The Breakthrough Hiring Show: Recruiting and Talent Acquisition Conversations
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The Breakthrough Hiring Show: Recruiting and Talent Acquisition Conversations
EP 109: How to properly leverage staffing agencies and optimize engagement.
In this episode, our host James Mackey discusses the world of staffing agencies with Steve Gage, CEO and Co-Founder of iLabor Network. They share valuable insights on leveraging staffing agencies effectively and offer practical advice for companies engaging with them. From understanding the critical application process elements to evaluating staffing agencies based on key metrics like hires and conversion rates.
0:33 Steve Gage's background
2:00 Leveraging staffing agencies
13:13 Staffing and recruiting challenges and considerations
23:19 Building trust and collaboration with recruiters
29:33 Cost per hire and agency partnering
39:23 Improving vendor relationships in staffing
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Hello everyone, welcome to The Breakthrough Hiring Show. I'm your host, James Mackey, very excited to have Steve Gage with us today. Steve, thanks for joining us. I'm really pumped. We're covering some new topics today that we have not discussed before on the show, actually, which is really cool. Before we jump into our topics, could you please tell us a little about yourself?
Steve Gage:Sure, well, I am a technology staff. I suppose I was a data communications engineer going back to the 90s. I used to look aft global data center communications. So fast forward.
Steve Gage:I'm in the US now where a company bought a small part of ESPN, bought and sold that a little bit, and I ended up being CEO of a large staffing company. It was more blue collar but we had hundreds of offices and so that was my first time to staff in. That company was bought out by TrueBlue actually and the former CEO of myself kind of put his head together and thought what should we do next? And we said let's solve this problem that we had at the staffing company, which was how to work with B2B, how to work with secondary suppliers, and what are the complexities and can we solve that complexity Because we experienced that. So we did that, and where we sit today is my platform basically takes all the wild west away from working with secondary vendors. So today we've got thousands of staffing companies and staffing firms within our system. So I've got a good kind of lending into how that industry operates and hiring and everything that goes with it.
James Mackey:Yeah, and I think what's really what's going to be very impactful is talking about our first topic how to leverage agencies properly. When you're engaging with, whether it's a staffing agency for contract work requirements, staff augmentation or you're looking for, we can. Also, I can, shed some light into permanent placement success, fee based agencies, embedded recruiting, contract recruiting, rpo. So, steve, you're going through your insight. I'll also drive parallels into different engagement types as well and we'll, I think, provide a pretty holistic view for folks on what they need to do to leverage agencies properly. To get us started, how do you think about companies engaging with staffing agencies? What do you think are the highest leverage things that leaders can do to properly engage with staffing firms?
Steve Gage:Yeah, I mean you've got there's 10, 20 different things that you can look out for. I think it's three or four that are critical. That'll kind of hit throughout the process. But the first one for me is you have to understand your requirements, and you have to. What I mean by that is and it sounds simple, but you have to know the exact job roles that you need. You have to have great job descriptions. What are the exact skills that you need, qualifications, experience, so really digging down and spending the time upfront to know what the requirements are. So it's still more steady as you go down the process there.
James Mackey:Yeah, I think. And so in application, where I see a lot of executive leaders as the frustration kind of funnels up in terms of okay, we're not getting what we need from our providers, there's a lot that should be done on the front end of opening a requisition with a staffing agency. That I think is typically skimmed over. There should be a multi-step process to have a rec approved to be sent out to a staffing agency. I mean opened in general, right 100%.
Steve Gage:Yeah, 100%. That's what we like to see, because it's robust, then, and it's clear and it's concise and what we're looking for.
James Mackey:Yeah, I mean there's just a lot where it's kind of flying by the CD or pants, so to speak, like getting all the salary requirements, the role description.
James Mackey:Even for a staff augmentation position there should be an onboarding plan, maybe it's accelerated, maybe roles are more limited in scope.
James Mackey:That's something that I think needs to be considered. If somebody's going to be on a shorter term project I don't know if they should necessarily have the breadth of responsibilities as a full-time person that's going to be staying a year and a half, two years so I think, like getting really dialed in on to like the outcomes that need to be achieved. If a full-time role needs to acquire like three outcomes to five outcomes, maybe the person sitting in the contract role should be accountable for one to two. Right, really be dialed in. Accelerating ramp understanding salary and really just I think just getting like more dialed in and having to get a multi-step approval process that funnels up to somebody ideally at minimum senior director, but a VP level, depending on the size of the organization prior to having these kind of wrecks open where it's like loose, like we need a software engineer to kind of work on this project. It just it has to be a lot more dialed in than that.
Steve Gage:Yeah, and it can be changed as well. I mean, we often see so you put a requirement out there and the candidate's flowing back in and not quite right, and that's often down to the original requirement. So changing that and tweaking it and massaging that throughout the process, there's nothing wrong with that at all.
James Mackey:Right. And so how do you think about industry specific agencies, Like how important do you feel like that is for? Them to have like a lot of industry experience, yeah.
Steve Gage:So I mean we look at the staffing agencies we've got out there. I think in the US now we're at 22,000 staffing firms that are out there that you can deal with. So obviously, depending on the criteria of that position whether it's a life science or healthcare or project management these staffing companies, some of them have very niche and specialising that. So I think spending the time about what are the kind of positions that this agency is feeling, are they in the right sector for me or for the majority of my roles If there's multiple roles, multiple agencies, that's also fine as well and then spending the time to research these agencies, because people talk about it all the time referrals, glass door staffing firms have a reputation and the ones that shout about their success rate. So really digging into the pedigree really of the staffing firm I think is very, very important.
James Mackey:I mean I think like there's. So there's a few things here. One, I think it's under, one of the most important when you're selecting a staffing agency is understanding if they're working on high volume roles or corporate roles and basically the structure of the process. Are they? Do you need one or two interview rounds or do you need five? What are the complexity of the roles of these more blue collar or corporate positions? And understanding the volume Is it a really high volume, lower, more entry level, more entry level blue collar type of roles or is it more strategic searches or higher level potentially searches when it comes to software engineers and these types of things? So I think qualifying those two honestly sometimes I feel it can be more important than industry experience, just understanding, like from a process perspective. How well does it align?
Steve Gage:Yeah, I was going to say the complexity of that workflow as well. Like you just mentioned there, this could be from blue collar light industry, or where we might not be even looking for a resume, right down to the extreme where we're doing skills testing and there's various levels of interviews and approval processes to go through. So the staffing agency has to be able to cater for that, because it's not one fit to every all box. It's diverse and it's very, very random often about what each position needs. So, yeah, flexibility at the agency level is key.
James Mackey:Right, and I think, too, it's like. The other thing that I would say is really important is I don't know if it's enough to research the results that a staffing agency has generated, because you're going to find people who love a certain agency. You're going to find people who hate that agency. It's hard to know if it's the agency's fault or if it's the end customer's fault, because they don't have an efficient hiring and onboarding process or they have leaders that don't know what they're doing and they're looking for, essentially, staffing agencies to take responsibility for deliverables that are really the responsibility of the department lead, or maybe there's high turnover at the staffing agency and that's impacting quality. So sometimes it's going to be the staffing firm's fault, sometimes it's the end clients, but anyways, I feel like with a lot of staffing agencies, you're going to get these mixed bag reviews. So one of the things that I recommend is you can ask to meet the people who are going to be on your project. You want to actually evaluate and staffing agencies hate when you do this, by the way but the reality is like you want to know who's going to work on the team, who's my delivery lead right, like who's overseeing performance right, and then who are going to be the recruiters, account managers, whatever that are going to be dedicated to the account. You can also ask for assurance that those folks are going to stay on your project. They're going to start to push back on stuff like that. But you actually can have that stuff put in the SOW, your statement of work, and I highly recommend that it shouldn't just be based on like submittals or like some kind of activity metric.
James Mackey:The two, first of all, the two things you can look for or you should be pushing for as a company, is number of hires or number of conversions. And then you also want to look at conversion rate. You know how many resumes that are being sent are being actually interviewed by the hire manager. And then also the conversion rate. That's actually even more helpful than one. More helpful than that is going to step further and saying, of the candidates that hiring manager interviews on the first round help, what percentage of those move forward to the next step. So you can put in a metric saying, okay, 50% of the resumes that are submitted to us have to make it to a hiring manager interview. When you're evaluating agencies, like you want to be looking about, like what are they willing to to commit, and also again like knowing who the team is that's going to be working with you and actually putting that in the statement of work, that those folks are not going to be pulled into different accounts.
Steve Gage:I think that's really important. Yeah, you're trusting them. You know you're listening here. They're looking for people that trust in their brand with an outside agency. So you want them, this outside agency, to care and love the recruitment process as much as what you do. If you're doing it in-house as well, it's all about you know. Sharing your vision is paramount.
James Mackey:Right, right, and I like just for everybody tuning in like I own a recruiting solutions firm, so, and we do like contract recruiting, embedded recruiting and RPO. But I also, prior to starting my company, I did contingent search, I did staffing. I started at K-Force, which is a publicly traded staffing agency. I worked my way up from as an intern. So, like I've been in those roles, I've also been in house run internal town acquisition departments.
James Mackey:I've been in the buyer seat of these different town solutions and what I can tell you is that you, quite honestly, as a buyer, you have a lot of leverage here because there are so many staffing agencies out there.
James Mackey:You have a lot of leverage to create an SOW that works for your company and again, it's not just about requirements, it's about the people that are actually working on your project. The other like just to pivot, to like the one other thing I would just say is like part of planning to open a role, like you should have a faster interview process for a contract position as through a staffing agency, then you have for a full time role. And so I like I think a lot of people confuse that by saying, like well, we need to make sure the person's really good? Of course you do, but again, the roles should be more limited in scope, so what you're evaluating should be less right. Again, if a full time role has three to five outcomes, the outcome that needs to be delivered by the contractor should be like one to two, and so that's how you accelerate the process, by making sure that you still have quality control in place.
Steve Gage:Yeah, exactly, it's giving the agency a little bit of flexibility there as well to be able to move around and, like you say, for contingent type working as well, if it doesn't work out right, it's a lot easier to fix than if it's a perm placement there, if it's something permanent. So, by not really reducing the requirements but just lightening them up a little bit and then creating some flexibility in there, right, we should yeah.
James Mackey:And again where companies get this wrong and also I feel like staffing agencies position it wrong. It's like when we say line up requirements, like we mean like shortening the scope of the role, it doesn't mean saying like lowering the bar on all the skill sets that are required. It just means like if you get a candidate like, this is what staffing agencies hate to hear. It's like they have all of this stuff but they're missing this like one tech right, and it's like we can't fill this role because it's like one thing. It's like okay, well, if that's mandatory, fine, but then cut some of the other things, make this like the role more limited in scope. And if that's not available on a contract basis, well, it sounds like that skill set is valuable enough that you need that on a permanent basis, right, so it shouldn't even be a contracted role.
Steve Gage:Yeah, and I'm flipping it to the candidate side as well. These candidates, if they're missing one out of 15 skills let's say we talked about some sort of development here by missing one these candidates like the opportunity to tap into another skill. You know something new that they've not quite done, because it's quite unlikely that they're going to be in an environment where there's five other of those guys there and they're gaining more experience. That gives them more self advancement really in it. So by again, we're not lowering the bar, it's just these people generally will get into a situation and be able to evolve and get that skill and get it. You know that skill, you know absolutely equipped.
James Mackey:Yeah, I completely agree and I like. One thing I wanted to touch on too is, like we're. I feel like I keep coming back to statements of work, which I feel like are very important when you're engaging with a staffing agency. So like, once you've established who's going to be working on the account, outlining that those are the folks that need to be engaged. And remember too, like when you're talking to a VP, usually they're incredibly sales bent, so you need to be aware of that. They're incredibly skilled at objection handling. So you really have to dive into what are the quality of the recruiters that are on the account. What background and experience do they have? Are they kids out of college? Do they have 10 years of experience? Yes, right, so you have, like a lot of these. And for high volume, recruiting a kid out of college is fine. For a strategic finance and accounting engineering roles. It just depends on what you need. So you want to understand the breakdown of the team.
James Mackey:But on the SOW, this is what's most favorable for the staffing agency. From requirement level, the most favorable is no SOW, like just button the seat is the most favorable. The layer underneath that is activity metrics, so it's like the number of messages sent, followed by the number of screening calls. So you have those. Then you have like submittals, and then further down funnel you have conversion rates and then further down funnel you have number of hires.
James Mackey:What's most favorable for the company is number of hires. What's most favorable for the staffing agency is nothing or high level of activity metrics, because then they just know the activity funnel and they can make sure they hit that metric. So that's why you see a lot of statements of work sort of meet in the middle to submittals, which has its challenges because they have once a middle but they need to make two a week. So they push someone through is not a great fit and then it messes with their conversion rate to from interview from person sent to who's actually interviewed. But it's like it's finding that middle ground sometimes that works for everybody.
Steve Gage:Yeah, and I think it's fair to say that, because every job is different. But if we're finding Java developers or project managers, there's quite a lot of those people out there, so the top of the funnel is going to flow down quite accurately. But if somebody's looking for the purple squirrel out there and it's hard to find that can easily screw around with metrics. I think having kind of macro statement of macro directions in the statement of work, depending on the roles as well, which sounds super complex, that's both smart, yeah, but it makes it successful, because everybody wants to succeed on both sides of this deal and there's also often, I see, things missing. What, if so people have been placed in the statement of work should be things like well, what if it doesn't work out? What does the replacement process look like? What does the refund process look like If something doesn't quite go right? Guy gets a job and five days in he's not really the right fit there. Everybody's the stuffing agency going to do about that.
James Mackey:Yeah, I think so. There's two follow-up points on that. Like one, when something goes wrong, internal leaders need to understand it's pretty close to 50-50. It could be the internal team versus the agency. I think the issue that you have to remember is that an internal hiring manager is probably not going to take responsibility for something going wrong. They're going to push it on the staffing agency. So it's like the feedback that, as a leader, you're going to receive is that 90% of the time it's the agency's fault. But the reality is that it's, honestly, usually like 50-50. It might be the agency's fault A lot of the times the responsibility was on an internal team to deliver an outcome.
James Mackey:So at the end of the day, hiring managers, your internal leaders, are accountable for the outcomes delivered. It doesn't matter if it's outcomes that their internal team needs to provide or that their agency needs to provide. So it's really important to remember that. So if something is going wrong with an agency, okay, fine, it's going wrong with the agency, let's even accept that. But at the end of the day, it's the responsibility of that internal leader to drive outcomes for their department.
James Mackey:So I feel like that's also really important to qualify, because I think, yeah, I've certainly been in situations where and now our business model is different, like we don't do staff log, we don't do success fee basis. We're so embedded and we work so closely with our customers that this unalignment doesn't really happen in this business model for us. But when I was working on the contingent and staffing side, there were definitely several instances where something was completely out of our control. But from the perception of the customer it was our fault and it's like well, look, you're keeping us at arm's length, limiting us to top a funnel. If all I can do is submit resumes, how are you going to hold me accountable for offer acceptance rate? I have nothing to do with that part of the process.
Steve Gage:You've got to extend that because they are the delivery arms. So this agency, you have to provide them with as much information as you can, maybe some internal blogs. What is your company culture? What's your selling proposition? And let them, you know, kind of on board the vendor as if you do an employee, you know, scare. What's your company culture like? What are the expectations within the role? What does the hierarchy look like within there?
Steve Gage:The more you give the agency and the more, like you say, close communication that you have there is important. And then you also put some feedback, you know, on how things are going. What I like to see is I like feedback on the things that didn't go right. So, you know, with top of funnel, we get 10 resumes and three go to interview. Why did these seven get, you know, submitted? Why did they not, you know, carry on the process and let's talk about those seven, because we don't want to leave those in a black hole either. You know, because everyone in this process wants to understand why. Because the agency or the recruiter of the agency is working this position. They don't want to be wasting their time and maybe they're not clear on some things. And you know why did, we got seven rejections. So having a lending to that as well, on the not the failures, because the job will get filled eventually but it might optimize the way that that job is being filled.
James Mackey:Yeah, I couldn't agree more, and I'm just trying to think of those other parallels. Okay, so we talked about staffing for contingent based firms or for embedded recruiting. I think the other thing you have to remember is recruiters at staffing agencies, contingent based success fee firms for perm placement they're working with several customers at once, right? So in some cases they're working with a lot so and and and those different structures. Like if they're a niche provider let's just say they provide software engineers then what they're going to do is, if they're location based, is they're going to try to take one software engineer and reduce them to 10 companies, so it increases the likelihood that that candidate's going to be placed. So you have to remember, like, if they're working with 10 different customers, first off, how much are they going to really have the ability to remember about your organization and how much time are they actually spending with you? So if they have 10 customers, that's four hours per week thinking about your company. So I'm not saying that, like, sometimes it's lower volume, but I would say on average, like when I was in staffing, I was working with a lot of customers at once, and so what ends up happening is like when they're doing the kickoff call with you.
James Mackey:They're asking questions about like, what's the hiring manager? Like, what are they looking for, what's the culture? Like, what are you guys building? And a great recruiter is going to ask the right questions. But what you need to do is you don't necessarily know at the beginning of engagement Are you getting a great recruiter, are you getting a mediocre recruiter? And the way that you shorten the delta to make sure that you can get the best results possible, provide them with the details in writing. This is how you position our company. Like, just have like, okay, this is how you position the company. This is how you position the role. This is how you position the hiring manager. This is our culture. These are, you know, whatever, if it's tip to hire, like this is what will happen upon conversion, success, path progression, all that kind of stuff. So that it should be a one pager, so the recruiter has all that information and you should be sharing that with your vendors. So, because otherwise they're going to give like a two sentence pitch that may or may not actually be that accurate.
Steve Gage:Yeah, and let's be honest, right, recruiters work fast and they want the easiest, lowest hanging fruit that they can get to. So the more material that they've got is like as a company, make that. Make that recruit. As a hiring manager, make that recruiter as successfully as he possibly can be, make it as easy. So when he switches his computer around in the morning he's going to go to, you know, steve Gage Corporation and work my job, because it's probably going to be the easiest one to fill, because I've got more information. So you can have always in competition with, like you say, the other nine companies that that recruiter is working for. So make it as easy as possible.
James Mackey:You know and like look, I think there might be some agencies tuning in like, wow, man, like you're really, you know you're talking to us in a way that like, maybe, like it seems like we're sometimes not.
James Mackey:You know it's like we're not doing great and like that's not the case. I think the best agency people tuning in and might be that are hearing this, like if you are in the agency side and you're hearing this, this is, this is all stuff that, like you actually want to share with a customer, like if you want to develop trust with a customer, and this is, you know, for CPOs tuning in to in house, like the right vendors are going to help you be aware of your blind spots and it's a mutually beneficial thing to have alignment on what performance good performance looks like. The best agencies are going to do that. And if a company like you know the way that I've built trust honestly with several customers and I've just said like, look like, if you need help, like if you choose not to do embedded recruiting and you decide to go contingent or the staffing firm, I can help you negotiate the terms, yeah.
James Mackey:I want to make sure that you're protected. And hey, by the way, as you're evaluating us, as you're evaluating other companies, this is what you should be looking for. And if you can provide that level of expertise where you're showing that you're not just being incredibly biased toward your own success, like I'm not saying negotiating it yourself. What I'm saying is bringing clarity to what good performance looks like, and if you can show them what good performance looks like and help them come to that conclusion, you are building trust and confidence and their belief that you can deliver, which is critical. So that's why you want to be pushing this stuff as an agency as well.
Steve Gage:Yeah, if you're incorporating that agency into your, your work life with the hiring manager. I mean it's all about relationships as well, and recruiters are experts. I mean they know better, probably, what the hiring manager needs as well. So it's not just about okay, here's the job requirements, go fill out the, you know, go grab resumes and get me some interviews. You know, these people can be lent on a little bit for advice as well. Hey, I've set this job up. Is it right? Like, like, accept some not criticism, but accept good advice from the experts which are the recruiters out there. It's going to be important.
James Mackey:Right, again, it's like it's. That's why you see a lot of recruiters try to limit scope, right, and there's a balancing act, like as an internal leader, you have to know what a role needs versus what. Maybe it doesn't, and a recruiter shouldn't be dictating that. But you should be taking that feedback and saying, okay, this seems to be what's choking our top of funnel, what are we going to do about that? And then you need to make a decision and share that with the recruiter. But if you have a role that's open for several months, like it's, it's like the recruiters want to make the money. Yeah, they want to fill it as fast as possible. So you got to like it's it's and, honestly, like it's.
James Mackey:You know, on the staffing side, particularly the quotas are so freaking intense, like I remember when I was at K-Force like you know it was, the quotas were really really tough. It was a grind. It wasn't a work-life balance, it was, you know, pumping out calls, like really moving out of a fast clip. I actually started on the sales side. My target was I had to do 100 cold calls a day plus three in-person meetings a day. Wow, wow. And so it was. And I was on the finance and accounting side.
James Mackey:When I started out, like you know, if somebody's been at a staffing agency for more than six months, you know if they have, in particular, if they have over a year of experience, if they've been at an agency for one to three years.
James Mackey:Like this person's a hustler, so you don't have to worry about like somebody's not grinding it out that the one thing I would say is, like, if you're starting to feel like there's a lack of engagement, it can be because they're like their time can be better spent. Like hey, I'm not going to work on this customer because they have these unrealistic expectations on compensation or roles. So you know that's a conversation that you know you can also have transparently with an agency. Like hey, like how high are we on the priority list? Like let's just level set, you know, based on the requirements you're giving you, how does this stack up with what else is on your plate? Yeah, and this have a real conversation about that. I want to make sure that we're the first thing you think about when you get to your desk in the morning.
James Mackey:And I remember I took. I built myself out as a chief people officer for a, a person in South's company. I did this during COVID and I wanted to take myself off overhead because things plummeted in hiring, absolutely. You know, I had to do what I had to do to keep the lights on. And that was basically a conversation where I had staffing agents like my. My sell to them was like, look, we're going to have a weekly meeting. I was selling them and working on our company. Like we're going to. This is how many placements I want you to make this month. This is how many, how much money you're going to make. Right, you know how? What do you need to get from me in order to that you can be successful? Yeah, like I want, I want to be your priority. I want you to wake up every day and work on my rules. What do we have to do to make that happen?
Steve Gage:And if you do that like and that music to their ears right.
James Mackey:Right, yeah, like let's make some money together, let's get you paid, let's get us what we need, let's get, let's get it done. And I don't think enough internal leaders have those genuine conversations with their agency partners.
Steve Gage:I don't, yeah, yeah, we don't see it, so it's yeah. I guess the the lesson here is you know, the more you can share, the more you can make them be. You know, I, you know I always get the delivery arm, but really they're, they're part of your company. It's the. Communication is everything, feedback is everything.
James Mackey:Yeah, yeah, and I think, like one thing we can get into, like I think we've already touched on a lot of like measuring performance and whatnot, but I would like to just like talk about cost per hire a little bit Mm-hmm. I know that's one of the things we that you had written down, like what are your thoughts on cost per hire sustainability when it comes to partnering with agencies?
Steve Gage:Yes, I mean everything you can be can be measured. You know I want to my pain this agency to get this candidate in there, you know, and there's an expense there. And how do you measure that up against if I was doing that internally with an internal person there? So looking at this is it's difficult to quantify at all levels because some positions are really quite easy and some positions are extremely difficult as well. So if you can kind of segment what the category of that position is, then you can kind of manage the cost, you know, per hire.
Steve Gage:So I mean in my world we're not doing direct now. So where we're looking at, you know, do a position comes in, even from the agency to go out to secondary suppliers? We know at a certain point, you know. So cost per hire for me means sometimes a little bit different of what it would for, let's say, a CPO at a large firm. Cost per hire could be what's the burden for having this employee on my W2 versus the burden to paying a higher contract price with no burden? You know, at a contract you know B2B level as well. So it's just understanding that and it could have been different for everybody.
James Mackey:Yeah, I think it's. Your cost per hire is something that you have to look at and make sure that you're hiring in a sustainable rate, and I think there's parallels from revenue organizations to talent organizations. When you're looking at your, you know a revenue side, you would call it customer acquisition cost. Yeah, right, I mean. So here it's like employee acquisition cost, and one of the most important ratios on, for instance, for us in tech specifically, is looking at the ratio between customer acquisition costs and lifetime value which is basically the amount of money you're going to make back.
Steve Gage:When do we get paid back? Right yeah, exactly Right.
James Mackey:You're paying back period and how the overall contract length and how much money you're ultimately going to collect, yeah, and what ratio that you need to. You know when you're thinking about the cost of delivering the solution and everything else where you need to be at in order to like how much money that you're going to be making back from the customer. So I think that that's an important thing, you know. The other thing I would just mention there is different engagement models are going to work based on your requirements. Like there are going to be some cases if you're leveraging contingent success fee firms too much where that's going to ultimately become a huge expense on a P&L and something that is can be seen unsustainable at a high volume level. And so I would just say, like, be strategic about working with contingent firms. Understand the quality of the recruiter that you're working with. On the contingent firm.
James Mackey:I personally this is why I went from when I started the company. I did contingent, I moved to contract and embedded recruiting RPO because I figured it was. I think it's a more sustainable solution if you're going to have ongoing needs and you want flexibility to your P&L. So, like, the ratio that I see often for later stage organizations is 70% in-house, 30% augmented to agency. So you have a flexible cost kind of baked into that can fluctuate alongside the fluctuation of hiring and still hire at a sustainable rate where you're bringing your cost for hire a lot further down on the agency side than working with contingent firms.
James Mackey:So there's different ways you can slice and dice it, but that's where it's like you have to think about okay, is this a staff log motion? Is this a embedded recruiting RPO motion? Do we need a success fee based provider or do we need some kind of hybrid between embedded and success fee, which you can also find? It's basically partially subscription, partially success based. So there's a lot of different ways to slice and dice it, but we have to think critically about what type of provider we need to plug in based on our hiring needs.
Steve Gage:Yeah, and two thoughts on that. One is current climate and where we are in the economy right now. But first, we're seeing some kind of skewed numbers a little bit at the minute because the lifetime payback of you know we've hired somebody and they're in a role and obviously we've got the perfect person, so the longer we can keep them, what we're seeing is that people are not starting new projects at the minute. So obviously new open requisitions are down, but what we are seeing, which is skewing, like my cost predictions, is that. But these hiring managers are keeping the existing people on and just moving to another project because if they lose that candidate then there's no budget to get another one, but there is budget to carry on that. So we see that changing a little bit. So that's easing up on the actual cost of acquisition there, or you know the said thing, employee acquisition.
Steve Gage:And then the second thought is we're also at a time now where, you know, economy is kind of hurting, especially in the tech industry, and maybe the internal talent recruiters are being let go, maybe sales teams are let go. But if you keep that relationship with the agency, that's highly recommended because when things are gonna change and when the switch flips in a few months, hopefully, where everything comes back to life. Then to lean on that agency. They're ready to go a lot faster than what you could be. So even if you're not opening jobs, keep the relationship with the agency.
James Mackey:Right, and this is why it's so important to go ahead and get MSAs in place. So if you're an internal leader of people, I don't care if you're a CEO, cpo, director of talent acquisition this is the time for you to get MSAs in place. If you have to go through procurement, that's gonna take time. You need to get MSAs in place outlining the terms, outlining performance at a statement of work. That doesn't mean that you have open rec with them, but you should be evaluating the quality of the teams. Like, again, I wanna know if I'm gonna work with an agency, I'm gonna know who's working on my account. Like I'm gonna interview them. I wanna make sure that they're good.
James Mackey:I need to make sure because that's gonna be the primary indicator of success is, when you're working with an agency, everybody's focused on the candidates. So when you're the candidate, oh right, but who's bringing you the candidates? Like one of your contractors is the recruiter. You need to make sure that you have the right recruiter and you wanna do that stuff proactively. So you should have those MSAs in place and then you can send additional statements of work, amendments to the MSA, to actually go ahead and have people billing and you can negotiate. You can either lock in pricing in an MSA or you can negotiate pricing on a per kind of like statement of work basis as roles open up. So there's different ways to structure that. But like you're absolutely right, like keep the recruiters warm, make sure that you have the agreements in place so it doesn't slow you down when you need to start to hire.
Steve Gage:Yeah, it is sound advice because we all know first to the table wins in this kind of scenario.
James Mackey:Right, you're gonna need it and you don't wanna be in a position where I was actually talking with a late stage global head of talent acquisition the other week. But we're doing exactly this. We're going ahead and working with Procurement, getting an MSA in place. They're not gonna need to leverage us probably till September or October, but we're getting this in place now because they honestly, like they cut a lot of their internal talent acquisition team. So their global head of TA is like look like, if we get more on our plate, like we're not able to deliver it on this in-house, so that's why we don't have the budget to hire somebody right now on my team. So we're not in a position where we have the budget but if we have to start hiring, I'm not gonna have. I need resources that I can plug in on-demand Right, and so that's like.
James Mackey:Those are some of the conversations that I'm having and I think a little some of the companies that are a little bit more sophisticated with their talent acquisition systems like this is what they're doing they're making sure that they have a bench of strong on-demand recruiters and, particularly with the uncertainty in the market, the volatility in tech, this is where it really makes sense to have flexible, like on-demand agency support, probably more now than even like a few years ago, or like that massive bull market we saw right From like 2010 to 2019, right, yeah, yeah, exactly, exactly. Well, hey, I wanna transition. I really wanna learn more about what your company does. I think it's a unique service offering. I want to talk about how you're partnering with agencies, staffing agencies as your customers, what you're providing. I mean, could you just like, before we dive into more of the complexities, specifics, could you just, high level, tell us about, like, what you're solving for these staffing agencies?
Steve Gage:Sure, yeah, so I mean it started out. It's staggering, really, how many of the large staffing firms out there are still using processes that are inefficient. So meaning, so we sit in the middle of you. Use K-Force as an example. They're a customer of mine as well. They get requirements in. They can't fill all the positions with all their recruiters, so they basically essentially spoke about that job to other staffing firms throughout the nation and that's always been done very in systematically emails and spreadsheets and hot lists and things going all over the place.
Steve Gage:So it's a way that we do deep integration into their applicant tracking system. So requisition floor, candidate floor, status floor, kind of you know, synchronously goes between two systems and it's all in one place. And what really we're trying to solve? People working outside of a system, because if they've not got tools to be able to do, they're all of a sudden these resumes that ended up staying in the email and they don't end up in the ACS. So we drive everything that we do through data metrics. Every company does right, they're looking at the numbers and if things are not within that system, then it's not working. So we just find a nice simple way to be able to distribute jobs resumes back in. That's the first part of it.
James Mackey:Fog question there. So when you're saying like, basically, you help staffing firms manage their relationships, working with third party vendors, who are the third party vendors, exactly Like what are examples of the vendors?
Steve Gage:Other staffing firms. So generally again, we've K-POS as an example. They've got access to American Airlines and Wells Fargo and all these huge companies out there that will not work with generally the smaller staffing companies. You know, if you're not on their MSP list or if you're not on their distribution list, you're not a trusted one. So by going and working through some of the large staffing agencies, the vendors are other staffing firms but often they're a lot smaller, sometimes they're competitors and they share jobs between each, but generally it's a little bit of a smaller one that gets access to those positions really and give them, you know, the chance to be able to fill those.
James Mackey:All right, great, and so just going into more detail, how do you build a trust relationship between a staffing firm and the vendor?
Steve Gage:Yes, so the vendor, so we flip it on its head. Yes, we love our clients and everything, but for us it's a lot about the vendor community. We try and make it easy for them because often some companies don't or can't work with secondary suppliers. But we typically see about 20% to 30% of requisitions are able to go to secondary spend. You know, because there's some companies out there that will allow an extra level in there. So obviously you know those requisitions there with the staffing company. But for the others that are distributed, we see about 20% to 30% spend go out.
Steve Gage:So we like to take care of the vendors and we our model is obviously we've got the technology to do all this, but it's the service and support that goes with it as well, because it's a very hard thing that we're solving. People will often just not even want to try and work with another secondary supplier because it's the complexities around it. So we build this nice simple structure and then the vendor community. We spend a lot of time with them. So you know there, well, for one, you can scale very quickly with the vendor community. You know, if you, you, you, we need, you know, 100 submittals and 10 positions for this mobile for American Airlines. Well, we can go after that quite quickly.
Steve Gage:So it's all about nurturing, building trust, building the relationships of. You know we don't really get in the middle of you know that recruiter at the staffing firm with the secondary vendor. There's really strong bondage relationships that are built there. We're celebrating constantly, so we're always there's a wars and badges and accolades that we do monthly and annually and our training and on demand. So we're always going after the vendors and and really you know, talking to them and what do they want? And you know my company, we have an advisory board but we also have another advisory team and it's dozens of staffing vendors. You know leaders of staffing vendors that are telling me what's going on in the world and what they're seeing and what they would like to see, and then we pass that back to the client as well and advise the client. You know, if you work this way, you're going to get more attention from the vendor community over here and that's interesting.
James Mackey:So it sounds like you're doing the advisement as well, because my next question was going to be surrounding like is this, is this process like, solely solved through technology, or is there kind of like this services advisory element to it as well?
Steve Gage:Yeah, we've seen both sides. So we and, frankly, james, when we first started, one of our initial mistakes was that we relied on, we thought pure technology only is going to work today and he didn't. And because there was, you know, we it was change control and we needed to. People didn't really understand it. You know, we were kind of a pioneer really in the industry about doing this and solving this problem and we knew it was going to be hard. So we thought, okay, we'll just give them the keys to the kingdom, switch it on and we'll just all. Of course, they're going to use the system and they didn't.
Steve Gage:So we started building the support teams that go around with it. So now we have relationship managers, customer success, customer support, that basically are talking to these people all the time. We go visit the vendors, you know, kind of do seminars every now and then where we talk about what we're trying to do. So and then I'll give you a prime example that we hear all the time One of our clients will say, hey, we, we need a hundred, you know, mobile developers like tomorrow, we need these billion. We're up against it, against other staffing companies. So the people, the staffing companies that are with those. They've accessed all these vendors there. So we will actively take this requirement and go on a you know a war dial and get into it with all the contacts, all the top quality vendors that we know, because we're measuring them all the time. We know. Go and take hot job, get this done. It'll be filled a lot easier than what some of the other positions are. So we focus the vendor community where focus is needed often.
James Mackey:I love it, and so my last question. We're coming up on time here. I wanted to talk a little bit about where you are today, what you're building, what are you working on right now? What's the focus of the company?
Steve Gage:Good question. So we obviously we're around the staffing side of things and we also have seen over the last few years that a very critical piece of this is removing a lot of the risk and compliance out of the relationship. So when we're onboarding the vendors, we now take a lot of care and a lot of time to be able to do that. So I'm looking at is this a corporation? Is the COI certificate of insurance? Is it in date? Have they got diversity? Have they got the certificate with that? So we onboard them, we check in against the actual agencies for you know, is this a legit tax ID number? Is the address where they told it is? So that removes so much of the risk away from it before it even gets to the candidate level or the visa level, because the community knows that they've been watched and measured. They play really nicely now for us. So because we've taken so much time there, so we have now.
Steve Gage:We are now building a platform we're quite advanced in this process to be able to put all this in one place. So a way to distribute documents, red line documents, sign up and really create this B2B vendor platform, particularly for the staffing industry, where the client has got a lens into a thousand vendors and 700 in compliance, and 100 this month. The COI is going to go out of date. So my future vision is I want to become the morning. What morning star is in the investment world? I want to be that in the B2B vendor world, so where somebody can go to a vendor profile, see the latest news, what's the latest stock price? Are they on a sanctioned list, you know? Are they filing their returns, you know? So all of that in one place is a very desirable thing that our clients are jumping all over right now.
James Mackey:That's really cool and this is solving quite a really important issue, because I think on the technology side there's just so many inefficiencies with staffing agencies. It's so much. So many processes are manual across the board whether we're talking about vendor management systems, technology or within the applicant tracking systems or across the board and there's so many opportunities to create more leverage if you can tweak and accelerate each part of the process, like I think. One thing to think about too, it's like I find it fascinating to think about if you tweak each part of the process to make it 3% more efficient, but if you can do that five times throughout your entire process, you're going to have massive compounding efficiency gains, and that's why you have to think about how can we leverage technology solutions that are going to help us at each phase of the process, to be more productive right, yeah, that's the hallelujah moment, right, it's, you know, because we're the company, we're an add-on, we're just a piece of the puzzle that goes together and these days, you know, partnerships is the way to go.
Steve Gage:You know you're not going to find a company that does everything. You have to bolt on and add on all these different pieces together and embracing, that is, other people, that will win.
James Mackey:Right. I mean you're working with a lot of the biggest agencies. It's quite an impressive list.
Steve Gage:Yeah, we are. Yeah, yeah, we're in the top 100. We focused on, you know, the larger companies, but we're going down there. Yeah, we've got some big names in there out of the top 20.
James Mackey:You have some really big brands, yeah, so that's a great job. Congratulations on that.
James Mackey:Steve Gage: Thank you very much. Thank you Well, hey, steve, this has been a lot of fun. We're coming up right on time. We went all the way through to the last minute. Thank you so much for coming on today and exploring again topic that we have not discussed in depth. There's just an incredible amount of value. If you're tuning in, I really hope that you take this episode, drop it in your Slack channel, share it with your recruiting team, share it with anybody who's evaluating staff and agencies, if you're on the staffing side, share it with your leaders or whomever would make a buying decision on this. I think it's incredibly important and so, steve, thank you for coming on today and sharing your wisdom on the topic. I appreciate you.
Steve Gage:Absolutely. It was an absolute pleasure.
James Mackey:And for everybody tuning in. Thank you for joining us and I'm looking forward to talking to you next time. Take care.
