#BiggerisBetter?: Recruitment Services

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HR Recruiter fees are a substantial part of the HR third party spend for most large companies. With fluctuating recruitment activity and the breadth of positions with a need for the recruiter to understand the target market, many outsource at least part of the demand to recruitment companies. In addition, temporary staff is almost always recruited through external firms, but in this article we will focus on permanent recruitment.

Before HR Category Management comes in, there is usually a myriad of recruiters used by various departments and HR, grown over time. Understanding the spend volume, the profile of the recruitment companies, by whom and what for they are used and the individual fee and contract arrangements is a first challenge in tackling the category. Once that baseline is established, the Category Manager will want to focus on creating a supplier pool based on clear criteria, probably more limited in number and with standardized contract terms and fee structures.

Running a tender with a likely large pool of existing recruitment firms, some will be large generalist businesses down to solopreneur recruiters with intimate industry networks in a specific niche. If an aggressive reduction of the number of firms is a goal, chances are it will be harder to justify including that small niche recruiters and most of the list will be made up by global, generalist recruitment companies. Their ability to scale up capacity quickly, financial stability, an often international network, large candidate database and experience working with the demands of large businesses put them at an advantage. But is bigger always beautiful?

In our experience, it depends. It depends on the type and seniority of the role you are looking to hire for. It depends how important protecting your employer brand in the market is. It depends if you have highly specialized requirements. It depends on how attractive your brand is in the talent market and on the location you are in. It also depends if you have a strong in-house HR team to manage the providers and guide the process.

Working with recruiters as Procurement professionals, hiring managers and candidates, we found that a less generic strategy with less focus on keeping the number of suppliers to the minimum is a better approach. Assuming you have the strong HR team to create a clear, rational scenario tree how the different types of recruiters are engaged and how the employer messaging and brand is effectively broadcast through these third parties.

Large recruitment shops have some clear advantages mentioned early in the article. But in a world where great talent is highly sought after and at the same time large candidate databases have lost their relevance with Linkedin. For more senior, hard to fill and sensitive appointments, a recruiter needs to have a quality, in-depth candidate pool. Candidates where they don’t just hold a copy of the resume, but have spoken to at length to understand more acutely where the strengths and concrete experiences and as importantly, what the candidate wants in a future employer and role and how they’d fit culturally with a client.

In our experience, those are things that some of the niche recruiters do much, much better. Quality boutique recruiters tend to compensate and retain their staff better, have a clear industry or functional focus, understand the value of long-term candidate relationships and invest time in quality discussion. So where to get referrals for good niche recruiters for your preferred list from? Well, usually the answer are from experienced professionals in the respective functions. At least those who have moved roles in the last few years, have likely met a number of recruiters and know how to distinguish the quality approaches.

So for the HR Category Manager in charge of creating a sourcing strategy for recruitment companies, we recommend inviting a mix of more broadly focussed and boutique recruiters for different purposes. For more general and junior roles, temporary hires and volume requirements the large shops are well placed to deliver. For the other roles, look to have a roster of recruiters who truly understand the industry and respective function.

For both, once the preferred supplier program is in place, the correct supplier management as a joint effort between HR and Procurement is important. The metrics are often limited to efficiency metrics such as number of resumes sent in versus hires, time taken to supply candidate profiles and similar. This has its merit, but can also encourage very narrow thinking and candidate selection. With roles constantly evolving and the need for talent with more cross-functional skills and new traits such as digital savvy and change leadership, this does not work so well.

So a mix of efficiency metrics and quality assessment will be more effective. Introducing candidate feedback on the recruitment process can be a great way to gauge how your recruiter is representing your brand in the market. BUT – don’t just survey successful candidates whose experiences will be skewed by the positive experience of getting the role. Add to that feedback from HR and hiring managers interacting with the recruiter. Are they making the effort to really understand your business and the specifics of the role? Can they demonstrate experience filling similar roles for other clients? Do they put the right level of consultant (seniority) on important roles?

And lastly, in a world where good candidates are often picky and highly sought after, managing a consistent representation of the employer brand through the recruiters is very important and a clear briefing and messaging process should be agreed. Similar to the overall structure of the preferred supplier list, the amount of agencies tasked with a role or a project should be considered. Having candidates approached about one role by several recruiters or having the role posted for months can “cheapen” the role. So having the right funnelling system in place to select the correct agency for the correct requirement as discussed above is important.

Having a solid framework in place for managing Recruiting Agencies and measuring their performance is a key ingredient for running an improved, more informed HR Category process once established. Those data points will ensure that learnings are not lost and this important category evolves to be even more strategic.

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