recruiters for 5.8 percent is the obvious way to go. If you need an intermediate level java programmer you probably want to go with a performance-based recruiting model. However, if you need a java application architect for your company's flagship product, you probably want to poach this person from the competition and in that case using a retained search firm at fee of 30 percent is well worth it.

Where do you see the search industry recovery coming from if jobs in general are not rebounding and are not expected to for two to three years as some are predicting? How much does this jobless recovery concern you and others in the recruiting industry?

The recovery will be sector specific. If you're recruiting in a niche that represents a strong market you're already seeing a recovery. Of course, sectors like finance and manufacturing will take a little longer to rebound. I also think highly strategic positions that fall into the executive search realm will be slow for the foreseeable future. The rank and file jobs will be coming back first. Leadership positions will be further behind. But the reality is this, there is plenty of work out there for recruiters who know how to sell themselves and truly provide some value. To put the amount of work available today into perspective, all you have to do is run a search on SimplyHired or and you will find hundreds of thousands of jobs. Who is filling those positions? The top 10 percent of the recruiters in our industry are filling them.

Is hiring demand building for 2010?

Yes. At ITeego, we’re seeing a definite uptick in hiring.

What is your general forecast for the headhunting business in the next 12 to 18 months?

Recruiting is, and always has been, a highly lucrative business for good recruiters. I don’t see that ever changing. In fact, I see premium recruiting services becoming even more valuable as the talent shortage increases and we begin a transition into a candidate driven market. If I were to make one bold prediction, I do think that the old-school commission-based telesales style of recruiting is pretty much dead. New generation recruiting will take advantage of the wired, interconnected business world in which we live. The ability to effectively and intuitively use internet tools and web services will be essential to a recruiter’s success. In other words, if the extent of your web savvy is performing Boolean searches on CareerBuilder, you don’t bring much value to the equation. Nobody is going to pay upwards of 10 percent for that anymore. Especially when you have services like Job Board Recruiters sprouting up everywhere. My final prediction would be that the recruiting business in the next 12 to 18 months will be an exciting and profitable time for recruiters that bring real value and integrity to the table. A lot of the contingency recruiters are gone so the marketplace is wide open and marketshare is prime for the taking. For recruiters who have wisely spent the last 12 months redefining their value proposition and strategically repositioning themselves, the next two years should be their most profitable years ever.

This concludes Part Two of our interview with Mr. Jenkins. To read Part One, please go to HSZ Media news archives.

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