Recruiting firms. Executive search firms. Headhunters. Staffing agencies. Temp agencies. Human resources.
Despite 2 recessions in the past 10 years and continuously high unemployment rates across the U.S., human resource departments always seem to have more work to do than time to complete the work. Sure, HR has been downsized as much as any other department, but from where is all this work coming?
Furthermore, how can there be any hiring if there are no jobs? Who is interviewing these days? No one seems to be getting interviews.
Contrary to popular belief, companies--at least the successful ones--are always looking to hire new employees, whether or not public job listings or ads say so. Companies always need to stay competitive and solve problems for themselves and their clients and customers. To solve these problems, employers need people--someone needs to analyze, critically think, and take action.
As HR sees reductions in numbers of employees or ceases to exist for a number of companies, someone is needed to help. Someone is needed to take on some of the challenges and time spent on recruiting and interviewing. In doing so, companies can focus on their core competencies and the HR departments that do exist can spend more time addressing other HR concerns. Even in instances where HR departments are adequately staffed, their employers sometimes just do not know where to start with some of their employee searches.
Meanwhile, applicants also struggle to get interviews and find employment in part because they do not know where to start the search. Unions can still help to some extent, but unions are disappearing due to rising administrative costs, global competition, wage resets, and other relevant issues. Networking contacts can also help, but networking can be thwarted by lack of power or lack of situational understanding by the referring parties.
When people and traditional organizations cannot help, technology is often thought to be able to fill the gap. Yet, while use of keywords and search engine optimization can generate names for applicants and employers, the frequent use of computers and database technology can also backfire due to information overload. Instead of making the application process easier, technology produces too many mismatches and takes too much time to continue to filter through.
With all of this in mind, the struggles to create and/or fill jobs are not just the result of unequal supply and demand caused by education mismatches, skill set mismatches, and lagging economies. Rather, the labor market itself has inefficiencies. In order to overcome these inefficiencies, companies and their HR departments can greatly benefit from working with recruiting firms, executive search firms, headhunters, staffing agencies, and temp agencies. In fact, a number of companies already do.
On one hand, recruiting firms (etc.) help employers to filter through loads of information: names, numbers, resumes, work histories, skill sets, and so on. In providing extra sets of eyes, ears, hands, minds, and so on for employers, recruiting firms (etc.) can help streamline the recruitment/application process. The employers can focus more on running their businesses while recruiting firms (etc.) act as their scouts and surveyors in better understanding the labor market.
On the other hand, recruiting firms (etc.) also help applicants to filter through loads of information. Like unions and networking contacts, recruiting firms (etc.) provide applicants with access to opportunities and resources. Warm leads/referrals from credible sources help open doors that applicants do not even know exist, as recruiting firms (etc.) act as applicants' scouts and surveyors in better understanding the labor market.
If this is the case, how do recruiting firms (etc.) stay in business? How do they make money? What is their business model?
Recruiting firms (etc.) primarily charge hiring/placement fees to employers rather than applicants. This is important because revenue comes directly from recruiters' work productivity--which is directly linked to employers' actual hiring/job placement of applicants. Different recruiting and staffing firms have different pay scales, but all should have a base pay plus commission (i.e. incentive pay) structure. This means that recruiters must do their work well to make money and keep their firms in business--which is as responsible and relevant a business model as any in today's economy.
Ultimately, HR skills and sales skills are needed everywhere--and they do overlap. As hiring and employment issues involve employers and employees, recruiting firms (etc.) must be able to reach out to both constituents. This includes effectively handling communication and administrative work and being able to sell opportunities and resources available to both parties. Going forward, the recruiting and staffing industry will continue to rise, as it is at the center of the business world--and the economy--with a fundamentally sound business model that should be considered by companies in other industries.