2. The Recruitment Prerequisites | Getting Started

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(This is part of a series of articles on becoming a Recruitment Entrepreneur. These articles are meant for first-time recruitment entrepreneurs and the more experienced recruiters may find some parts elementary.  I shall start dwelling deeper into each aspect once we get done with the basics. If you wish to contribute to this topic please write to ajay@recruitcrm.io I will be happy to incorporate your ideas as well. You may also mail me if you wish me to write on any specific topic.)

To get started, you obviously need to get in place all the things that an entrepreneur would need. Will list some of those things here:

1) Choose a name for your firm. Good if the name is related to or has words like recruit, placement, jobs, etc. This is useful ( though not a must) while optimizing for search engines on the internet or also for easier recall. Well, any name is fine if ‘Apple’ can work for computers!

2) Register your firm. You could either create a ‘Proprietorship firm’, ‘limited liability partnership (LLP)’ or a ‘Private limited company’. Different terms are used in different countries. Suffice to understand that a ‘Proprietorship firm’ does not differentiate between the ‘Proprietor’ (that is you) and the owner.

Thus it has tax and liability implications. In proprietary firms the income of the firm & owner are clubbed and taxed whereas in an LLP or a private limited company, the company or partnership is treated as a separate entity from the owners (equity or stockholders). The liability of the firms’ owner is limited to the amount of equity invested in the firm. Let us say the owner has invested 10,000 dollars in a firm.

In case of a civil suit filed by a client or a candidate against the firm for say one million dollars, the max liability of the owner would be the ten thousand dollars invested and the law cannot come after your personal property (house) and savings etc. Thus this structure legally protects the owners.

However, the flip side is the additional regulatory & compliance filings needed for such firms. Many entrepreneurs take a progressive path by starting as a proprietorship firm and then converting the same into a Private limited firm or C Corporation as they become larger and successful.

3) Buy a domain name. This would cost approximately 50 dollars for a year.

4) Get a simple website created. You can create it yourself or get it created online for as less as 100 dollars. What do you write on your website? Well, keep it simple. The sectors that your firm would work in, the level of positions (entry-level, mid-level, etc), any specific functions/roles that you would specialize in.  You would, of course, put in your address and contact details. As you start growing you could start adding a list of clients, a jobs(careers) page, a separate page for employers and one for candidates, a blog page, etc.

5) Buy a hosting plan to host your website which would cost you another 60-70 dollars.

6) It is also important to create a business specific email id. Most service providers make them available for  a few dollars per month.

7) Get your visiting cards printed.

8) You will also need to have a computer an internet connection and a phone connection (or mobile). You could subscribe to ‘Linkedin Recruiter‘ and also subscribe to a popular job portal ( like Indeed, Monster, etc).

Getting your first client

So now with the basics in place you can get started. The first thing to do would be to get a client to sign you up to fill some position for them. Typically as a fresh recruiter would find it difficult to approach a large company asking for business (unless you have connections or are lucky).

However, a mid-sized company that is growing fast would be a good bet to start with. Request for a meeting with the Recruitment Head (or Talent Acquisition Head) to pitch your recruitment services. Go well prepared with a presentation, the idea being to convince the client that you can deliver.

In the recruitment business, the risk to a client (of giving a recruitment mandate to a new recruiter) is not very high as the payments are made based only on successful closure (contingency based recruitment).

Therefore the only investment is in registering/empanelling the new recruitment agency and spending time with them explaining the requirement. Most hiring companies would have a regular MOU/agreement format to start an engagement. Much as you will find many such formats on the internet, it is important to be careful about some terms/clauses.

1. Service to be provided

Be clear about the exact nature of service to be provided. In most cases, it would be to identify, screen and present/introduce a candidate. Clarify the method of communication (either email or an online ERP that the client may have). Insist on a single point of contact in client organization.

2. Candidate Ownership

In case the candidate has already been presented by another agency then you need to be informed immediately about such an occurrence, usually within one or two working days. Moreover, even if the candidate is not selected/shortlisted then, you still ‘own’ the candidate and need to get paid even if the client directly contacts such candidate later and appoint’s her within a period of 12 months of you having submitted the resume.

3. Recruitment Fees

This is normally calculated as a % of the salary offered to the candidate and could vary from 8.33 % (one month’s salary) to 20 %  or more. The important thing here is to clearly define the term ‘Salary’ or ‘Cost to Company’ in the agreement as many companies have all kinds of benefits & allowances which are to be added to the cash component of salary.

This needs to be mutually agreed upon and mentioned in the agreement. For sake of transparency you could also request a copy of the offer letter of any of your candidate offered a job by the client.

4. Replacement Clause

Most clients will insist on such a clause and could vary from one month to six months. You obviously bargain for the shortest period possible. It is also important to mention here that you would provide replacement only if the candidate voluntarily resigns (for any reason) after joining within the agreed period. A candidate fired for non-performance (or even forced to resign) would not come under this clause. After all, non-performance could be due to a host of factors and the recruiter cannot be held responsible for the same.

5. Payment Terms

Normally an invoice is raised on the day any of your candidates join the client company. It is also common practice to provide a 15 or 30 day credit period for the client to pay the invoice. This, however, needs to be clearly mentioned in the commercial terms and agreement. It is also important to mention whether the billing is inclusive or exclusive of taxes like VAT or local taxes.

Rest of the agreement terms and clauses are pretty straight forward like, termination of the agreement, confidentiality, indemnity, etc. Once the agreement is in place you are good to go. So what’s the next step? You will now need to pick up the requirement from the client. Schedule a separate meeting with the ‘SPOC’ (single point of contact). Remember that apart from understanding the details of the requirement you will also need to build your ‘Client relationship‘.

Goes without saying that you must reach on time for the meeting and go well prepared. The preparation would largely be understanding  the company and the industry in which it operates. Go carefully through the company website and understand the structure (business division), products/services, office/factory locations, new projects/initiatives, stock market listing, number of employees, turnover, profits etc.

Essentially any and every information that helps to understand the company better. It would be criminal to ask for any information/query that is easily available on the company website or the internet. In fact, the more you know about the company/industry the more you seem equipped to handle their assignment.

It is always best to understand the assignment (and make notes simultaneously) in a structured way.

Start by asking the SPOC for Job description and a Job Specification. As discussed in the previous article, a ‘job description’ will enumerate the role & responsibilities of the job while a ‘job specification’ spell out the qualifications, skills, abilities & knowledge for the job.

Most good organizations will have a detailed document for each job. However, in case there is no such document available be prepared to make one. Some of the things that you would like to clarify would be-

1) Job Title

2) List of Responsibilities

3) Reporting Structures / Organisational Structure

4) Work location, timings, shifts etc

5) Equipment to be handled

6) Job Context (Budgets to be handled, reporting staff, size of business, kind & number of stakeholders etc)

7) Remuneration (Salary & benefits)

8) Growth Opportunities

The Job Specification would include:

1) Minimum academic qualification for the job

2) Equipment handling  skills required if any

3) Competencies Required

4) Specific level of knowledge (Certifications)

5) Licences required if any

6) Years of prior or relevant experienced

7) Language skills

Notwithstanding stringent laws in many countries regarding ‘Equal Employment Opportunities (EEO) ‘, in some countries or some jobs, there may be specific requirements like gender & physical attributes (height/ weight, disability). Also, some employers may have a no-poach agreement with certain companies (who are in a similar business or who are their vendors/customers).

Also sometimes employers wish to hire candidates only from specific companies, or candidates that are alumni of specific institutes. Many of such qualifiers/disqualifiers are never put in writing or on record however it is important for the recruiter to be aware of such requirements/biases. This would only increase the efficiency of the recruitment process. Well, you always have the option of not working with such employers who are not EEO compliant.

It is also important to understand the entire recruitment process of the employer to include the various test & duration of such tests, the various interviews to be conducted (and by whom), making of job offer to successful candidates, background verification process, joining period allowed and if client will buy out the notice period (or any other lock-in) with previous employer.

Having now gathered & understood the clients requirement in detail, you are now equipped to identify candidates. Depending on your confidence of the time you will take to identify the right candidates you may make a commitment to the client to email the first set of candidates within a week or ten days. Now you are ready to get your hands dirty…

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