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The WRONG way to save money on recruitment costs

In tough times people look to slash expenses. It's tempting to think that reducing your costs by asking your recruiter to take 5% less (or by courting a new recruiter who offers you a similar discount) is a smart move.

But before you consider this course of action, remember the old saying 'you get what you pay for'.

Added on 14.06.2014

Those who have been in business a while have usually realised two important things: first, businesses whose main selling point is price are far less likely to offer a good product; second, those who make important decisions based solely on price are unlikely to make good clients.

Recruiters face fierce competition for clients from job boards, big agencies and RPOs, and you might just find that your recruiter will agree to work for less money, but we're of the view that if they don't, you'd be wise if you remain with them. Here's why:

Respect...

The cost of living and doing business is not falling. Squeezing a contractor's margin sends a message that you don't really respect them, or what they do for you. It says that you are primarily motivated by cost and not results. That's no basis for a relationship, and niche recruitment is all about relationships.

...it's a two way street

Ask yourself this - if you've slashed your recruiter's margin to below industry standard, do you know that all your competitors have too? If not, then who do you think is going to get the pick of the top candidates from now on? You, or the people offering more?

Candidate quality

Now, let's say that you have found a niche recruiter who will take less than the industry standard. What sort of candidates do you imagine they'll send you? 

Any candidate will hope that their specialist recruiter is privy to the best openings in that market - the best candidates will expect it. Good recruiters work hard to understand their clients and match people with jobs; average recruiters don't. Over time, an average recruiter will send more people to roles that don't suit them and that they don't get offered. When word of this gets round (and it will), where do you think those top candidates will go instead?

Can you afford to compromise?

The likelihood is that you'll be shopping around for a new consultant that can do what your old one used to be able to. Not to mention the fact that you won't have the best quality people working for you; the sort of quality that drives your bottom line.

What you should be looking for instead

Look for a recruiter that guarantees results and has a compensation package when candidates don't work out. Whether it's rebates, a reduced (or free) replacement, this is a sign of someone who is confident that they 'get' your business and its staffing needs, and will stake time and money on it.

As we said above, a good working relationship is one based on respect. Rather than asking your recruiter to work for less money, look to build a strong (or even exclusive) relationship with them, and help them focus on the quality of the people they put your way.

The best way to save money is to make more of it - and the very best candidates will do that for your business.