What we're talking about

A recruiter, or a recruitment agency, works closely with a business to identify the right people needed to fill positions that can help the company grow. They take care of the more laborious side of hiring: sourcing excellent candidates, screening them, interviewing them and, then, all being well, presenting the best applicants to you.

They also work on the other side of the equation, helping candidates who are looking for work find companies that are a good fit. While big businesses might have an internal HR team dedicated to recruitment, you probably won't have the budget for that. That's where working with a smaller recruitment agency or individual recruiter comes in.

Why it's important

The term ‘recruiter’ can raise a little skepticism: you might think that working with them is an unnecessary expense, that you know your company better than an external third party and that you're more attuned to who's a good fit for your team. The truth is, though, working with the right recruiters can be great – and necessary – for a small business going through a significant period of growth or change. In a recent survey, almost a third of small businesses planned on using one to help their employment needs.

Good, niche recruiters are specialists in the hiring process. They have the skills and expertise you need, with a large network of candidates – plus, they have insights into the ever-changing job market that you won't have. They'll also be able to think of hiring solutions that you might not know about, so you'll be positioned to attract top talent. This is a big appeal for small businesses owners, who probably won't be able to find a crop of engaged candidates as quickly as a recruiter, who finds them for a living.

Things to note

They come in various shapes and sizes. Recruiters are quite varied. Some function internally as part of a large organization's HR team; there are ‘headhunters’ who find qualified candidates with specific skill sets; and executive search recruiters specialize in filling highly skilled senior management roles. At the small business end of the scale, you'll most likely be working with a smaller recruitment agency or individual. This will either be on a contingency basis (the recruiter gets paid only as and when you make a hire) or on a retainer basis (a fixed amount is paid upfront or on a regular basis, and the remainder when you successfully hire someone).  

It's all about finding the right fit. Finding the right recruiter is a matchmaking process – and the wrong choice can be a serious waste of time. The aim should be to foster a long-term, mutually beneficial relationship: the recruiter should fully grasp and align with your mission and understand your culture. So, don't be put off by a recruiter asking you lots of questions about your business and team. In the main, small- and mid-sized agencies are beneficial because they're normally more flexible than larger companies, provide a more personal and tailored service and are more accountable with a clear point of contact. Bear in mind that there'll probably be recruitment agencies that hire specifically for your industry. And, generally speaking, the more niche they are, the better.

Candidate diversity can be a problem. As you're no doubt aware, there are plenty of biases inherent in the recruitment process that often mean candidates aren't from a diverse range of backgrounds. Recruiters are often trained in removing their own unconscious bias, but they'll be taking a steer from you on the type of hiring process that you want. When you vet or engage in early conversations with a recruiter, get clear information on what they do to ensure biases aren't in play and that people from marginalized backgrounds apply or are sought out. Some recruiters offer a blind application process, where any identifiable data (eg, names or photos) are removed from the early stages – but this requires input and approval from you.

It can be expensive. A general rule of thumb is that the standard recruiting fee for agencies is around 15% to 20% of the first-year salary of the role being filled (though it might be higher for hard-to-fill roles – it can be as high as 30% for senior hires who have been actively headhunted). It's often possible to negotiate this down, though. As mentioned, many work on a contingency basis and there's also usually a 30- to 90-day period during which, if the newly hired employee leaves, the agency will replace the employee without charge.

They can offer more than you might think. The best recruiters offer far more than simply sourcing good people and putting you in touch. They can also help you strategize which roles you really need, solutions to problems and compensation terms. It's not always easy for business owners to know what market rates to offer, while recruiters should know them inside out.

How to find the right recruitment agency 

1. Clarify what you're looking for. Before you make any moves, get clear on what you need to help your business grow. You may already have a clear idea of the role (or roles) you need to fill, but it's worth confirming the skill set, level of experience and general attitude required. Is a full-time hire definitely what you need? Is it a specialist role? Work out the specifics.

2. Create a role spec. It's helpful to formally write down a list of the key objectives you need from that role – eg, for a graphic designer, the ability to design a new website – and also the character traits. This can be helpful for your own hiring process, but it's also handy to pass to a recruiter – plus, you can reference this if they send candidates that don't fit the bill. Don't always assume that the recruiter knows what you want just from a job title – you need to be clear on the key requirements for your business (the nice-to-haves and the must-haves). 

3. Get your house in order. Recruiting isn't a one-way street – candidates will be checking out your business to decide if you're a good fit for them, too. That means your outward-facing profile needs to be up to scratch – from the general look and feel of your website and social profiles to your ‘about us’ and jobs pages. You need to make clear the value of working for your business and what you're hoping to build.

4. Start with personal recommendations. Start with people you know to find out if they've worked with any great agencies or specific individuals. Speak to other business owners or ask for recommendations from employees or your network. Word of mouth is a great place to start to find agencies or individuals who have done good work for others.

5. Search online. This will vary depending on what sector you're in and the niche you're looking to fill, but searching online can throw up some options for good recruiters in your area. You might start with LinkedIn or even a targeted Google search. There are directories too, depending on your location. Look to shortlist around three to five potentials that appear to align with your needs.

6. Reach out. This is all about seeing if you're a good fit for each other and if this recruiter is right for what you're looking for. Have they worked with businesses like yours in the past? Do they have client testimonials? Do they work with candidates that match your specific needs? Do they have a track record of working with a diverse pool of candidates? Be open-minded and ready to listen to their advice. Narrow down to the one or two that you feel are the best fit.

7. Show them your culture. Provided early conversations have gone well, invite the agency or individual that you're interested in down to your place of work (if appropriate), so that they can get a real feeling of how your business operates and the culture. You don't want them sending you bad candidates – it's key that they understand how you work.

8. Negotiate terms. Your initial conversation will have given you an idea of their costs – now it's time to put your negotiating hat on and agree on a fee. You can often negotiate down on their initial price – make sure that you find an amount that's at a logical price point for your business and the role you need to fill. It's worth noting that your recruiter will be working with multiple people so, if you negotiate the fee down too much, you may become less of a priority.

9. Keep in touch. Once you've agreed on terms, keep the phone lines open. Give them a platform to ask questions, as working together should be collaborative. Then, make sure to give thorough feedback at all stages of the process – this will help them best serve your needs.

Key takeaways

●  Working with recruiters can be great – but only if you take time to find the perfect fit. Generally speaking, smaller, more niche agencies or individuals will be a better fit for a small business. 

●  You're looking to avoid being sent the wrong candidates. That means creating clear candidate outlines for recruiters to follow – and immersing them in your culture.

●  When it comes to payment, you should agree to a fee before you start. Be prepared to negotiate where you can, but remember that you want this to be a long-term relationship.

Level up

Perspective. In this excellent piece, Peter Kazanjy, founder of software recruiting company TalentBin, offers his learnings on how to find a great recruiter.

Tool. Work management platform Asana has a great candidate tracking tool, with an easy-to-use template that provides all the details in one place.

Example. If you need some help writing a job description to send to recruiters, applicant-tracking system Workable has a range of templates to use.

A version of this article was published in the Courier Workshop newsletter. For more deep dives into essential business concepts, sign up here.