After publishing How to Disrupt Technical Recruiting – Hire an Agent and reading the subsequent feedback from readers at Hacker News and elsewhere, it is clear that at least some subset of engineers believe two things:

1. The technical recruiting industry is at times remarkably flawed, and the financial incentives inherent to the system will not always lead a recruiter to represent the job seeker’s best interests.
2. There is some demand for a talent/agent model for tech professionals, and it is a service several would be willing to pay for.

And it is also worth noting that the only agent that engineers have know is Ari Gold (or at least that is the agent they want).  Not even ONE Jerry Maguire reference?  It seems engineers want to hug it out and care less about being shown the money.

During my dissection of the industry, I somehow overlooked perhaps the biggest flaw that is at the absolute core of the issues with the recruiting industry.  I’m a bit embarrassed that I missed it, and it wasn’t mentioned in the threads, so here goes:

Secrecy and privacy of information is THE cornerstone to traditional recruiting.

Why is that?  Well think about it.  If hiring companies knew every local candidate that possessed the skills they were seeking, many would not use an agency recruiter to handle the process and would simply have HR/managers contact them directly.  Likewise, there would be many candidates that distrust recruiters applying directly to jobs if every available job were listed in one single place to search.  There would certainly be some companies and candidates that recognize the value the recruiter brings beyond the initial introduction, but if all information were available to both sides we would find much less demand in the industry.

Why do you think recruiters don’t generally list their clients’ names publicly?  Why are there so many complaints about recruiters being unwilling to share a deep amount of detail about projects or their open jobs?  There are two main reasons.

1. To prevent other recruiters from learning about who they represent (NOTE:  this is a big one, particularly for recruiters that work exclusively with start-ups that fly under the radar).
2. To prevent candidates from applying directly to those companies, thus cutting out the chance for the recruiter’s fee.

So in order to preserve their chances of being paid a fee, recruiters need to keep candidates and companies from knowing about each other until a precise moment where they make the introduction to both sides, and then hope that the company doesn’t respond with some evidence of prior contact and that the candidate doesn’t say that he/she applied to that job yesterday.  If either of those two scenarios happen, the recruiter has some incentive for that deal to NOT work out, even though it is his/her client!  Let’s assume that company has one vacancy, and my candidate applied to it a day before I discussed it with him/her.  My incentive instantly goes from wanting my candidate to get the job (so I can get a fee) to a financial incentive that the candidate isn’t successful (so the job will still be available for another candidate I can find).  That is a very dark and unfortunate set of incentives inherent to the system.

It’s very easy to see how the incentives are built in this model.  Recruiters have the incentive to help out their client companies to fill jobs, but only if the hire comes from my agency.  The recruiter has the incentive to help a candidate find a job, but only if he/she takes a job at one of our clients.  This is the unfortunate symptom of contingency work, and thankfully in my current business model (which isn’t contingency) I don’t have these same incentives to the same degree.  Who are contingency recruiters really providing a service to anyway?

Why do you think recruiters see LinkedIn as both a blessing and a curse?  We use it to find new candidates and keep in touch with past candidates and clients, yet we realize that everyone else now has access to the same information and companies can much more easily find candidates.  As a recruiter, you are probably likely to list your contacts as ‘private’ for this reason.

The agent model would not have this privacy incentive built into the system.  I could see an argument made where an agent might not want other agents to know who he/she is representing, but I think that is a much smaller problem than what we have today.  When one of an agent’s talents is seeking work, there would be a campaign of open information to try and get the talent noticed.  Having a business model based on privacy and secrecy is much less attractive than an agent model with openness.

Enough about what’s broken, let’s talk about solutions.

Based on the discussions, here are the services that the talent knows they want:

1. Negotiation in job changes – Engineers seem to agree that an agent would probably be better at negotiating compensation packages.  Another added benefit to having an agent in act as a proxy in negotiations is the preserved comfort factor after you potentially start the job.  Picture a very trying or heated negotiation between an engineer and a start-up CEO that comes to an eventual agreement, and then the two must work in adjacent cubicles the following Monday.  A buffer would have helped prevent any potential awkwardness.
2. Job identification and coordination – Many in the community made it pretty clear that they are not interested or skilled in cold calling and introducing their services to potential clients.  Having an agent do the legwork to identify potential employers and then to contact them and schedule meetings on the talent’s behalf will save lots of time to do other things.  For consultants paid hourly, remember that every hour spent on job search is an hour you can’t bill to a client.
3. Competitive salary/rate information – There seems to be a general distrust for websites that provide market information, and engineers may be somewhat insulated when it comes to what others with similar skills are earning.  An agent would have some solid evidence regarding street value of any talent and would do the research necessary.
4. Marketing/PR/Selling – It has become clear to me over the years that there is a sizable percentage of talented engineers that are uncomfortable talking up their own skills, and that was mentioned a couple times as another asset of an agent.  Marketing and PR would probably mean different things for different career levels, but it could include work to increase the talent’s blog traffic, booking a presenter’s invite to a users group/meetup, or strategy on how to build the talent’s brand.

There were some services and advantages that were somewhat surprisingly not mentioned:

1. Handling incoming job solicitations – All of the complaints about recruiter spam and cold calls are gone for the agent’s talent.  Forward calls, emails and LinkedIn spam to your agent, and he/she will investigate.  Put your agent’s name on your website and LinkedIn profile.  If the opportunity is legitimate and meets the criteria the talent sets for sharing, your will get the details.  If not, you never have to waste your time hearing about it.
2. Interview coaching – Not just your standard fare interview coaching you can find on web sites, but also any inside tips on the specific interview.  This could include past experiences others have had with the company, some research on the background of the people you are meeting, and anything else that will be helpful to the talent.  Remember that the agent is representing you at this point and not the company.  As one reader noted, a good agent would not want to do companies a disservice by providing specific interview questions (as that would harm the agent model, the hiring company, and the agent himself/herself), but it is fair to offer the talent some guidance on what format to expect and who they will be meeting.
3. Internal company information – As your representative, the agent should be providing talent with details on both their current employer and any that you may be considering for future employment.  The information learned from discussions with others in the business will be helpful to the agent’s entire stable of talent.  Consider it the type of info you may find on Glassdoor, but from verified sources.
4. Career advice in non-search situations – Are you thinking about moving from code into management, or considering taking a leadership position on a project doomed for failure?  Considering a jump into contracting, or thinking about abandoning your current independent consulting project to join a start-up?  Want to talk about it?  The value of this advice could be quite large yet difficult to quantify.
5. Negotiation of promotions or raises – Changing jobs is not the only scenario where negotiation may take place.  An agent could help you get the best deal from your current employer, either through direct negotiation or by coaching you on how to maximize your chances of getting a good number.
6. Resume creation/curating – This one isn’t a huge service but it’s a few hours out of your work year.
7. Transparency! – The agent model is completely transparent to everyone involved.  The agent represents the talent, and the talent pays for that representation.  There is no question about the agent’s loyalty as there is in contingency recruiting models (is the recruiter representing me or the company?).

Some potential issues were identified in the comments

1. Would there be any conflict of interest when representing multiple candidates?  Doubtful.  I guess there could be a rare situation where two talents vie for the same position, and in that scenario the agent would simply represent both fairly and let the best person for the job win.  The agent would probably have no financial incentive favoring either candidate.  Transparency would be important (revealing the situation to both talents).
2. Would there be backlash by hiring entities against candidates who use an agent?  It’s hard to tell, but it’s conceivable that there would be some organizations that might react hesitantly at first.  However, the key here is that an agent would be providing a service to a company for free (or if not completely free, definitely much less expensive than recruiters).  It would be hard to think that firms would not be very pleased with a cold call from an agent stating that there is a qualified candidate interested in your company, and you will get all the normal recruiter services for the process with no recruiter fee at the back-end.
3. How much would the agent need to know about technology?  This one comes up quite a bit in criticisms of technical recruiters and then in the discussion of an agent.  The agent needs to know enough about tech that he/she won’t misrepresent the talent, and will not waste time marketing talent to positions that are not a technical fit.  An agent should also have some sense of tech trends, what skills are in demand, and the overall market for different types of talent.  The biggest complaint seems to be wasting time with discussions of jobs that are not a fit or being sent on interviews that are not appropriate.  An agent would not have the same incentive to send you everywhere imaginable, as that incentive is not built into the agent model.
4. Would the service be just for contractors?  No, not the way I see it.  The pricing model for contractors is very easy to consider, as paying a percentage of hourly rate to the agent is already a common practice for staffing firms (what is called ‘margin’).  The value of an agent’s service to engineers with salaried positions seems very obvious in helping to manage the overall career as well as the career moves.

How do we compensate the agent?

This is a bit tricky and I believe that the pricing model might be different for contractors and talent in direct salaried positions.  For contractors, the existing model (a ‘per hour’ cut) is well-known and accepted.  I think the main difference is an agent would have some fixed transparent rate ($x/hr or y%/hr.  Many recruiting firms do not reveal the full bill rate to the contractor, which tends to cause distrust when the contractor finds out the actual rate.  Having a fixed percentage or dollar per hour figure would make the relationship much more comfortable for both sides.

For talent in permanent salaried positions, there needs to be more discussion.  My vision would be some flat annual representation fee for service with an additional charge/bonus for times of active job search (where the level of services and time invested would increase).  The job search fee could have several models built in – perhaps an hourly rate, flat fee per week/month, flat fee per job search, or some percentage of salary.  The problem with the percentage of salary model is that it gives some incentive for the agent to suggest you take the highest paying job even if that is not best for your career.  Another model would be a negotiation bonus above some level set and agreed upon by the agent and talent.  “For anything I get you over 120K, I get a one-time bonus of 50% of the difference.”  That leads to some incentive to take the highest paying job, but it also gives more motivation to negotiate.

The reason I include an annual representation fee into the discussion is it helps to eliminate an agent’s incentive for candidates to change jobs, and it allows the agent to justify investing time with the talent to discuss career-related issues that come up.  In the traditional recruiting model, the recruiter hopes everyone is looking for a job at all times.  An agent would have much less of a financial incentive for you to change employers, so the agent wouldn’t be as likely to suggest you leave a job that is right for you.

CONCLUSION/tl;dr

Traditional contingency recruiting incentives are:

1. Privacy and secrecy of client company and candidate information.
2. Only help client company when it results in a fee.  Only help candidates when they take jobs at my clients.
3. A desire for people to leave jobs as often as possible.

Agent model incentives:

1. Keep the talent happy so they remain your talent.
2. ???

Let’s keep the dialogue going on this.  Based on lots of direct feedback, it seems the community could be on to something.  Agree, disagree, suggest?

A recent anti-recruiter rant posted to a news group and a subsequent commentary on HackerNews got me thinking about the many ways that tech recruiting and the relationship between recruiters and the tech community is broken.  I saw a few comments referencing that the community always says how broken it is, but no one tries to fix it.  Here are some ideas on how we got here and directions we can go.

Why is the recruiting industry the way it is?

• The high demand and low supply for tech talent creates a very lucrative market for recruiters.  Many technologists might not be aware of this, but successful recruiters probably all make over 100K (some earn much more) and as a commission-based business your compensation has no maximum.
• Recruiting is an easy field to enter.  No formal training is required, although you will need some sales training and tech knowledge to truly make an impact.  One can easily start with a computer, a phone line, and a basic website.

So we have an industry that can be very lucrative (for some much more lucrative than the tech industry itself) with almost no barriers to entry.  Of course an industry with these characteristics will draw both talented, ethical professionals as well as carpetbaggers and bottom-feeders just as the gold rush did.

What are the biggest complaints about recruiters (and how can we solve them)?

First, complaints from candidates (tech pros):

• Too many cold calls.  POSSIBLE SOLUTION:  Without some widespread changes from all three parties (candidates, hiring firms, and recruiters) in the industry, this one is probably impossible to solve.  Simply mentioning that you do not wish to hear from recruiters is no guarantee that they won’t contact you, but if I see on a LinkedIn page that someone specifically doesn’t want to hear from recruiters I won’t contact them as it is clear they do not value the services I provide.
• Dishonesty about the job description or salary.  POSSIBLE SOLUTION:  What if companies gave recruiters some form of ‘verified job spec‘ to share with candidates?  Salary range, job description, location, whatever else might be helpful.  A candidate could request this from the recruiter before agreeing to an interview.
• Being marketed/used without their knowledge.  POSSIBLE SOLUTION:  Companies could require a ‘right to represent‘ email giving a recruiter permission to submit his/her resume for any or all positions, which would at least eliminate some of this.  Of course, recruiters will still send blinded resumes (contact info removed) to client prospects.  A better idea may be for candidates to have a document that they ask recruiters to sign – a contract where the recruiter agrees not to send their resume in any form to any company without the express written consent (the ‘right to represent’) of the candidate.  I’m not a lawyer, but I assume there could be some financial penalties/restitution allowed if you were to break that trust, as you may damage the candidate’s career.  As a rule, if I want to market a candidate to a client, I always get their permission first.
• No feedback or follow-up.  POSSIBLE SOLUTION:  Unfortunately there is little value that a company gets by providing specific feedback about a candidate, and it actually exposes them to substantial risk (ageism, racism, etc.).  Likewise, taking time to give rejected candidates details provides nothing to the recruiter except goodwill with the candidate.  This one is difficult to solve, but probably not as big an issue as the other problems.

And complaints from hiring firms:

• Too many resumes.  POSSIBLE SOLUTION:  If you provide a very good requirement to a good recruiter, he/she should be able and very willing to limit the resumes.  Telling your recruiter that you want to see the best five available candidates should encourage them to limit submissions.
• Unqualified candidates.  POSSIBLE SOLUTION: Same as above.
• Misrepresenting a candidate’s background.  POSSIBLE SOLUTION:  Well for starters, stop working with the recruiter and that agency entirely.  If you want to make a positive change for the recruiting industry, contact the recruiter’s manager and tell your side of the story.  Having liars in an industry is bad for everyone except the liars and those that profit off of them.
• Marketing cold calls.  POSSIBLE SOLUTION:  If you truly will not use recruiters for your searches, list that on your job specifications both on your website and the jobs you post publicly.  I would rather not waste my time if a company has a policy against using recruiters, and if your policy changes perhaps you will be calling me.  I will not call a company that specifically lists that they do not want to hear from recruiters, as it is clear they do not value the service I provide.
• Price gouging.  POSSIBLE SOLUTION:  This could be when recruiting agencies mark-up their candidates’ hourly rates well beyond what is a reasonable margin, or when recruiters who receive permanent placement fees tied to salary will stretch every penny from the hiring company.  Flat transparent fees work very well for both of these problems (a flat hourly mark-up on contractors and a flat fee for permanent placements), although recruiters would particularly hate a flat fee structure for contractors.  The recruiter’s ‘sale’ to a contractor is, “If I can get you $300/hr, do you care if I make $2/hr or $100/hr?“.  The answer is usually ‘no’, which is all fine until the contractor finds out that you are billing your client $300/hr and only paying the him/her maybe $50/hr.  That is rare, but that is when things get ugly.  Flat and transparent rates exposed to all three parties involved will solve that problem, but don’t expect recruiters to go for it.

To all the technology pros who claim they really want to disrupt the industry, I have one simple question.

Would you be willing to hire, and pay for, an agent?

I’ve heard the argument from some engineers that they would like recruiters to care more about the engineer’s career and not treat them like a commodity.  Recruiters are traditionally paid for by the hiring companies, but only if they can both find the proper talent and get that talent to take the job (contingency recruiting).  This can lead to a recruiter treating candidates like some homogenized commodity that all have similar value.

If engineers want true representation of their best interests, having representation from a sole agent would be one obvious choice.  As your agent, I could provide career advice at various times during the year, making suggestions on technologies that you may want to explore or giving inside information on which companies might have interest in you.  You might come to me to discuss any thoughts on changing jobs, how to apply for promotion, or how to ask for a salary increase (which I could negotiate for you directly with your manager).  When you do decide to explore new opportunities, the agent would help put together your resume, set a job search strategy, and possibly market your background to some hiring companies.  As the agent is making his living by charging a fee to the candidates, the agent could charge a much smaller fee (or potentially even no fee) to the hiring company, which would make hiring you much less expensive than hiring through a traditional recruiter.

If you were contacted by a recruiter from an agency or a hiring company, you would simply refer them to me for the first discussions and I would share the information with you (if appropriate) at a convenient time.  You could even list my name on your LinkedIn, GitHub, and Twitter accounts.  “If you are interested in hiring me, contact Dave at Fecak.com“  How good would that feel?  How good would it feel to tell your friends that you have an agent?

All of this assumes your agent would have some high degree of knowledge about the industry, the players, market rates, and a host of other things.  Many recruiters don’t have this expertise, but some certainly do.  An agent could probably represent and manage the career of perhaps 50-100 candidates very comfortably and make a good living doing it.

Would you be willing to pay a percentage of your salary or a flat annual rate to an agent who provides you with these services?

If the answer is ‘yes’, look me up and I’d be happy to discuss it with you further.  But I’m guessing for many the answer is ‘no’ (or ‘yes, depending on the price’).

My business model

Most recruiters are contingency based, which means they only get a fee if they make a placement.  If they search for months and don’t find a proper candidate, they just wasted months for no payment.  This places 100% of the risk of a search on the recruiter and 100% of the control with the hiring company.  Even if the recruiter finds a great fit, the company can walk away without making a hire.  Contingency recruiting is cut-throat and causes desperation to make a placement, and this is where most of the problems arise for candidates.  This is the ‘numbers game’ that tech pros talk about, where the recruiter’s main incentive is to get resumes and bodies in front of clients and see what sticks.

Some recruiters are retained search, which means that basically all their fees are guaranteed up front regardless of their results.  This is great for the recruiter but places 100% of the risk on the hiring company.  The recruiter is working this search to save his/her reputation, which is obviously very important in getting future searches.  This is not cut-throat, because it is not a competitive industry – recruiters have exclusive deals with a retained client for that particular job.

The model I use combines contingency and retained search.  I charge clients a relatively small flat fee upfront to initiate the search, which is non-refundable.  When a placement is made, I charge my clients another flat fee (not tied to salary).  When you combine the two fees, the percentage of salary is often about half what contingency recruiters would get for the same placement.

So you think I’m an idiot for charging much less than my competition.  Perhaps.  I see it as creating a true partnership with companies that continue to come back with additional searches and repeat business, often referring me to their friends and partners.  When a company gives you a fee upfront, they are putting their money where their mouth is and you can be sure they are serious about hiring.  It takes some degree of trust on behalf of the hiring company, but once you have been in the business for a while the references are there and chances are we have some business connections in common.

So far this model has worked well, with happy clients and lots of repeat business.  I have already met my goal for 2012, and I’m hoping to double it in the coming months.

What else do I do differently?

• I give it away (sometimes) – information, resume and interview advice, and any other kind of help you can think of are requested of me, and I rarely refuse a reasonable request.  If I can’t help you find a job, I can at least take a look at your resume or evaluate how your applications look. I have known some engineers for over ten years without ever having made .05 in fees, and  have helped them make career decisions for free.  I’ll often introduce candidates to  start-ups or one-man firms with limited budgets who may end up hiring without using my services, with the hopes that they will use me for future searches.
• I run a users’ group – I’ve run the local Java Users’ Group for almost 13 years.  It is a volunteer job with no compensation, but it helps me stay in touch with the tech community and it also adds some credibility to my name.  It is a lot of effort at times, but the success of the group is something that I’m quite proud of.  I don’t recruit out of the group, but most of the group are aware of my services and come to me for my services when necessary.
• I specialize – Historically I focused both geographically and on one technology (Philadelphia Java market).  I’ve opened that up a bit as many of those Java pros are now doing mobile, RoR, and alternative JVM lang work, and I’m a bit more regional now.  Staying specialized in one geography and one technology forces a recruiter to be very careful about his/her reputation, as the degrees of Kevin Bacon are always low.
• Flat fees – A flat fee lets the company know that my goal is to fill the position and how much you pay the candidate is irrelevant.  I inform candidates of this relationship so they are aware that my goal is to get them an offer that they will accept, and my client companies know that if I say I need $5K more in salary to close the deal that I am not trying to line my pockets.

CONCLUSION
Don’t expect my model to be adopted by any other firms, but I wanted to share it with readers as at least one alternative to the traditional contingency model that seems to be the biggest complaint for both candidates and hiring firms.  And I believe the agent model would work quite nicely for all parties involved if anyone would like to inquire.  If you truly want to disrupt the industry, let’s talk.