Finance Recruitment is Not a Group Effort

December 12, 2019
by: Lance Osborne
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Let’s imagine that you’re the CFO of a largish, successful, auto parts manufacturer located somewhere in Markham. You’ve recently done a bit of reorganization and you need to hire a controller for one of your divisions. You spec out the job and decide that you need to hire someone with a CPA, preferably from the CMA stream so they’ll have a solid grounding in costing, inventory and other manufacturing issues. You also want someone from a Tier 1 or Tier 2 auto parts OEM environment with solid management skills and experience leading an ERP installation or conversion.

You haven’t had to hire in a while so you don’t have an existing relationship with any recruitment firms. However, you reliably get called by placement agencies every couple of days, so your plan is to give the first two or three agencies that call your specs and see what they can come up with.

Let’s Look Behind Door Number 3

And sure enough, you get the calls, tell the recruiters what you’re looking for and then sit back and wait for the qualified candidates to come flooding in. After a couple of days, you do start getting candidate submissions from the placement agencies, but the resumes aren’t exactly what you were hoping for. Resume # 1 doesn’t have any auto parts OEM experience. Resume # 2 has lots of experience but you’d probably expect that from someone with 30 years as a controller (not exactly the up and comer you were looking for). Resume # 3 has had four jobs in the past seven years and a couple of major gaps to boot. Resume # 4 apparently can’t spell ERP….and so on.

Your impulse may be to blame the recruiters, but what you’re experiencing is a direct result of how you’ve gone about the search. Certainly, when you first talked to the recruiters you were very specific about what the position entailed and the qualifications and experience you needed to properly fill that position. And every placement agency agreed that your criteria were reasonable and that they would try their hardest to find you candidates who would fit the bill.

We Meant Well, But…

You and the recruiters may have started out with the best of intentions, but when you farmed your controller search out to two or three competing firms on a contingency fee basis, you created the dynamic that led to your current less-than-stellar results.

You may be surprised to learn that when you gave your search assignment to multiple placement agencies, no matter what criteria or mandate you think you’ve given them, those are not the criteria that are going to define the search. Placement agencies that work on a contingency fee basis are not incentivized to spend a lot of time doing original research and recruitment to find you the best possible candidate. They’re under the gun to get you resumes before their competition does, so they’ll go through their current stockpile of available candidates and send you the resumes that are the closest fit, not necessarily the right fit. It’s entirely possible that one of them will luck out and have a candidate that’s pretty close to your ideal. But if the placement agencies don’t happen to already know a qualified candidate, they’ll assume one of the other agencies have lucked out, and so are disinclined to spend much time or effort on your search.

What You May Not Know About the Agency Business Model

The scenario I’ve just described is not an anomaly—it’s the placement agency business model. Any recruitment firm that works on a contingency fee basis is in the business of placing the people they currently know; they’re not in the business of proactively and thoroughly researching and recruiting potential candidates outside their in-house stock of available applicants. Most will make some effort at additional recruitment on specific assignments, but none of them can afford to spend too much time on activities that have a low probability of paying off.

Placement agencies don’t expect to fill all the searches they take on. In fact, they don’t expect to fill most of the assignments they take on. Some recruitment firms only fill one in every four or five “job orders” they undertake. According to a recent industry survey by Bullhorn, the leading applicant tracking system software provider, the average fill rate for contingency recruitment firms in North America is less than 40%.

Farming out your search assignment to multiple firms is fine when you’re looking for more generic, junior echelon candidates. However, when you need to recruit a financial professional where finding specific skill sets and fit are a concern, this approach relies too much on luck to be an effective search strategy. If you really want to find the best possible candidate, find a search firm that’s set up to do some actual head hunting on your behalf and work with them exclusively.

If you think you may be in the market for top financial talent in the next few months, call me direct or email me, for a no obligation consultation.

(416) 567-7782 lance@osbornefinancialsearch.com

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