I want to be a Recruitment Entrepreneur

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Recruit CRM Published on Mar 22, 2020

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Starting as an Entrepreneur

If you have considered some of these issues and still decided to go ahead, then let me tell you the most important point to be considered, MONEY. You should have enough money to keep you going for at least six months (a year if you plan to hire a couple of employees). This would include your expenses for stay, food, travel, employee salaries, communication & other miscellaneous spends.

Luckily recruitment is a business that you could very well start without an office and with just a telephone (mobile) and a job board login (or a LinkedIn login for that matter). Money for six months would be sufficient as most recruitment cycles (at junior-mid level employees) would be around 3 months and that should be enough to get your cashflow going.

So lets’ start with first understanding the larger Hiring/Recruiting landscape. There are a large number of intermediaries/actors in the hiring/recruitment  space.

The hiring firms themselves. Most large firms depend on a host of sources for their recruitment. Recruitment firms, social media, campus recruitment, company website (careers page), advertised recruitment (print advt), job boards, etc. The source of hiring used depends on the type of role, the level of job, the volume of hires, the urgency in hiring and of course the budgets.

Entry level recruitments mostly happen from campuses, junior and mid-level through internal recruitment teams, company careers page or recruitment agencies, senior levels through Executive Search firms or through references and temp jobs through staffing firms.

1. Executive Search Firms

These firms help identify CXO level hires (and are typically referred to as ‘Search’ firms). These are the blue-blooded big boys in the recruitment industry. ‘Search’ is purely relationship based and needs many years of work experience, industry knowledge and familiarity with a wide range of senior professionals within the industry.

These assignments are few and far between, highly confidential and do not come by easily. Most firms only work with a retainer fee (guaranteed fee irrespective of closure) and their fees could be anywhere between 33 to 50  percent of the annual salary offered to the candidate.

2. Recruitment Agencies

These typically handle mid and junior management level recruitments and are sometimes referred to as ‘Selection’ agencies. These are the easiest to start (even as a stand alone recruitment consultant), the recruitment cycles are comparatively shorter and candidates more accessible (found on job boards and LinkedIn). Some firms who do only senior-mid level hiring (other than CXO) also call themselves ‘High Value Selection’ firms.

3. Temping/Staffing Firms

These firms provide resources to clients on a contractual basis mostly on a monthly/weekly/hourly fee. The resource is on the rolls of the staffing firm and the salary is paid by them. This is mostly a volume play with modest margins.

4. Specialist Staffing

This is essentially temp staffing in an area of high skills where resources are required only for specific time or projects , like software development, oil rig engineers, trainers etc These are mostly billed by the hour and is high margin business.

5. Recruitment Process Outsourcing (RPO)

This is a relatively new service wherein a hiring firm outsources its internal recruitment team. The RPO firms team is located on the hiring firms premise and effectively operate as the internal recruitment team. They handle the entire end to end recruitment function including handling vendors. Many Hiring firms are using this kind of engagement to bring higher efficiency and to lower costs.

6. Outplacement Agency

When large firms are downsizing or when some firm is shutting down, they engage an outplacement agency to place their displaced employees in other jobs. This is a very difficult task specifically during a downturn. Also, many of the employees terminated need to acquire newer skills to become employable again. Here the fee is typically charged as a fixed fee per employee plus an additional fee for a successful placement.

7. Services Firms (Manpower)

These are firms that not only provide the manpower, but also supervise them. Here the billing is not only for the resources but also for the output or a combination of both.

8. Assessment Partners

Apart form various other uses of assessments like organisational development & competency mapping, many hiring companies use a variety of assessment tools for recruitment. These could be psychometric tests, aptitude tests, interviews, assessment centres, situational judgement test. These could be conducted in person, with pen and paper, digitally as well as through gamification. Mostly a combination of tests are used which greatly enhances the validity of the findings.

9. Job boards

Job boards are where job seekers post their Cvs/Resumes and where Hiring companies & recruitment agencies post their jobs. It is more like a marketplace where the recruiter & candidates find each other.

10. ATS

ATS or applicant tracking system is largely used by hiring organizations to manage their entire recruitment processes to include handling job role approvals, tracking applicants for each job, the entire assessment process of various stages, communication with candidates & hiring managers.

Many times it also includes VMS (vendor management system) which assists in handling candidates presented by various recruitment agencies and their billings & on-boarding. Many Applicant Tracking Systems are part of a comprehensive HR management system or an ERP system.

11. Recruitment CRM

A CRM on the other hand is used by recruitment agencies to handle its relationship with its clients as well as its candidates. It helps agencies monitor their client/jobs pipeline, their candidate pipeline as well as helps them monitor recruiter performance and manage its invoicing.

12. Temping Payroll System

These are essentially payroll systems integrated with client and candidate management tools. It would require a country specific payroll engine (to handle employment related statutory calculations/filings. It would further need integration with an accounting system to handle client invoicing and candidate/employee payments.

13. Recruitment/Temping Associations

Most countries have such associations which largely work as a lobbying/pressure group to handle employment/staffing related government policies. Registering with such an association would not only help in networking but would also help keep abreast of all the latest policy matters.

Let me now also acquaint you with some of the terminology and jargon associated with the industry.

Contingency Based Recruitment

Recruitment agency gets paid only if there is a successful closure and the candidate joins the client company.

Retained Search

A retainer (fixed amount or anything between 25% to 50% of recruitment fees) is collected by the recruitment firm before starting the assignment. This is non-refundable irrespective the position is closed or not. This is basically charged to cover for the effort being put in to carry out the assignment irrespective of the outcome. In case a candidate joins then the remainder of the fees is paid.

No Poach Agreements

Many organisations which employ people with similar skills sometimes sign such an agreement to not hire each others employs. In many countries this could be construed to be anti labour and therefore unfair trade practice.

Free replacement clause

This is the period of time during which a recruiter needs to provide a replacement free of cost in case a candidate (who joined) leaves a job within such period. This could range from a month for junior positions to about six months for senior positions.

FTE Units (Full time Equivalent)

This is a ‘contract staffing term’ wherein resources are hired by the hour or on a weekly basis.  FTE unit is equivalent to the total number of hours worked by a full-time employee. So if a full-time employee works for 8 hours a day, then 4 contract worked engaged for 2 hours on a day would be equivalent to one FTE.

Internal Recruiter

These would be recruiters from an employer company who essentially carry out the recruitment process or handle candidates referred by recruitment agencies.

Head Hunter

A loosely used term for recruiters. However this would more refer to a recruiter who identifies a candidate who is not looking for a job and convinces her to look at a new job opportunity. Therefore any recruiter who finds candidates from a job board or who speaks with candidates who have responded/applied to a job posting cannot be referred to a ‘Head Hunter’.

Job Description

A statement describing the roles, responsibilities, duties and scope of a particular job.

Job Specification

The minimum qualifications and skills required to perform in a particular job.

Pre Employment Screening/ Background Verification

Verification of the candidates qualifications, employment record, claim of compensation and uncovering criminal history if any or other past employment issues before hiring a candidate.

Competency Based Interview

An interview technique designed to assess specific competencies of a prospective hire. Also referred to as ‘behavioural interviews’.

Difference Between Curriculum Vitae (CV) and Resume

Curriculum Vitae is a Latin expression loosely translated as a ‘ The Course of my life’ and is usually a detailed description of your career, skills, education, publications, achievements & other interests. Resume is a French word meaning ‘summary’ and therefore is a brief description of your career, skills & education typically restricted to max 2 pages. However, both these terms are interchangeably used in the recruitment word.

With this brief overview of the recruitment industry, it is now time to get started. Much as you can start anywhere and with anything, I feel a ‘Recruitment Agency’ (Selection firm) handling mid to junior level would be the lowest hanging fruit to get started in this industry.

You could even start off alone with just a mobile phone, a computer, an internet connection, and a job board/LinkedIn recruiter subscription. In the next article, I shall write about ‘The Recruitment Prerequisites- Getting Started’.