When a Small Business Should Use a Recruiter

For small businesses without Human Resources (HR), it’s often difficult to know when to employ a recruiter. While HR does much more than recruiting, in many instances, a smaller company’s primary HR need is the acquisition of talent in order to perform at its best and grow.

One of the solutions is to hire a contract (temporary) recruiter. Typically a contract recruiter works by the hour, but sometimes their services can be at a daily, weekly, or monthly rate. Contract recruiters may work for a specified number of requisitions (called a req), which is essentially the authorization to source and hire an individual for a job. Contracts can be for a certain length of time, can be left open, or they can be for a certain amount of hires.

The advantage of a temporary full-time recruiter is that he or she can focus solely on the hiring process. When managers have to serve as recruiters productivity goes down because they are taken out of their day to day thinking and functions. Additionally, many managers don’t truly know how to recruit, and given that the process is foreign to them, they are uncomfortable with it. This can cause them to take months to hire an individual, and the person selected may not be the right person for the job. Hiring the wrong person can be very damaging to the organization in just the first two weeks the new hire is on the job.

Most contract recruiters are generalists, in that they possess the ability to recruit needed employees from a variety of areas. For example, they can recruit an accountant, a marketing or product manager, or perhaps a sales or administrative person. But, there are some specialists who focus exclusively in one area, such as those in the IT field. IT or IS employees are fairly unique in their skill sets, and recruiters who work in this area sometimes come from the IT sector or have been in or around it for some time.

Another solution is to use an agency or a search firm. Agencies and search firms both have databases with candidates. The difference is that an agency is generally used for lower level positions and their fees are less- typically anywhere from 15%-20% of the position’s annual hiring salary. Search firms are used for sourcing and selecting executives and they charge a fee up to as much as 40% of the position’s hiring salary depending on how difficult the search is and how long it may take.

Agencies and some search firms operate under a “contingent” basis, that is, the organization does not pay the fee unless the candidate is hired. There is usually a 30-90 day period under which if the newly hired employee leaves, for any reason, then the agency will replace the employee with no further charges.

Search firms who function on a “retainer” basis are paid an initial fee up front. They are then paid on either a time basis or performance basis until the search is completed. Again, this is a standard practice when looking for a senior executive to join the organization.

There are two primary reasons to use an agency or a search firm. First, the job is not mainstream and the position that needs to be filled is very unique. As an example, most recruiters are not able to source or find candidates in the field of bio-technology. It takes a specialist in that field. If the company needing such an employee only needs one or two, and these positions do not turnover, then it is worth the cost of hiring an agency or firm to find what is needed.

The second reason to use an agency or firm is when the employee is needed very quickly. If there is a sense of urgency, then agencies or search firms can often fill the position in 60 days or less. I’ve even seen firms fill a job in 3 days, but that is a rarity.

In summary, a temporary recruiter or agency/firm can be useful and helpful to an organization. Fees are always negotiable. Once a company has used a recruiter, it becomes easier to determine if there might be future recruiting needs, in terms of hiring a full-time recruiter. Every now and then, a recruiter has other HR skill sets that they bring to the table. Those skills may have real benefits for a smaller organization, and there are certainly plenty of smaller organizations which have an HR person who wears multiple hats.

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Jed Friend
Jed Friend holds a Ph.D. in the area of Industrial-Organizational psychology and works in the field of talent management. LinkedIn Profile
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