I have always thought that this is a rather silly question. Yes, you get what you pay for; the real question is whether it is worth what you paid? As the saying goes: “If you pay peanuts, you get monkeys.” This concept is deeply engrained in our psyche, yet the pull of getting a “bargain” is sometimes even stronger.
There have been many marketing studies that have shown that price has a direct relation to the perception of quality. Would you buy the “basic” $3 vitamins or would you rather pay a little more for the $10 variety?
I suspect that many of us would opt for the latter. You wouldn’t be so tempted by the “bargain” product as you value your health and suspect that the quality may be lower in the “basic” product. The situation would be different if it applied to a commodity like electricity or water (for example). There you know that the quality should be of a certain standard, and you will probably go with the lower price while reading the small print, of course….
When you are buying a product that has a like-for-like comparison, this is an easier choice to make. Free-range eggs or factory-farmed eggs? The choice is clear. However, when you are buying a service, that choice suddenly becomes a little more complicated. The costs depend on what is included within that service. The grey areas start to appear, and there are plenty of companies willing to exploit this.
The recruitment industry is currently being disrupted by RPO/MSP providers offering “cut-price” deals to hiring companies. I admit that there are some great RPO/MSP providers out there, but for the majority of the smaller firms without the proper quality controls in place, if something offers unbelievably “good value”, it probably is…. unbelievable.
What if I told you that an RPO/MSP firm would be able to source you that elusive executive for 5-10% of their annual salary? A standard search firm would charge 30%. The RPO/MSP guys work on a fixed day rate, and they are fully accountable for the work they put in. Sounds great, doesn’t it?
Well, let go back to that health / electricity example. For the mass-market roles (such as retail cashiers), this RPO/MSP model might work fine. If however, you are looking for a crucial Finance hire, I would question the “amazing value” that an RPO/MSP provider might offer.
This article isn’t about saying that Executive Search is “better” than working with an RPO/MSP provider. There will be situations in which an RPO/MSP will offer better value and be the better option. I would just like to suggest that you should look at the nature of the service that you are looking to purchase and make sure that the solution is “fit for purpose.”
Otherwise, paying peanuts might well get you monkeys.