This one is a Whirpool forum special - I doubt you can go 48 hours there without someone claiming recruiters are posting fake job ads on Seek. Now given Seek ads cost quite a lot of money, and recruiters only get paid when they place real people in real jobs, I've always been somewhat mystified by the logic behind this, but let's explore two of the more more frequently cited theories around this:
(1) Agencies want my CV so they can harvest information about my previous employers and also build a database.
If that was indeed an agency's aim, it's an amazingly convoluted and expensive way to go about doing it. You can access LinkedIn for free, and get a nigh on infinte stream of information about companies, the technologies they use, the people that work for them, where they tend to hire people from, etc. And for a few hundred bucks you can access an online database such as LinkMe or Career One and access several hundreds of thousands of resumes.
(2) I apply for heaps of roles on Seek and never hear anything back from the agencies. Therefore the ads are fakes.
2 + 2 = 5.
I desparately want my ad response to be great - it's the easiest way to find people. The reality is though the bulk of ad response is from candidates who just aren't up the job. If you got loads of great people applying for jobs, no-one would ever use an agency.
If you're applying for heaps of roles and never heard back from the agencies I would suggest you are either applying for a lot of roles that don't suit your experience and background, are in a very competitive sector of the market or you have a very poor CV. Suitable people with good CVs get called back.
Friday, September 23, 2011
Sunday, September 11, 2011
Salary (& Rate) Negotiations
The approach of candidates to salary (& rate) negotiations is probably best described as chaotic. Chaotic and terrible.
Here are some of the more oft seen "strategies", and an explaination why they suck:
(1) Asking for significantly more at the end of the recruitment process. When a recruiter sends your CV, they also include your salary expectations. Companies almost have budgets to work to, and (a) they want to make sure you are in that budget, and (b) want to make sure the person they hire is great value for money. If you ratchet up your salary expectations at the end, you can completely blow their budget or totally throw out the value for money equation - you might be the best Cisco Engineer they've seen for $80K, but are you the best Cisco Engineer on the market for $90K? Probably not.
(2) Keeping things vague, and not placing a figure on what you are seeking. This is a favourite of senior candidates. Almost without fail you get to the end of the the interview process only to discover the candidate and the company are 20-40% apart on salary expectations. This is a real time waster.
(3) Asking for some massively overly inflated salary, with the expectation that you can negotiate back to what you want. It's a silly tactic, because when you get you'll fail the value for money test 10 days out of 10 - people will pass over you for more reasonably priced candidates before you ever get to negotiations. It also dents your credibility when you accept a number that's much lower than what you asked for.
My suggestion? Be honest, realistic, up front and consistant about what you want. Pretty simple really. Building a little bit of fat (say 5%) into your expectations isn't a bad thing, as companies often want to negotiate down at offer stage (in spite of our efforts the educate them otherwise).
Here are some of the more oft seen "strategies", and an explaination why they suck:
(1) Asking for significantly more at the end of the recruitment process. When a recruiter sends your CV, they also include your salary expectations. Companies almost have budgets to work to, and (a) they want to make sure you are in that budget, and (b) want to make sure the person they hire is great value for money. If you ratchet up your salary expectations at the end, you can completely blow their budget or totally throw out the value for money equation - you might be the best Cisco Engineer they've seen for $80K, but are you the best Cisco Engineer on the market for $90K? Probably not.
(2) Keeping things vague, and not placing a figure on what you are seeking. This is a favourite of senior candidates. Almost without fail you get to the end of the the interview process only to discover the candidate and the company are 20-40% apart on salary expectations. This is a real time waster.
(3) Asking for some massively overly inflated salary, with the expectation that you can negotiate back to what you want. It's a silly tactic, because when you get you'll fail the value for money test 10 days out of 10 - people will pass over you for more reasonably priced candidates before you ever get to negotiations. It also dents your credibility when you accept a number that's much lower than what you asked for.
My suggestion? Be honest, realistic, up front and consistant about what you want. Pretty simple really. Building a little bit of fat (say 5%) into your expectations isn't a bad thing, as companies often want to negotiate down at offer stage (in spite of our efforts the educate them otherwise).
Saturday, September 3, 2011
Typical Recruitment Fees
In my last post (Recuitment's Iceburg), I was justifying the fees a recruitment agency makes. I guess then it makes sense the to outline what sort of fees agencies tend to charge.
Jobs can broadly be cut into two types - permanent and contract. The fee stucture is quite different for the two.
Let's start with permanent. Permanent fees are typically a single, one off fee based on a percentage of the successful candidate's annual salary package. The actual percentage can vary significantly on a range of factors - the seniority of the role (more senior roles command a higher percentage), the number of other agencies that are working the same role in competition, how difficult the positions are to fill and the volume of roles that a client gives an agency. A typical "rack rate" fee for contingent permanent recruitment is around the 20% mark. So for someone who is placed at a $60000 package, that means the agency fee would be $12000.
Contract fees are calculated somewhat differently. Rather than paying a one off fee to the agency, the agency puts their margin over and above the rate that the contractor is recieving, and therefore the agency thus derives a stream of commision while the contractor works for that company. Factors such as the amount of competition, the volume of roles, etc again influence the size of that margin, though the duration of the contract also comes into play - obviously an agency will derive a lot more commision from a 12 month contract than a 1 week contract, and that is typically factored into the margin.
Again, a standard rack rate for for contingent contract recruitment runs around the 20% mark. The calculations are a little more complex though, as payroll tax also needs to be factored into the rate as well. Here's how the calculations play out for someone on $60/hr:
Rate to contractor = $60/hr
Payroll Tax (5.45% in NSW) = $3.27/hr
Agency Margin (20%) = $15.82/hr
Total Charge rate = $79.09/hr
So over the course of a 3 month contract, an agency would make approximately $7500 from that placement.
You sometimes see claims of recruitment agencies making five or even ten times what the contractor getting. I think one of four things is happening in those situations:
(1) they are confusing consultancies and recruitment agencies. Consultancies charge their people out at those sort of multiples as they are responsible for deliverables, whereas recruitment agencies are not.
(2) they are citing an example from the early 1990s when recruitment was in its infancy, and there was an element of the wild west about the industry. These days competition is ferocious, and companies want transparency. No-one is going to be paying way over the odds.
(3) It's a very short term deal, so the recruiter can justify charging a higher margin to make decent money on the deal
(4) they are just making it up.
No doubt there will though be people who are reading this who will think these fees are ridiculously high. Sometime soon I'll write a separate article justifying agency fees, but I will leave you with two key points.
Jobs can broadly be cut into two types - permanent and contract. The fee stucture is quite different for the two.
Let's start with permanent. Permanent fees are typically a single, one off fee based on a percentage of the successful candidate's annual salary package. The actual percentage can vary significantly on a range of factors - the seniority of the role (more senior roles command a higher percentage), the number of other agencies that are working the same role in competition, how difficult the positions are to fill and the volume of roles that a client gives an agency. A typical "rack rate" fee for contingent permanent recruitment is around the 20% mark. So for someone who is placed at a $60000 package, that means the agency fee would be $12000.
Contract fees are calculated somewhat differently. Rather than paying a one off fee to the agency, the agency puts their margin over and above the rate that the contractor is recieving, and therefore the agency thus derives a stream of commision while the contractor works for that company. Factors such as the amount of competition, the volume of roles, etc again influence the size of that margin, though the duration of the contract also comes into play - obviously an agency will derive a lot more commision from a 12 month contract than a 1 week contract, and that is typically factored into the margin.
Again, a standard rack rate for for contingent contract recruitment runs around the 20% mark. The calculations are a little more complex though, as payroll tax also needs to be factored into the rate as well. Here's how the calculations play out for someone on $60/hr:
Rate to contractor = $60/hr
Payroll Tax (5.45% in NSW) = $3.27/hr
Agency Margin (20%) = $15.82/hr
Total Charge rate = $79.09/hr
So over the course of a 3 month contract, an agency would make approximately $7500 from that placement.
You sometimes see claims of recruitment agencies making five or even ten times what the contractor getting. I think one of four things is happening in those situations:
(1) they are confusing consultancies and recruitment agencies. Consultancies charge their people out at those sort of multiples as they are responsible for deliverables, whereas recruitment agencies are not.
(2) they are citing an example from the early 1990s when recruitment was in its infancy, and there was an element of the wild west about the industry. These days competition is ferocious, and companies want transparency. No-one is going to be paying way over the odds.
(3) It's a very short term deal, so the recruiter can justify charging a higher margin to make decent money on the deal
(4) they are just making it up.
No doubt there will though be people who are reading this who will think these fees are ridiculously high. Sometime soon I'll write a separate article justifying agency fees, but I will leave you with two key points.
- The numbers quoted here are rack rates. Larger organisations will use their buying power to negotiate rates that are 30 or even 40% cheaper
- All the fees here hinge on successfully placing the person. If you don't make the placement, you don't make a cent
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