This article is by Peter Kazanjy, co-founder of TalentBin.
When you run a software recruiting company, you end up fielding a lot of questions from other founders who are just starting to hire. The number one question I get: How can I find a great recruiter?
This is a top priority for good reason. If you’re doing it right, hiring is one of your most time-consuming and energy-depleting tasks. That’s simply how you find the best people at the beginning. But when you hit hyper-growth, or your leadership needs to jam on the product, this isn’t always realistic. It’s easy to fall behind. A well-matched recruiter can not only catch you up, but help propel your startup through massive step changes.
The operative part there is “well-matched.” If you end up working with a recruiter who doesn’t get your company or your mission at a gut level, or who doesn’t have the full suite of skills they need, you can end up stalling out in your most important area for growth. It’s high-stakes. In my role at TalentBin, I’ve seen hundreds of recruiting relationships at companies of all stages. I’ve seen how it works with in-house recruiters, agencies, consultants and more. Here’s what you need to know.
First off, what do you need?
The worst thing about most “startup advice” is that it isn’t stage-specific. It addresses one experience, but your pain points could be totally different depending on how old your company is, your field, how much funding you have, etc. So, instead of me serving up a bunch of un-targeted wisdom, let’s define what your hiring need actually is. Then we can find the right prescription.
You can break down hiring needs into these categories:
- Number of hires: How many people are you hiring? Ten market development reps? One android engineer? A VP of engineering? Make a list, and anticipate the near future.
- Role type: Are you hiring in a talent-constrained market like iOS engineering? Roles in sales, marketing, customer service, and other non-technical functions will give you the benefit of more supply. Are you looking for junior people? Leadership? Plot out where your desired hires land on both of these spectrums.
- How quickly do you need someone? How fast do you need to get butts in seats? Most likely this is a blend — you need three people immediately, and then three more per quarter for the next three quarters. It’s helpful to have a timeline so you can see if this will really scale your resources against your business needs. Bucket your headcount accordingly.
- What is your funding situation? That is, what can you pay in terms of recruiting expenses, and are you going to be able to pay market rate for the talent you're looking to acquire? Are you bootstrapping and your only resources are your own labor and equity? Or do you have liquid cash?
These answers should reflect both your current pain points and your future goals. It’s safe to plan, at least tenuously, for three quarters in advance so you don’t get caught without the people you need to execute on near-term objectives.
For example: Are sales ramping and projected to continue? Is your current customer service team swamped (and will continue to be unless you do something)? If that’s the case, you need CS reps now, and you need to start building a pipeline for them going forward.
Are you spinning up an Android version of your existing iOS app to test if it will work for that market? Then you probably just need a single Android dev for now, and you can wait to see what happens when you ship.
Did you just raise a Series A, and your six-person team is about to jump to 16? You’re probably going to need a VP of engineering to lead that charge. You’ll need an executive search followed by serious pipeline building.
Have your specific case written down clearly before you do anything.
What makes a recruiter a recruiter?
Now that you have a good sense of your need, let’s talk about how we can solve it.
Recruiting is a combination of skills and assets — some of which will be more or less important to you based on your needs (as defined above). Knowing which skill sets you should have on your team, and which ones you can de-prioritize, will drive you toward the right type of recruiter (or maybe you don't need one at all).
As an aside, recruiters get a lot of crap. But it’s rapidly becoming an industry of its own, with its own practices and craft. In the past, there was a low barrier to entry into the field. Bad recruiters could engage in bad behavior, and as a result, they’ve given a lot of good recruiters a bad name. On top of that, given the huge imbalance between supply and demand for technical talent, recruiters often pop up in people’s inboxes when they aren’t looking for a new job. They create more noise than signal when they do their jobs poorly. Not to mention, it’s somewhat fashionable among the Hacker News set to kvetch about recruiters (“Oh my god, I can’t believe this person is trying to get me a raise. Jeez!”). It’s a kissing cousin of the crap that sales reps get, and it’s not productive.
This much is true: Recruiters make the hiring market go round. They trade in human capital. If you’re pissed at your boss or you feel under-compensated, a recruiter is a godsend. Same if you’re unemployed. And if you’re a hiring manager looking down the barrel of onboarding 1,000 new customers in the next six months, the recruiter who can help you get the 20 CS reps you need will become your best friend.
“If you think Facebook, Google and Twitter were built without recruiters, you're deluding yourself.”
All three of those companies needed dozens of people dedicated to hunting down the best people possible to write code, close customers and keep them happy after the fact. It’s the best practice that no one wants to talk about.
Most importantly, it comes in different forms:
Raw Labor: At the most basic level, a recruiter is raw, fungible labor that moves candidates forward through a process. They schedule interviews. They monitor calendars so that hiring managers don’t miss these interviews. This isn’t the most highly-skilled labor in the world, and it’s part of the recruiting workflow that, if necessary, you could probably do yourself.
When you need this: Having support in this area becomes key when you have too many other things that are more valuable for you to be working on. You could do this work yourself, but if you’re burning time arranging interviews that you could be spending on product or making sales, you need to reconsider bringing someone in to help. This is especially true if you’re sacrificing opportunities for revenue or product-market fit.
Skilled Labor: There are a set of recruiting skills that are more rarified. They are typically much harder to find or do yourself. Many recruiters have specialized knowledge that can ensure that you’re turning over every stone to find the best talent. This includes triaging resumes, writing job descriptions, pre-closing candidates, sourcing, high-impact, high-volume email outreach. These are the recruiters who are acquainted with the tools that can power up their search skills — LinkedIn Recruiter, TalentBin, ATS systems. They are seasoned at cold calling, phone screening and reference checking. Some even offer interview coaching. Others will help you create an advertising budget for job openings and allocate your spend.
When you need this: When you haven’t done a lot of recruiting yourself, a skilled recruiter will have a strong advantage over you. You will need this type of person — particularly when it comes to filling out sales or engineering squads.
Network / Pipeline Recruiting: This is where a recruiter can have a massive advantage over you. People who are good at network recruiting interact with people all day long every day. It’s what they do for a living. Their network of potential candidates will dwarf yours, and will probably include candidates they’ve placed before or know very well. They’re also likely to offer a pre-stocked pipeline for many of the roles you’re looking to fill. This means they can get someone in front of you for an interview fast. This is one of the advantages of working with a recruiter for a contingency search. It can be expensive, but they have tremendous influence.
When you need this: You might have a strong network after working for many years with many different people, but if you need a high volume of hires that would exhaust your own social graph; if you need to hire for roles that aren’t well-represented in your network; or if you want be able to snap up great candidates already in motion, you’ll need to tap into this type of resource.
Organizational Acumen: This is the ability to help implement strong processes in the context of your current hiring. A recruiter with organizational acumen can come in, assess what you need, and create unique pipelines for various roles that you can replicate as you accelerate your hiring. The idea is for this knowledge to stick with you whether this recruiter is temporary or joins you in-house. Think of this as hiring infrastructure or “hiring culture.” This includes things like a good phone screen process, interview process, referral recruiting programs, interview outcome documentation, and even effective onboarding that sets hires up for success.
When you need this: For a one-off hire, this is less important. If you’re not at the stage where you’re moving hundreds of candidates through a pipeline to fill dozens of spots, then investing in this type of recruiting is likely a waste of time and money. It’s a nice to have, and good learning if you can afford it, but not required. If you are hiring at a high volume and have less experience with scaled hiring, then this skill set can be extremely important in keeping your candidate close rates high. Having someone design processes for you can make sure you pre-close candidates, that your hiring managers are asking the right questions, that you’re not sucking up management’s time inefficiently, that you keep the bar high for talent, and that you’re keeping a lid on your cost per hire.
These are the various tools that you can stack your cupboard with, so to speak, and should define the kind of recruiter you go after. It’s critical to consider which of these “features” is essential to your business where you’re at today.
Let’s go to market!
Now that we’ve discussed your needs and you have a good sense of which recruiters bring what to the table, let’s talk about how you can access those skills.
In-House Recruiters: This can be a bit of a misnomer. It implies that you’ve hired someone full-time to work on recruiting. A better way to think about it is “hiring a recruiter who works for the hiring manager as their primary stakeholder.”
The benefits of an in-house recruiter are that their incentives are aligned with your organization rather than the candidates. While contingency recruiters have candidates in hand with the goal of maximizing their salaries (and by extension their fees), an in-house recruiter wants to ensure a high-quality hire at a low cost.
While they have their own strong networks by virtue of being recruiters, they typically won’t have a “pipeline in flight,” which can be problematic if you need candidate flow immediately. That said, once they generate a pipeline of candidates, it becomes your company’s property. You can also supplement them with contingency recruiting until their pipeline is spun up. Yes, technically that’s paying double, but only for that first hire or so, and it can be well worth it for big hires at the executive level.
From a cost structure standpoint, in-house recruiters are usually compensated at a fixed rate — hourly, contract term or full hire, and may or may not get equity in the process. This eliminates the pay-for-performance piece, which is standard for contingency recruiters. It costs the same to have someone hiring many candidates as it does to hire one, which can be very helpful.
Also, as someone closely tied to your company, this recruiter can bake in acumen, start building processes you’ll use for a long time, and will probably articulate your mission and values better than any other type of hiring support. They understand the story, the mission and the vision. They know what you’re looking for from a talent perspective and they play as part of the team.
There’s a couple of ways you can achieve this:
1. Full Hire: If you have substantial hiring needs spread out over a long span of time (let’s say 10 in a year), then you should get a full-time recruiter. From a cost-per-hire, quality-of-hire and infrastructure standpoint, you can’t beat this solution.
“One of the best moves you can make is hiring a former agency recruiter who is interested in working in-house.”
Especially in the technical world, agency recruiters have an operational tempo and ability to execute that matches a startup’s needs. They’re not “post and pray” types — they go out and find the best person available for the job. So, if you can find one who has been at an agency for a couple of years at least — ideally making it rain in a high-stress environment — adding them to your team full-time is a great option. Find someone who is excited about the concept of transitioning from a lone hunter-killer to someone who wants to grow an organization and eventually lead a team.
The only downside is that if you hire just one person, they still have limited human capabilities. It’s hard for one person, no matter how savvy they are, to hire 10 engineers in a quarter on their own. Of course this depends on the difficulty of the roles you are hiring for (engineering will be more labor intensive than other functions), and your ability to supplement with contingency or agency recruiting.
If you do pull in a full-time recruiting resource, and do a good job hiring them, you’ll not only get a person dedicated to talent acquisition, but also the right processes and culture that will pay dividends for years.
2. Consulting / Contract: If you have a smaller number of people to hire, between three and 10, and that will hold for a while, then it’s probably not worth it to hire for a full-time position. It is, however, a good idea to find a contractor as a stop-gap solution.
You can contract someone to work full-time, for a constrained amount of time (e.g. three months or four hires, whichever comes first), or even part-time (three half days a week for three months, for example).
These folks can yield many of the same benefits of an in-house recruiter (incentive alignment, pipeline building, organizational acumen), but without a longer-term commitment. Expect to pay more on a per-unit-of-time basis, but remember you’re still saving costs of hiring a full-fledged employee.
You can find these types of recruiters on LinkedIn, which will give you a sense of how big their networks are and where they specialize. Also, if your company is funded by a VC firm that has recruiters in-house (as an increasing number of them do these days), ask them for help. Like full-time recruiters, they're extremely well connected and will probably have a laundry list of great candidates in their back pocket.
3. RPO (Recruitment Process Outsourcing): If you have a larger chunk of hiring to do (so many hires that a single in-house recruiter wouldn’t be enough to cover it), RPO can help you out.
For example, if you’ve raised a Series A and need to hire 10 people over a three-month period and then plan to pause, RPO is probably a good fit. With an RPO like Binc or Talent Fusion, you can lease recruiting resources for a set period. When the initial hiring project is done, these types of companies can even hire you a full-time recruiter to leave behind after they are done.
From a cost standpoint, RPO is something that is only accessible for well-funded companies. The cost will be two, three or four times that of a single contract recruiter for the same amount of time. Sounds steep, but the benefit is rapid growth and turnkey human capital that will align with your company’s interests and still be cheaper on a cost-per-hire basis than going pure contingency.
It may not be as cost effective as hiring someone full-time, but you’re paying a premium for speed and volume that one recruiter wouldn’t be able to match, especially if they just started at your company.
4. On-Demand Recruiting Resources: Services in this category vary from just sourcing to scheduling to pre-screening, etc. The advantage is that you can quickly scale candidate flow, create a pipeline, and tap into skilled labor immediately. Examples include sourcing-by-the-hour services like The Sourcery, recruiter-on-demand marketplace RecruitLoop, and even freelancer market oDesk.
There are a couple downsides. First, you won’t build any institutional knowledge this way. The people you work with will have their own processes, and you may not have access to any of them. Second, there’s high variability when it comes to quality (especially with services like oDesk). As soon as you see quality dip, you need to take action. But otherwise, on-demand options aren’t a bad call for augmenting your existing recruiting resources.
5. Office Managers: There’s a common siren song in this industry, luring founders to hand off recruiting efforts to untrained office managers or executive assistants. Avoid this at all costs. If you want the best, recruiting needs to be someone’s actual job and responsibility.
The only way this strategy can work is if you’re trying to transition your office manager into a full-time recruiting role, and if you’re willing to invest in the training they’ll need to do it well. If this is the case, the best approach is to pair them with a contracting or consulting recruiter who can lay the groundwork. At first, your staffer can add unskilled labor, and through drilling and osmosis can become skilled over time.
“If you find yourself saying, 'Oh, I'll just have my office manager do it,' go give your investors back their money right now.”
6. Contingency: This is the most pervasive recruiting resource used by startups. They always have a pipeline of candidates in-process, making them perfect for quick hires. Naturally, you’ll need to pay extra for this convenience, typically 15 to 25% of a hire’s first-year salary in the form of a recruiting fee.
Also important to note: Their loyalty and incentives lie 100% with their candidates. Contingency recruiters have a list of people who have told them, “I’m interested in looking for other opportunities,” and their job is to present them to any organization that could possibly be a fit. The recruiter wants to land the candidate a role with the highest salary where they are likely to stay for more than three months (the standard guarantee time). So don’t try to low-ball them. Don’t think you’re being clever by talking them down to a 10% or 15% fee. They’re going to show their best candidates to the folks who signed up to pay 25%. They won’t tell you that. You’ll think you’re being smart, but you’re actually hurting yourself.
Contingency recruiters also have incentive to get all of their candidates a slot somewhere, and fast. This means that if you don’t proactively manage them, they will flood your inbox with resumes. This isn’t helpful. This is noise. To prevent this issue, you need to be clear about your requirements and your quality bar (be concrete, give examples of the kind of people you want).
“If a recruiter submits a candidate that doesn’t meet your criteria, drop the boom hard.”
If you don’t, and they think they can fill a seat at your company, they will walk all over you and waste precious time.
Try the “one-in-one-out” strategy with resumes. Tell your recruiter that they can only send you a single resume at a time, and until you respond to that one, that’s it. By serializing the process, you motivate them to present their best candidates first, and you protect yourself from getting buried in resume spam. In a similar vein, don’t work with too many contingency recruiters at once. You may think if one is good, then four from different firms will be better. This is only good if you have an iron grip on resume submission volume. Otherwise, you’ll be overwhelmed.
As a last piece of advice, be responsive. If the account manager at your contingency firm thinks you’re not serious, or you’re not helping at all with the hiring process, or you don’t seem like you’ll ever hire someone, they will fire you as a customer. Reply to resumes quickly. Don’t miss phone screens. Show up and do your part.
Contingency recruiting is a powerful tool that can be misused if you’re not careful. But if you need an iOS engineer yesterday and you have no other resources at your disposal, it’s your best bet by far. These recruiters can also help buy you time as you train or hire someone in-house. Time and speed is often worth its weight in gold.
7. VC Recruiters: In-house recruiters at your investors can be very helpful for providing candidate flow and building a pipeline, but they’re not there to babysit you and schedule interviews. They're skilled, connected and have seen a lot. It would benefit you to capitalize on all three qualities. Leverage their networks, have them make warm introductions, ask them to pre-close important candidates. They are usually sharp at all of these things, as well as building processes that you can use going forward.
If you do have an office manager or HR generalist that you want to terraform into a recruiter, VC teams can help. Some of them even offer playbooks to help you implement good recruiting hygiene and protocols. They can teach you advanced concepts too, like how to provide a great candidate experience and why that’s important. Many of them will come to your office, hear you out about your needs and do their best (as long as they have your buy-in and active participation). Generally, they are excellent.
8. Retained Search: This is the black diamond peak of recruiting. If you’re looking for a VP of engineering, CTO, head of product, VP of sales, etc., you’re in the realm of the retained search. It’s not going to be easy, and it’s not going to be cheap. The total number of talented VP of engineering candidates in any given geography is not large. And access to that network is not something any founder can get on their own. You have to buy in to an elite echelon of professional recruiters — and the ticket will probably cost you between $50,000 and $100,000. But you’ll emerge with a guaranteed outcome.
If you have a killer in-house recruiter who completely dominated at an agency before they joined your team they may be able to pull off something on this scale. You don’t want to leave any of these hires to chance, so think about it long and hard. I recommend going the retained search route if you fit any of the following:
- You just raised on an idea and a Powerpoint deck, and you need a technical co-founder. This is a delicate match. You need to bring in the big guns.
- You hit product-market fit and need a VP of engineering to regiment your five-person dev team and scale it to 20.
- You’re hiring your first senior executives who could very conceivably replace you at some point, and it’s critical that the fragile chemistry of your young team is maintained.
So that’s your potential arsenal, neatly enumerated and explained. The combinations that you create will depend entirely on the needs you outlined at the beginning of this article, the so-called “features” or skills you want from a recruiter, and of course financial constraints. But to give you an even clearer, cut-and-dried sense of which path to take, consider the following rubric: