Myths CTOs Believe About Recruiting Agencies, and How to Break Through Them to Supercharge Your Hiring Efforts

Myths CTOs Believe About Recruiting Agencies, and How to Break Through Them to Supercharge Your Hiring Efforts!

If you’re a CTO, VP, or Director of Engineering hiring is probably the bane of your existence. And rightfully so.

Hiring engineers and programmers is tough. There’s no doubt about that.

A recent survey conducted by Harvey Nash and KPMG of over 3,000 technology leaders found that 65% believe hiring challenges are holding their companies back from innovation and product development critical to company revenues.

The War for Talent

The War for Talent, a term Mckinsey researchers coined back in 1998, now extends far beyond Silicon Valley to virtually (pun intended) every corner of the globe and every industry.

Companies have clearly taken notice, sparing no expense to attract the best and brightest. Employee perks offered by both startups and tech titans like Google and Apple have been well documented – everything from gourmet meals to hour long massages, nap rooms, vacation stipends, and more. We’ve written previously about the “Tech Campus Arms Race” unfolding among the tech elite.

Brag worthy perks and swanky offices, however, aren’t enough. Companies are shelling out big bucks too. In Silicon Valley, the average salary for a Product Development Engineer is now over $169,000. Ditto for a Data Warehouse Architect. Zoom out to a national view and the median salary for a Software Developer is still over $100,000 (US Bureau of Labor Statistics). And those are just averages.

Candidates hold a lot of the power in the current marketplace. With over half a million open tech jobs to choose from, and with that gap expected to grow to over a million openings by 2020 (US Bureau of Labor Statistics) the sky-high turnover rates across the industry aren’t surprising.

Among the top 10, only Facebook has retained employees long enough to match the GPA needed to gain a computer science degree (a solid 2.02).

All of this probably sounds horrifying. So, what’s the answer? How do companies compete if they’re not equipped with an Apple or Google sized war chest?

The real problem lies not just in the growing skills gap, but also in the myths that have been spread about working with technical recruiting agencies.

Myth 1: Recruiting Agencies Are Just Resume Farms

Of all the myths out there about agencies this is probably the least … mythical. Meaning, yes, some agencies have built their business almost entirely on the practice of spamming out resumes to hiring managers in the hopes of earning a placement fee through some legal (or nonlegal) technicality.

These agencies will often submit candidates without their prior consent or even months after losing touch with them simply to stake their claim to a potential placement fee for a new role. It’s an awful, awful practice that has scarred the recruiting industry, job seekers, and companies alike.

That said, this is NOT how most agency recruiters make their living. The real value great agencies bring to the table is in two key areas: relationships and process.

Beyond traditional job boards, a whole industry of recruitment tools has popped up to help anyone find candidates for nearly any position. Sounds wonderful. But remember the War for Talent? Remember Google? This is where relationships trump resumes.

Because agency recruiters spend 100 percent of their time speaking with tech professionals and not writing code, they’re able to spend the extra time necessary to develop actual relationships with potential candidates.

What does this whole “relationship” concept mean in practice? It means less interviews and declined offers. It means they know when one of your competitors has made a management change that is causing people to jump ship. It means they have a legitimate pulse on the industry that allows them to navigate the market more efficiently to save you time and money.

Top agencies have spent years perfecting the process of attracting and hiring the right people, and trying to replicate that success in addition to your team’s core competencies is a tall order. Much like your company has a product or service that its operation is built around, sourcing the right candidates and fostering deep relationships is the service that great agencies have built their entire business model around.

So while you’re busy spending most of your time coding (and rightfully so) they’re out building relationships with the exact people you want on your team.

Which leads us to…

Myth 2: Agencies Can’t Hire as Well as Internal Teams

If your company has an internal hiring team (or if you’re part of said team) we’re not here to rain on your parade. When you get to a certain stage or size, internal teams can certainly be a valuable part of your company’s hiring efforts.

For most startups, this is a luxury they simply cannot afford. But even if your company has the budget for an internal team (and, again, kudos), don’t give your external recruiting partners the boot just yet. There’s a reason that most companies, regardless of their size or internal teams, work with external agencies.

In 2018, the US Staffing Industry is projected to reach a whopping $148.3 billion in revenue. That’s up from $119.4 billion in 2013. This, again, despite many companies building up their own internal teams. But why?

Yes, internal teams should absolutely have a more intimate knowledge of both the roles and the companies they are employed to hire for. And, yes, they too can use modern tools and job boards to help find great candidates. Their main role, however, is to coordinate everyone involved on the company’s behalf. Getting team members on the same page and coordinating an effective interview process is no small task. It takes time and effort.

Remember, internal recruiters are also typically hiring across multiple departments including sales, marketing, product, and other roles. Which doesn’t allow them to develop the necessary expertise over a given field (i.e. blockchain development) to source efficiently and effectively. Specialization is maybe the biggest area where great recruiters separate themselves from the pack. Agency recruiters leverage their deep network of relationships to gain an awareness of the market that is both vital and difficult to replicate.

Fundamentally, agency recruiters (great ones) create relationships with candidates that internal teams can’t replicate for several reasons. One, as described above, is time. The second is their somewhat more neutral position in relation to the company. Think of this as the difference between a sports agent and a team scout. That analogy may be lost on you, but it’s simply the difference between one person who works directly for your company and one who doesn’t. You pay both to help you with hiring, but to candidates there’s a clear difference.

Which leads us to…

Myth 3: Paying Agencies Upfront Is a Waste of Money

Most agencies rave about how you can work with them without paying a dime upfront. It’s the classic try before you buy pitch. “Don’t pay us anything until you hire one of our candidates.” But there are big problems with this approach.

We’ve been conditioned to equate price with value. When we don’t pay for things (or pay as much), we don’t value them as much. Given the choice between two watches our brains are programmed to believe the more expensive watch is of better quality and better designed. The more we pay for something, the more valuable it is, the more we take care of it, the more value we try to extract from it.

The same applies to working with agencies. Paying upfront forces you to better align yourself with that agency partner to make sure you get your money’s worth.

“But I already love my agency partners and work closely with them. I pay them a large fee for every placement. Should I really pay them upfront?”

This well intention-ed attempt to save money is only leading to more interviews, more declined offers, and more wasted time.

When you choose to work with an agency on a contingency (commission) basis, they will still send you quality candidates but they will send those candidates out to other companies as well. Conversely, if you’ve pay an agency an upfront fee they are obligated to deliver on what you paid them for. Candidates they submit won’t be going on other interviews. This crucial difference ends up causing companies to miss out on candidates all the time.

As a CTO or tech lead, ask yourself:

“Do I really want to interview another 10 people for this position?”

“How much longer can we afford to get by without this hire?”

If hiring is a roadblock to your company’s progress, then paying an agency to help you build a better team with less effort shouldn’t even be a question. Depending on the stage of your company, hiring the right technical talent could mean the difference between life and death. In any case, it will save you way more than you could ever spend on the right agency partner.

This article was brought to you by the team at Source Coders.