Disrupt Tech Recruiting II – So You Want Ari Gold?

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 knowledge of 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?

13 comments

  1. Ivan

    An actor’s job lasts on average only a couple of months, which means job hunting is far more frequent than what a normal full-time employee faces. Developers only need job hunting resources only once every few years, why pay an annual commission?

    To this day I have never seen the need for a recruiter. Passive candidate? Never. I only look for a job when I am good and ready, not a second before.

    • fecak

      Ivan – Thanks for the comments. There seems to be some preconceived notions about an agent based on the industries that we use that term in – entertainment, sports. Perhaps agent/manager would be easier to digest, where an agent/manager for an athlete would be an asset when that athlete changes teams (jobs) but also handling endorsement deals, PR issues, and other items during their career. If you think Kobe Bryant only needed an agent during a contract negotiation, do a search for Kobe Bryant. I’m not suggesting that engineers are going to have the same types of problems that athletes or entertainers would have , but they deserve that level of representation without any question of who the representative is truly representing. And with the amount of requests for advice that I get regarding promotions, how to ask for salary increases, should I stay tech or go management, etc, it’s obvious that engineers are begging for guidance – they just aren’t paying for it.

      If you have never seen the need for a recruiter, you would probably never see or appreciate the value of an agent, so by all means don’t use one. Perhaps you are a better negotiator than I am and have received much more than I could have received for you? That’s certainly possible. Or perhaps you have left thousands of dollars on the table over the course of your career – that is possible too.

      Regarding passive candidates, that is interesting. So you are either in full job search mode or you are not at all open to hearing about any opportunities I guess? One would think you may have missed out on some good opportunities over the years, unless you think that you were lucky enough that the absolute best jobs just so happened to be available at the exact moment you were in active job search mode? Companies tend to value passive candidates quite a bit, as there are often several reasons why candidates are in very active search modes.

      Continued good luck in your career!

  2. Dan Fellars

    “Secrecy and privacy of information is THE cornerstone to traditional recruiting.” Yes, I agree with this.
    I also read your post on hiring an agent. Some of the issues you talk about here and on that were the genesis of building betacave.com. Privacy is essential in this world. Would love to get your thoughts on it.

    • fecak

      Dan – I’ll take a look. If you are really interested in some dialogue about your product, contact me offline. My points about privacy were more about recruiters not sharing information, which is privacy that tends to cause problems. All privacy/secrecy is obviously not good. The privacy of candidates in job searches that your product seems to address is an entirely different matter, but important in at least some scenarios.

      There is certainly a movement to eliminate any intermediary between job seekers and hiring companies, and the major flaw in that movement is that many candidates want and understand the advantage to having professional representation. Too many deals are lost every year because of poor negotiating tactics on both sides, and an arbitrator/liaison has countless advantages. Deals that should have happened, but simply didn’t. The agent model is not simply about privacy, but about true and transparent representation for workers when communicating with employers.

      Thanks for the comments and good luck with your venture.

      • Dan

        Yes,let’s talk offline. I actually have a different view of recruiters than what you might be thinking. I don’t see us trying to replace recruiters but actually help overcome some of the challenges you talk about. Will contact you offline.

  3. Pingback: Geek Reading September 26, 2012 | Regular Geek
  4. Gregory Leib

    I like the idea of a holistic approach to career management for geeks – I’m good at software development, but my track record on making career decisions is anything but optimal. There’s more to my career than compensation – like solving interesting problems or learning new skills – so balancing those considerations can be challenging. I can see value in this approach.

  5. Mike S

    Dave, you make some genuinely good arguments. But I have one misgiving and one suggestion.

    The misgiving is related to compensation and benefits. It’s relatively easy for an agent to demonstrate to the engineer that they helped the engineer get a job, or helped them prepare a resume, and helped them prepare for interviews. If you were unemployed before, or looking for a different job, then you got an agent and took their advice, and got a new job, clearly it worked. But it’s difficult – unless I’m missing something – for you to prove that you got the engineer near the best pay and benefits that the company would be willing to offer. Maybe they would have gotten 5% more on their own, or 20% less, but either way they don’t know.

    The suggestion would be for the agent’s transparency with the engineers to include a full disclosure of their business clients and current positions they’re trying to fill with the engineers, including positions the engineer is not suited to fill. Say for example you have two companies hiring and five engineers you represent. One company wants Python developers and the other wants Java developers. Of your five engineers, you have four Java developers and one developer proficient in both Java and Python. You now have an incentive to conceal from your Java/Python engineer the Java job opportunity because you can fill it with another candidate and “save him for later” with the Python shop. That kind of disclosure also helps the engineer more accurately guess when the next round of interviews might happen. If you have no companies that want new hires within three months, any engineer that employs you should know.

    (I am, of course, speaking from a negative personal experience here.)

    • fecak

      Mike – Very interesting points, and I’ll address them both. First, thanks for reading, and I’m sure most of my blog visitors probably have had at least one negative experience.

      Regarding your first point – you are correct that there is no way to prove that the engineer couldn’t have negotiated the same deal (or even a better deal) for himself/herself. One idea that came up was for an engineer to set an ‘acceptable salary’ number that is a goal for the agent to receive for the talent. If the agent gets an offer above that acceptable number, the agent would get a one-time percentage of the difference (talent says 80K is acceptable, agent gets 90K offer that is accepted by the talent, agent gets a percentage of the 10K). This arrangement could be easier to quantify an agent’s value, but even in this arrangement it would never be clear if the talent could have received the higher number without the help.

      This ‘misgiving’ you describe exists in all agent/talent relationships though, doesn’t it? Is there any way for a star athlete to know if their contract is maximized by the agent? My proposal of the agent/talent relationship goes well beyond simply a hired negotiator. Over the years I’ve provided lots of good advice (and probably some bad advice too) that has helped engineers get promotions, raises, new jobs, etc that have all contributed to their career earnings. I’ve provided this for free (accumulating goodwill along the way), but I think there is a market for this type of information and I believe that the transparency in who the agent is truly representing has some significant inherent value to the talent.

      Regarding your point on transparency – this is a bit more complicated perhaps. When you mention the agent’s ‘business clients’, I assume you are referring to hiring companies and not other talent that the agent represents? In a perfect model, the agent does not represent any companies at all and does not represent jobs. Kobe Bryant’s agent does not represent the Lakers or the NBA, and he certainly does not represent any open positions at other teams – the agent represents Kobe alone. Ideally, an agent would represent engineers and not companies, although companies MAY pay some fee to the agent in addition to the fee paid by the talent (to offset the cost to the talent, but the overall price paid by both talent and company would be less than a typical recruiter fee).

      Your example is a good one with the exception of the concept that the agent represents jobs. If a situation arose like the one you mentioned, where an agent was aware (not representing, but aware) of companies as you mention, I think some transparency would be important.

      I actually find myself telling my candidates now about any potential biases. If I have one candidate interviewing at two companies, I will almost always tell the candidate if there is any significant difference in my fee structure at the two companies, so the candidate can decide if he/she senses that I may be pushing a decision towards a particular offer. I’m guessing most in my business don’t do that, but I feel transparency is the key element missing and the source of almost all of the issues between recruiters and tech talent.

      Thanks again for reading.

      • Mike S

        Dave,

        Thanks for your response. With respect to the agent to engineer relationship, I think it’s not quite accurate to compare it to the agent to athlete relationship or agent to Hollywood actor relationship, because in those cases almost every actor or star athlete has an agent, while in our field I think agents are less common. But your point does carry weight, of course. There really is no way to be sure your agent got you the best deal or close to it. I like the idea of the agent getting a percentage of salary above a negotiated baseline.

        With respect to business clients, I did not necessarily mean a formal relationship. I was just thinking if you get a phone call from a company asking for talent, you have a potential ethical dilemma. If you send your least qualified but still acceptable engineer to that company, it leaves you with a pool of remaining candidates that are more likely to meet the needs of whoever calls next (because your low man on the skill totem pole is already employed). But for your remaining engineers, they might have preferred a first shot at that specific job opening.

        Please forgive me for being especially cynical, but I’m impressed that you’re this open about the entire situation and recruiting industry. I do appreciate it. Thanks.

      • fecak

        I don’t know of any agents that work in the software engineering space at this point. Hiring companies surely don’t expect that they will deal with an agent when hiring tech talent, but dealing with recruiters is expected so there is some precedent. Companies are probably under the impression that recruiters represent the company’s best interest, but if you really think about contingency recruiting agreements with fees directly tied to a hire’s salary, who does the recruiter REALLY represent? It’s difficult to compare the model to the Hollywood or athlete model, as you mention, but perhaps in the future this will be more common. We’ll see.

        On the ethical dilemma, I think the premise may be a bit flawed. You mention a company calling an agent looking for talent, where I envision the opposite scenario (agent calls on company to express talent’s interest in working for company), although both could obviously occur.

        I do understand anyone being cynical about the model, and it’s very helpful for me to iron out possible scenarios if I choose to offer this service (I’m seriously considering it based on lots of positive feedback). The agent’s goal is to represent the talent the best that they can. I think we can use the Hollywood/athlete model in this scenario. A movie may only hire one star and an agent may represent many stars who all want that part – the agent should be somewhat transparent about who is being represented for the part (or at least that the agent has more than one talent vying for the part) and at some point it has to boil down to the part going to the ‘best’ candidate. Excellent points, thanks again.

  6. Oolan Zimmer

    I think the notion of an agent for SW developers or technology executives is an intriguing idea, but keep this in mind…

    As an ongoing retainer, I can hire a career coach / executive coach that does many of the same things for helping get jobs, plus has weekly feedback about developments in office politics, identification of behaviours that don’t help the situation, honest advice about how to advance one’s career, etc. I think you’d have a hard time charging more than about $3000 / year unless you provide this type of high-touch service.

    That said, upwards of $10k might be reasonable as a one-time fee for a placement that works out, and by placement I mean finding a position that isn’t posted publicly, or bypassing HR nonsense and getting a network connection to the hiring manager, etc.

    • fecak

      Oolan – Thanks for commenting. As I described in the post, the services an agent would provide are exactly what a career coach does with some additional offerings. If an engineer had an agent, they would not need a career coach as well. I think 3K a year is definitely in the neighborhood, but I would not expect many to pay a 10K fee for a job unless they were perhaps CTO level or making 200K+. That seems well beyond a reasonable fee for most engineers, but as I mention a company could contribute as well.

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