The Recruitment Paradox: Why Cutting Fees & Expanding PSL's is a Losing Strategy!

The Real Estate Finance & Specialist Finance sector is currently facing one of its most significant challenges: securing top-tier talent in an increasingly competitive talent market. With a limited supply of experienced professionals and an ever-growing demand for their expertise, hiring the right individuals has never been more critical.

Yet, many Real Estate Finance firms are adopting a fundamentally flawed approach to solving this problem. Instead of investing in stronger recruitment partnerships and focusing on quality, they are attempting to lower recruitment fees while simultaneously adding more agencies to their preferred supplier lists (PSLs). The logic behind this strategy may seem appealing, broaden the talent pool, increase competition, and drive down costs. But in reality, it achieves the exact opposite.

Why This Strategy Fails

1. Lower Fees Equal Lower Quality Recruitment is a service-driven industry, and just like in any sector, you get what you pay for. By pushing for lower fees, firms inevitably drive high-quality, specialist recruiters away. The best recruiters, those who have deep industry knowledge, strong networks, and a track record of placing high-calibre candidates simply won’t work on reduced margins. Instead, you are left with more junior specialists or even generic recruiters who lack market expertise and have little incentive to prioritise your roles.
2. An Expanding PSL Creates Chaos, Not Quality More recruiters do not mean better candidates. In fact, the opposite is true. The more agencies you involve, the harder it becomes to manage quality control, messaging consistency, and overall efficiency. Instead of receiving a curated selection of high-calibre candidates, hiring managers are flooded with a barrage of CVs, many of which are unsuitable. Worse still, the same candidates are often submitted multiple times by different agencies, leading to disputes and wasted time.
3. Junior Specialists / Generic Recruiters Are Not Equipped for Senior Hires Senior-level roles require a different approach to recruitment. These positions are filled through targeted headhunting, relationship-building, and deep market insight, not a scattergun approach. Junior Specialists or Generalist recruiters, often focused on speed and volume rather than precision, lack the ability to engage and secure high-level talent effectively. The result? A lower calibre of candidate, longer hiring processes, and an increased risk of making the wrong hire, which all ultimately have a negative impact on your teams and business.
4. The Rules of Supply and Demand Cannot Be Ignored In any market where demand significantly outweighs supply, prices generally increase. Real estate finance talent is scarce, and competition for the best candidates is fierce. Expecting to cut costs while improving quality contradicts basic economic principles. If top firms are willing to invest more in securing the best people, but you are trying to do it for less, you will always lose out.

How to Solve This Issue and Hire the Best

If you truly want to attract and secure the best talent in the market, a strategic shift is required. Here’s what you should be doing instead:

1. Reduce the Number of Recruitment Partners Quality over quantity. Partner with a select few specialist recruiters who truly understand your market and business needs. This will ensure consistency, better relationships, and a more focused, high-quality talent pipeline.
2. Be Prepared to Invest More in Recruitment The best talent comes at a premium, and so does the best recruitment service. Offering fair and competitive fees ensures you attract recruiters who will dedicate time, resources, and expertise to securing the right hires for your business.
3. Scrutinise Your Recruitment Partners Not all recruiters are created equal. Before adding a recruiter to your PSL, assess their market expertise, track record, network, and approach. Ask them how they source candidates, how they engage passive talent, and how they differentiate themselves from other agencies.
4. Spend More Time with Your Chosen Partners The best results come from strong, collaborative relationships. Educate your recruitment partners on your company culture, hiring challenges, and long-term goals. The more aligned they are with your business, the better the talent they will deliver.

Final Thoughts

The current approach of lowering fees and adding more recruiters to the mix is a race to the bottom. It leads to lower-quality candidates, longer hiring times, and an overall decrease in hiring effectiveness. Instead, firms should be focusing on fewer, higher-quality recruitment partnerships, increasing their investment in talent acquisition, and ensuring their chosen recruiters operate at the level required to deliver real value.

Your recruitment strategy should not be about spending less—it should be about spending wisely. If your business growth depends on hiring the best talent, make sure you have the best recruitment partnerships possible to ensure they deliver the best talent in the market - helping your teams and business to grow FURTHER, FASTER!

Are you ready to elevate your hiring strategy and unlock access to high performing, top tier talent for your teams and business? Visit Valorem Partners to learn how we can help you align talent acquisition with your most important business goals and financial objectives.

If you would like to learn more on this subject or to discuss your specific needs via a confidential conversation, then please do not hesitate to contact the VP team at any time.

To be kept up to date with all of our regular and informative content - please follow the Valorem Partners company page here on LinkedIn.