Our last blog post walked through a framework to determine when and how to augment internal recruiting resources. Assuming you have decided to engage a recruiting agency, the next natural question is “which agency”? If you have a trusted relationship with a firm already, then it is an easy decision to go with them again! Ninety-nine times out of a hundred, going with a trusted partner again will be the right decision.
However, if your organization has never used an external agency before, if your current partner does not have expertise in the role you are looking to hire, or if your current agency does not have bandwidth to help, then you have a decision to make on your hands. There is no dearth of agencies and you & your team are probably bombarded with countless solicitations. How do you evaluate and choose an agency in that case? Here are 8 key factors to consider as you make your decision.
1. Referrals & references
Like any other vendor selection, referrals are the best way to select a recruitment agency.
- Peer referrals – ask your peers if they have any firms to recommend? While some may be reticent to share their secret weapon, most folks will be happy to share experiences and recommendations.
- Investor referrals – investors particularly venture capital firms and private equity firms have a roster of trusted partners with preferential pricing and proven success among the portfolio. For example, Rocket is regularly referred by A16Z, NEA, Radical Ventures and others to their portfolio founders and HR executives.
- Agency references - if you don’t receive any referrals, ask for references from agencies you have shortlisted. Ideally you can speak to a variety of past and current clients as well as candidates placed by the agency to understand their strengths and weaknesses.
2. Expertise & experience
Agency expertise in the functions and seniority levels you are looking to hire is another critical factor. However, it can be difficult to cut through the marketing noise and truly understand the expertise and experience of an agency. Here are some pointed questions to ask any agency that you are considering:
- What makes your agency uniquely qualified to perform this work? As an example, at Rocket we only recruit for roles where one of the co-founders or senior leaders of Rocket actually was in that role or managed someone in that role earlier in their career. This rigorous hurdle ensures that we understand the roles we work on inside out and can be a trusted partner on the search.
- Has your agency recruited for this role? How many times? Can you share profiles of 3-5 candidates you successfully placed in a similar role?
- Do you have a ready talent pool for this role? Or will it be a brand new search?
3. Trust & culture fit
One of the most challenging aspects of selecting a recruitment partner is that you can’t see a demo of their services unlike a software or physical product. The proof really is in the pudding in this industry. In such an environment, trust and culture fit become even critical in trying to predict success. Some items to consider:
- Honesty – are they frank? Is the answer to “how long will it take you to help us fill this role” realistic? Painting an overly optimistic picture is almost always a red flag.
- Fit – are they good communicators? Does their working style match yours?
- Advice – do they have the ability to give you feedback and advice? At Rocket, we believe that we serve our clients best by providing direct critical feedback – whether on the job description, the interview process, the compensation range, or candidate expectations. Such two way communication improves the recruiting process and outcomes.
4. Recruiting process
It is important to have clear alignment on the process the firm will follow. There is no right or wrong answer here but it is important that the search firm’s process aligns with your expectations to ensure a smooth search. Some key questions to ask and consider:
- When can the search be kicked off?
- When can the first candidate submission be expected?
- What happens if we reject the first 2-3 candidates submitted?
- How/where does your firm find candidates?
- How do you reach out to candidates? Do you communicate which company the role is with or do you keep it confidential?
- Do candidates know it is a 3rd party firm reaching out to them?
- Do you interview all candidates you submit tome? What does the interview cover? Are candidates aware they will be submitted to a role with our company?
- Will you take care of ATS submissions? Will you handle interview scheduling?
- Will you de dupe candidates that are already in our Applicant Tracking System (ATS) so there isn’t channel conflict?
- What is the process to determine candidate ownership?
- How often do we meet with you to calibrate and give feedback?
5. Agency size
The size of the agency can make a big difference in your search experience. While there is no easy answer to whether a larger or smaller agency is better, here are some considerations to keep in mind:
Large agency:
- Proven success over longer timeframe
- More resources available
Small agency:
- Your business is likely more important to them
- High touch experience
Regardless of agency size, you should understand who will be the Account Managers and Recruiters working on your role and ensure that you are excited about working with them.
6. Metrics
Closely related to search firm expertise is the agency's metrics on client satisfaction and results achieved. Some potential areas to consider include:
- What percent of their searches result in a hire?
- What is the average time to placement?
- How many candidates on average do they submit for a role?
- What percent of candidates submitted are interviewed by the client?
- Do they measure Client NPS? What is it?
7. Fees
Obviously, fees are an important consideration in selecting a partner. However, instead of optimizing for the lowest fees, most organizations are best served by ensuring that the fees are reasonable and in line with industry standards and focusing on the other selection criteria. That begs the question – what is reasonable and in line with industry standards? While there are a lot of factors such as function, seniority and volume discounts here are some rough guidelines:
- Contingency (Success based) – generally fees for top tier firms range between 25% and 35% of the candidate's first year compensation.
- Executive/Retained search (Exclusive) – generally fees for top tier firms range between 30% and 40% of the first year compensation or flat fees between $75-$100k.
For fees below this range, you should try to understand why the firm is pricing below market average. Is it because they are new and establishing a brand? Are they looking to win market share? Are their recruiters and other staff as qualified as at peer firms? Similarly, fees above this range should trigger a conversation on why higher fees are merited? Does the agency have a particularly exceptional track record?
8. Guarantees
A good firm will offer guarantees on candidates placed. Despite rigorous interviews and reference checks, there will always be the occasional candidate who doesn’t perform well on the job and either resigns or needs to be let go. While that is frustrating, it shouldn’t be expensive. A good firm will conduct the search again free of charge. Key questions to ask:
- How long is the guarantee? Guarantees of 60-90 days are standard for individual contributors and between three to six months for executive hiring.
- Are resignations covered or only employees that are let go? Does the employee who is let go need to have a documented performance improvement plan? There is no reason to go with an agency that won’t protect you in both scenarios without any requirement of specific performance improvement plans or other bureaucratic hurdles.
- Are there any exceptions or fine print? As expected, firms will not cover layoffs or resignations triggered by changes in compensation, title or location.
Hopefully, these factors have given you some food for thought as you select an agency for your hiring. Good luck!
About Rocket
Rocket pairs talented recruiters with advanced AI to help companies hit their hiring goals. Rocket is headquartered in the heart of Silicon Valley but has recruiters all over the US & Canada serving the needs of our growing client base across engineering, product management, data science and more.
