What if we told you that the sales recruiting industry has a truth that doesn’t get talked about? That truth? The industry average for the percentage of clients’ searches that get filled (Win Rate) is only 20% for permanent placement recruiting firms. The source of this information is InsightSquared’s 2015 “A Data-Backed Analysis of Top Staffing & Recruiting Firms” Report. As a supplier of CRM systems to the staffing industry, InsightSquared calculated this Win Rate from their customer’s actual data. In 2014, InsightSquared’s reported that the Win Rate was 21%, showing us that this a fairly stable number.
The Win Rate for permanent placement recruiting firms is only 20%.
What we found most surprising from the report, is the fastest growing firms had similar win rates to their slower growing peers. They simply were able to maintain that Win Rate while processing more openings. InsightSquared’s suggestion to recruiting leaders was to increase the number of searches worked while maintaining the Win Rate. This might be good for increasing the growth rate of recruiting firms but what about their clients? Filling only 20% of job openings isn’t going to solve the sales recruiting needs for growing companies. It also creates a bad name for the sales recruiting industry as a whole.
Can Sales Recruiting be Done Differently?
We started thinking differently about our business in 2012. The traditional yardstick measure of success in our industry has been (and still is) the Sendouts to Hire ratio (the # of candidates interviewed for each hire). In 2012 our ratio was excellent but we discovered it was leading us down the wrong path. When we examined what we do best as a company (headhunting passive top sales performers), it became clear that a few of our clients didn’t align with our strengths. The clients that didn’t fit employs what we now call the “drag race” approach to sales recruiting. Hire several firms, line them all up and see who can fill up the Sales Manager’s interview day first. We discovered the problem with this approach by looking at our Win Rates (the % of searches we successfuly make a hire with).
With “drag race” clients, we would conduct a thorough search and headhunt 3-5 strong candidates with the exact backgrounds they wanted. Because this takes 2 weeks on average, we often found out that there were only 1-2 time slots left. Although the average quality of our candidates was superior, our Win Rate wasn’t very high given that we had 1-2 candidates interviewing out of a field of 7-8. The Sendouts to Hire ratios with these clients looked fine but our success rate was disappointing. Unfortunately, our clients lost out too. Most of the candidates that they were interviewing weren’t headhunted. They were active job seekers and they weren’t passive, currently employed top performers that can only be reached through headhunting.
Back to Win Rates. With our non “drag racing” clients, we discovered that we had a very high Win Rate of 46.5% in 2012. The 3 clients that employed a drag racer approach had a combined Win Rate in 2012 of 14.9%. Moving forward, we focused our efforts on clients that value the quality of hire over the time it takes to fill interview timeslots.
Following this strategy increased our Win Rate to 46.8% from 2013-2015. (2019 Update – further focus on our win rate has increased this to 60.1%). With retained sales searches, our success rate jumps to over 90%. (Read about the merits of retained sales search vs. contingency sales recruiting here.)
Additional Challenges with the Sales Recruiting Industry’s Status Quo.
Assuming that a company has the resources to juggle multiple sales recruiting firm relationships, our previous clients have proven that it’s possible to consistently fill open positions by engaging multiple recruiting firms. Having watched this play out, we’ve learned that there are three glaring drawbacks that may or may not affect the ultimate success of this approach:
- Zero ownership of the problem. The only way a sales recruiting firm can achieve success in a 20% Win Rate environment is to get in and get out quickly. If the search is still open after the first round of interviews, who is going to “own” seeing the search through to completion?
- With multiple recruiting firms engaged, it becomes a race to see who can be the first one to get a candidate submitted to the client. By definition, this means that taking the time to ensure a great fit goes out of the window. This increase in mishires is costly for both the client and the candidate.
- This approach also means that recruiting currently employed, top sales performers that aren’t actively looking (headhunting passive candidates) is off the table. It simply takes too long as we discovered back in 2012. This also means that the majority of the candidates being interviewed are not currently employed. In the world of sales, there’s often a reason why they aren’t currently employed or they’re currently employed but actively looking.
Many companies that employ the traditional approach to hiring multiple recruiting firms attempt to address the limitations above by engaging even more recruiting firms to work on their searches. Perhaps the answer isn’t to engage more but to work with fewer, better sales recruiting firms.