Welcome to the eighth installment of our series, and today we’re going to be talking about recruitment agencies.
Whenever possible, founders should start with their own network. If they’ve exhausted their network or don’t have a strong network for a particular role, consider working with an agency (for example, at Gem we used an agency to hire our first marketer).
But there’s a catch…the average recruitment agency can provide a mixed ROI for small startups, mainly due to variations in cost, incentives and quality.
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Agencies typically charge 20-30% of a new employee’s first year salary. – For a small startup, this is a lot of expense.
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Agencies can waste your time – Most agencies are willing to place talent anywhere, which usually results in a “candidate hunt” across many opportunities, making it difficult to close a deal.
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Incentives may be misaligned – Many agencies are compensated based on a percentage of first year salary, so they may have an incentive to convince candidates to negotiate a higher offer or accept an offer from a larger company that can pay more cash. Most agencies are only accountable for short-term performance and don’t work with you to provide long-term fit.
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Quality varies, especially for engineering jobs – Some talented engineers don’t want to work with agencies. Those who do will be sent to as many companies as possible. Some agencies have no incentive to submit many candidates in the hope that one of them will make it through the hiring process, so they fill their funnel with low-quality leads.
Because of these pitfalls, it is important to choose the right agency you can trust.
How to choose an agency
Start by asking your network for some introductions — choose an agency that has good recommendations from other founders you trust. Also, make sure to choose an agency that specializes in the specific role you’re looking to fill and has a deep network of qualified candidates.
If you’re not sure where to start, I asked my LinkedIn network last week and received a ton of recommendations (Check out my post here).
Schedule a kickoff call with each agency.
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[5-10 mins] Give us an overview of the company and the role you’re looking for.
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[15 mins] Ask a few questions to learn more about your past searches
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Tell us about a search that took more than six months.
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Tell us about the latest full-stack candidate you placed at a startup.
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Have you ever recruited for a startup on our stage?
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Tell us about a search you haven’t performed.
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Make note of the companies you work with in these searches so you can have a backchannel.
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[5-10 mins] Ask them to describe your company within a few minutes. They will be the first point of contact and likely the first to engage with every candidate they introduce, so you want to be confident they will represent your company well. You can also schedule a follow-up conversation if they are not ready to describe your company during the initial call.
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Do some backchannel lookups, the second one should give you a good list.
Outside of digging through recommendations and questions, break the tie based on who you enjoyed speaking with the most — if you enjoyed interacting with them, the hope is that the candidate will enjoy it as well.
Top Startup Agencies List
Want to know more about agencies that work with startups? Top Startup Agencies Airtable Database I crowdsourced two LinkedIn posts (Post 1, Post 2(If you want to check the testimonials yourself)
You can narrow down the list to find an agency that specializes in the area you need.
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Stage (e.g. “small startup”)
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Function/role (e.g. GTM, Sales, Design, etc.)
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Level (e.g. IC, Manager, Director, VP, C-level)
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Industry (e.g. Technology, Hardware, Healthcare, AI, B2B/Enterprise, etc.)
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Location (e.g. North America, EMEA, APAC, New York, San Francisco, etc.)
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Model (e.g. retainer, contingency, container, monthly, etc.)
We also tagged a dozen or two agencies as “Most Recommended” and “Hired by Gem” based on the agencies that received the most public endorsements in crowdsourced LinkedIn posts and our experience working with them directly at Gem.
There’s also a brief description and links to recent placements, their website, social media and contact information in case you want to find out more.
As an aside, more specialization is often better: if you’re looking for your first designer, for example, consider contacting an agency that specializes in just design, or design and a few other roles.
Partnering with agencies
If you use an agency, make sure you manage them well by setting expectations/scope/criteria up front and also prepare your agency for onboarding so they can get the job done and represent your brand.
Incidentally, agencies are extremely valuable for executive recruitment, but that’s not relevant at your stage.
Next
in Part 9 of the seriesSo, I’ll explain some methods that you might be used to (for example, if you’ve worked at a large company) and why they may or may not work for a small startup.
Meanwhile…
