How to choose a recruitment consultancy: rules of attraction

1 October 2008:

The recruitment process is now, by all accounts, a daunting affair. It’s been likened not so much to an art as a science – such is the complexity of the process and the jigsaw-like pieces that must slot seamlessly together to get the best people into an organisation. It’s no surprise that recruitment agencies have risen to such prominence in the minds of company leaders and executives over the past decade. In a tight, complex labour market, any assistance is better than none.

What options are out there and what are the pros and cons of using a third party for recruitment needs?
Over time, the biggest change has been the growth in number and scope of services offered by recruitment agencies. Today there are large multinational recruitment agencies and small boutique specialists and everything in between, and the range of services they provide has also changed. Many organisations will have preferred supplier agreements with a range of agencies in order to cover all bases. Indeed, it is now possible to outsource large chunks of HR and recruitment processes.

Building agency relationships

It’s a cliché but the best recruiters are those who truly partner with their clients. They take the time to understand the makeup and culture of that business, and know what kind of people will work well. They also know the industry in which the business operates and are prepared to attend industry functions to increase their knowledge. They will know who’s about to leave an organisation before the organisation does – because they network so effectively.

Building that relationship takes an investment of time – or what could be called ‘conversations without purpose’ – to the point where the recruiter should be confident enough to say, ‘no I don’t think we can do that job for you’.

Bear in mind that there are plenty of agencies out there who will simply want the business. They’ll look to get a bum on a chair, with no real concerns about the duration that person stays for or the fit.

HR professionals often claim that a trusted agency consultant is like gold – particularly in an industry where consultant turnover is notoriously high. If that trust exists, many steps in the recruitment process can be passed over to the external recruiter, and it’s only necessary for the employer to become involved when a shortlist of candidates is produced, or perhaps to check references. In exceptional employer/agency relationships, the employer will allow the agency to send through unsolicited CVs, simply because the employer trusts the judgment of the agency and the agency understand the needs of the employer.

Central to this relationship is the service level expectations agreed with the agency. Clarify exactly what you are asking for and what you expect to receive. Most managers have had the experience of being inundated with CVs, where they’ve specified that they are only interested in people suitable for senior roles and yet they receive candidates with two years of work experience. A clear brief will hopefully remove the likelihood of unsuitable candidates.

It’s also important not to fall for time pressure tactics – for instance, when an agency consultant says that a competitor is also interested in a candidate and is about to make an offer. Nothing replaces good sound recruitment practices and when the process is sped up prematurely it’s not going to work. It’s crucial to continue to recruit for the right skills and behaviours.

As always, perhaps the most contentious issue is the price agencies charge for their services. Once upon a time rates lingered around 10-12%. Now it’s not unusual to see rates as high as 25-30+%. As the rate is charged on annual income for the candidate, one might think it doesn’t need to change too much, given that the amount will increase with the CPI and cost of wages. The increase can therefore be traced to broader service offerings and the sophistication of today’s labour market.

However, in some cases the rate charged is more than justified – especially for hard to fill roles and senior positions. In addition, agency rates should be low on the list of considerations; those employers purely looking at price will get what they deserve.

Self knowledge

Before engaging any recruitment assistance it’s important to be clear about exactly what is required. The most successful organisations will have clear talent management strategies. These strategies look at short, medium and long-term business objectives and map talent strategies to those objectives. For example, if the business is aiming to grow sales by 15% in the next five years, what human capital requirements will be needed to make that a reality? Or perhaps the business aims to set up overseas operations – what talent will be required to do that? What talent already exists within the organisation that could potentially be developed and promoted from within, and where will it be necessary to bring in external talent?

Once a talent strategy has been aligned to business strategy, choices need to be made about the most effective means to achieve those talent objectives. Traditionally this is where an organisation’s HR department would kick into gear. However, there have also been changes in this area over the past decade.
Larger organisations in particular will now outsource many day-to-day HR functions to third party operators such as payroll and salary packaging specialists.

In house vs outsource

In HR circles, the outsource/in-house/recruitment hybrid debate continues to rage. There is merit to doing it all or as much as possible in-house, but it’s vital to understand what you’re trying to recruit for and ensure you have full understanding of the process, and make sure it’s done as efficiently as possible.

Alternatively, if you find there are people who can do it better, more cost effectively and have a more up to date view of the market then it’s worth considering outsourcing some or all of the process.

Another alternative is to have agency consultants sitting within your company or firm. Under this arrangement – known as in-house recruitment outsourcing – recruiters are effectively employees of that organisation, yet they bring the resources and skills of the agency with them. In this way the agency reps learn about the inner workings and culture of a company particularly well.

The recruitment choice really depends on the organisation and what sort of infrastructure it has. For a small firm that doesn’t have HR infrastructure, an external agency would likely be very positive because they don’t have the skills and experience in-house. For a firm that does have the infrastructure and also a recognised brand who would achieve more by advertising themselves it’s clear why they can do it alone.

One thing is clear: agencies, especially those with good reputations, vast candidate databases and well-connected consultants, can provide a valuable lifeline to already-burdened managers.