Why Do Companies Use Recruiters?

Why would a company use a recruiter instead of just hiring their own employees? When you think of it, it doesn’t make much sense that a company would pay another company to find employees…to pay!

It sounds crazy, but it happens every day of the week. Corporations all over the world outsource their hiring needs to companies that use recruiters.

This process is nothing unusual, even though many people are not aware of how it works.

What I’m going to do here is briefly review the main reasons why companies use recruiters. It’s  

Why Do Companies Use Recruiters Instead of Indeed?

Indeed is one of the biggest job sites online. It is super easy to use. And everyone in the country knows about it, so why would a company use a recruiter instead of Indeed?

I’ll tell you why. Because when you place an ad on Indeed, you will get responses for sure. But a lot of them might not be relevant. Or, the person might be very hard to reach.

As a recruiter who has placed job advertisements online will attest, the hard part isn’t placing an ad, it’s screening and sourcing and handling the people who apply. And all of that takes time.

Many companies recognize the important of saving themselves time and money by simply hiring a recruiting agency to screen, source, and pre-interview for them. All of that legwork? That’s what recruiters do. It’s also one of the reasons you should use a recruiter instead of applying directly, oftentimes it bypasses the peole who don’t really review resumes.

The quality of candidates that a company will get from a recruiting firm is going to far exceed anything that will be found online by posting ads.

First, the people that are sent by the recruiting firm are going to be pre-vetted and screened. This weeds out the majority of applicants who are either un-qualified, or simply not that interested in the role. Recruiters spend their time looking for the best people for the job.

Companies avoid having no-shows to their interviews, people who are simply not what they pretend to be on paper.

When  companies use recruiting agencies, or at least good ones with good recruiters, then they avoid all of this hassle.

There are other reasons as well. And these primarily have to do with payroll taxes, unemployment liability, workers compensation problems, and other financial issues.

Do Big Companies Use Recruiters?

It depends on the type of role that they are recruiting for. Some companies have such extensive internal recruiting departments that it isn’t really worth their effort. When you think of the gigantic corporations out there, realize that there are hundreds if not thousands of people who work in their Human Resources department and who handle new hires.

However, some big companies do sometimes use recruiters. This is mainly done when there is a high level executive search needed.

And the reason for that is that internal recruiters at gigantic companies are not as skilled as agency recruiters at headhunting.

The main task of a salaried employee who works for HR for some enormous company is going to be drudgery and a lot of paperwork and red tape.

External agency recruiters are streamlined compared to internal recruiters and can move faster, plus they work on a commission basis, so it’s cost effective

Is There A Downside For A Company To Use A Recruiter?

What, if any, would be a downside for a company to use a recruiter? If they are not costly, then why not use them?

That’s a great question and one that recruiters are always met with if they are doing business development.

There are little downsides at all, unless the contract with the recruiting agency is cost prohibitive.

For direct hire purposes, as long as the contract details are agreeable, then there is little issue.

For temp or temp to hire contracts, there are more considerations. The terms of the contract must spell out who is responsible for insurance issues, who is responsible for OSHA trainings if needed, and a host of other issues. The majority of people who are using a temp agency want almost all responsibility laid on the agency and none on themselves, hence the reason to use a recruiter and temp agency in the first place.

So, as long as the contract details are strong enough in the companies favor, there is no reason to not proceed with using a recruiter.

What are some of those details? Good question:

A Bill Rate that is not too expensive (in the case of a temporary worker)

A search fee. (in the case of a direct hire placement)

Proper insurance terms and stipulations and who is responsible for PTO, Taxes, and all other important financial issues.

Why Type of Companies Use Recruiters?

So, if big companies are not that keen on using recruiters, who exactly would use a search agency?

Well, smaller and mid sized companies. They are the prime target for recruiters and recruiting agencies. The reason that they are likely to use recruiters is that they do not have the same yearly, recuring budget for in-house talent acquisition and internal recruiters. They might not even have a decent sized HR staff.

Along with those issues, it’s simply a better decision from a financial vantage point.

Let’s take a look at some potential scenarios:

1. A small business places ads on Indeed. This is somewhat costly. Or maybe they opt for Craigslist, cheaper but not as high profile. The company then has to divert man hours to reviewing those resumes, calling the people, trying to connect with them, spending time interviewing them, and all other pre-hire tasks. This is a huge undertaking.
2. The company enlists the help of a recruiting agency. If they do this, there is no fee until there is a placement. Unless you are dealing with executive searches with retainers (a very unique type of search for recruiters, and one where you can’t find people by placing ads online). In this case, the company pays nothing until they find the perfect candidate.

It’s short sighted to object to the fee that an agency charges when placed up against the huge number of hours required to find, screen, pre-interview, and arrange for the new hire that recruiters at agencies have to do.