I. Do I Need A Recruiting Team?
Choosing whether or not to have a dedicated recruiting team depends on a few factors. I'm not here to tell you that you always need to have a dedicated recruiting function. Once you do though, you'll want to make sure you do it well.
The big question that smaller companies need to ask is if they are hiring at a high enough volume to justify the expense of an in-house recruitment team.
It can take a long time to get to this point.
Much of what I discuss in my posts are typically targeted towards organizations that are scaling. My experience is almost exclusively in environments like this, where profit windfalls or venture capital investments provide the funds to invest in rapid hiring. Any large corporation will likely need some sort of recruitment function.
If you're working at an organization without a dedicated recruiting function today, you may not be missing out on much. But, it could save you money and enable you to attract better candidates. It depends on the types of people you're hiring and how often you need to hire.
Organizations without a dedicated recruiting function typically choose to 1) outsource this to an agency, with an HR, Operations, or Finance person managing the relationship or 2) make recruiting someone's part-time job. Both are manageable assuming the overall volume of hiring is low. However, as volume picks up, this becomes a strain on financial resources (agency fees) and taking up too much time of the people who are moonlighting as recruiters, distracting from their core duties. In most small companies, recruiting isn't usually their area of expertise, and they likely aren't doing any active sourcing: instead relying on inbound candidates from job postings or whomever their agency brings in, then evaluating them for fit. While this saves time, it can limit the volume and quality of candidates being introduced to the company.
But when do I know if it'd be cheaper for me to have someone dedicated to this?
I calculate the estimated cost of agency fees based on the average salary I expect to pay. I also look at historical estimates of time spent on recruitment activities and highlight the opportunity cost of doing so. I'd then compare this to the cost of hiring someone to take on recruiting internally on a full-time basis.
The decision to insource or outsource hiring largely depends on the type of roles you're filling. If you're primarily hiring temporary or hourly workers at lower wage levels, insourcing may not be worth the effort unless agency fees are significantly impacting your costs. This workforce often experiences higher turnover, which can feel like perpetually refilling an empty bucket.
Insourcing does offer the advantage of greater control over candidate quality, whereas some temp agencies may prioritize speed over fit, sending a high volume of candidates in the hopes that some stick. For low wage, hourly workers, the choice depends on your specific context, risk tolerance, and budget.
Executive recruiting is also often a different game altogether. It's low volume and high impact, so thus doesn't require the same degree of standardization you see on the lower end of the spectrum. This isn't usually an area you want to skimp on, and executive search firms operate with a much greater level of service and emphasis on quality than firms focused on quickly filling temporarily roles (at least in my own experience).
Where I'd first look to insource recruiting is for full-time, salaried employees. In most cases, recruitment agencies will charge 15%-25% of the candidate's salary as payment for placement. This can quickly add up. For example, if you need to hire four people at $100k each, with a 25% rate you're paying $100k in salary plus $25k in fees. After four hires, you've paid enough for a fifth person's salary. This ignores a few other costs associated with employment, such as benefits, but is illustrative enough. Chances are, you'd have paid for the salary of a full-time recruiter in agency fees. In the real world, you may negotiate a lower rate per hire assuming you know you'll want to work with the same agency for multiple roles -- this should be negotiated with the firm if you plan to do so, but rarely will you ever get below 15% in my experience.
Salary data for recruiters is complex, with pay structures varying widely across industries and experience levels. Agency recruiters typically earn a low base salary supplemented by commissions, while in-house recruiters usually receive a fixed base salary. This difference stems from their distinct roles: agency recruiters are in the business of sales: they actively hunt for new business opportunities and connect candidates to them, whereas in-house recruiters are focused on meeting the organization's specific hiring needs and may handle additional responsibilities for the company, such as HR admin tasks, employer branding, or interview training. Agency recruiters don't typically cover much of these on behalf of an organization, since their compensation is focused on how many client roles they can fill.
Industry also matters. Certain industries pay a premium for recruiters, such as technology and finance, as they can afford the best talent. Other industries may need to cut corners here. Use your judgment and research your field to see what average salary looks like for a recruiter to do the comparison.
The second piece will be the opportunity cost. If your CFO is spending X % of their time focused on managing an agency recruiter, what are they unable to do? This is a helpful exercise to evaluate if this is the best use of their time. If that isn't compelling enough to justify a full-time recruitment hire, it may at least encourage a leader to give someone else this opportunity instead. While early stage companies may have leaders directly manage recruitment from the outset, it's not uncommon to see this given to someone else to manage once the company is big enough where leaders have more responsibilities to juggle.
When making your case, create a clear, data-driven document or presentation. Numbers speak louder than opinions -- in professional settings, compelling data can be your most persuasive tool. Too often, people in this space get overlooked because they can't articulate their value. Instead, they get rolled over by those with more business sense who can speak the language of finance and metrics. Don't be like them. Learn how to make your case.
By building a strategic argument grounded in concrete metrics, you'll not only demonstrate your insights but also increase your chances of getting the resources and support you need to excel. If you're in a situation like what I outline above, try doing some of these calculations to see what you learn.
II. Growing a recruiting team
So let's assume your part of a rapidly growing technology company. Congratulations. This is exciting and should be a challenging, but enjoyable, stage in your career. You're now responsible for figuring out how to grow the recruiting function to keep up with the demands of the business. In order for sales to hit their gaudy numbers and for engineering and product to build what customers are asking for, they need quality people to help them. To get those folks to join, you likely need to start building out a recruiting function.
This generally isn't a situation where you just want to throw people at the problem. While many recruiters are full-cycle, managing all stages of the process, it may be more efficient to hire different kinds of specialties and functions to build a proper recruitment engine: an efficient and effective hiring machine. This takes time to build, and being thoughtful about how to build it will be important to scaling the team responsibly over time.
Below I list out phases to help frame what your growth plan for this department could look like.
Phase 1: Recruiting Is Someone's Side-Job
In early-stage or small companies, recruitment is typically sporadic and reactive. Hiring happens on an "as-needed" basis, usually with minimal effort: posting basic job listings, attending the occasional networking event, or engaging an outside recruiter for specific searches. Rarely are people with recruitment as a partial responsibility investing in active sourcing beyond looking for referrals from their immediate networks through word of mouth.
During these initial stages, the business doesn't invest heavily in recruitment. This makes sense given the low volume of hiring. With hopes of keeping cost-per-hire low, the business focuses on passive tactics as much as possible to find qualified candidates.
Who manages it? Typically, recruitment becomes an additional responsibility for a leader, office admin, or operations team member. They must balance their primary duties and hiring needs without spending too much money. Building a system to hire effectively is a low priority, because there isn't enough volume to justify investment standardizing how this gets done -- it isn't a need. At least not yet.
Phase 2: Sole recruiter
The first recruiter hired will be tasked with a lot. The sole recruiter is responsible for bringing in the most high priority roles. This person should also start establishing some recruitment processes and interview training to reduce churn downstream.
Chances are, when a recruiter is hired for the first time in-house, there is a lack of internal education on hiring best practices or how to run an effective interview process. The sole recruiter will need to start laying the foundation to build a strong hiring culture while also showing they were worth the investment.
Building good process and "the playbook" while also running full-cycle recruitment can be a challenge. It's important for the sole recruiter to be honest about how much volume they can handle on their own, especially in an environment that relies primarily on active sourcing to generate demand for roles. This is especially important when the company is a relatively unknown brand and doesn't get huge returns for each posting. For startups that need more people to fuel growth before all cash is burned up, hiring quickly could help ensure growth targets are met.
Your first full-time recruitment hire is critical to get right. Chances are, the business is making an investment in an area it has little experience with, and this person is coming into an environment with little process or tools to step into. Typically, a first recruiter has to balance 1) urgent hiring needs, 2) developing internal infrastructure to support increased hiring, such as interview process, applicant tracking, and offer management, and 3) building a positive employer brand to attract candidates as the company grows.
If you're in a position to hire a first recruiter, you'll want someone who can balance these priorities. Filling roles is great, but laying the groundwork to elevate the team's hiring practices and improving perception of the employer's brand in the marketplace will helpmake this person more effective -- and thus make the company better at hiring talent -- in the long term.
For the first recruitment hire, meeting immediate needs while building good systems will lay a strong foundation for the growth of this function.
Phase 3: Small recruiting team w/ functional focus
As you grow from one recruiter to two and beyond, we'll need to divide up the work. Much like going from zero to one recruiter, the flow of work at this stage from one to two can be challenging: there may not be enough volume to fully occupy two full-time recruiters, but if you're having this conversation and bringing someone on, clearly one is too few. Here's how I'd do it.
Look at the number of open jobs you have right now and the estimated timeline to hire each. Then look at the future, how many more jobs will you estimate needing if growth continues on a similar trajectory? This can be a bit more art than science, as headcount doesn't linearly scale with revenue, but it should be illustrative enough to help you forecast demand.
As a side note, this exercise also needs to include estimates for employee turnover to gauge how many backfills you'll need to do too. For example, if you have a 20% turnover rate at your company year over year, estimate needing to hire that many more roles on top of growth estimates. This will provide a balanced and realistic view of what demand for recruitment resources will look like.
Then compare to what your recruiter can handle. Is the flow manageable or not for a single person? If I can afford to make aggressive hiring plans, I'd want to lead with building the infrastructure to hire people efficiently. This means I'd want to bring on more recruitment capacity before I fully need it.
Some may think this is wasteful, but if you have big plans, getting ahead of demand will help you scale on pace and meet demand versus feeling strangled by it.
For example, you'd want to build a bigger port to handle a higher volume of ships you're expecting to deliver goods before they are trying to dock. When it comes to hiring, building out the team and infrastructure before you really start feel like you're losing because you didn't invest enough here.
This is, of course, a luxurious position to take. If your company does have its designs on growing internally, it's good to get ahead of it so you can meet the demand when it comes versus trying to play catch-up later.
So during this ramp up period, it's critical to have your recruitment duo focus on expanding and solidifying operations. Train interviewers. Get your process locked. Scope job roles and build out scorecards for roles. This is going to make hiring much smoother as things really start to heat up. While the groundwork starts to get laid with one recruiter, getting two recruiters enables the formalization of recruitment processes and hiring culture to accelerate and form.
Over time, as your small recruitment team continues to scale, you may want to start giving each a functional focus and specialize roles. For example, if I had three recruiters for a technology business, I'd probably have one focused on sales and customer-facing roles, one focused on engineering and product roles, and a third focused on other corporate functions. Pending what's needed, I may instead look to have a third person solely focused on operations: namely scheduling, wrangling interviewers, and maybe some sourcing if time permits. Again, this also depends on your budget and needs: you may want someone more junior focused purely on scheduling (recruitment coordinator) since it's lower cost, enabling a senior person to focus on the highest value activity: engaging with candidates. The forecast will help guide where you need to invest in recruitment to meet the business demand.
You may notice I tend to hedge a lot -- that's because there is no one-size fits all solution to this, and what you ask people to do in their roles will vary contextually in your business. My goal here is to give you ideas on how to scale and what to consider when making choices.
Phase 4: Matrixed recruiting org with deeper expertise
As the recruitment team continues to scale to meet growing needs of the business, eventually you'll have recruitment teams to support functions or business units. Ideally, you are finding ways to ensure that the company has a consistent recruitment process and set of principles it abides by, with different functional stacks having deeper expertise in the market for the industry or role they're recruiting for.
Let's break down what I mean by "matrixed" org here, since I don't want to assume you fully understand the business jargon that's infected my vocabulary.
By matrixed, I'm referring to building a team that's aligned on two axes. This means that teams are aligned by their functional expertise, such as recruitment lead, sourcing, scheduling, etc. as well as the business line they support, which could be a department like finance, engineering, or sales, or could be a product line, business unit, or geography. There are different ways to split this up, and it will depend on the nature of your business.
To sketch this out, I recommend drawing out a table with an X-Axis for function and a Y-Axis for team. On the X-Axis, these should be different folks within recruiting that report to a functional line manager, and the Y-Axis should be the different teams they support.
See this rough sketch below I drew while drinking coffee. Note that beyond individuals supporting each group, you may also look at people dedicated to overarching recruitment analytics or operations to guide where resources get allocated.
The goal of this approach is to create centers of functional excellence and business expertise.
Functional excellence is built by teams that all do, fundamentally, the same job. Each column is doing the same core work and tasks. They should report into a functional manager who evaluates how each of them perform their duties as practitioners. The functional leaders should also be evaluating who on their team is best suited to address the challenges of each of their internal business clients on the Y-Axis.
These benefits extend beyond managerial visibility: For team members, it it ensures there are regular touchpoints for people doing the same job across the business. This encourages sharing best practices and giving functional managers a sense of trends across the company. This is good for knowledge sharing and growth.
Business expertise is built by understanding the core customer the functional practitioners are supporting. This is supported by a team of people with different functional roles who support the same customer outcome. This may be expressed as a "dotted line" to the leader of a specific department, who helps set priorities and advises on what the team actually needs, while recruitment consults on best practices and partners to ensure that the department is well-equipped with the knowhow to hire effectively. If business leaders can provide context, guidance, and insight into what they need, cross-functional recruitment teams can be adequately equipped to support them.
Building a small, cross-functional group aligned to business units will help build camaraderie, consistency, and the knowledge of their business to do their job effectively.
I've worked in environments where every project will have a different mix of people working on it. While this can be good for giving people exposure to new areas, it can slow things down when every project feels like an order being taken versus something the team actually owns.
Developing expertise in a business takes time, but frequent rotations can hinder this progress. While it's valuable to give teams exposure to different functions to broaden their skills, over-rotating prevents them from building the deep expertise needed to deliver meaningful results.
In recruitment, success relies on building relationships with hiring managers, understanding market dynamics, growing a candidate network, and fine-tuning team operations. A recruiter's credibility comes from familiarity with specific functions, which is why roles like "technical recruiter" often focus solely on technical talent. Beyond recruitment skills, this specialization develops business-level expertise over time. In my days as a recruiter, I got to know certain sales jobs so well that I was often asked if I had been in the role before moving into recruitment. This level of credibility helped me build camaraderie with candidates and helped answer questions they'd have about the role.
While reallocating recruiters across business units may seem efficient on paper, doing so too often disrupts relationships and wastes time as they ramp up in new areas. Instead, it's better to let them cultivate expertise in areas of interest as much as you can and not shuffling them too much if possible.
For the record, I didn’t invent the concept of a matrixed organization. I first learned about it from a friend who runs his own business, inspired by Shoe Dog, Phil Knight's account of Nike's rise—supposedly, this is how they structured their teams.
It's a great framework for organizing teams and scaling effectively. Depending on the organization’s size, you might need multiple people in the same function. For instance, sales and engineering may require more dedicated support, while finance and HR might need fewer, reflecting their respective hiring volumes. Use this model to prioritize and allocate resources wisely rather than rigidly applying it to every team.
This approach also aligns with how I think about L&D and performance management teams. I'll cover this more in future posts.
For now, let this framework guide where to focus based on hiring volume and departmental needs.
III. Some Closing Thoughts
It's important to distinguish between running a recruitment process and identifying talented people to bring on board.
Recruiting isn't just for recruiters -- it’s everyone’s job to help the company find the best talent. The best founders and leaders actively build relationships with potential hires, even when no immediate openings exist.
If you’re a founder with growth ambitions, you should always be recruiting. Similarly, if you manage a team, you need to stay ahead by building a strong bench. Don’t wait for a position to open -- build the network before you need them.
As a leader, your primary focus should be enabling your team to do their best work. While it’s easy to get caught up in the functional aspects of your role, the best managers focus on building and supporting the team to deliver great work. Leaders need to know what quality work looks like, of course, but they are best when they are building and developing teams. In this way, leadership becomes a point of leverage, focused on strengthening the team -- whether through hiring new talent or developing current teammates.
A strong partnership between business and recruitment functions is key to efficiently bringing in top talent. I’ll dive deeper into how this partnership works in a future post.