As we come to the end of the EPL transfer window, one of the most striking aspects has been the compensation being paid out to football agents. It is alleged that as part of the transfer of Alexis Sanchez to Manchester United, his agent was paid £10 million for making it happen. Whilst footballers operate in a different salary galaxy to almost anyone else, the question remains as to whether recruiters in the future should consider pivoting their business model.

Factor that football agents will typically have a portfolio of clients, ranging from fully fledged premiership stars, to youth players on the verge of signing their first contract. In that context, lets look at the method. used by football agents:

  1. Sign up talent early. Typically a player will have an agent by eighteen who is then responsible for advising them on career options as well as negotiating all contracts. Players are asked to sign exclusive terms with the agent for a fixed period of time to be reviewed periodically. (typically two to three years.)
  2. The talent is the client, not the club. The agent understands that whilst payment may originate from the club, the talent is the one they are representing, so it is their interests which take priority.
  3. Constantly canvas the market for opportunities for clients. Players will have contract negotiations with clubs where as part of that, their agent will be looking for all the various opportunities available, to maximise their players negotiating position. If the club is offering well below market rate, the player is informed thanks to the work of the agent. The agent is then paid a commission on not just moves, but also all contracts as well to reflect their work through the period.

With that in mind, what aspects could recruiters apply?

  1. Generating star candidates. Continuing with the football metaphor, by the time a footballer is a fully fledged star, they already have expert representation, with relationships built up over time. In the same way recruiters need to work the long game to build their star candidates. Perhaps recruiters should be going to university fairs and looking to represent graduates and help them get employment in return for some form of representation agreement?
  2. Whilst it sounds counter intuitive, actually the rise of internal recruiters means that PSLs themselves may well become more porous, enabling an external agent to change their business model. Internal recruiters will increasingly only use agents for the roles they struggle to fill using the tools they have access to. Therefore what they need help with is a much smaller proportion of roles, where for those, PSL’s become less important than the ability of the agent to deliver on the roles they need help with.
  3. Possibly this would be the most challenging shift. Whilst in sports it is highly unusual for players to negotiate their own contracts, in the corporate world, most people negotiate with the employer directly. However, this is potentially an area where an agent can add the most value. It is well known that people that stay in a job over time will earn less than people who change. Explaining to people the real value the agent offers is to ensure that should they want to stay in the company they are working in, their compensation would remain competitive with market rates, and it is on that basis they earn their commission. Also, the other point to factor is that an individual negotiating with an employer for salary and compensation is an uneven playing field. The person they are negotiating with is typically an expert in their field, so representing themselves is akin to going to court and not having legal representation.

Whilst it may sound far fetched, imagine a situation where a recruiter has a pool of around fifty people they manage, where they provide each career advice, contract negotiation as well identifying the right career move when necessary. The basis of the shift to a commission per contract (say 1% per annum) means there is a residual income of say £30k for these services, where the exclusivity clause means that whenever any of the people want to change jobs, the agent is guaranteed a fee. If the average person changes jobs every two years, that could mean fifty placements per year, which would quickly translate to billings of £50k+ per month, where earnings are immunised against pressures from internal recruiters.

Over the last ten years Vacancysoft has worked with recruitment firms of all sizes to help them map out market activity in order to identify changes in demand. For more information about how we can help, please contact us.

 

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