Part 8 of a 10-part series entitled, “10 Traits of the Best Contract Recruiters“
How to Build a Business Case for Contract Recruiters
The best contract recruiters make a great business case for utilizing a contract recruiter versus hiring a regular full time recruiter, or using a headhunter, or having no one at all.
In the course of managing our business since 1999, we have interviewed and hired a number of highly successful professional contract recruiters. We intend to keep doing that and have worked to identify some of the traits we have seen in our best performers over the last 18 years.
Today’s blog is the eighth in a series of 10 that identifies the traits of our most successful senior recruiters. We hope this perspective will provide guidance to those new to contract recruiting, offer some insight to experienced recruiters who are always looking to improve, and give TA/HR leaders some ideas on what should be expected of a contract recruiter. We also hope that this will stimulate ideas and conversation to provide additional insight from readers of this blog.
Building the Case
Quite often we need to build a business case with a potential client for the use of contract recruiters versus the use of agency search or hiring of a full-time employee (FTE) recruiter, or doing nothing. Contract recruiters marketing themselves have to do this as do Talent Acquisition (TA) and Human Resources (HR) Leaders who seek budget approvals for additional resources. I thought it might be useful to share some of the key points we use when building a case for a potential client.
Best Solution for the Client
Each client’s situation and needs are different. We always strive to understand the best solution for the client, given the circumstances, even if that solution does not lead to a sizable business deal.
Example1: We often get small companies (or divisions) without a dedicated recruiter, which have a sudden need to hire a few people. Typically, the HR person serves as a filter / router of resumes coming in from the ads or referrals. The burden of in-depth screening, processing, and interviewing is on the managers. We get called in when it’s become a huge time commitment interfering with normal daily activities and adversely impacting productivity. They need a temporary solution. Rather than a full-cycle recruiter, it may be more appropriate to hire a less expensive sourcer to fill the pipeline with only qualified, pre-screened candidates. If they do need someone to run the process as well, we recommend they hire a full-cycle contract recruiter on a part-time basis until the positions are filled.
Example 2: In some cases, an in-house recruiter or sourcer might not be the best solution. As an example, if there is a “time sink” job to be filled, a headhunter who specializes in that area may actually be a better solution for the client. Or, for some lower paid jobs, a temp agency that specializes in those types of candidates in volume might be a better solution.
If the forecast is for steady growth for as long as can be reasonably forecast, then a full-time recruiter is a viable solution. However, if steady growth is not in the forecast and the hiring will be in sporadic stages, a full-time contract recruiter should be utilized. Each stage of hiring can be considered an individual project where additional temporary resources are needed for that project. Hiring a full-time employee for a sporadic hiring blimp will add unnecessary costs, potential legal issues, and team trauma if hiring stops and that person is laid off.
NOTE: In a major hiring ramp where Time is more important than Cost, a combination of contract, FTE, and agencies may be best. In other words, throw everything at the problem.
Any business relationship is built on trust. Clients want to know that they have decided on the correct course of action that will bring results quickly. From the beginning, the best contract recruiters start building trust in their abilities to show that minimal ramp time is needed to deliver those desired results. They demonstrate that by doing their homework before meeting the potential client to get a feel for the possible challenges, competitors, products, financials, key players, and job openings. When they meet, they are knowledgeable and they ask the right questions regarding issues, expectations, wants, process, tools, and resources. They are prepared to show their industry knowledge, metrics from previous work, network of applicable contacts, and explain why they are an excellent resource to address the company’s issues.
Like any professional consultant, they set expectations and lay out deliverables in detail. It is important to do this because some clients do not know all of the services a full-cycle recruiter provides. The best contract recruiters describe how they can not only increase the volume of qualified candidates and process those candidates efficiently, but also enhance the image of the company in the community so that future candidates will be easier to attract.
Companies often hire recruiters on contract to see how they will perform and adapt to the team and culture, in general. Conversely, it gives the recruiter a chance to look at the company before committing “forever”. Essentially, it’s dating before marriage. This approach has benefits for both sides and is definitely worth considering.
It costs less to utilize a contract recruiter than it does to use a headhunter or to hire a recruiter of the same experience as a full-time employee. Here’s the math:
FTE Recruiter annual cost = base ($80,00 average) plus about 30% for benefits and administrative costs (SHRM estimates 31.7% added for all benefits, holidays, insurances, payroll, and other administrative costs) and the cost comes to roughly $104,000.
Agency fee at 20% (some go to 30%) on a base of $100,00 = $20,000 per hire. 4 hires = $80,000, the FTE recruiter’s base salary. Company does not get the ancillary candidates generated nor benefit from raised community awareness.
Contract Recruiter annual cost (rates vary by geographic area and industry) = $50/hour X 1960 hours (no pay for vacation or holidays) is $98,000. PLUS, the client company does not have the liabilities /cost for injury, unemployment, training, termination, etc.
Departmental Budget Impact
An interesting twist in some companies is assigning recruiter costs. A headhunter’s fee is generally charged to the hiring department’s budget. An FTE recruiter’s salary will be charged to the TA or HR department. However, a contract recruiter’s cost could be assigned to either the TA / HR department or to the internal groups the recruiter is servicing. It’s a negotiating point for TA / HR Leaders and a definite consideration.
Your Reputation is Your Best Business Case
Business leaders ask other business leaders for referrals. Ultimately, it is developing a reputation for delivering timely results, having professional integrity, and maintaining great business relationships that the best contract recruiters build a real-time business case for getting hired today and in the future.
10 Traits of the Best Contract Recruiters
Part 1: Pursue Contract that Leverage Your Strengths
Part 2: Client Relationship, Not an Employer
Part 3: Professional Curiosity and Pursuit of Knowledge
Part 4: Stay Organized and Communicate Efforts
Part 5: Respect the Dynamics of Being a Virtual Recruiter
Part 6: Factors in Determining Hourly Rate
Part 7: Should a Contract Recruiter Incorporate?
Part 8: Building a Business Case for Contract Recruiters
Part 9: The Added Value a Good Contract Recruiter Brings