Agents for Software Developers, Revisited
NOTE: I RECENTLY BEGAN OFFERING AGENT SERVICES – SEE FECAK.COM FOR MORE INFO
A few recent Reddit and Hacker News posts alluded to the idea of agents in the world of software. If professional athletes and artists can have agents representing them in hiring and negotiation situations, why not software talent as well?
Recruiters are almost always mentioned in these discussions, and after almost 20 years in agency recruiting I feel I understand the short and long-term financial motivations of recruiters pretty well. The primary difference between agents for athletes/artists and tech recruiters is that agents have incentive to help you get the best paying job, whereas recruiters only have incentive to help you get jobs with their clients.
Whether internal recruiters (think Facebook recruiters that only recruit for Facebook) or agency recruiters (that represent multiple companies), the motivation is only to get you the job IF the job happens to be with a company that is paying them.
If Lebron James’ agent only represented the Lakers, Knicks, and Celtics, it would severely limit his professional options. The agent wouldn’t care what the Cavaliers and Warriors might offer or whether those opportunities would be better for Lebron’s career. Lebron would likely want to work with multiple agents so he could be considered by the other 20+ teams in the league. Lebron might have 10 agents in this example, and they would all be working against each other and perhaps lying and cheating to get Lebron to sign with their client teams. This helps highlight a fundamental issue with the incentives of agency recruiters.
I first wrote about this topic almost four years ago in How to Disrupt Technical Recruiting – Hire an Agent, which explored the many issues and inefficiencies in contingency recruiting and how an agent model might work. I even wrote a follow-up piece shortly thereafter that got more specific on services that an agent might offer.
I admit that the current state of the recruiting industry, and in particular the overwhelming negative sentiment faced by third-party recruiters, has provided substantial temptation to transition my one man semi-retained recruiting practice into this agency model. My launch of Resume Raiders and offering of consulting and coaching to job seekers are a small step in that direction, and those services resemble a part of what I’d provide as an agent. If you want to seriously discuss representation, I’m easy to find.
Who Would Need an Agent?
The vast majority of software pros probably don’t feel that they need an agent, but that doesn’t mean there isn’t a market for the service. Here are a few thoughts on who might benefit most from an agent.
- The busy – Job searching takes time, which is why many just wait for jobs to come to them instead of actively researching opportunities. An agent could also manage and vet incoming inquiries (READ: clean out your LinkedIn inbox) to see if they are realistic options or a waste of time. Instead of replying to every recruiter, imagine having your agent reply that he/she will be fielding questions.
- The under-networked – Those without an established network are often limited to the traditional job market (listed positions) and don’t have access to the many possibilities that aren’t in the public domain. An agent must be connected to this hidden job market and to the major players.
- The transitioners – These are people who just need a true advocate during a challenging job search, which usually involves either getting out of a bad situation or transitioning into something significantly different (new tech, new industry, etc.). When a job seeker goes it alone, they are their only advocate. When using an agency recruiter, the job seeker now has another advocate, but that recruiter will only advocate for jobs represented by his/her agency.
- The meek – Those lacking confidence are more likely to accept jobs which are not ideal and approve of compensation packages below market. An agent will protect the client and help them say “no” to the wrong opportunity, provide guidance on regional market rates, and assist with negotiations if an offer comes in low.
Would You Actually Pay An Agent? And How Much?
The question of career agents usually comes down to money. Agency recruiters provide a free service (essentially paid by hiring companies) that some job seekers value and appreciate, but the service is clearly flawed due to the misalignment of incentives outlined earlier. The recruiter may do a great job and represent your best interests as well as possible, but at the end of the day, the recruiter works for the hiring company.
To hire an agent who will truly be representing without bias, the job seeker has to foot the bill. And how much should it cost?
The value of this service likely varies depending on who is being represented and what services the agent provides. Lebron James doesn’t need an advocate to generate interest in his abilities but rather just needs someone to make sure that market rate is received, help making the right choice, and ensure the terms of the contract are favorable.
Developers might feel that the value of this service will depend somewhat on how much an agent would be able to negotiate above the developer’s expectations. It’s been suggested that the agent’s compensation might be n% of the difference between actual compensation and expected compensation. So if the client would be satisfied with 100K and the agent negotiated an offer at 120K, one element of the agent’s pay would be a percentage of that 20K difference, keeping in mind that this is a one-time payment for an annual salary (that 20K difference multiplies every year). One flaw in this model is that the agent has an incentive to recommend the highest offer, even if that highest offer is not the best career move for the client.
Hourly rates are another possibility. One issue with hourly rates is that it encourages the agent to draw out the process. Any arrangement that doesn’t include some commission on the salary provides little incentive for the agent to negotiate aggressively.
There are companies who claim they are providing this type of service for technologists now, but those are mostly recruiting companies that are rebranded as agencies. A true agent will be able to help you with any employer, so firms that only service a select group of clients are not true agencies.
I’d be curious to hear thoughts on this topic. Again, I don’t expect this service would be appealing to everyone (what service is?), but it certainly would help to change the typical recruiter/candidate relationship that is so unpopular in the industry.
Maybe this is naive, but wouldn’t it be simpler to just negotiate a flat fee up front? “If I accept a position, you get $3,000 now and $300 a month for the first… X months I am at the company.” That reduces the agent’s incentive to get the best possible deal for his client, but it also removes the conflict of interest in which the best career option or a shorter commute or other difficult to financially quantify benefits for the client might not pay the agent as well as the best offer.
And then in turn, the honesty of the agent to the client will hopefully pay off in word-of-mouth referrals and positive reviews.
And if the client doesn’t like any of the options you find, there’s just no payment.
The problem here is that your model has a contingency element (just like agency recruiting), so the job seeker could hire multiple agents to represent them and only have to pay one of them. This leads to the lying and cheating that we see in agency recruiting.
And just like contingency recruiting, it also can lead to a service being provided without payment, which means the agent has to charge his/her other clients more to make up for those times that were unpaid.
Lebron’s agent gets paid by Lebron regardless of what team Lebron goes to, or even if he signs a new contract with his current team. It’s basically equivalent to an annual fee. If Lebron signs a 10 year deal for $100M and the agent is getting 20%, that agent gets $20M, or the equivalent of an annual fee of $2M per year over 10 years.
Lebron’s agent is basically getting paid for every year, even the years that Lebron isn’t looking for a job.
Would a software developer be willing to pay their agent an annual fee, even if they were happy in their current job? Perhaps not, which is where the model starts to fail.
Good points. I completely overlooked your need to trust me the same way I trust you, because I could play agencies off against each other. That makes sense.
I think the hard sell for the agent communicating with the developer is the first step. If I think I can get X dollars a year and a specific benefits package, and you think you can get me X + at least $10,000 dollars a year with equal or better benefits, and (crucially) I believe you, then yes I would be willing to pay you an annual fee. Of course I picked $10,000 as a starting point – if you’re willing to accept $1,000 a year from me, then you only have to convince me you can consistently add $4,000 or so to my annual income for it to be worthwhile. (And I suspect some people wouldn’t accept that deal, and would only be satisfied if the agent commission was 15% or less.)
The ongoing costs are a hard sell, though. I don’t remember the exact recommendation you give, but I think it’s something like moving jobs every five years or so, at an outside? Whatever the number is, in my experience people still prefer to settle in for the long haul. If I’m going to switch jobs every two or three years and you negotiate good deals for me, paying you on the off years is well worthwhile. If on the other hand I plan to spend five or ten or even fifteen years in one place, then even if I plan to look you up when it’s time to hunt for a new job I’ll be highly tempted to drop your services right after I’m hired.
Those are all good points, and many of the reasons it would be challenging to make it work unless the economics were just right. I think billing on an hourly rate combined with some incentive on negotiation results is probably the most realistic scenario.
That is an interesting idea. I like to think of myself and LeBron James as on the same level, perhaps for different things though…
You are clearly the Lebron James of your field!
Several months ago I was recruited to do sales for a Sr. developer who was mainly freelance and after I did an excellent job for him, it led me to research the industry and discovered the big disappointing truths of the recruiting industry and saw the opportunity to change the way professionals seek out employment. My business mentor encouraged me to start my own agency to help others. Now, for the past 6 months I’ve been representing several clients as a Tech Agent since February and my experiences in pricing and service have been overwhelmingly positive. They see me as their “job assurance”, especially since many talented developers job hop today and it’s seemingly becoming a standard, due to the whole “Tech-on-Demand”. My clients are happy to pay a flat fee monthly as a retainer + negotiated commission per placement I generate to them, as they know I care about their job search due to it leading me to my big reward upon them landing gainful jobs in their desired area of expertise. I mainly help Tech/Designers that are talented and need my assistance. I’m selective about who I bring on as a client, more is not better in my eyes. It’s all about the relationship and trust between the client and I at the end of the day. It’s a labor of love and the more people like us that exist the better! Kudos to you Dave, a fellow consultant in the field. Love the blog, really glad I came across it recently.
That’s quite a story. Glad it’s working out for you and thanks for the kind words. Monthly retainers and commission is a pretty good model, thanks for sharing your experience.
This sounds positively amazing … recruiters are the worst and I’d pay someone just so that I deal with someone I know, who won’t call me during the workday (unless it were for an offer, obviously). I think I usually spend the first 20-30 mins on the phone where they try and “get to know me” (probably to see if I may be a good fit) and all I want to know is their pitch so that I can figure out if it’s even something I’d be willing to do…
If it were arranged so that I pay 15% for two years, or 10% for 3 years, 5% for 5 years, I’d likely go for three, and an option to renew when I’m ready to find a new gig… I’d take you as my agent tomorrow. You might know: it is pretty difficult to raise a child, work, stay on top of my craft, be a husband, contribute to open source, and try and find a job in a decently weathered place in the world … all while “working” 9-5?
I’d think it would save people like yourself a fair amount of time and potentially some headaches as well. I haven’t quite figured out a pricing strategy yet, but the numbers you quoted seem higher than I think most would be willing to pay. If you seriously want to explore this kind of arrangement, feel free to reach out to me directly.
I had an agent to market my Motif book. In return for shopping it around to multiple publishers and advising me on the pros and cons of each offer, his company took 10% of my royalties. Which, in retrospect, was probably a money-losing proposition for him.
Contract programmers who work through agencies already have a similar deal, but I wonder if full-timers would be OK with saying “sure, you get 10% for as long as I continue working at this job.”
I also think that analogies with sports agents are off base.* Professional athletes have been tracked since high school, and the top performers are in high demand. I could imagine Ron Dayne’s agent putting in a lot of work to get him that first-round pick; I suspect that the sixth-rounders in the same draft got a pro forma contract.** In my view, the vast majority of software developers are undifferentiated (aka undrafted, aka walk-on), at least in the eyes of potential employers.
* – Yes, intended.
** – https://en.wikipedia.org/wiki/2000_NFL_Draft
I agree. The agent analogy can only be applied to a few industries that people are familiar with (sports, film, and music mainly). I’m also awarding you 5 points for the Ron Dayne reference.