Fiona writes on workplace issues, including management,
psychology, workplace design, human resources and recruitment. She is
a former Work Space editor at The Australian Financial Review and has
also covered property, technology, architecture and general news.
Co-founder and CEO Michael Overell (left) recently relocated to San Francisco to open a US office and seek venture capital. Chairman Garry Visontay (middle) and Denis Zubkov (right) head of product at RecruitLoop.
Photo: Louie Douvis
Paul Slezak says he is not killing the recruitment industry. It was already dying and he’s resuscitating it.
He is one of the four founders of RecruitLoop — an online hiring marketplace claiming to cut traditional recruitment costs by 80 per cent to 90 per cent.
The business model for traditional recruitment agencies is under attack from all sides, with social media being the biggest competitor of all.
“It’s hard to charge a $22,500 fee to hire someone who can easily be found on LinkedIn,” says Slezak, who had 20 years of experience in doing things the agency old way.
Slezak and co are not the only ones taking a bite out of agency business. Many companies are finding new employees through their own networks, while recruiters are also being undercut by the automation of services, including reference checking and resume writing.
How it works
The RecruitLoop model allows employers to select recruiters, who have an average of 10 or more years of experience, and charge by the hour. These recruiters usually work for themselves, often from home.
A traditional recruitment agency charges between 12.5 per cent to 22 per cent of the candidate’s annual salary, equating to a charge of around $14,000 for a position paying $70,000.
Slezak says that is too expensive for many small to medium-sized businesses.
Recruitloop recruiters charge an average fee of less than $2,000 and provide a level of transparency, where the employer can see exactly what they are being charged for at every step along the way.
There is also an automated video interview option, which can take the place of an initial telephone interview. (BRW put Slezak through the interview process here).
RecruitLoop takes between 15 per cent and 30 per cent of the recruiter’s hourly rate.
Co-founder and CEO, Michael Overell, (a former McKinsey & Co business analyst) recently relocated to San Francisco to open a US office and seek venture capital.
He says, via Twitter, that there aren’t any direct competitors for his company that he has found go far.
“Hence, our move over here [is] relatively early,” he says.
@fionaatwork 15-30% of salary. Up to $50k for a senior engineer.
The other two founders are technology investor Garry Visontay and software developer and product designer Denis Zubkov.
RecruitLoop has completed nearly 400 recruitment projects since it started 15 months ago and has a network of about 70 recruiters, mostly in Australia, but also in New Zealand, the US and the Middle East.
Says Slezak: “It is starting to make a mark and ruffle some feathers”.
Slezak says it is proving successful in hiring generallist white-collar workers in administration, finance, IT, sales and marketing jobs.
What the client says
One hiring manager in a large Sydney-based company says she was pleased with her experience hiring a software developer through RecruitLoop.
“I’ve used two different recruiters through Recruitloop, one to hire developers and the other for customer support staff. In total, I have hired seven people at an average of about $2500 per person — some as low as $1,000, the highest was $5,500.
“In one situation, there were two very qualified candidates presented and I hired them both - for no additional charge,” she says.
What it means for the industry
Recruitment industry expert, Ross Clennett, says the individual elements of RecruitLoop’s offering are not especially unique, but “when you combine them all you do have something that is unique”.
Not only does the service work for the employers who want to cut costs and the people who get jobs, it is also working for the recruitment consultants that sign on — many of whom are working from home, who want to set their own hours and be their own boss.
Some of the established companies (such as Talent2) are also using RecruitLoop as an alternative to the full service offering.
Clennett says traditional recruiters no longer have the upper hand in holding databases of candidates, thanks to the ease of searching through Google and LinkedIn.
“Having access to candidates is not the advantage it once was. The value proposition has been eroded,” he says.
This is very bad news for the owners of recruitment businesses who have banked their retirement on being able to sell out at a good price.
“They are going to be very, very disappointed.”
Their own worst enemies
The Sydney hiring manager, says some recruitment agencies encourage employers to look for alternatives by: assigning junior staff who waste the client’s time, by charging a fixed percentage of the candidates salary, no matter how much work they put into the job, and by “pushing” unsuitable candidates.
“In working with a RecruitLoop recruiter, he came across a candidate that he had learned of through word-of-mouth on people recently finishing a project. I interviewed the person and subsequently hired him,” she says.
“A recruiter that had worked with the company on other roles and who was also aware of this candidate emailed me an invoice for $16,000 because he said he had sent this resume to a development manager he had worked with on another role.
“So he was perfectly comfortable charging me for a hire that he did absolutely nothing on and about - which I had never spoken to him prior to that moment. It’s this kind of thing that can give a recruiter a bad reputation.”