15 April 2009

Why use a recruitment agency?

This article was originally published in Issue 67 of InSight on 4 February 2009

The current employment market has thrown up a lot of challenges for recruitment agencies, not just in Australia but across the globe.

One of the most confronting ones is relevance.

This is a very familiar issue for me. When I started pounding the pavements of Sydney, as a junior recruiter in the early 1990s, unemployment rose from 8% to 11% and there were vast numbers of available and active candidates. The major ‘sell' when I sat in front of a client or prospect wasn't (mostly) one of why I was better than my competitors, it was why use a recruitment agency at all!

Fifteen plus years later, I am certainly not expecting that unemployment will return to double figures (or even close) however I do sense that recruiters are yet again, confronting the issue of relevance.

As more people become active job seekers (combining those currently unemployed, with those who know or suspect they are soon to be unemployed) and the pressure continues across organisations for greater cost reductions, the use of recruitment agencies will come under the financial microscope like never before.

‘Why use a recruiter when we can post a job online and have all the candidates we need?' I hear CEOs and GMs asking of their hiring managers.

A predictable question I would suggest and one that all recruiters need to be able to answer emphatically or risk death by irrelevance.

Here are 7 reasons why using a high quality, third party, recruitment consultant is still likely to be the most cost-effective option for a client seeking to hire the best employees, regardless of the economic climate.

1.    Find the best candidates - just because there is a dim economic mood, it doesn't mean that high quality candidates are flooding online ads with applications. A high quality recruiter uses many tools and techniques to access and woo top candidates. Most clients just rely on online ads to generate candidates for jobs.  

2.     Speed - almost all clients attempting their own direct recruitment have higher daily priorities than hiring. Recruitment consultants have no higher priorities than responding quickly to a client request for quality permanent and/or temporary staff. A high quality recruiter should always be able to provide suitable candidates to a client, faster than the client can do it themselves (if they can't then they don't know their market niche well enough).  

3.    Recognise liars and frauds - a database and filing system, with deep history, allows a recruiter to compare the resume currently submitted by a candidate to one they may have submitted in the past. Considering that between 20% and 40% of resumes have significant inaccuracies (depending upon which survey you believe), your chances of detecting a fabrication or omission in a candidate's resume is generally going to be better than your client's. 

4.    Skills testing and other assessment tools - all high quality recruiters have some form of testing that assesses one, or a combination, of a candidate's skills, competencies and motivations. Most clients do not. Any independent, valid and proven assessment tool is going to improve the chances of an effective hiring decision being made. 

5.    Temps - assessing and managing candidates for temporary or casual positions involves a slightly different set of skills to those required for permanent recruitment. See this article for more details. Most clients have very little competence in effective temporary recruitment because they don't understand the subtle differences.  

6.    Act as a client advocate - when the client is recruiting directly, they have no independent advocate going in to bat for them with the candidate (remembering that quality candidates will almost always have other choices). A high quality recruitment consultant knows how to most effectively present job opportunities and (mostly unknown) organisations to their candidates.  

7.    Market expertise - a high quality recruitment consultant knows their market niche so intimately that they can provide excellent advice to their clients about candidate availability, sourcing methods, salaries & benefits, hiring timeframes and key ‘push & pull' factors for quality candidates. It is highly unlikely that a client will have anything close to the same level of expertise about the relevant candidate market.

Recruitment agencies are intermediaries. All market economy intermediaries (like real estate agents, travel agents, dating agents, shipping agents, mortgage brokers, share brokers, etc) have either thrived or withered over time, based on their level of effectiveness with which they bring together a relevant buyer and a relevant seller in a specific marketplace.

Recruitment agents are no different.

How relevant are you?

More importantly, how effectively are you communicating your relevance to your current and prospective clients?

5 comments:

  1. Ross

    An intersting justifcation of the role of an agency. Let me start of by saying I think that recruitment agencies have a vital part to play in the resourcing mix.

    However, my personal view (and that of many of my clients) is that they play too big a role in recruiting positions that could be filled directly by the orgnisation at much lower cost.

    Here's some discussion points under each of your 7 reasons...




    Here are 7 reasons why using a high quality, third party, recruitment consultant is still likely to be the most cost-effective option for a client seeking to hire the best employees, regardless of the economic climate.

    1. Find the best candidates - just because there is a dim economic mood, it doesn't mean that high quality candidates are flooding online ads with applications. A high quality recruiter uses many tools and techniques to access and woo top candidates. Most clients just rely on online ads to generate candidates for jobs.

    In my experience, most clients don’t rely on online ads to generate candidates – far from it.

    The tools used by most recruiters are broadly the same as those used by companies sourcing direct into their organisations.

    Additionally, recruitment agencies cannot access some powerful tools – the Linkedin corporate package is not available to recruitment agencies. The one advantage of the agency is the ability to conduct a high quality headhunt – easier access to technology has levelled the playing field in most other areas.

    2. Speed - almost all clients attempting their own direct recruitment have higher daily priorities than hiring. Recruitment consultants have no higher priorities than responding quickly to a client request for quality permanent and/or temporary staff. A high quality recruiter should always be able to provide suitable candidates to a client, faster than the client can do it themselves (if they can't then they don't know their market niche well enough).

    Speed is important when you are in a rush to hire. Many recruitment processes are lengthy affairs and the need to have a CV on the desk within minutes of the requirement being published is less important that the organisation running an organised, consistent and fair process.

    I would argue that there are few occasions when speed is a substitute for success. As an employee does not become fully productive for at least a year (according the CIPD) losing candidates hired in haste before this time is an expensive business even if the blow is softened by a lengthy rebate period.

    If clients do have a higher priority than recruiting the best people for their organisation I would suggest that they find a more suitable job. Also, let’s not mistake “higher priorities” for laziness.

    3. Recognise liars and frauds - a database and filing system, with deep history, allows a recruiter to compare the resume currently submitted by a candidate to one they may have submitted in the past. Considering that between 20% and 40% of resumes have significant inaccuracies (depending upon which survey you believe), your chances of detecting a fabrication or omission in a candidate's resume is generally going to be better than your client's.

    Sure you can compare past lies to present ones but the value this adds is dubious. Better to have a robust assessment and back-check service that eliminates a paper comparison.

    Taking an average of 30% inaccuracy and your filing system will simply compare different sets of rubbish.

    Well publicised policies on background checks and well organised selection stages will keep people honest.

    4. Skills testing and other assessment tools - all high quality recruiters have some form of testing that assesses one, or a combination, of a candidate's skills, competencies and motivations. Most clients do not. Any independent, valid and proven assessment tool is going to improve the chances of an effective hiring decision being made.

    Integrated online tests delivered through an ATS do this job. I’m not sure why I’d pay someone else to use a test that hasn’t been validated against company norms or designed specifically for a particular skillset. I suppose it depends on the size of the orgnisation and the willingness to invest in the infrastructure. However, as you could implement an ATS for less that the likely fee for a senior candidate, the arguments for doing so become more pronounced.


    5. Temps - assessing and managing candidates for temporary or casual positions involves a slightly different set of skills to those required for permanent recruitment. See this article for more details. Most clients have very little competence in effective temporary recruitment because they don't understand the subtle differences.

    No argument here. Temp recruitment is less hassle through an agency unless you're prepared to run your temporary recruitment through a talent bank that you could establish as part of your ATS. Again, it depends on size of organisation.

    6. Act as a client advocate - when the client is recruiting directly, they have no independent advocate going in to bat for them with the candidate (remembering that quality candidates will almost always have other choices). A high quality recruitment consultant knows how to most effectively present job opportunities and (mostly unknown) organisations to their candidates.

    The biggest advocate for a client is surely the client themselves. I hesitate to bracket recruitment consultancies with estate agents but as a candidate you’d have to pretty naïve to think that your consultant is a model of altruism. I concede that there is a value add in the offer management process but as a candidate, I'd always want to hear my information from the horse's mouth.

    7. Market expertise - a high quality recruitment consultant knows their market niche so intimately that they can provide excellent advice to their clients about candidate availability, sourcing methods, salaries & benefits, hiring timeframes and key ‘push & pull' factors for quality candidates. It is highly unlikely that a client will have anything close to the same level of expertise about the relevant candidate market.

    Market expertise is valuable. However as more and more organisations seek candidates with transferable skills from outside the specific market sector, it’s more important to understand the role and the likely candidate source and be able to represent these candidates to clients. Does this diminish the 'sector specialist' argument in some cases?

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  2. Thanks Potter, I appreciate your view. Ultimately the results are what count. As many, many client organisations keep little, if any, statistics about their recruitment activities there is no way of producing industry-wide comparisons of self-recruitment v agency recruitment. A project for someone, someday.

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  4. This is really a very useful article.
    Thanks

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  5. This is a great post, the last line says it all!

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