Today, we’re talking about recruitment consultants and if you should use them?
For your 1st 10 employees? Absolutely not. The first 10 employees at a startup are the foundation of the company’s future. You need true believers. Unfortunately, the way recruitment consultants are paid, creates a bad incentive structure — for example 25% of the year 1 salary if the employee stays for 12 months. So the recruiters want the highest salary for a candidate — not long term equity and after the refund period is over, they can make a lot of money finding that employee another role.
Now, a lot of later stage executive hiring, Series A and beyond, will involve recruitment consultants. Personally, I still don’t like it. Yes the candidates are more senior but the bad incentive structure remains in place.
As an alternative, I have seen success with the hiring marketplaces, like Hired.com, Angelist A list and similar — they still charge contingency fees but as a marketplace, there’s less risk of individual recruiter behavior hurting your company.