Recruiters don’t work for startups — Why I’m cutting the middleman
We’ve all seen Google’s search results when you type recruiter. I’ve read multiple “open letters”, hate posts, attempts to explain how “companies” and “candidates” should be treated. I have recently experienced it from the “company” side, which surprisingly is even more annoying than the “candidate” side. But that’s not the purpose of this post. The purpose is to focus on recruiting for startups, how it is now and how it can possibly become better. Obviously I’ll start with a short rant, but after I’ll try to gracefully outline some new thoughts and ideas for making this work.
Once upon a time…
Well actually it was a couple of months ago, I started scouting for developers for my platform and posted a naive message on LinkedIn. I was hoping to get some replies from interesting developers. Within one minute of posting, I received a phone call. It was a recruiter. I’ve written before about the pyramid of communication. Obviously, it threw me off when a salesperson called me without my permission. As far as I’m concerned, people should call if they (1) Want intimacy (2) Have something urgent to say (3) Are close to me and want to tell me a long story that it’ll take too long to write. But because it caught me off guard I agreed to talk to the recruiter.
A few days had passed and as a result of that post I got loads of messages, all from recruiters. Actually, I also posted the request on Facebook. The overall result of my 3300 connections in LinkedIn and 1700 friends in Facebook amounted to 20 messages from recruiters and one friend that recommended a person. That’s a pretty crappy return on what’s supposed to be the core value of the platform — namely finding employees.
The following week was full of unexpected calls from recruiters, contacting me left, right and centre whenever they felt like it. Some calls were even at weird times. And of course everyone leaves voice messages instead of sending an email.
We had a couple of interviews and after the first batch, we realized that the definition of what we were looking for was wrong. The recruiters didn’t get it, it was the developers themselves who explained it to us. So much for expert recruiters who can translate your need into reality.
I must admit I’ve experienced two approaches from recruiting agencies. The first is ”I’m not working till I’m promised money because I don’t want to waste my time”, the other is “we give you value then up-sell”.
Working in a startup has many unknowns to tackle, therefore, I prefer to minimize unknowns especially when it comes to burning rate. So even with agencies that didn’t mention their terms, I defined in advance a day rate including the agency fee. The problem was that, even after taking that step, once the agency saw I was interested in a candidate they started renegotiating the rate. Time is the most valuable asset a startup has and since a big part of my time is prioritizing and planning I have zero tolerance for things that waste my time.
Let’s talk about money
The recruiting agency model is most definitely not matched for startups. Let’s assume a person is 100 per day, a recruiter will take between 15–25 percent on top of that. For every day a person works for me, I will pay 100 to them and 25 to the recruiter, and the best part is that’s how it works forever.
If you want to hire a person permanently it’ll be a bit different. You will have to pay 20–30% in one go. So if someone earns 100k you will have to pay 30k immediately, after their probation is over.
Big companies save so much money by having their own HR and processes but also reluctantly sometimes use recruiters if they need to grow fast. But for a startup who raised seed or A round money, the prospect of subscribing to recruiters forever, or giving an immediate payout for a perm role is foolish.
Professional startup consultants
Solicitors, closers, and advisors learned and developed ways to work with startups, by agreeing to risks, getting paid a bit now and then more later. Startup employees who also believe in the company do the same. To me it makes perfect sense, and recruiters should see an amazing prospect here too. The startup can continue hiring through them for a very long time, and maybe at some point even buy them as their HR department. You’d think that would work for everyone involved.
But throughout my experience, I haven’t seen any flexibility, no models that work well for startups. The business world has evolved, but it feels like the recruiting world has stood still. After all, what does a startup need when it comes to recruitment:
- The ability to understand they made a mistake and terminate a contract quickly if the person doesn’t fit.
- The support and connection of people who believe in it.
What does a startup have to give:
- The promise it’ll be new, agile, interesting and revolutionary.
- A return on investment of either time or money.
I think more recruiting agencies should start developing a model for this. The corporate world is brilliant but the startup world has much to offer too. Invest in startups and we will be grateful. I promise you it will translate into long-term working relationships.
The whole reason to choose a recruitment agency is to save you time, but I guess I’ve learned there are no shortcuts here. My advice to myself is to use personal recommendations (like we did so far) and go to meetups and find people myself. Maybe one day when there are good models I’ll test the recruiting world again, but at the moment it feels dated and rigid.
How to make recruitment work for startups
In a startup things are unexpected mainly due to inexperience. Lack of experience could be reflected in: legal, recruiting, management etc. In addition, the startup might pivot or get hit with a lawsuit or a partner crisis. The startup world is hard and unstable, so warmth and flexibility help oil the joints.
Flexibility can also be reflected in the lack of pressure recruiters put on businesses. Work with the startup on their terms. Have a weekly meeting with the CEO about new candidates. Be a part of the mission, anticipate the needs of the company and suggest what roles could help it develop. Instead of bombarding us with emails and phone calls that just distract and create antagonism, let the startup cope. The CEO will talk to you when they have time and if they don’t it’s not your place to push. It probably just means that priorities have changed.
Fire quickly — In reality this flexibility could be in the financial model a recruiter offers a startup. The ability to fire fast is key, especially during the probation period. Big companies can afford to keep the contractor for another two weeks, but in startup life two weeks are like two months.
Vesting — Percentages and big chunks of money don’t work for startups. It’s just not sustainable. Top candidates come and work for a pay cut and blue sky options. They come because they believe in a mission and are willing to work together to make it happen. A recruiter should also believe and invest in the same way. If you are vested the startup will continue working with you. With startups it’s not all about now, it’s about the future. There’s a chance it’ll turn into a Unicorn company and that you’ll have 50% of their recruiting cycle. That’s a lot of business that is good for everyone.
Permanent roles — Let’s face it, in a startup having a perm position doesn’t promise the stability it does in a corporate. The wheels are moving fast, the pressure is high and statistically employees stay less time…mainly because most startups fail. So instead of taking a huge chunk at the beginning, stretch it over a couple of years to make sure it’s the same amount of value a corporate client gets. Yes, there’s a risk involved, but that’s unavoidable when it comes to dealing with startups.
Find a way to give value that stays with the company. Recruiters search for and know many candidates and they can use this to the startup’s advantage. Having a database of options that are a match to the startup could be great for the future. It might not work out today, but it’s definitely valuable for tomorrow. To facilitate that a new account management system should be in place. Imagine an SaaS model for a startup or a yearly subscription that helps the startup keep track of potential employees, ready for the day when they can hire them.
Startup recruiters should be like VCs and investors. The market is big and many people are looking for jobs or employees. Allow yourself to be selective about the people you work with. Make sure the company you are recruiting for will survive the next six months and if you believe them then invest and create a long-term relationship. Build a pricing range that says, for example, in seed money I will get x% per employee I put to work there, in series A the percentage will grow and in series B as well. Start thinking outside the box when it comes to charging, rather than relying on the current structures that are so ill-suited to startup businesses.
Help the company and advise them as an HR expert. Help them to retain candidates as then your percentage will grow the longer they stay. Link the success of the employee to your success. If they get promoted or stay longer it might help you as well.
As a recruiter you don’t need to prove that you can find one person who can survive 90 days in the company. You need to be able to continuously bring value when needed and grow the current value based on experience and your success. Recruiting should be less like pimps and more like a long-term relationship. It requires trust, understanding and hard work, as well as support in the bad times as well as the good.
In today’s fast-paced world people move more. I don’t know if it’s because of interest, ambition, boredom, recruiters or bad management. But what I do know is that if someone did a good job for me I’d want to see them again and offer them another job. We’ve all got people that we like working with and that we love to hire, I’d like to see recruiters join that group as well.
#RVZME: The Revoluzionne’s Curated Membership
Join our exclusive membership!
The Revoluzionne’s membership programs allows our members to receive exclusive reports and features, quarterly digital magazines and bi-annual print magazines. We also have online and live events throughout the world starting this year! We also send out surprise trinkets to your way (just because we want to).
For only $69 per year, you get to meet, connect and even contribute to our community of multi-faceted reader and writers all over the world.
Here’s the changing the world, one story at a time.