Using Independent Recruiters to Locate Top Talent

Executive White Paper
Using Independent Recruiters
to Locate Top Talent
Advantages and Disadvantages of
Popular Recruitment Models

Copyright © NPAWorldwide.com www.TPISearch.com
By reading this paper you will
learn:
• Reasons to use an independent
recruiter
• Different types of recruiters
• Common fee structures
• How recruiters can help HR
professionals
• How much a vacancy really costs
• Costs associated with poor hiring
decisions
Executive Summary
With demographics and improving global business conditions
heating up the war for talent, employers are finding it more
challenging to find and retain top talent. Since the use of
recruiting services is a common method for talent
identification, a review of some common recruitment models
and methods is in order. Finding the right talent is part art, part
science. Success requires more than just a good job opening
and solid employer; it requires teamwork from key players to
work closely with and support the hiring manager. This white
paper serves as an introduction of how various recruitment
methodologies can support a talent management plan.
Page 2

Good recruiters can access a larger pool
of qualified talent.
5 Reasons to Find Talent via Recruiters
There are multiple reasons1
why recruiters should be used to
find candi dates:
1. Right candidate. Given the experience and exposure,
recruiters are generally good at hiring an individual who
can do the job, not just an individual who does well on the
interviews.
2. Larger pool of talent. A good recruiter can access a
broader range of qualified and interested candidates than
other sources. This includes active, non-active, and passive
job seekers.
3. Acceptance of offer. Having a good recruiter involved in
the process will greatly increase the likelihood that the
candidate selected will accept the job offer.
4. Define and describe the position. The use of professional
recruiters will assist and guide the company2
to know what
they are looking for. A recruiter knows what is out there
and can coach the company on the realism of your position
description, the availability of talent, and the cost of the
talent required.
5. Save staff time and cost. Not only will a search for an
employee distract managers and leaders, it may also cost
the company more money than a search turned over to an
independent recruiter.
Page 3 1. Source: https://www.recruitersconnection.com/pages/recruiters/resources.php?Resld=34
2. Source: http://www.theladders.com/career-advice/why-employers-use-executive-recruiters

Popular Recruitment Models
There are four popular recruitment models; each has its
advantages and disadvantages. In this white paper we will
explore:
• In-house/corporate recruiters
• Multinational recruiting & staffing firms
• Online services
• Independent recruiters
In-house / Corporate Recruiters
An internal, in-house or corporate recruiter is the most
common3
type of recruiter. Internal recruiters are usually
employees of the company for which they hire and source
employees. They are paid a salary and benefits just like any
other employee. Corporate recruiters may do more than recruit.
If they are functioning in an HR role, they may also be
responsible for insurance, benefits, company policies, disputes
and complaints, etc. Corporate recruiters get the benefit of
meeting directly and frequently with the hiring manager to
determine actual requirements.
Advantages:
In–house recruiters know your business and culture.
• Operational benefits. In-house recruitment can offer
organizations more control over the recruitment process.
The organization can develop a process that works best for
its culture and allows that process to be implemented
consistently.
• Flexibility4
. There is often little flexibility to adapt to
short-term shifts in regulation, changes in community
expectations, or shifts in skill requirements – and this is
where in-sourcing has fundamental advantages.
• Dynamic adaptation based on marketplace. Offers
control over the types and numbers of people recruited, the
ability to change as the marketplace and organization
changes and flexible training and development processes.
• Faster, streamlined process. In-house recruiters can
potentially streamline the attraction process if it is a
repetitive process. Good process design will deliver fewer
poor-match candidates and save recruitment time.
Page 4
In-house recruiters often have other
duties and responsibilities.
3. Source: http://www.oncontracting.com/article/the-5-different-types-of-recruiters.html

Disadvantages:
• Market knowledge. In-house recruiters typically have less
knowledge of the overall market.
• Extended reach. Some candidates are hard to find. They
may be passive or they may be selective. If they aren’t
responding to the job advertisement, they don’t see
themselves as part of the ‘talent pool.’ Most in-house
recruiters do not spend time building a network of contacts
and potential candidates for future hiring needs.
Multinational recruitment and staffing firms
Big companies, chain operations or outplacement agencies
provide resume and interviewing assistance, career counseling,
etc. Several of these companies are divisions of larger staffing
companies.
Advantages:
• Knowledge of the market. The best recruiters4
will have
their finger on the pulse of their specialist markets, and can
give the hiring team insight into what is happening.
• Extended reach. Some candidates are hard to find. They
may be passive or they may be selective to a specialty.
Recruiters from large, multinational firms have the
resources to build large databases of potential candidates.
• Help with employer brand. Large companies invest a lot
of time and money in developing and marketing their
employer brand, but many SME (Small medium enterprise)
and smaller businesses don’t have the same resources.
Disadvantages:
• Focus on deals, not relationships. Large recruitment
firms may experience high turnover and low
accountability. Additionally, clients may work with junior
staff with a very transactional approach to business.
• High fees. For permanent recruitment5,
you will have to
pay a one-time placement fee to the agency, which usually
is based on a percentage of the employee’s annual salary.
• Short-term goals don’t match long-term strategy. Some
big company recruiters may focus more on their
commission than on your long-term, strategic hiring plans.
Page 5
Larger firms may have more resources
to deploy on a search.
Do you have the attention of senior
management?
4. Source: http://info.broadbean.com/blog/6-advantages-of-hiring-through-a-recruitment-agency
5. Source: https://www.nibusinessinfo.co.uk/content/using-employment-agencies-find-staff

Online Services
Online recruitment, e-recruitment or web based recruitment is
the use of online technology or the internet to attract candidates
and aid the recruitment process. For most recruiters, this
usually means using one’s own company website, a third-party
job site or job board, a CV database, social media or search
engine marketing as part of the recruitment process.
Advantages:
• Low cost, high impact. Online recruitment is cost-
effective. Putting a job vacancy on your own company
website costs you nothing, and many job boards offer
reasonably-priced posting options.
• Speed. Online recruitment is quick. A vacancy can be put
on a job site in the morning, the first applications arrive by
lunchtime, and a candidate interviewed by the end of the
day. Of course, it isn’t always like this. But the fact that
such things can happen so quickly gives an indication of
just how immediate recruiting online can be.
Disadvantages:
• Quality vs. quantity. Too many candidates can be treated
as candidate spam, leading to HR managers dealing with
inappropriate, irrelevant and bad candidates.
• Selective success. Not every job vacancy posted can or
will be filled online. There will always be difficult-to-fill
jobs that can only be filled by recruitment consultants,
headhunters or in other ways.
• There is a mismatch between resumes and Applicant
Tracking Systems. Resumes that do not contain the
“correct” keywords are easily overlooked in an automated
system.
• The best candidates do not always have an online
presence. You can’t find something that doesn’t exist
where you’re looking.
• Many online career sites are not mobile-friendly. Great
candidates are increasingly leaving career sites that offer a
poor mobile experience, and the odds diminish that they
will later return to those sites via desktop. And, career sites
with a poor mobile experience are not being returned by
Google in mobile search results, which means companies
may not even be reaching the full pool of potential job
seekers.
Page 6
Job boards continue to be affordable,
but results can be bogged down with
low-quality applicants.
Is your career site optimized for a mobile
environment?

Independent Recruiters
Independent recruiters are a group of talented and
entrepreneurial professionals. These ‘third party recruiters’
work6
on a contingency or retained search basis. Independent
recruiters are able to network, cold call, scan and review
resumes from many more resources and networks and reach
out to affiliates to get help finding the perfect candidate.
Advantages:
• Better insight. Independent recruiters usually work “both
sides of the desk”7
(locating candidates and generating new
clients with hiring needs). This helps them fully understand
the role.
• Reliable source of candidates. Independent recruiters
typically rely on networks to get training, support, best
practices and tools they need to be in business. This
generally leads to better candidates, resources, and reach.
Disadvantages:
• Scalability. Independent recruiters may work alone or in a
small office and can occasionally reach capacity on the
amount of jobs or candidates they can take on without
jeopardizing the quality of service.
Page 7
Small agencies and solo practitioners
are limited in the number of searches
they can perform at a given time.
6. Source: http://www.recruitingblogs.com/profiles/blogs/what-kind-of-a-recruiter-are
7. Source: http://www.recruitingblogs.com/profiles/blogs/what-kind-of-a-recruiter-are

Fee Structure
Generally speaking, there are three types8
of outsourced
recruiters, and their differences rest in the fee arrangement:
• Contingent. A recruiter working on contingency is paid no
money until the job is filled. For contingency searches,
fees are based on a percentage of a candidate’s first-year
compensation. That typically ranges from 20-30 percent,
but it’s rising as the talent shortage creates scarcity in
many professions.
Advantage: Pure performance-based fee structure. No
payment until a position is filled.
Disadvantage: Contingent firms typically work on a large
number of job orders at once. There is no guarantee
regarding the amount of focus your job will receive.
• Retained. Client pays the recruiter an upfront fee based on
the salary level of the position they are trying to fill. They
usually pay a retainer at the beginning, a progress payment
at an agreed-upon landmark in the process (often when a
shortlist of candidates is presented), and the remainder
when the candidate is hired.
Advantages: Recruiter is committed to completing the
search and filling the position. The best candidates like
retained searches because they know the employer is
serious about filling the position.
• Contract. These recruiters work on a straight hourly rate.
This approach, also called “rent-a-recruiter,” can become
expensive if you don’t place controls and constraints on the
number of hours. Contract recruiters usually charge an
hourly rate ranging from US $75 to $150 per hour.
Contract recruiters claim that this hourly billing
arrangement usually costs much less (closer to 15 percent
of first-year compensation) than other types of searches. It
is important to clarify exactly what activities the recruiter
will be performing, since the lower rate will not typically
include the same services as a full fee search.
Page 8
While fees may seem higher, it’s likely
more economical to pay a third party
than paying salary, benefits, and
overhead for an in-house recruiter.
8. Source: http://www.allbusiness.com/how-much-should-you-expect-to-pay-a-recruiter-7606468-1.html

How Independent Recruiters Can Assist
HR
For most businesses, the hiring manager often a very good idea
of the requirement of the job, although there are several areas
of hiring where a recruiter is the better option, armed with their
knowledge and experience. These are:
• Understanding the customer’s hiring requirements.
From real-life experiences of several recruiters, it’s clear
that many times what HR asks for in a candidate isn’t what
the hiring manager actually wants. Skilled recruiters won’t
go looking for candidates until they take a little time to dig
into what their client really wants.
• Broader skillset. A good recruiter can access a broader
range9
of qualified and interested candidates than any other
resource. This includes: (a) Active–these are the candidates
who are engaged in an active job search. (b) Semi-Active–
these candidates are currently employed but have made a
decision to change jobs. (c) Non-Active– these individuals
are not seeking a change. They are currently employed and
totally unaware that a better opportunity may exist for
them with another employer.
• Low withdrawals. The process a good recruiter executes
on behalf of their client will dramatically decrease the
likelihood of qualified and interested candidates
withdrawing themselves from consideration. In turn, it will
also greatly increase the likelihood that the candidate
selected will accept the job offer.
• Always close the loop. Too many companies just let
candidates fade away rather than doing them the courtesy
of turning them down, leaving a sour taste.
• Counteroffers. A good recruiter, through the
implementation of a customized transition strategy, will
minimize the possibility that the candidate selected will
accept a counter offer or change their decision after the
fact.
• Sounding board. Good independent recruiters can provide
a valuable sounding board for their clients during the
hiring process.
Page 9
Skilled recruiters help you remain
focused, and can also offer coaching on
the realities of the talent pool.
9. Source: https://www.recruitersconnection.com/pages/recruiters/resources.php?ResId=34

• Industry knowledge. While most hiring managers know
their own company inside out10
, they may have a less-clear
picture of their industry as a whole both geographically
and in terms of talent pool.
• Specific knowledge. Specialist recruiters and external
search firms know their industry and can bring a lot of
specialized knowlege to the table.
Independent recruiters have extensive networks to call upon,
and are able to quickly identify the top candidates regardless if
they are openly looking to move on or not. Some search firms
also have specialists for each type of role (technical, marketing,
sales, etc.), whereas it is unlikely an internal team could afford
that level of specialism, except perhaps at the largest
organization.
How Much Does A Vacancy Cost?
There are numerous costs11
associated with an unfilled position
in any company. Many of these costs are difficult to quantify,
but nonetheless are very real and can be very costly. The
unfilled jobs cost to the US labor market according the
London-based center for Economic Research, D’Arcy is more
than $13 billion12
a month, or roughly $160 billion a year.
According to CSR Talent, many firms calculate the cost of a
vacancy, which can be significant; anywhere from $7,000
dollars per day to $50,000 per day for an engineering position.
Key leadership positions may cost as much as a million dollars
per week. Couple these amounts with the fact that the length of
many vacancies often exceeds 100 days, and you are talking
about some serious financial impacts ($7,000 x 100 days =
$700k).
According to Deb Tompkins13
, North Consulting, “By
assuming that each current employee has a positive revenue
impact (which they should), it is easy to calculate an average
minimum baseline cost of each of your open positions.
Page 10
Do your hiring needs require specialist
knowledge of a particular niche?
Unfilled vacancies can cost a business
3-5 times (or more) the annual salary
for the vacant role.
10. Source: http://emerald-technology.com/headhunters-over-inhouse-recruiters/
11. Source: http://www.csrtalent.com/pdfs/costofanopening.pdf
12. Source: http://fortune.com/2014/11/18/unfilled-jobs-us-economy/
13. Source: https://www.linkedin.com/pulse/20140611030426-10805757-the-cost-of-unfilled-positions

Use the following values in the 2-step calculation below:
R=Annual company Revenue, E=Number of Employees.
1. Step 1: Calculate Revenue per Employee
• R/E = Revenue per Employee
2. Step 2: Calculate Daily Revenue per Employee
• Revenue per Employee/365 = Daily Revenue per
Employee
Using the above calculation for 5 mid-level employees, the
Cost of Vacancy (CoV) can be $12,500 in just 5 days.
According to Keenan, President as A Sales Guy Inc., “An open
sales position with a yearly quota of $800,000 dollars, that
takes 30 days to hire for and 60 days to ramp up (both
traditionally short periods of time) costs a company $2,100 per
day and over $197,000 for the 90 days it takes to get the new
rep hired, trained and producing.”
Similarly, based on a new survey from CareerBuilder,
employers estimate that, on average, they lose more than
$14,000 for every job that stays vacant for three months or
longer, and 1 in 6 companies say they lose $25,000 or more.
Page 11
Do you know how much your open
positions are costing your business?

Costs of Making a Hiring Mistake
While there are certainly costs associated with a vacancy, some
experts believe that the cost of a bad hire can be as much as
three times14
the person’s annual salary. The amount of new
hires that don’t work out is frightening—in fact a study by
leadership IQ15
across a range of industries and job roles found
that up to 48% of new hires fail within 18 months. It’s a
problem that’s estimated to cost UK business over 4 billion
pounds (approximately $6.3 billion) a year.
Bradford Smart estimates16
the cost of a mishire to be
anywhere from four times an annual salary for supervisors all
the way up to 15 times the annual salary for vice presidents and
executives. Smart’s book further explains that hiring the wrong
sales representative can cost up to $527,87017
, broken down as
follows:
• Hiring costs $22,008
• Compensation $141,416
• Maintenance $13,112
• Severance $23,420
• Opportunity Costs $234,132
• Disruption Costs $93,672
This may be an extreme example, but it’s not just the financial
costs businesses should be concerned about. The truth is that a
bad hiring decision can result in a number of painful and costly
outcomes, and some of those can be much harder to put a price
on than others. Those outcomes may include any of the
following:
• Attrition and wasted hiring budgets
• Theft or embezzlement
• Damaged employee relations and morale
• Endangerment of employees, client and business associates
• Lost productivity
• Litigation
• Public scandals and negative publicity
• Loss of other employees
Page 12
What are the soft costs associated with
a bad hire?
14. Source: http://www.csrtalent.com/pdfs/costofanopening.pdf
15. Source: http://blog.executivesonline.co.uk/blog/the-true-cost-of-a-bad-executive-hire-infographic
16. Source: Bradford Smart, Topgrading 201: How to Avoid Costly Mis-Hires. (Top Grading, Inc. 2012).
PG. 34
17. Source: https://www.linkedin.com/pulse/20140611030426-10805757-the-cost-of-unfilled-positions

Conclusion
Over 37,000 employers in 42 countries and territories
participated in Manpower Group’s ninth annual Talent
Shortage Survey18
. Thirty-six percent of employers report
difficulty filling jobs—the highest number since 2007.
This implies that most growing companies are constantly
looking for qualified candidates. As stated early, these open
positions are costing the US economy roughly $160 billion per
year. An open leadership position can cost up to $700,000 in
just 100 days.
Hiring the wrong talent or otherwise making a bad hire can
have even steeper consequences. CSR Talent estimates the cost
of poor hires to be three times the annual salary of the open
position. These costs can increase from 4-15 times the annual
salary for executive-level roles. Therefore, it is critical that
companies make the best hire for their business.
Using a skilled independent recruiter increases a company’s
role of finding the best talent in the market while lowering the
chances of the candidate withdrawing from the interviewing
process, accepting a counteroffer, or turning down an offer.
Page 13
More than 1/3 of employers globally
report difficulty filling open roles.
18. Source: http://www.manpowergroup.com/talent-shortage-explorer/#.VZv1v_lJZxh

Independent recruitment offices that belong to a formal
network are able to provide both a further reach and an ability
to fulfill unique talent searches. The major advantages of using
independent recruiters include:
• Able to find and attract the best people
• Keep clients focused
• Save staff time and expense
• Know where to look for talent
• Know how to attract talent
• Less apt to lose the best candidates
• Offer a method for continuous improvement
While every hiring situation does not call for the use of a
qualified independent recruiter, employers are wise to consider
this option for all critical roles. Recruiters spend most of their
time interacting with candidates and hiring managers to ensure
the right person is hired for the job.
They find the best candidate for the job, and ensure that person
is hired and successfully brought on board19
.
Consider using a skilled independent
recruiter for critical hiring needs.
19. Source: http://hirevue.com/blog/what-is-the-real-purpose-of-a-recruiter
23110 State Road 54 #262, Lutz, FL 33549
813-475-5525 (office) 727-804-3839 (cell)
Mitch Vigeveno
President & CEO
mitch@tpisearch.com
813-475-5525
Debra Grier
Vice President
deb@tpisearch.com
813-475-5525
Page 14

Using Independent Recruiters to Locate Top Talent

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