In-House Recruiters: Here’s Why You’re not Being Paid Enough
“Very hardworking”
“Some of what he does is pretty good”
“We’re quite pleased”
Just some of the euphemisms you will read on someone’s first appraisal. The truth is probably something closer to:
“We had high hopes as they looked so good on paper and blew us away face-to-face and whilst they’re doing ok, we’re not exactly bowled over.”
Let’s be honest: Most new recruits do okay but not great. Most new recruits operate in the range of 6 – 8 out of 10. How many times have you recruited an absolute star? The one that does so well that within months he or she is fast tracked to head of this or senior VP of that or is pushing for the top job in a short space of time? How many times have you hired someone and the head of department the person joined came to you thanking you for adding a genius to his/her team? My guess is probably not that often; so, here’s an idea:
Pay Recruitment Managers relative to the success of the people they hire.
Okay, so 100 percent commission only is a bit harsh and would be well nigh unworkable. Yet, sales people typically earn 30 – 80 percent of their earnings in bonuses related to their performance, so why not recruiters ?
Typically the metrics used to evaluate an in-house recruiter would be the cost-per-hire and time-to-hire, but how often is the quality of hire measured? Think about it for a moment. Let’s say Bob is the in-house recruitment manager at Hot Start Up Inc. and hires 30 people for them in 2013, all in good time and not costing them the earth in fees. Bob gets a pat on the back from the CEO for a job well done…or is it?
Supposing five of those hires leave in the first 6 months (perfectly possible), three have poor appraisal ratings, 15 have average or good ratings, two are rated excellent and five are promoted. So, 7 out of 30 are actually really good. The rest are a mix of okay and a bit disappointing. Put another way, less than 25 percent actually excel.
Now suppose Bob leaves and is replaced by Sarah who does a better job. She’s smarter, knows where to fish for the superstars and knows the messages to send out to reel them in, and in 2014, she also hires 30 people for the company but this time 15 of those are rated as excellent or better and only one leaves with the rest doing okay. Why shouldn’t she earn far more than Bob did? Why shouldn’t she be earning the kind of bonuses that the top sales people are earning? Why shouldn’t she be handed large chunks of share options? If she hires a superstar who creates a new product earning the company a small fortune, why shouldn’t she get some of it?
Think about Apple: Who was it who re-hired Steve Jobs in 1997? Shouldn’t that person get a big bonus? Look at the turn around Jobs initiated. What about the recruiter who spotted Johnny Ives’s talent? How about the recruiter who took Ian Callum to Aston Martin? His DB7 design all but saved the company. Extreme examples but you get the gist.
Increasingly in-house recruiters are operating like staffing agencies, so why not be paid like them? After all, a consultant at an employment agency more often than not earns a modest base salary and will double or treble it with bonuses.
The point I’m making is that companies too easily settle for “He’s a 7 out of 10, he’ll do”.
If the recruiter was incentivized to find a 9 out of 10 then surely the quality of people let through to meet the hiring manager would be nudged a little higher as the recruiter has a vested interest in the hiring manager only taking on top, top people.
Here’s how it could work. The recruitment manager earns a base salary but much lower than is the current norm but—and it’s a big but—he or she can earn up to 4X (yes 4 times) his or her base salary if the average appraisal rating for all the hires the person makes is, say, 90 percent or more. Obviously, a company would have to create a consistent rating system that every employee is graded against and given an aggregate score out of 100. If the recruiter is consistently sourcing candidates who are scoring 90 and above (or whatever figure is chosen) the person should get the full 4x bonus. The bonus earned should thus be relative to the average rating of the employees they have sourced.
Okay, so already I can hear howls of protests from hiring managers, the most obvious gripe being that they rarely make the final call on a candidate. That is done by the hiring manager. The recruiter could legitimately say if a new recruit doesn’t work out, “well I told you we should have gone for XYZ instead”. All of which may be true, but I would argue two points:
1. It’s up to the recruitment manager to put in place a rigorous selection campaign that makes it easy to identify the stand out candidate. I’m not talking purely psychometrics or clever technical tests but a forensic analysis of what existing superstars at your company look like and picking out character traits and background clues or educational achievements to help identify who will work really, really well and who will tank.
2. Don’t let one person make the call on whether someone is hired or not. It should be a group decision. Generally groups make better decisions than just one person; so, a group is less likely to pick the wrong one.
So, if you’re just about to take on a new recruitment manager, offer him or her that deal. If the person turns it down, you might want to ask why.