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Thoughts on Unbundling Recruiting Services

Question:  I have heard a lot of talk lately about unbundling recruiting services with clients.  What are some examples of this and do you feel this would add significant value to our firm?  – Chris, Florida

Answer: Yes, I used to do it all the time going back to the 1990s.  Now you hear more about RPO recruiting, placement outsourcing.  That is where at a high level you can have somebody that is employed by you working on-site at a client, and they become, in effect, the client’s internal recruiter, except they work for you.  Our firm did that a few times in partnership with a couple other offices.  That is one way, and then they can give openings out to the outside world.  That is if you are managing dozens and dozens of openings at any one time.

I will give you some examples of simpler ways to unbundle recruiting services.  The ways to do is almost unlimited.  The key is to find out what the client really wants.  It is not just to make things cheaper.  I hate that word, and I use it on purpose.  It is to add value to an area they are weak in.

I will give you a really specific example we did a few years ago.  We had a client that had a need for very generic sales people.  They did not require any kind of specific background or even need sales experience.  It was selling life insurance, so it was the typical model of a base salary for 6 months which was going to dwindle away and they did not need a series 6 or series 7.  They were going to do the whole process.  They needed pure, raw talent, and they needed them nationally in huge quantities.  So when they got on the phone with us, me and the other recruiting firms partnered on this project, we are thinking the old traditional model of what do we charge per head. However, we had to work through internal recruiters, and they said we have a really good internal recruiting operation to which all of us rolled our eyes.

Come to find out, they actually did have a really good internal recruiting operation that managed the process very well.  We uncovered that their biggest headache was not enough people entering the funnel, meaning the interview process.  Through us doing a really good diagnostic, we did determine that they actually managed it very well.  There were step-by-step assessment levels, first interview, second interview, hire, offer, onboard, methodical, textbook.  So when we huddled up as a recruiting team off the call, I remember saying they do not really need us to make placements.  In a situation like this where they are totally controlling that process, I do not want to be held accountable to placements.

They said over and over again, if we just had more people we could sell them, and they actually knew what their metrics were.  For every x amount of people that entered their funnel, they know what came off in offers and acceptances.  So we charged them per person entering the funnel and the definition of pass or fail was they had a basic sales assessment test they gave everyone before the first interview.  If they passed the assessment, they were in.  If they did not pass the assessment, they were out.

So we billed approximately $1,300 or $1,400 for every person that passed the assessment, and then we billed them $3,000 for everyone they hired.  Now, I threw in the placement fee . . . I lobbed that over the fence to see if it would stick.  We would have been happy just with the $1,300 per assessment because we had a project team we could just place on that to do the sourcing and the recruiting on that, and we charged them like that.  I said, well if they agree to this, we get $3,000 per placement and it also gives us something to negotiate away.  They were thrilled with the whole thing.  They took the whole thing hook, line, and sinker.  It worked out great.  Over a couple of years my recruiting firm and the other recruiting firms partnered on the project billed millions to that account.

I have seen where people go in and they sell profiles.  They will go in and they will say, we will approach candidates, position your opportunity, and get a resume.  We will create a profile sheet for you.  We will complete the data in addition to the resume, and they billed profile.  That is a way to outsource.

Those are just a couple of examples, breaking down the placement process.  You can tack on managing the recruiting process and billing for that.  I generally recommend that you do not bill per hour because it is very difficult to track.  Our recruiting was not engineered for that, and I did not want to be held accountable per hour, nor have to justify my hours.  If it took me 2 minutes to get a resume, it would still have the same value if it took me 10 hours to get the resume.

Those are a couple quick examples of unbundling.  Let us say you had a really good researcher working at $5/hour and for $100 you could get a decent list, even 100 names, phone numbers, and email addresses.  You could sell that to a company for $1,000.  That is not a bad number by the way.  All you need to do is refine the research by monitoring it for quality.  Once complete you can re-bundle the results so that it came from you, send it off to the client, and have a $900 margin for your effort of finding and identifying.  This way you are leveraging your existing researchers.

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