OK, so maybe you can't rely exclusively on your in-house recruiters-which means it hat it may be time to go to the "out-house" recruiters. But who says you can't change the way they are paid? They work for you, don't they? With the trend toward pay for performance on the rise, start looking at how you pay everyone, including your third-party service providers. This idea can be applied to more than just headhunters.
Pay drives behavior. If you pay headhunters for finding people,that's what they'll do. Whenever I speak to a room full of recruiters, employment mangers, and the like, and suggest paying for retention or success, they look at me like I have two heads. (I think that's the reason.) That no the way it's done! Says who?
There are plenty of search firms that will guarantee their placements for to ninety days, which usually means that they will offer you a credit toward the next search, as if it's OK to keep trying and failing. You've lost a lot more than the cost of the fee already! But few, if any, will offer to tie any portion of their fee to the person's actually staying and doing the job. Even used cars have warranties.
Here's an offer they can't refuse: Offer to pay more than normal. If the person stays for a certain period of time (maybe a year) and if key,clearly defined performance objectives are met, the search firm will be eligible for a performance bonus or some other incentive, like first preference in future searches. You can create whatever incentive you want, but if it is above and beyond the "normal" compensation, the search firm has no room to complain. My suggestion is to make the base fee less than standard, with a kicker (the added incentive) that can take it above the standard fee.
The first response you will get from headhunters is that they have no control over these things. However, headhunters do have control over sending you people with the core competencies and credentials, if you, the employer, can identify them. In fact, it's their responsibility to do so. Headhunters are paid to screen and select, not just to find warm bodies. And, if they are not willing to get paid more than usual for doing more than usual, find another firm.
You can apply this pay for performances concept to any number of variables, but the biggest ones should be retention and performance. And you should be willing and able to pay a premium(albeit a minimal one) for someone who stays long enough and contributes significantly enough to provide a return on you investment. Another way to tie the longer-term value to the headhunter's compensation is to tie the headhunter's bonus to the employee's first-year pay, rather than to the hiring salary. This works only if you have a strong pay for performance plan in place already. And if you do, the better the person performs, the more the headhunters stands to earn, too.
The managing director for the Chicago-based firm A. T. Kearney actually recommends this type of gain sharing for his firm. For example, in one case, the firm negotiated with a Fortune 100 technology company to place executive in a new, high-end sales operation. In exchange, the firm earns bonuses based on the sales performance of the executives they place.
Some companies are actually paying outside consultants in equity (stock). The Parthenon Group, a Boston management consulting firm, is one that accepts equity payments. They give up a portion of generous fee to build an investment portfolio that includes a hot new company. The advantage to the client is that it encourages consultants to focus on long-term success, rather than quick fixes. It also increases the odds that the consultants will perform at their best because they stand to profit from your profit. It ties both client and vendor to the same goal(s). It's now a shared risk, instead of a onesided deal.
Smaller companies and start-ups are particularly suited for this type of arrangement because they usually have limited cash, but also have lots of potential (they hope). It also allows smaller or younger companies to start utilizing the services outside consultants and benefiting from their expertise earlier than they might otherwise he able to afford under traditional fee-for-services arrangements. Hold 'em hostage for their bounty!
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