Spencer Green, Ph.D. Recruitment Director, North America Operations,  CrescentiaSpencer Green, Ph.D. Recruitment Director, North America Operations, Crescentia
Having taught college introductory writing courses for more than a decade, I am familiar with the problems that develop when two groups working on the same project have different goals. In my experience, students and professors tend to hold at least a mild resentment against each other—especially in English classes. One student may complain that “my teacher’s too tough!” Another may say “grading is all subjective,” while professors might complain how their students are too focused on grades rather than learning.

This mutual antipathy between student and professor can be a real hindrance to learning.

But what IS the root of the student/teacher conflict? It’s a lack of alignment between their goals. Despite working on the same assignments, the student and the teacher want different things. Students want a good, or at least passing, grade while professors want students to learn and improve. As long as they want different things, they will fight rather than cooperate.

Companies and recruiters often suffer similar friction as they seek to work together.

While risk is a constant in business and life, the risks of a company who can hire multiple recruiters or firms and only has to pay when they receive the candidate they like is much less than the recruiter who only gets paid if and when they fill the role. Of course, sometimes what looked like a perfect candidate doesn’t pan out, but thanks to backfill clauses common in many searches, companies experience low risk compared with the high risk of recruiters.

Of course low risk sounds great for companies—just as the big commissions sound great for recruiters, but the problem is that unequal risk, leads to friction rather than cooperation. Nassim Taleb in Skin in the Game argues that for those without, or with less, “skin in the game,” performance suffers. So, while a company may bring in an outside recruiter who is highly motivated by a high commission, without equal amounts of “skin in the game,” the company will, paradoxically, not be an equal partner in solving their own recruiting problems.

In short, unequal risk creates adversaries not allies.

Despite having the best talent and resources, projects can get stalled or end up going in circles rather than achieve their goals when the different groups working on the project don’t have their goals and risk levels aligned. And while most companies, and recruiters are aware of, and, indeed, spend a lot of time and effort working on, aligning goals, most companies and recruiters ignore the need and benefits of aligning risk.

There’s a lot of innovation in recruiting in terms of matching companies up with recruiters, finding candidates, and in solving persistent problems, but almost no one is fixing the risk-misalignment problem that pervades recruiting and stems from paying recruiters on commission.

Luckily, Crescentia has a solution: a pay-as-you-go model of recruiting that can not only save companies a ton in their recruiting but can help align the risk and reward of companies and recruiters and turn adversaries into allies and strife into synergy.
  • "I’m tempted to end with a nod to the original Spider-man movie and say, ‘with great risk comes great rewards,’ but I might go further back to Cicero and say ‘sharing risks is its own reward.’" said Spencer Green, Ph.D. Recruitment Director, North America Operations

So how does it work? Instead of paying a commission, companies will share the risk of finding—or not finding—a great candidate by paying the recruiters for their work as they go. Like most recruiting projects, this begins with a meeting to review requirements and align goals. This is followed by a round of research and recruiting. The company can then interview or pass on those candidates, take stock of the candidates and their needs, and either finish their recruiting or go for another round. Rinse and repeat. The process itself may not sound revolutionary, but with aligned risk, the company and recruiter are able to work together as allies to find the best candidate as quickly and efficiently as possible.

Despite greater efficiency and a better working relationship, why would a company want to increase their risk? Because it increases their reward. Instead of paying a guaranteed $15000 for a hire, they could pay as little as $1000 for that same hire. It could be more, but the pay-as-you-go model gives companies a lot of runway to be on the winning side of the risk and reward equation.

I’m tempted to end with a nod to the original Spider-man movie and say, ‘with great risk comes great rewards,’ but I might go further back to Cicero and say ‘sharing risks is its own reward.’ And while not every company is ready for changing from the tried-and-true commission model to the pay-as-you-go model, for those who are, it’s really the first step in better partnerships between companies and recruiters.