I am not sure I buy the thesis. Greed and money are universal, yet most businesses don't need the call centric approach. Not even companies which sells very expensive things like, say, diamonds.
My guess is that recruitment doesn't generate much value, which is a bigger problem than being greedy. After all, what does recruitment do that a job board can't? Looking through a resume for keywords is easy to do with a computer and most recruiters doesn't provide more than that.
My guess is that recruitment doesn't generate much value, which is a bigger problem than being greedy.
You're right, there is very little value when the recruiter is just another salesman and the industry is incredibly self-aware. Most recruiters know that they have little to add but why should they care if people continue paying ridiculous fee's for their services? The only way to counter-act a lack of value add is to take the cunning sales approach and convince you that their is more value than what you have been led to believe which is generally just smoke and mirrors.
I disagree with recruitment not adding value. Imagine a recruiter that sent you 5 qualified candidates who were all interested in your job. You would spend a little bit of time in the interview to verify they were qualified, but mainly you just have to decide who is the best fit for your team. Compare that to hours of reviewing resumes, tens of hours of interviews on unqualified candidates, etc.
A recruiter could offer a lot of value, the problem is that it's difficult to show that you're a useful recruiter. This is an econ problem[1], where you have people offering something valuable and people offering something not very valuable and you can't tell the difference. What's needed is a way of signaling that they're going to be a good recruiter.
Sure, if a good recruiter was better at sorting resumes than one of your developers, they'd add value. hell, even if they were only slightly worse, they'd add some value.
The thing is, to justify current prices, a recruiter would need to be rather a lot better at picking good prospects than your in-house hiring manager, and many times better at sorting resumes than someone who actually does the job you are hiring for. My understanding is that the fee charged is in the tens of thousands of dollars; for that, you had better save me a lot of employee hours, or get me a dramatically better candidate.
In theory, recruiters can save a lot of work by sorting resumes once and then using that sort to give some subset to companies A, B, and C - rather than the sort being repeated at each company.
I agree that it is possible for a recruiter who knew the job well enough and that had multiple clients looking for people in the same field to more efficiently sort the resumes, but even if you could find a sufficiently skilled recruiter, I don't think there is 1/3rd of a year's salary worth of value in that alone. I mean, maybe if the recruiter charged me a week's salary, it'd be worth it for the time I'm saving, but 1/3rd of a year is a lot of money; that's a lot of time I or my people could spend sorting resumes.
I mean, if the recruiter knew more about the position than I did, that'd be different. I mean, this would be very unlikely if I was hiring someone in my own field, but hey, sometimes you need to hire outside your field. I can see using a consulting recruiter for that, but most of that value is teaching me what to look for in an accountant (or whatever I'm hiring for) and they'd need to sit in on the interview. Really, in that case, I'd be looking more for a consultant than a recruiter.
A lot of very expensive items are things people want because they visibly signal a certain level of wealth (diamonds, big homes, expensive cars, etc). You don't need to employ an outbound call center to sell Ferraris because they people who can afford them (and many people who can't) will seek out places to buy them so that they will be able to send signals to others about their wealth.
No CTO gets to show off their expensive developer to other CTOs and brag about it.
What a recruiter can do that a job board can't is access passive candidates.
For example a recruiter might have a pre-established network of candidates who aren't actively looking or might cold-call people working at your competitor to get them to come and work for you.
LinkedIn, GitHub, blogs, and online "presence" in general have been opening up more passive candidates to the average hiring manager (from whom, when a passive candidate, I'd much rather take a call or e-mail than a recruiter).
However, I agree there are still people not adequately accessible by online social tools, so a good recruiter could add value in this regard.
My guess is that recruitment doesn't generate much value, which is a bigger problem than being greedy. After all, what does recruitment do that a job board can't? Looking through a resume for keywords is easy to do with a computer and most recruiters doesn't provide more than that.
Hopefully the recession will kill recruiters.