Recruiting: Why Recruiters May Not Get You A Job

For all time, companies have relied on networking to hire the majority of employees – best guess is 80% of employees have traditionally come through networking.  Someone known to a trusted employee is generally a reliable reference.  But recruiters always played a considerable role – maybe 10-15% or more of jobs, particularly for senior employees.  About a decade ago, companies began incentivizing employees to make referrals to insure an inexpensive flow of talent. And then along came the internet.

However there is a big problem with this kind of recruiting.  I learned years ago that people send their friends - people in the next office, people they see for lunch, friends of friends - without any real knowledge of their skills or abilities or even if they are a good cultural fit.  They just know each other, sometimes not even well.

Effective recruiters learn how to dig into personalities and strengths to take these things into account when sending candidates.

The best recruiters always had a solid relationship with their client agencies and the HR people who were responsible for hiring.  I can remember having a candidate who I thought would be fabulous for one of my agency clients.  When I called the agency, without a specific assignment, the Human Resources person told me he did not have an opening but would be happy to meet my candidate.  After talking to each other for half an hour, the HR person came up with several possible jobs.  Two weeks later my candidate was working there; that was twenty years ago and he is still there.

Not so much any more. In fact, many of my old clients won’t even return my calls because the holding companies have forbidden them to deal with recruiters.  There are several reasons.

First, the holding companies and the financial people decided that recruiter fees were too high so they eliminated placement people from all but the most difficult searches.  I said to one CFO that I could find them better, more suitable people than those they were hiring. He told me that, especially at junior levels, it no longer mattered – “One kid is like another. If they do well, great.  If not, we will just find another.  It doesn’t really matter.”

Then along came LinkedIn and other placement programs.  My experience is that many of these programs provide résumés based on key word searches.  Some, like LinkedIn, require the candidate to provide enough data in their background for the listing to be useful, which is rare; more often than not, people merely list where they have worked, but not what they have worked on or what they have actually accomplished).  Then, as I wrote a couple of weeks ago, either keywords or junior HR people take over screening résumés.

The problem is that people have become fungible. And, especially at junior levels, companies have no loyalty.

There is minimal out-of-pocket cost for companies to use LinkedIn Recruiter, Siftly, Monster, Indeed or any of a dozen other programs.  Mostly those costs are just an affordable monthly fee. But companies get what they pay for; I have tried these programs and they don’t provide much value added service and they certainly do not include any reference to personality or passion.  They simply provide a list of candidates, often unqualified.  In fact, with two of the biggest recruiting sites, I spent time on the net sharing with their managers positions which I had open.  In both cases, they were going to show me how to do it "right" so they could sell me their service.  In both cases, we worked together for about an hour. And, guess what? Neither of them developed a viable candidate equal to the specs of the jobs. Their programs were just not finite enough to produce candidates.  In both cases these spokespeople for their companies told me they would get back to me to figure it out why they were unsuccessful.  I never heard back from either because internet recruiting just isn't fully functional.

That is because, as I have said frequently, the key to recruiting is not business worked on (resumes) but rather the ability to do a job – and that requires that the hiring company define the problems that have to be solved or resolved.  And this information simply doesn’t show up on job listings or on people's resumes as they are put on the web.  In fact, most candidates have no idea how to properly program their own backgrounds for maximum effectiveness.  That is the reason why so many hiring managers complain about the quality of the candidates that they are seeing.

The issue is that it all really comes down to money.  Why pay a recruiter who is familiar with your company and its people (and its problems) if you can get a résumé for free?

As they say, penny wise and pound foolish.

This does not mean that you should not see recruiters or accept their calls.  What it means is that you have to know the limitations imposed on them in this climate.  

Time To Allow Account Management To Do Its Job Again

There is no question in my mind that fees have truly hurt the client/agency relationship.  And while clients pay the bills and now make the rules, agencies are not fighting back.  They agree to fees that are too low simply to gain or keep the business, but have to cut back on servicing in order to make a profit or break even because of those low fees. 

 

I truly believe that the holding companies have allowed this to happen to their agencies in order to gain business and revenues, regardless of profits.  In fact, their agencies may be losing money and losing out to other services from consultancies to freelancers.  The holding companies, in their race to appease shareholders, have commoditized the business.

I know many stories which indicate that this is so.  One that is particularly relevant is the new president who quickly found that his agency was losing money on an account; they were simply not paying enough and, in addition, no one who worked on it liked them. When the president went to the client and asked for a higher fee, the client refused and so, on the spot, he fired the client. He promised that no staff cuts would be made and, in fact,; the whole incident was great for morale.  Meanwhile, the holding company had a fit and told the president that he had no right to fire the client without holding company permission; the holding company needed the revenue, despite the actual loss on the account.  Of course that is absurd. The president explained to the holding company CEO and CFO that he was, by contract, responsible for the profitability of the agency and his own bonus depended on the profits.  He told the holding company that if they wanted the account, they should call the client and get the account to hire another of its agencies.  They never made the call.

It is a great example of what effective account management can contribute.

Now when someone owns you, it is difficult, but agencies have to find a way to get back to their roots.  Account management has been weakened to the point where it is almost unnecessary. The irony is that I never met a good creative person who did not value an equally talented account person. That is why, even to this day, most new agencies are partnered and started with both creatives and an account person.

I am shocked when I interview junior account people who rarely, if ever, visit their clients, even those who are local.  Juniors are no longer taught how to dig into their businesses so that they become a valuable resource for their clients.  As a result, many clients don’t see any value in their junior account people or sharing vital information with their account executives and supervisors.  The more senior account people are so busy just getting work out that they, too, don’t really learn their clients business, so that all they can do is day-to-day service with not much value added.

A few years ago, I asked an account supervisor when the last time she had lunch with her client.  She had been on the account for four years. Her answer was that she never, in those years had lunch alone with her counterpart.  I asked her when was the last time she spent a day with her client – alone, just the two of them, working on a project.  It had never happened.  So I begged her to call her client and just go to visit them (in New Jersey, so no big deal).  I told her to tell her brand person that she just wanted to spend more time with her and get to know the business better and had no specific agenda.  The account supervisor was actually reluctant, fearing that the management supervisor she reported to would be angry and not approve her car rental.  I assured her that it would work out and the auto rental would get approved.

It took a little convincing on my part, but she did it.  And guess what?  She spent the day just hanging. It was a really successful day that resulted in her getting closer to her client both business wise and personally.  And she was actually able to make a contribution at a packaging meeting.  When she got back to the agency her supervisor actually did give her a hard time, but approved the car rental.  The visit was so beneficial that the client involved her in many projects that she had previously been excluded from.  Seven or eight months later when the account was moved to another agency, the account supervisor was the only person asked to move with the account.  She also got a promotion.

There is no substitute for getting to know the client and their business.

The more visible the agency is to its clients, the better the relationship.  And this is the responsibility of account management.  It can’t be done by creative or planners or project management. 

Strong and well trained account management can pay significant dividends.

Adventures In Recruiting: The Wrong Way And Right Way To Start A Business

Over the years I have been approached countless times to put creative people together, usually a writer and an art director, with an account person to start a business; usually its an ad agency but occasionally a consultancy.  Inevitably, the creative people have been working or freelancing together and have developed a relationship with a company whereby they can poach the account to fund a their business.   Or, occasionally, they have enough freelance business to be able to turn it into a real business. I generally turn the opportunity down.  Here is why.

I originally wrote about this last October 10th, but I thought it deserved a fuller explanation

Usually, one or both of the creatives are fully employed and earning a paycheck from a company or ad agency, their freelance income is on top of their regular paycheck.  The freelance income becomes significant which drives the decision to leave their current employment and start an ad agency.  They approach me to find them a partner to do this.  In the meanwhile, they continue to earn money from their current employer.  In most cases they are willing to call the new person a president and offer him or her a percentage of the business sometimes equal, sometimes not. In addition, they want the new person to devote full time to the new business effort; all this normally without pay.

Unfortunately, in most cases, the new business person/president is expected to resign from their current job (or to be out of work in the first place) to spend full time developing new business for the creative team, which is currently employed or, if not, earning significant freelance income.  While the creatives share their freelance income they are unwilling to share it with the person who will become their partner because of work done on their behalf. 

Essentially the account person is expected to work for nothing.  

While this may sound insane, it is the usual process.  

Predictably, the new partner will only be paid out of the revenues generated by new business that she/he brings in.  And since the creative people often consider themselves to be the product, the account person sometimes is offered less than a full third of new business.  

Even if I am offered remuneration (rarely my full fee), I turn this kind of assignment down because, with very few exceptions, these arrangements rarely succeed; starting partners have to be respected, valued and compensated equally.  I generally tell the potential partners that they have to incorporate and set up a business with all the necessary legal paperwork, including partnership agreements.  

More often than not, they balk at the formality.  In one case that I remember, they told the account person that he was far too nervy and had too much chutzpah to ask for a contract; this is not a good start.

The irony is that in almost every case I can think of, creative people always need a partner to both administer and manage the business as well as to run the entire new business program.  This person is almost always the first person hired once the business starts.

Over many years when I explained what is wrong with this premise, almost everyone who has put it forth to me has said the same thing:  "If this person is good and really believes in themselves, they will bring in business quickly and then end up making a lot of money."  This is truly specious logic.  Anyone who has ever worked for an ad agency and pitched new business, knows how difficult it is to win an account. And it is ten times more difficult for a start-up, especially one with no history, even if there is one anchor account. In other words, they are asking the account person to give up his or her job and paycheck in order to create a business for people who are already working, getting income and have nothing to lose if their pitching is unsuccessful.

I can think of only several instances where the writer and art director (actually, in one case it was a writer and a producer) actually got the logic of the issue and agreed to split whatever they earned freelance because they understood that the new person would be working on their behalf.

If the creative people have freelance income, they should be willing to share it with an account person (or other title) so that they are all invested equally.  This provides everyone involved with incentive and insures mutual commitment.   

Mutual commitment is essential to a respectful and equal relationship.  There is no other way.

What Happened To Account Management?

If clients want to get their money’s worth from their ad agencies, they should demand more from their account managers.  Unfortunately, over the past twenty-five years, account management has been emasculated.

Going back to the Mad Men days and before, account people had a very specific function that helped lead to great creative and media work.  Account executives (the term is used in its broadest sense for this post) worked closely with their clients and were marketing partners.  They did sales and marketing analysis, they went out on sales calls both at the retail level and corporately. As a result, they often knew more about the business than their actual clients.  All of this was to strengthen the relationship and build credibility so that the agency could sell its creative work.   

However, there was always an undercurrent of distrust between weak brand people and strong account people.  The concern was that giving away too much proprietary information might, somehow, hurt the client.  Many companies refused to share data feeling that it was not the agency’s business.  Many others did the minimum they had to in order to integrate their account people into their marketing and advertising.  Over many years, this situation spread and, gradually, marketing was mostly removed from the agency function.

Ad agencies established account planning, taking away the strategic function from their account people.  If one goes back to the beginnings of planning, that was not the intention.  The original planners were there to strengthen the communications function and to be the voice of the consumer, gaining insights into the market which, truthfully, many account people did not or could not do.  They were to be partners with both account and creative people.  But account people were often given the cold shoulder by planners who tended to relate better to the creative people, thereby weakening thie account function even further.

Fees, which became prevalent in the nineteen nineties, cut away agency profits.  This resulted in clients demanding that they be serviced only by senior people; unfortunately, this further limited the account function, since account directors and group directors were relegated to doing the administrative work that account executives had previously done.  Because so much of what junior account people did was handle billing and traffic, those functions were also removed from account people and given to lower paid project managers (or some other title).  

Media, while important, was always relegated to the bottom of the heap.  For instance, media was mostly the last to speak in creative presentations.  And, half a century ago, as media choices started to grow with the advent of cable, media buying services were developed.  Gradually, they gained a toehold in the business and became profitable.  The holding companies then separated media from their traditional agencies.  Over the last two decades media has become fractionated – spot, network, cable, digital, social, and many other aspects – which have complicated the media landscape in every aspect.  Media people always said that media was its own profession and in the mid-nineteen nineties, they got their way.  But, that took one other major function from account people.  Unfortunately, today, most account people have little or nothing to do with media planning, buying or analysis.  Media agencies have their own account people to handle clients and to deal with their traditional and digital agencies.  Even the media agencies owned by the holding companies have their own account people to deal with their traditional agencies.

All these changes served to weaken a very necessary function – working with clients to develop business and marketing and advertising strategy.  Today, we are starting to see that a lot of this work is being handed off to consultants, and as that happens, agency fees will get cut even more.  And account people may become superfluous.

It has become a vicious circle.

I fully believe that as account people have been removed from the creative and marketing process, the work coming out of agencies has become weakened.  Why?  Because account people were once fully involved with the creative process and were the source of information, insight and knowledge; that kind of insight helped creative people to do better, more effective work.  Today, since this function has been divided among dozens of people, many of whom work for outside companies.  It is very hard for an ad agency to have full control and oversight over the vision for its brands. And every brand needs a vision.

This is the vision that the pioneers of the business – Ogilvy, Reeves, Chiat, and many others – had that enabled their businesses to grow and thrive. The holding companies are just too big and complicated.