7 ms·

Dear Developers, a "Free" Headhunter Will Cost You Over $10k

31 points by nathanh 16y ago

j_baker 16y ago
I don't think it really works that way. Or at least it shouldn't if the company doing the hiring is smart. If a good candidate comes across a startup's desk, are they really going to risk losing them by paying them $10k less to make up for the cost of the recruiter? If the company doesn't want to pay these kinds of expenses, they shouldn't use a recruiter. They shouldn't shortchange their people because of it. Besides, if the candidate truly is good, they will more than make up for the extra 10k.
- raganwald 16y ago
  There's no way to make the $10K go away. If I can afford to pay $90K for salary and a $10K fee, can I automatically afford $100K salary plus a $15K fee? If I can, why not pay $115K salary and a $20K fee? If the candidate is worth "stretching" to pay that extra $10K, wouldn't I rather deal direct with the candidate so that I can "stretch" from $100K salary to $110K salary rather than stretch from $90K salary to $100K salary? Sooner or later a company ready to make an offer runs into a limit as to how much can go on the table. The more in the headhunter's pocket, the less in the candidate's pocket. I am not aware of any company that is able to warp the laws of space, time, and the conservation of cash expenses.
  - dustingetz 16y ago
    it might help to not think of your engineers as costs.
    - raganwald 16y ago
      Of course I don't. But nevertheless, calculate the expected return from Candidate X per year. Work out an expected horizon given that some candidates leave in a few months, some stay a few years, some stay indefinitely... Work out what you're prepared to invest to lease an asset of this magnificent quality. Now: there is an up front fee associated with leasing this asset. Is a fee on the order of 20% of one year's lease really immaterial? true or false, does the up front fee change what you
gigantor 16y ago
An experienced web developer where I'm living at (Western Canada) contracts at about $60/hour, with the recruiter taking away usually $10/hour. Yes, it's a decent chunk, but the bigger picture is that companies paying the highest contract rates almost exclusively go with recruiters from a convenience and insurable standpoint, and the fact that good engineers are not plentiful. That adds up to around $1500 to the recruiter every month for their bounty. If you want to avoid this overhead and the luxury of contracts being offered to you on a regular basis, and you don't have a solid network of peers that can fill you in on opportunities, you'll need to spend quite a bit of time on your own scrounging online ads, or the Careers sections of companies you'd like to work for, or market yourself some other way, all of which require effort. Now we play the opportunity cost game. Frequent contracts are offered to you making you around $10,000/month by headhunters looking to make a buck off you. Or you can spend a few more months looking by yourself, and save yourself that $1,500 cost per month that you're unemployed, but ultimately taking longer to land a contract. Is every month spent 'looking' and being without a contract worth the $10,000 in lost revenue?
- gaius 16y ago
  One thing about contracting through an agency is usually they pay the contractor weekly, but actually get the cash money 90 days in arrears from the client. They need to maintain a lot of working capital, and it's got to come from somewhere.
philfreo 16y ago
As someone who's trying to recruit developers for our startup, Hirelite looks interesting. Is there any way to target only people within a specific location (like San Francisco)? Or only people who are willing to relocate? I'd definitely pay to interview 20 "screened developers"* if they were all in the SF Bay Area already. Much less interested if they could be anywhere. *What does "screened" really mean? Are you only showing me people that match the skillsets I mentioned?
- nathanh 16y ago
  Thanks! We're still very early stage, so we haven't expanded to other locations but definitely plan to. So far, we've focused on back-end and generalist software jobs around NYC. For our first web-based event, we required developers to be in the NYC area, but for this event we're accepting developers who would be willing to relocate to NYC. We've had a lot of interest in remote work. What do you think of that? We're targeting full time jobs, but would be open to getting in to contract gigs (which seem to be mostly remote jobs). >> What does "screened" really mean? Are you only showing me people that match the skillsets I mentioned? We screen developers with a brief programming test in the language of their choosing and look over their profile and github account. Currently, we don't offer to match specific skill sets. We look for companies that are comfortable letting developers catch up on whatever their tech stack is.
  - philfreo 16y ago
    Everyone and their brother is willing to do remote or contract work. What's tough is finding good local people who are willing to join a team. It seems kind of useless to let me talk to any developer if you're not doing ANY skillset matching. If I'm looking for PHP or JavaScript developers, if someone really only knows C++ or .NET - I'm much less likely to want to talk to them.
    - pavel_lishin 16y ago
      Aren't the stats that something like 50% of developers applying for a position don't actually know how to code? If someone can eliminate those people so you don't have to waste your time on them, it might be worth it.
iamdave 16y ago
I'll gladly advocate for people to go directly to companies in the hopes of finding work. What about, then those companies that want a recruiter to go out and find someone? Hirelite is definitely an interesting approach to the game of finding work, and this post is accurate in some respects of the recruiting model. It misses though that most companies operate with a lean model, and simply do not have the resources to source, identify, isolate, and shrinkrap a by-line procedural methodology for finding new hires. Enter us recruiters. For what it's worth, hiring is rare unless you're with a firm that places 500 people or more a month. If you, like me are a solo virtual recruiter, factoring in just operating alone (the costs of subscribing to job boards, paying to post ads), the ends justify the means.
mattmaroon 16y ago
This is terrible advice. You're setting a precedent right off the bat that you're just in it for the money. If someone said "hey I see that you often use recruiters, but I came to you directly, so how about you give me $10k" I'd retract my employment offer immediately.
- Travis 16y ago
  On the other hand, the reason it's work and they call you a professional is because you get paid. By definition. I don't see anything wrong with showing some gumption and savvy to approach directly. For one, it shows that they understand how important context is. For another, it shows that they are willing to think outside the box in order to make more money -- which is something I would really want in an employee. I'm not of the mind that addressing salary/pay first off is a bad thing. The employer already knows that you wouldn't be working for them if not for getting paid. Why should they object to sending their money to their employee rather than a third party recruiter? [sorry if this double posts, having connectivity issues. but it looks like i'm in the clear]
- raganwald 16y ago
  I don't understand. Nobody says you're just in it for the money, but once all other issues (competence, cultural fit, start date, location, &c.) have been agreed, isn't a candidate supposed to negotiate for the highest possible compensation in good faith? far be it from me to lecture Americans about their culture, but isn't that the American Way? Or is it really that companies pretend everyone is coming to work for the excitement of doing fun stuff and having vintage pinball machines in the lobby, while the founders of the company get rich? I'm not singling you out personally, but if anyone ever told me that the money is not supposed to matter, I'd tell them that since it doesn't matter, they can jolly-well give me what I ask.
  - mattmaroon 16y ago
    Yes, negotiating is fine. No problems there, it seems from the down votes that everyone misunderstood. I wasn't suggesting that an employee has to just take what's offered or that's it. But trying to ding me for half a recruiter fee? That's just a scummy gimmick. I'd rather you just asked for $10k more in salary because you thought you were worth it. Suppose a friend said "I'm going to Outback for dinner, want to ride with me." You go with him, order the same stuff, and when you go to split the check he asks you to pay an extra $5 since he drove. You start wondering, did he just invite me to dinner to save $5? This is kinda like that. You applied to my company, I decided I wanted to hire you, and now you want me to pay you for having applied to my company directly? That's just shady. Do I even trust that you're going to remain with the company for long enough for this to be worth it for me, or do you just go around trying to ding employers for $10k? Take my word for it as someone who hires people, don't ask for a $10k bonus because you applied through the website. Ask for $10k more salary instead and explain why you're worth it.
raganwald 16y ago
Two things not mentioned: When I was hiring, a resume that came direct (e.g. through an employee referral) was always the first choice to interview. Even a cold referral ("I don't know him, but he replied to my tweet about jobs") was a resume that had a "$0" recruiting fee attached to it, while a similar candidate from a headhunter carried a $10K+ fee. No matter which way you shuffle things, as an employer I want to talk to qualified candidates that don't have a heavy fee dragging them down. Either I save money, or I have more flexibility about pay, it's a win for everyone except the head hunter. Therefore, i always encourage people to network. It could be that you are marginally less attractive than another resumé, but if you don't have a fee, you'll get the interview and that may give you the chance to win the job. In which case, it's worth a lot more than $10K to talk directly to the employer.
- raganwald 16y ago
  I forgot the other thing: One good thing about recruiters from the company's perspective is that provide plausible deniability about poaching. While perfectly legal, if I personally start cold-calling developers around Toronto when I need to hire, I'm going to make a few enemies. But everyone knows that recruiters are going to be aggressive about finding candidates. For whatever social reason, it's perfectly acceptable to hire someone away from another company through a recruiter, but depending on how you do it you can step on toes doing the same thing directly. FWIW, almost any intermediary or pretext takes you off the hook. Meet someone at a conference? Hire them away. Meet someone at a developer lunch? Hire them away. Meet someone through a blind date service? Hire them away. But cold-calling them... Tacky and taboo.
  - jacquesm 16y ago
    I think the Toronto scene is especially sensitive to this because it is fairly small and seasoned developers are in short supply.
rickmb 16y ago
There's also another side to this story: headhunters benefit from "selling" developers at a high price, and usually they are way better negotiators than the average developer. Most of the time, that money saved doesn't go towards a signing bonus or a salary bump, but stays in the pockets of the employer. Also, if you're confident about your development skills but not so much about your interviewing skills, having a good headhunter basically doing the initial salespitch for you can be very helpful.
abeppu 16y ago
Just another dataoint : I just got hired at a new company using a headhunter. Midway through the process of doing interviews arranged by my recruiter I received advice along these lines from my significant other, and was shocked at the typical size of a headhunter's commission. Given that it seemed like my particular headhunter couldn't have spent that much time hooking me up with interviews, 20-30% of my first year's salary still sounds ridiculously high. But ultimately, I was pleasantly surprised by the offers I received, and it seems to have helped that the headhunter made sure multiple companies were providing offers within days of each other. Also, he recommended me to companies that I wouldn't have considered otherwise, one of which I am very happy to be joining.
- ig1 16y ago
  Yes it's high but it also has to cover the cost of all the work the recruiter did on candidates he didn't place, and the time spent cold calling, the money spent placing ads on job boards etc. to find candidates.
  - cubicle67 16y ago
    yes, but from the figures given I could live quite well placing only 2 or 3 people a year, or extremely well if I upped that to 1 a month
    - ig1 16y ago
      The recruitment consultant will only get about 20% of that figure, with 80% going to cover the agency costs. The average IT recruiter in the UK makes about 40k GBP/year (about 25k base, and 15k commission).
- gaius 16y ago
  I like the recruiter business model because even tho' the recruiter is paid by the company, his or her interests are aligned with that of the candidate. The better the salary they negotiate for you, the bigger their own commission.
kablamo 16y ago
this site is blocked at my company, btw. thanks company! no idea why and not sure what software my company uses.

31 points by nathanh 16y ago

I don't think it really works that way. Or at least it shouldn't if the company doing the hiring is smart. If a good candidate comes across a startup's desk, are they really going to risk losing them by paying them $10k less to make up for the cost of the recruiter? If the company doesn't want to pay these kinds of expenses, they shouldn't use a recruiter. They shouldn't shortchange their people because of it. Besides, if the candidate truly is good, they will more than make up for the extra 10k.

raganwald 16y ago
There's no way to make the $10K go away. If I can afford to pay $90K for salary and a $10K fee, can I automatically afford $100K salary plus a $15K fee? If I can, why not pay $115K salary and a $20K fee? If the candidate is worth "stretching" to pay that extra $10K, wouldn't I rather deal direct with the candidate so that I can "stretch" from $100K salary to $110K salary rather than stretch from $90K salary to $100K salary? Sooner or later a company ready to make an offer runs into a limit as to how much can go on the table. The more in the headhunter's pocket, the less in the candidate's pocket. I am not aware of any company that is able to warp the laws of space, time, and the conservation of cash expenses.
- dustingetz 16y ago
  it might help to not think of your engineers as costs.
  - raganwald 16y ago
    Of course I don't. But nevertheless, calculate the expected return from Candidate X per year. Work out an expected horizon given that some candidates leave in a few months, some stay a few years, some stay indefinitely... Work out what you're prepared to invest to lease an asset of this magnificent quality. Now: there is an up front fee associated with leasing this asset. Is a fee on the order of 20% of one year's lease really immaterial? true or false, does the up front fee change what you

gigantor 16y ago

An experienced web developer where I'm living at (Western Canada) contracts at about $60/hour, with the recruiter taking away usually $10/hour. Yes, it's a decent chunk, but the bigger picture is that companies paying the highest contract rates almost exclusively go with recruiters from a convenience and insurable standpoint, and the fact that good engineers are not plentiful. That adds up to around $1500 to the recruiter every month for their bounty. If you want to avoid this overhead and the luxury of contracts being offered to you on a regular basis, and you don't have a solid network of peers that can fill you in on opportunities, you'll need to spend quite a bit of time on your own scrounging online ads, or the Careers sections of companies you'd like to work for, or market yourself some other way, all of which require effort. Now we play the opportunity cost game. Frequent contracts are offered to you making you around $10,000/month by headhunters looking to make a buck off you. Or you can spend a few more months looking by yourself, and save yourself that $1,500 cost per month that you're unemployed, but ultimately taking longer to land a contract. Is every month spent 'looking' and being without a contract worth the $10,000 in lost revenue?

gaius 16y ago
One thing about contracting through an agency is usually they pay the contractor weekly, but actually get the cash money 90 days in arrears from the client. They need to maintain a lot of working capital, and it's got to come from somewhere.

philfreo 16y ago

As someone who's trying to recruit developers for our startup, Hirelite looks interesting. Is there any way to target only people within a specific location (like San Francisco)? Or only people who are willing to relocate? I'd definitely pay to interview 20 "screened developers"* if they were all in the SF Bay Area already. Much less interested if they could be anywhere. *What does "screened" really mean? Are you only showing me people that match the skillsets I mentioned?

nathanh 16y ago
Thanks! We're still very early stage, so we haven't expanded to other locations but definitely plan to. So far, we've focused on back-end and generalist software jobs around NYC. For our first web-based event, we required developers to be in the NYC area, but for this event we're accepting developers who would be willing to relocate to NYC. We've had a lot of interest in remote work. What do you think of that? We're targeting full time jobs, but would be open to getting in to contract gigs (which seem to be mostly remote jobs). >> What does "screened" really mean? Are you only showing me people that match the skillsets I mentioned? We screen developers with a brief programming test in the language of their choosing and look over their profile and github account. Currently, we don't offer to match specific skill sets. We look for companies that are comfortable letting developers catch up on whatever their tech stack is.
- philfreo 16y ago
  Everyone and their brother is willing to do remote or contract work. What's tough is finding good local people who are willing to join a team. It seems kind of useless to let me talk to any developer if you're not doing ANY skillset matching. If I'm looking for PHP or JavaScript developers, if someone really only knows C++ or .NET - I'm much less likely to want to talk to them.
  - pavel_lishin 16y ago
    Aren't the stats that something like 50% of developers applying for a position don't actually know how to code? If someone can eliminate those people so you don't have to waste your time on them, it might be worth it.

iamdave 16y ago

I'll gladly advocate for people to go directly to companies in the hopes of finding work. What about, then those companies that want a recruiter to go out and find someone? Hirelite is definitely an interesting approach to the game of finding work, and this post is accurate in some respects of the recruiting model. It misses though that most companies operate with a lean model, and simply do not have the resources to source, identify, isolate, and shrinkrap a by-line procedural methodology for finding new hires. Enter us recruiters. For what it's worth, hiring is rare unless you're with a firm that places 500 people or more a month. If you, like me are a solo virtual recruiter, factoring in just operating alone (the costs of subscribing to job boards, paying to post ads), the ends justify the means.

mattmaroon 16y ago

This is terrible advice. You're setting a precedent right off the bat that you're just in it for the money. If someone said "hey I see that you often use recruiters, but I came to you directly, so how about you give me $10k" I'd retract my employment offer immediately.

Travis 16y ago
On the other hand, the reason it's work and they call you a professional is because you get paid. By definition. I don't see anything wrong with showing some gumption and savvy to approach directly. For one, it shows that they understand how important context is. For another, it shows that they are willing to think outside the box in order to make more money -- which is something I would really want in an employee. I'm not of the mind that addressing salary/pay first off is a bad thing. The employer already knows that you wouldn't be working for them if not for getting paid. Why should they object to sending their money to their employee rather than a third party recruiter? [sorry if this double posts, having connectivity issues. but it looks like i'm in the clear]
raganwald 16y ago
I don't understand. Nobody says you're just in it for the money, but once all other issues (competence, cultural fit, start date, location, &c.) have been agreed, isn't a candidate supposed to negotiate for the highest possible compensation in good faith? far be it from me to lecture Americans about their culture, but isn't that the American Way? Or is it really that companies pretend everyone is coming to work for the excitement of doing fun stuff and having vintage pinball machines in the lobby, while the founders of the company get rich? I'm not singling you out personally, but if anyone ever told me that the money is not supposed to matter, I'd tell them that since it doesn't matter, they can jolly-well give me what I ask.
- mattmaroon 16y ago
  Yes, negotiating is fine. No problems there, it seems from the down votes that everyone misunderstood. I wasn't suggesting that an employee has to just take what's offered or that's it. But trying to ding me for half a recruiter fee? That's just a scummy gimmick. I'd rather you just asked for $10k more in salary because you thought you were worth it. Suppose a friend said "I'm going to Outback for dinner, want to ride with me." You go with him, order the same stuff, and when you go to split the check he asks you to pay an extra $5 since he drove. You start wondering, did he just invite me to dinner to save $5? This is kinda like that. You applied to my company, I decided I wanted to hire you, and now you want me to pay you for having applied to my company directly? That's just shady. Do I even trust that you're going to remain with the company for long enough for this to be worth it for me, or do you just go around trying to ding employers for $10k? Take my word for it as someone who hires people, don't ask for a $10k bonus because you applied through the website. Ask for $10k more salary instead and explain why you're worth it.

raganwald 16y ago

Two things not mentioned: When I was hiring, a resume that came direct (e.g. through an employee referral) was always the first choice to interview. Even a cold referral ("I don't know him, but he replied to my tweet about jobs") was a resume that had a "$0" recruiting fee attached to it, while a similar candidate from a headhunter carried a $10K+ fee. No matter which way you shuffle things, as an employer I want to talk to qualified candidates that don't have a heavy fee dragging them down. Either I save money, or I have more flexibility about pay, it's a win for everyone except the head hunter. Therefore, i always encourage people to network. It could be that you are marginally less attractive than another resumé, but if you don't have a fee, you'll get the interview and that may give you the chance to win the job. In which case, it's worth a lot more than $10K to talk directly to the employer.

raganwald 16y ago
I forgot the other thing: One good thing about recruiters from the company's perspective is that provide plausible deniability about poaching. While perfectly legal, if I personally start cold-calling developers around Toronto when I need to hire, I'm going to make a few enemies. But everyone knows that recruiters are going to be aggressive about finding candidates. For whatever social reason, it's perfectly acceptable to hire someone away from another company through a recruiter, but depending on how you do it you can step on toes doing the same thing directly. FWIW, almost any intermediary or pretext takes you off the hook. Meet someone at a conference? Hire them away. Meet someone at a developer lunch? Hire them away. Meet someone through a blind date service? Hire them away. But cold-calling them... Tacky and taboo.
- jacquesm 16y ago
  I think the Toronto scene is especially sensitive to this because it is fairly small and seasoned developers are in short supply.

rickmb 16y ago

There's also another side to this story: headhunters benefit from "selling" developers at a high price, and usually they are way better negotiators than the average developer. Most of the time, that money saved doesn't go towards a signing bonus or a salary bump, but stays in the pockets of the employer. Also, if you're confident about your development skills but not so much about your interviewing skills, having a good headhunter basically doing the initial salespitch for you can be very helpful.

abeppu 16y ago

Just another dataoint : I just got hired at a new company using a headhunter. Midway through the process of doing interviews arranged by my recruiter I received advice along these lines from my significant other, and was shocked at the typical size of a headhunter's commission. Given that it seemed like my particular headhunter couldn't have spent that much time hooking me up with interviews, 20-30% of my first year's salary still sounds ridiculously high. But ultimately, I was pleasantly surprised by the offers I received, and it seems to have helped that the headhunter made sure multiple companies were providing offers within days of each other. Also, he recommended me to companies that I wouldn't have considered otherwise, one of which I am very happy to be joining.

ig1 16y ago
Yes it's high but it also has to cover the cost of all the work the recruiter did on candidates he didn't place, and the time spent cold calling, the money spent placing ads on job boards etc. to find candidates.
- cubicle67 16y ago
  yes, but from the figures given I could live quite well placing only 2 or 3 people a year, or extremely well if I upped that to 1 a month
  - ig1 16y ago
    The recruitment consultant will only get about 20% of that figure, with 80% going to cover the agency costs. The average IT recruiter in the UK makes about 40k GBP/year (about 25k base, and 15k commission).
gaius 16y ago
I like the recruiter business model because even tho' the recruiter is paid by the company, his or her interests are aligned with that of the candidate. The better the salary they negotiate for you, the bigger their own commission.

kablamo 16y ago

this site is blocked at my company, btw. thanks company! no idea why and not sure what software my company uses.