I’m currently having my bathrooms renovated. Although very happy with the quality of workmanship thus far, it’s not a cheap job these days. As explained to me by Owen Plumber (the nickname I have given him following Medieval nomenclature), it would have been considerably cheaper 2 years ago. The scarcity of building products, GIB especially, has seen a hike in prices. This cost increase is of course passed on to me, the homeowner, and I think we all agree that “such is life”. On the flip side of course, the kiwi summer has meant my fruit and veg is not only fresher and plumper, but also cheaper. And that’s how it works: if there’s lots of stuff it’s cheaper. If there’s not much, it’s more.
When I first arrived in New Zealand nearly 11 years ago, there was much to learn. One of the first things I was told is that Recruitment firms charge 15% for permanent recruitment. At the time, I was so busy trying to pronounce words like Waitākere and Whanau that I didn’t have the bandwidth to question this. Fast forward a decade, and I’m going to take a punt that most of us are still charging 15%.
Does this not strike you as odd?
What other goods or service have held such a steady price for so long? Food prices change, building material prices change, and even professional services prices change. Yet here we are. Now you may argue that our fees have changed. As salaries have increased, so have our fees right? Well yes, but why the hell are we linking our price to the salary that a candidate is paid? The hardest roles to fill are those that are underpaying. In this instance, the fee is less, and we do more work. Madness that can only exist in an industry where the barriers to entry are so incredibly low. Our sister business JOYN has no such issue. We offer Recruitment as a Service, and quote our client an hourly rate. This rate is always changing. It’s affected by the Consultant we use, how much work the client requires us to do, the sector the role sits in, and how bloody difficult it will be to fill. There is no rate card, and I don’t believe there ever will be. By flexing the rate, we not only ensure our JOYN Consultants are well rewarded for the fantastic work they do, but also, we’re not overcharging the client. If I were to charge all our clients the same hourly rate no matter the task, I’d have to charge most of them more. I’d be foolish not to.
This is not how Rice Consulting approaches permanent recruitment. We charge 15% for a recruitment process that involves jumping through fiery hoops, and we charge 15% for an absolute tap-in. 15% rarely reflects the work actually involved. One of the reasons that we settle for this is our own laziness. It’s not the type of laziness a teenage son displays when he lays in bed until midday. It’s the laziness of not talking to your partner about your non-existent sex life. The mortgage is almost paid, the kids are off to Uni, and is it really worth rocking the boat with something so confrontational? Most recruiters to not want to discuss “value” and how charging 15% for every role may not make sense. It could be confronting to discuss that not only have we undercharged, but at certain times in certain markets, overcharged. No way man – much better to have silent agreement with almost every other firm out there that we’re charging 15% and anyone charging less is crap and anyone charging more is greedy got it?
Given that we currently work in a market where we’re all working much harder to find candidates, perhaps now is the time to review this. There’s a nice 14-year-old looking chap in the UK called Jon Brooks. I’ve never met the fella, but he seems pleasant online. From what I discern, he consults with recruitment firms around innovative pricing models, and how to get them across the line. I’m in no way affiliated with him, but I reckon there’s a place in the market for such a concept. We may think that charging 15% for everything we do is simpler for both client and consultant, but logic follows that we’re usually either ripping people off, or being ripped off. The chances of the actual work being put in being worth exactly 15% is quite unlikely.
That’s why I think we should make a shift. Imagine sitting with a client and saying “in this current market, I should be able to find this person reasonably quickly”. or “I actually know a couple of people who could do this – shall we say 12%”. Or, “This is almost impossible, but I will work my cute little ass off to find you someone, but it’s 22%”. Or how about getting crazy and staggering a fee? Or charging your services by the hour? Or working as the candidate manager for the internal recruiter for a lesser fee? There’s also sorts of weird sh*t we could be doing which would link the work we do to what we actually charge. Not just some arbitrary number.
Anyway, that’s it for this sunny Friday. I’m off to grow some balls before my next client meeting.