Why Are More Companies Sending Mid-Level Positions to Search Firms?

When looking to fill a role, companies can either work with their internal recruiters, or they can leverage outside help in the form of a search firm recruiter.

Usually, organizations will turn to search firms under certain conditions:

The internal recruiting team is stretched too thin, possibly because there are too many roles to fill or because other tasks demand their attention.

The company is looking to fill a role in a new location where the internal recruiter doesn't have an established network.

The company needs to fill a new position that the internal recruiter doesn't have much experience filling.

The company doesn't have an internal recruitment team.

Often, organizations will also turn to search firm recruiters to fill high-level positions. In recent times, however, a new trend has emerged: Employers are increasingly looking for assistance in filling mid-level roles as well.

Data collected by recruitment marketplace Scout Exchange shows a significantly higher percentage of jobs in the mid-level ($50-75,000) salary range being sent to search firms. When comparing job postings from the second half of 2016 to data from the second half of 2015, we see a 39 percent increase in the number of mid-level positions sent to outside recruiters:

Why Is This Happening?

A number of job market changes may explain this trend. Let's take a look at some of them:

1. Unemployment Hit a Nine-Year Low in November of 2016

This means skilled labor is in very high demand, especially in hot industries like technology, healthcare, and finance. Fast Company explains that as these industries are rapidly expanding, companies are investing more in hiring efforts and trying to fill more and more roles. The majority of the labor pool is already employed, shrinking the supply of available talent and forcing employers to look for help as they try to fill positions.

2. Companies Are Getting Creative With Their Candidate Searches

Industries are looking to streamline and automate as much as possible. According to SHRM, this extends to the hiring process, where many employers are leaning on analytics and other new HR technologies to meet their hiring needs.

As organizations try to increase talent acquisition efficiency, they are also turning to search firms for help. Companies struggling to fill open roles are relying on the already established networks that search firms provide.

3. Companies Are Offering Positions With Variable Compensation or Lower Base Salaries

Some of the activity Scout tracked suggests that employers are offering more roles with variable compensation. This could account for some of the mid-level salary positions going to search firms.

The base salaries may be lower under a variable compensation structure, but employees can benefit from performance-based bonuses if they reach their full potential. Variable compensation models also reduce the company's financial risk when making a new hire. The turn to variable compensation could be a reaction to the uncertain economy as employers attempt to reduce their committed spend while attracting top-performing candidates.

What Does It All Mean for 2017?

We're expecting to see similar trends in 2017. The baby boomer generation will continue to retire, freeing up even more jobs to the still limited labor market. STEM fields, healthcare, and education will continue growing and looking for new hires. The job market will still favor the job seekers, and talent acquisition teams will keep looking for solutions to support their efforts to meet their hiring needs.

Sean Bisceglia is president and founder of Scout Exchange.