MBA2339 Should You Hire Through an Agency? + Free Ride Friday

0:09Heyo! Welcome to the$100 MBA show because a better business begins with you. That's why we deliver practical business lessons. I'm your host, your coach, your teacher, Omar Zinhome. I'm also the co-founder of Webinar Ninja, an independent software company I started back in 2014. And today is Free Ride Friday, where we give a lifetime membership to the$100 MBA program, our six-part course on how to become a better entrepreneur. You can learn more of our 100mba.net, but if you want to win a free ride, just leave us an Apple Podcast rating and review, and you enter our weekly random draw. Listen out on Friday, just like today, to see if you won.

0:43We announced this week's winner, a little bit later in the episode. In today's episode, you will learn, should you hire through an agency? When you're hiring for a position, you can do it yourself where you write the job description, you post it on job boards, you pay for the fees, you screen candidates, you go through CVs, you make assessments, you give the candidates the assessments, you go through the interview process, you go through all the paperwork, the contracts, and then you make the hire. And some people choose to go down the agency route. Many recruitment agencies will do everything for you, including taking care of paying the employee, the contracts, the legal work, everything.

1:19And some will actually just do the recruitment process for you and hand you over the candidate for a recruitment fee. Is it worth it? Should you do this for your hires going through an agency or is it a ripoff? I'm going to share with you my experience and what I recommend depending on what you're hiring for. So let's get into it. Let's get down to business. I want to first say that recruitment is very time consuming. Even if you're just making one hire, it takes a lot of your time to do all those things I talked about. The job description and the interviewing and the screening and the testing.

1:52And there's a lot of wasted time because when you're hiring, you're going to have to go through a lot of people to find the right candidate. Yeah, of course, you can get lucky, but most of the time, you're going to interview 10, 20, 30 people before you find the right candidate. That takes a lot of time. Even if you spend 30 minutes on an interview, that's 15 hours plus all the time that you did beforehand to get the job up and recruit people. So it is time consuming to do yourself. Having said that, I do recommend doing it yourself if you're hiring for particular positions. In my experience, if you know the position very well, like you could do it yourself, you could do the job yourself, meaning you can identify great talent very quickly.

2:31And the position is not hard to find or to fill, meaning it's a position where there is a lot of talent in the market. For example, right now, it's hard to hire software engineers. There's not a lot of talent in the market. But maybe for an administrator or a VA, there's more talent in the market, so there's more people that you can go through, and there's more of a chance you're going to find great talent. In those two scenarios, it might be worth you saving some money and going through the process. especially if you've done it already once, you have the process down pat and you can do it over and over again.

3:04Now, if you're hiring outside of those circumstances, you're hiring highly skilled people, people that are hard to find, people that have skill sets that you don't have, you don't understand what they actually do, this is where an agency can really come in handy because they have experts to find out if they're good. But not all agencies are created equal. Make sure when you engage with a recruitment agency, whether they're going to take care of everything for you or just the recruitment process and hand over the candidate for a recruitment fee, make sure that how they get paid is contingent on how good the candidate is.

3:40What I mean by this, some recruitment agencies, they'll charge you 10 to 20 percent of the annual salary of the employee. That's a lot of money. So if you're paying somebody, let's say, that's highly skilled, like a software engineer,$100 ,000, that's at least$10 to$20. that you have to pay up front because they found you somebody for this position. This is expensive, right? It's a big amount of money. And the higher the salary, the higher the fee. So you got to make sure that in the agreement, somehow you have a clause where if the person's not great, if they don't work out, whether it's a probation period or something like that, that you are entitled to a replacement for free or some sort of refund if they're totally not a good fit.

4:23You have to have some sort of safety measure because this is such an investment, they have to be brilliant. It's worth it if they're great, but if they're not great, you gotta have some way to protect yourself and protect your investment. Now, some agencies, what they do is they hire talent themselves, and then they give you the talent for a fee. This model is very interesting to me, and I find that it's actually quite good for entrepreneurs, especially independent entrepreneurs, self-funded entrepreneurs, bootstrappers, whatever, because the risk is much lower. Why? Most of these agencies, they specialize in an area.

4:57They specialize in virtual assistants or they specialize in software engineers or they specialize in designers. And the point here is that they hire a whole bunch of people with a skill set. They pay them and then they give out these people to work on projects or your project or your business full time. And then they just invoice you, meaning you pay the agency and this person works for your company. They take care of all the legalities. You're basically paying for a service. But in essence, in practice, this person's basically working on your team full time. And on a day-to-day, it's pretty much the same as if you just hired them from a practical point of view.

5:35But from a logistical point of view, this is a lot cleaner for you because you just pay an invoice from the agency. You don't have to deal with any kind of legal issues, contracts, taxes, all that kind of stuff, especially if you're hiring overseas. But most of all, if, for example, the candidate doesn't work out, they're not a good fit, maybe even just not a good cultural fit, you can then go back to the agency. Hey, you can give them a warning. This person's not working out. Can we get them some training? Can we help them out? And if for any reason they don't work out, they can easily say, hey, move this person to a different project.

6:05We're going to give you somebody else from our talent pool. That kind of agency gives you a little bit more reassurance. Now, in the first model where you pay an upfront recruitment fee, you pay once and that's it. This one is going to be reoccurring because you're going to pay the monthly fee for this talent or talent in general if you have more than one person that you're going through the agency. But obviously, there's going to be a little bit of a premium. In essence, many marketplaces function like this, like Upwork. But agencies kind of vet them, test them, train them. It's a little bit more white glove.

6:38Now, the reason why the agency model kind of is advantageous to startups and businesses is that you're basically outsourcing all that time and effort that you have to go through to hire somebody. You can scale very quickly. So as your business grows, you can start adding more talent quickly. Instead of taking months to make a hire, you can hire people in weeks. Now, this also is helpful if you need to scale back for some reason. And this is what many people are experiencing right now in this economic downturn. Now, the agency model is quite attractive to businesses for these reasons. Now, your job is to build the culture within your company, regardless if they're coming through an agency or a direct hire, or maybe you have a team that's a mix of both.

7:18You've got to make sure everybody is singing from the same song sheet, that everybody's treated the same, that they love working there, that they're doing rewarding work, that they have direction and clarity, and they know exactly what's expected of them. This is your job as the leader of the company, as the manager, as the person that's giving them the vision. The agency is not going to do that. The agency is just giving you talent. You've got to know how to manage them. They can't solve that problem. So you have to make sure even more so with somebody that's not a direct hire that they're supported, that they're led, that they have a clear vision of what is expected of them, and they know how to win in your company.

7:54I've hired and recruited in all three ways. I've hired directly. I've hired through a recruitment agency and they required a fee. I hired through an agency several times. None of them are perfect. They all have positives. They all have negatives. It's all about what you're most comfortable with. Many people, especially if they're starting out in their first few years and they can't afford the time to recruit, love the agency model. And I don't blame them. It's actually a pretty good model and I recommend it. And that's why I shared it on the show. I started out by saying that recruitment takes a lot of time and effort and energy.

8:28And if you're going to recruit for your own business yourself, and this is something you want to do for the long term, it might be worth thinking about building out your own recruitment team in the company. Because essentially, scaling your company is all about attracting great talent and recruitment. So you might think about starting with an admin assistant, HR assistant, a recruiter, in-house recruiter that can look for talent and network and find people on LinkedIn and do all the legwork for you as if you have your own firm in-house so that you're always finding great talent, even if you're not hiring, even if you find somebody great, they might be a good hire for the future that you can keep them on your system and say, hey, we have a position to just opened up.

9:08When things open up, you can reach out to them. That's what recruitment's all about, finding great talent and reaching them and finding them when you need them most. Thanks so much for listening to the$100 VA show. These episodes is not over though. It's Free Ride Friday. Let's see who won this week's free ride. The winner is D. D.L. Rose says, great for busy small business owners. Five stars. No fluff, just actionable business advice. Thanks D. for that great review. Your mission is to email me over at omar at 100mba.net so I can hook you up with a lifetime membership to the$100 MBA program. Our six-part program on how to become a better entrepreneur.

9:42100 % guaranteed. If you want to win a free ride, just leave us an Apple Podcast rating and review and you enter our weekly random draw. while listening on Friday, just like right now, to see if you won. It's that easy. Before I go, I want to leave you with this. If you don't like the process of finding talent, writing job descriptions, hiring, interviewing, testing people, if that's something that you really just can't stand and feel like it's a waste of your time, then this should be a no-brainer for you. You should go down the agency route because you're just going to hate it and you're not going to recruit people because you're not going to be at your best.

10:13You're not going to recruit the best people, I should say. At the very least, the agency will do most of the legwork for you. You can do a soft interview and a culture interview with the person before you make the decision to hire them. That's pretty bearable, pretty easy. We live in a world where there's so many options, so take advantage of this option if this is for you. Thanks so much for listening, and I'll check you in Monday's episode. I'll see you then. Take care.

10:46Thank you.