<aside> 📌

Goal: Delegate sourcing for hard-to-fill roles.

</aside>

Background

Recruiters can accelerate your hiring process, but they are also expensive. I recommend you reserve them for sourcing

• Technical roles, especially those with many requirements that would benefit from screening
• Senior and leadership roles, which may require “poaching” from a list of target companies
• Niche roles or roles with very specific requirements

I have had success with inbound candidates for “normal” roles, so unless you need to hire urgently, I suggest trying your luck with job boards, social media, and referrals first (see Hiring).

In my experience, individual recruiters and boutique agencies source better candidates and are more cost-effective. Regardless, you should work with a recruiter who specializes in startup roles, ideally in your industry. Ask your investors and other founders for recommendations, especially as some offer referral discounts.

Fees & Guarantees

Most recruiters work on retainer, in which you pay a (flat) retainer fee upfront to retain their services plus a (variable) contingency fee upon hiring a candidate they sourced. The contingency fee under a retainer is typically ~20% of the hire’s first-year salary. This is the fee structure that I recommend as the retainer fee commits the recruiter to dedicated sourcing for your roles while the contingency fee incentivizes finding strong candidates.

Some recruiters work on a pure success basis, but because there is no retainer fee, the success fee is higher—typically ~30% of the hire’s first-year salary. This may be worth it if you have a few critical or specialized roles. In any case, avoid using recruiters who charge by the hour like a regular contractor as these incentives may result in huge fees with few good candidates.

You should always check the recruiting contract contains a guarantee. Most recruiter give you 60-90 days to see if the candidate who you hired from them is a good fit. The guarantee generally takes the form of finding a replacement with the paid fee as a credit. Alternatively, they may offer to refund the fee pro-rated based on how much of the guarantee period elapsed before you informed them.

Work Cadence

I recommend creating a folder of documents for your recruiter that includes

• Job descriptions and screener questions
• Compensation bands—ask your recruiter for help creating this (see Hiring)
• 2-3 paragraph overview on the company, founders, and investors that your recruiter can use to sell your roles

You should communicate frequently in the beginning to calibrate sourcing and screening—it would not be excessive to provide feedback on every candidate until your recruiter is aligned. (The amount of time this takes is another reason not to use an hourly recruiter.) I find it easier to do this piecemeal over email, but some prefer live reviewing a batch of candidates in a meeting.

Back to Hiring or MVOps