IT headhunters considered harmful

Posted on 7 January 2010 in Business of Software, Rants

I got an interesting call from a headhunter today; he knew that we were likely to start hiring software developers at Resolver Systems soon (keep an eye on our jobs page or drop me a line if you're interested) because he had helped someone who'd chosen to leave us to find their new job.

As I said, it was interesting. I admire his honesty if not his morals; while most such people will merely hint about things, this chap came straight out with it: "we're actively trying to poach people who work for you, and we'll stop doing it if you stop trying to recruit people on the open market and use us instead".

Now, I know that is how a large part of the IT recruitment industry works, but it was a surprise to hear from someone who admitted it so directly. I would post the details of the person and the company concerned, but I wasn't recording the call and UK libel laws put the onus on the publisher to prove conclusively that what they said was correct.

I'm no big fan of recruitment consultants, either when hiring software developers or when looking for development work myself. In general, in the UK their fees for a successful hire are 20% of the recruit's first year's salary (yes, you read that right: 20% of a year's salary), and they don't seem to provide much value in return. We've never used them at Resolver Systems, and I doubt we ever will. But back when I worked for Goldman Sachs, we'd use them all the time. If we were hiring, we'd send them a description of what we needed, and they'd send back quite literally hundreds of programmers' CVs. Perhaps two thirds of them would be completely unsuitable; there was almost no evidence of filtering on the part of the "consultants". We'd invite the remainder in for interviews, and the people who turned up for those were frequently hopeless. Luckily, enough people applied that we were able to find the stars and hire them; I don't remember a bad hire over the years I was there, but the process to make that happen was a lot of effort. (Goldman's wasn't really my kind of place, but the one thing I really do appreciate is that the people there were generally extremely smart. Not necessarily doing the right thing, but at least doing the wrong thing intelligently :-)

So, anyway, 20% of a year's salary. That's a lot of money going for no obvious added value, and that means, to my mind, two things, depending on whether you're buying or selling your time...

If you're looking for a development job

If you're intending to leave your current job and move to a new one, then don't get a new job through a recruitment company. The consultant there will get 20% of your first year's salary, while you do all the hard work. Even worse, if, say, you're interviewing for a job paying £30,000 a year, then an employer who uses a consultant is looking at a total cost of £36,000 for the first year if they hire you. That means that if someone who contacted them directly, and does as well as you in the interview, asks for £35,000, it's to the hirer's advantage to hire that person at the higher salary. (As an employer, salary for later years isn't so important when hiring; after a year, good hires will need to be given a raise, and you hope to have got rid of bad hires. This might be different in countries like France where it's hard to fire people, and so you have to be 200% sure of anyone before taking them on.)

Now, that's not to say that you shouldn't go to interviews set up by consultants. After all, you need to have a benchmark for how much you should be paid for a particular kind of work in a particular industry, as otherwise you don't know what your room for negotiation is. I've not tried it myself, but it occurs to me that it might make sense to go to an interview arranged by a recruitment consultant as a way of establishing your value to company A, find out how much is on offer, then to apply directly to A's competitor using that as a baseline, adding on maybe 15% to allow for the saving the employer is making. Remember that to a certain degree you and the employer are both trying to get as much as you can of the 20% saving from not using a recruitment consultant, and that the more information you have on the going rate for your labour, the better off you are.

If you're an employer

If you're an employer looking for great developers, don't waste money on recruiters when you can spend it on paying better salaries. Recruitment consultants will say that they "represent" a lot of good programmers, but those good programmers will also be looking on job boards for their favourite programming language, or ones that are run by techies for techies. Or even better, they'll be applying to companies they're interested in directly. If you want to hire the best, make sure your company is a place where the best programmers will want to work and do all that you can to make sure everyone knows -- Joel Spolsky is, of course, the master at this. Or perhaps they don't know about you -- but you can find out about them. Check for open source projects that are related to your business area and see if there are (non-spammy!) ways you can engage with the best people to see if they're interested in working for your company.

Oh, and finally, ignore threats to "poach" your staff. People won't leave your company for a worse job because a recruiter told them to. A call from one might be the trigger, but ultimately people will leave because they want a new challenge, or more interesting work, or to learn something new, or because their boss is an idiot, or any one of a thousand other reasons, many sensible and some not, and they think that the new job will be better. They may well be right. I remember reading that on average, software developers change jobs about every three years. If you're doing worse than this, then see what you can do to fix your company before you blame the recruiters. If you're doing better, well done! (Or perhaps you need to hire more pro-active people ;-)

(UPDATE: the first version of this article didn't make it clear enough that I'm talking purely about using recruitment consultants for hiring software developers; I've updated it to make that a little clearer. I've no experience with other kinds of headhunters, so can't speak about whether they're more useful, or, indeed, professional.)