How To Disrupt Technical Recruiting - Hire an Agent
javacodegeeks.com
javacodegeeks.com
Long story short, I was freelancing as a full-stack (Rails) dev, and also playing in a couple bands. Through the music scene, I met some music managers in NYC. They've been in the biz for 15-20 years (managed John Mayer, Martin Sexton, Bruce Springsteen's tours, etc.). In talking, we realized what they do for music clients would be really useful for me as a freelance programmer.
Basically, a manager's job is to take care of the business side, so the talent can focus on what they're good at. So, in a strange experiment, I hired them to act as my agent for programming gigs. They started taking care of all my negotiation, invoicing, collection, scheduling, etc.
It worked out really well for both of us, so we partnered up and started 10x Management, to do this for more people. Essentially, we're bringing the concept of a talent agency to the tech world.
Unlike the OP, we focus only on freelance work (not full-time placement), but so far the model is working very well for all parties. The talent is happy (we've been described as a "virtualization layer" for freelancers), the customers are happy (we represent the best), and we're happy (it's very gratifying to help people with their long-term career and lifestyle goals).
We're growing fast, so if you're interested in representation, or you need a badass freelancer (web/mobile dev, design, data science/viz, PM, etc.), or you just want to learn more, get in touch via our website or hit me up at altay@10xmanagement.com.
What is a reasonable fee? Good question! Perm placement fees range from 15-25% of base salary, but I wouldn't expect any engineer to pay that much. The key to think about is that even though an agent is getting some fee from the job seeker, there is nothing to prevent him/her from taking a few bucks from the hiring company as well - so in theory an agent could charge a low fee to the job seeker and a reduced fee to the hiring company, which would seem like a win?
Conflict of interest is something I also hadn't though about (glad a dialogue is starting and I don't pretend to have all the answers). I would think that in representing candidates (and not companies) there wouldn't be too many conflict situations.
The stock model might be an interesting compromise. So represent me and I grant you x% of my ISO on a per-annum basis. So lets say you agree to a 10% take, and I go to startup X and get 100,000 share option. (vesting at 25,000 shares a year) so on my anniversary date I exercise and transfer to you 2,500 shares in the startup I'm working at. Could be hugely profitable, and a waste of time, but the risk is shared. Can't eat shares though, so there has to be a model for some cash.
What I like here though is exploring other models.
Also, the idea of having an agent to negotiate salary, at least initially, sounds great since the agent will presumably have a lot more knowledge of other salaries in the area or even at that company and the information situation would be more balanced.
The agent would make sure finances are handled well, PR is constant and appropriate, negotiations are taken care of and much more.
In general when I deal with recruiters I even tend to treat them as an agent: I flat-out refuse to accept anything over 10% on top of my rate.
For a consultancy company my logic is the same: I find out what is being charged for me, deduct my salary + costs from it and evaluate whether the services that my company is providing me are worth the amount of money they are earning on me.
At some stages in your career they are but often times they aren't. At those times I would love to just get an agent I can trust, that I can work well with and that will get me the jobs I want.
If someone ever came to me looking for a job who had an agent, I wouldn't even bother. Just like I don't bother with 3rd party recruiters.
You could argue all recruiters are opportunists to some degree. But if I do my job and do it well, someone gets a job they want and a company grows. It's a win win (except for the company that loses the employee).
It makes a bit of sense in the context of the latter two; the contracts are worth so much money that an agent can make a living off of a small percentage of the take. But if you're a programmer who can't handle your own finances, PR or salary negotiation, how well-rounded are you?
There are more programmers than athletes and Hollywood stars, but there are many more people in industries where using a recruiter/agent is not the norm. If you think that programmers are good at or enjoy handling their own finances, doing PR, or salary negotiation, I'd encourage you to talk to thousands of programmers and ask them how they feel about that. I have programmers come to me for advice on negotiation and what career moves to take that aren't even active candidates (jobs they found on their own, yet still seeking representation). Programmers that I have met hate that part of the business, hate negotiation and building their brand. Of course there are some that are willing to do it and are good at it, but the majority seem to be completely fine passing that off on to somebody else if they can.
What you say is reasonable.
I'm not sure how I'd answer that question, however, which I guess brings us full circle to why it seems frothy to me. I'm not arguing that there is no business to be had in the space; apparently, it's happening.
But the fact that there is actually demand for such an occupation to require or request agency representation is so far from the norm, it seems like an anomaly, destined to be corrected. Of course, I'm using hindsight, not foresight.
Agents work in Hollywood because if you're doing smaller work (commercials, etc) you might get 3, 4, 5 jobs a month. If you're doing movies, you might still do 2 or 3 or even 4 movies a year.
The average developer is at 1 job a year (or longer), or maybe 2 over the course of a year.
Additionally, all the Possible Solutions to Problems identified in this post are already being solved by GOOD recruiters. And many of the solutions proposed that are "opt in" are what GOOD recruiters already do... the problem with the industry isn't recruiters. It's BAD recruiters.
but they also have a lot less work to do per client, they're only needed for a few weeks' work every year each.
and that serves them well if they build a portfolio of clients with myriad technical skills between them - IMO engineers aren't anywhere near as fungible as actors.
Contrast that to a Hollywood or major-league sports agent: they represent a client for years across many many possible engagements. They work to get the best possible deal for their client. And they get paid handsomely for that: 10-15% gross of an actor/athlete's earnings.
I guess I'm just having trouble seeing how this model could realistically work.
Trust me: nobody working as a developer can afford to give up the kinds of percentages of their incomes that would make it worthwhile for a potential hired manager or an agent.
It's like the infamous "buyer's broker" in real estate. It only makes sense if you buy enough.
"Trust me: nobody working as a developer can afford to give up the kinds of percentages of their incomes that would make it worthwhile for a potential hired manager or an agent."
I think you are assuming a bit much here. If you can get say 100 clients (programmers) to give 2K a year, you just made 200K, which isn't too bad. That might be < 2% of salary for most people who would even want an agent - if that person is a consultant, it could be 1% range.
Everyone keeps assuming the agent only gets paid during job changes, where I was assuming it was a career agent that was part of the team all year round and not just during job changes. Athletes have agents, paid a percentage, but don't change agents every time they change teams.
If I negotiate you a 5K salary more than you would have negotiated yourself, that 2K per year seems pretty small. Just spitballing the numbers of course.
http://www.freakonomics.com/2008/02/26/real-estate-agents-re...
But if they can't (and the paper seems to suggest they don't) then it might be better to avoid using an agent and arrange a deal yourself.
Long term requires recruiters to be fully ethical or lose credibility. If I send you for an interview and it isn't the best fit for you, I'm financially motivated to try and get you to take it anyway. As your agent, I would tell you not to since you are my client.
The agent model would be advantageous to the tech community, but obviously more costly to them. Whether or not it would be sustainable is something I would be curious to find out. I'm not sure if an agent would only get paid during a job search, as there could be advising going on during your entire career that has some value (how to negotiate a raise for yourself, what is hot/not, trends) - some of this engineers are good at, and some they are not.
That doesn't make any sense. My agent is still financially motivated to get me to take the job.
The second issue is that most of the time I'm approached it feels like a template where my name was has replaced {{name}}. For instance, take DHH for example: https://gist.github.com/1285068
Now on to your question, would I pay for an agent. Sure, but they'd have to be like Ari from Entourage. If I suck, tell me. If I don't, pay me.
Anyways, my $0.02.
The problem is, i've no idea how to go and find work for them, if i did, i wouldnt use recruiters myself. I'm not comfortable cold calling companies and i think thats a poor way to do things and most contract positions are only advertised online by other recruiters.
If i knew any UK companies that were looking for a contractor, i could absolutely place a highly qualified one in their company, but how do i find those companies?
If you are making cold calls to tech companies starved for talent, telling them you can solve their problem for free (that they have been paying a LOT for historically), the cold calls will get pretty warm pretty quickly.
On the other hand, what's an employer to think when they see that you have an agent? I would see it as a sign of flakiness. If you need an agent, you must be jumping around jobs a lot. That is not a good impression to make.
I'm not sure what a company would think. If it were to become more common, it would just be a way of doing business. I negotiate most of my candidates' salaries and packages now anyway, so having an intermediary would not be a huge leap for most companies that already use recruiters. The leap would be the term 'agent', but I think companies would respect the fact that someone takes their career seriously to have an advisor. We'll see.
I would LOVE to hire someone to help me keep those hours full. I have a day job that pays me well, so I can afford to be generous if it means I never have to wonder "Barton, are you just being strung along by this lead?"
I don't see anyone in this discussion questioning whether we, as job seekers, even need 3rd party recruiters. In my experience, we don't. Throughout my 16 year career as a developer, I've only been placed by a 3rd party recruiter once. That was way back when I only had a year of experience. I haven't needed 3rd party recruiters for the last 15 years.
If you want to disrupt technical recruiting, don't send recruiters your resume, and don't work with them when they contact you. Instead, do some leg work when you're looking for a new job.
Browse the job boards looking for positions posted directly by the company with the opening. Contact people in your network about open positions where they work. Find tech companies local to you, and look on their job boards. (This is how I found my current position, and it is the best job I've had yet.) If a recruiter contacts you about an interesting position and tells you the name of the company that's hiring, bypass them and submit your resume to the company directly.
Bottom line, they can't make money without us. We can make money without them.
What if I were to tell you that, in negotiating a job 15 years ago, you left say 10% of your salary on the table (you took 60 but were worth 66). And every raise you have received since was based on that number in some way, resulting in compounded earnings loss for your career in the tens of thousands? You don't have to believe this scenario is possible, but I talk to people every day who are substantially underpaid for what they do, sometimes for years. If they had an agent who knew their value, negotiating on their behalf, with inside information on what that company pays other people in the same job, they wouldn't have lost tens of thousands over the span of a career.
Your point about recruiters taking money out of your pocket is interesting. You would assume then, if this were true, that companies that use recruiters pay their engineers less? Or perhaps don't pay for hiring internal recruiters? I've never seen any evidence of companies that use recruiters paying less to engineers - have you?
I guess the alternate theory is that firms that use agency recruiters do so not at the expense of their own employees' salaries, but simply because they have the luxury (because they can afford both a recruiter fee AND to pay employees a fair market rate). If you believe this alternative to be true, is it a coincidence that firms using recruiters are in a better financial situation than those that can't afford it?
Just playing devil's advocate here. Recruiters often have access to jobs hat may not be in your network. Again, if you don't need them, don't talk to them and perhaps miss out on some jobs you didn't know about.
And I would warn you about bypassing the recruiter after he/she told you about a position. If a recruiter finds out about that (in small companies it is easy to find out), the recruiter could very easily call the company to claim they created your interest in the opportunity yet you applied directly, making you look a bit dishonest to a potential employer and possibly costing you the job. Recruiters have been paid by firms without sending resumes/referrals directly in situations just like the one you mention.
Firms that use agencies value the service and are willing to pay for it. I do list many of my client names on my jobs page, running the risk of people doing exactly what you describe. My model is different (primary services paid up front, usually exclusive searches), so I'm willing to take that risk to help publicize my clients.
My service is such that job seekers come to me, even when they already know who my clients are in advance in many cases, because they understand that I know how to prep them to be successful in interviews, which hiring manager will be good or bad cop, and how to negotiate at the end. I don't care how well networked most job seekers are, info on a wide range of companies only comes with experience with many.
Ever been turned down for a job you really wanted? A recruiter could have helped prep you with all that info you didn't have (you didn't know that white board exercise was coming, and you panicked). Even if you failed a first interview, a recruiter may have been able to revive your candidacy by advocating for you (references are good when that happens). I've done that as well for candidates, where companies get the wrong first impression, and I've had companies and candidates thank me years later.
Thanks for the comments and I'm glad to see dialogue with differing opinions.
Also, if I was an employer using your agency, I'd fire your firm if I found out you were telling candidates what was going to be asked in a technical interview. You're doing them a disservice by giving out this information. At one of my jobs where I was interviewing new candidates, we had to make several tests with different questions on each one because recruiters were telling candidates what questions we asked on the test. This became painfully obvious when candidates could answer test questions perfectly, but fell short on other very basic technical question we asked. The recruiter cost us money since we had to dedicate team member time to writing multiple tests instead of working on developing our product.
This brings up another problem with agency recruiting. You can't represent both parties without there being an inherent conflict of interest. At the end of the day, most agency recruiters will misrepresent one party or the other to make a deal and get paid. This of course leads into your article's suggestion that job seekers have an agent who only represents them, but that begs the question whether any sort of middleman is necessary in this sort of transaction. Other industries manage to hire people without using an agency, but recruiting is accepted as a necessity, almost without question, in the IT industry.
Perhaps I am an anomaly because I can, as you said, "do my own taxes." To be fair, I know there are agency recruiters out there who really do manage to add value to both side of the equation. However, in my experience, they are the exception rather than the rule.
p.s. Regarding bypassing a recruiter, I only do this when the company has directly posted the listing themselves in addition to using a recruiter. If I don't see the position posted elsewhere, I assume they are looking exclusively through the recruiter, and I don't bother pursuing the position unless it's exactly the position I've been dreaming about. At that point I'll grudgingly work with the recruiter.
Regarding your thoughts on representing both parties, that is exactly what I'm saying. It would seem more 'just' to represent the candidate. I'd like to see that model - companies need the referrals and candidate flow, but they can represent themselves without much risk. Candidates mistrust recruiters because recruiters are given the wrong incentives (representing both sides in a deal, but only one pays?).
No explanation needed on bypassing recruiters, that is a decision job seekers are free to make.