Previous Searches
Looking to recruit?

Investigo Blog

Counting the true cost of recruitment

Recruitmentagency recruitmentrecruitment costs
Board room image_.jpg

I’d argue we are now enjoying the most encouraging recruitment market conditions since 2008. Certainly the over-riding feeling within the business community is a more positive one. From the flat-lined conditions of 2008 to 2012, the pent up commercial frustration is now beginning to be unleashed. Businesses are looking to the future, investing in new systems, re-structuring, investing in their people, getting the show on the road again and positioning themselves for a long-overdue period of positive growth. Long may it continue.

Whilst this is promising news for all, the recruitment industry included, I’m interested to see what view businesses will take when it comes to hiring that future talent which it’s going to need to capitalise on the conditions and realise this growth. As the shackles are increasingly loosened, it is without doubt becoming a more candidate led market place and if a business is serious about having the competitive advantage in that market then it has to make sure it’s hiring the best people it possibly can.

There are many resourcing strategies and plans out there to find this talent and everyone has different view on what the priorities are. Cost is invariably a common theme and if a business unit is mandated to drive it’s costs down then an obvious measure to focus in on is the recruitment fees. It’s a clearly quantifiable figure. Something to be mindful of, yes, but the danger is when %fee becomes the decision making tool for which suppliers to engage with.

All too often a client will expect an agency to fall in line with commercial terms purely on the basis that every other approved agency has agreed to them. Yes it can quickly demonstrate a saving of £x compared with the previous year but to what detriment? Is that business then engaging with the right suppliers? Is it getting the best people (that future talent, the competitive advantage they will be so reliant on) or are they possibly getting the 1st people those agencies have found who they think can do the job, a knee-jerk reaction? Could they possibly be protecting their best candidates for the clients prepared to pay the higher fees?

Whether a business hiring strategy is managed by an RPO, an in-house team, 100% external agency, a against highly aggressive SLA’s and commercial terms which don’t reflect the search efforts or service delivery required to find them in the first place will only achieve one thing: a decrease in quality over time. Whether that is in the quality of candidates to select from, the level of screening undertaken, the priority which it is given, the time to hire.. The delay getting a key hire in post or hiring the best of the bunch rather than the true top talent, the cream - this has can have a huge impact on the future performance and success of a business. The butterfly effect in action. But it is a very subjective, un-quantifiable cost and I wonder to what extent is taken into account.

The true cost of recruitment to an agency can be calculated by the lengths it goes to to ensure their client ends up with not only exactly the right person but the very best person for that particular role; how thoroughly it has searched the market; how broad their network; how deep the relationships; how detailed their due diligence for each candidate submitted or how knowledgeable and experienced the consultants are: the prouder it is of all these points the more genuinely they can justify their fees, the more a client should listen and the less inclined they will be to simply fall commercially in line with those agencies who possibly don’t take such pride in their work.

The true cost of recruitment to a business is more complex to calculate but I would gamble the money those clients they think they’ve saved in those fees on the future profitability of their business suffering from actually selecting their “future talent” in reality from anywhere but the cream.

Posted by
LinkedIn Twitter Facebook