The world and beyond – Surviving in the economic jungle

Advice, tips and tricks on how to engage with the UK jobs market and commercial environment, from a female executive's perspective

Fee or Famine?

with 2 comments

When an organisation needs legal advice they use a lawyer, and when they need financial advice, they use an accountant. How is it then, that when they need to address the issues of their most important asset – Their people – they often consult their mate down the road?

In the current tight recruitment market (In line with the tough economic climate) there is huge pressure on budgets and everyone’s belt is tightened to weather the storm. But I can’t help wondering whether the risk aversity I see in many organisations to recruitment and the associated spend, won’t in the long term have a direct knock-on effect to their efficiency and the quality of their workforce?

The issue of recruitment fees (And how high they are) comes up in every conversation I have with my clients. And always, there is a feeling that justifying the cost of recruitment is impossible.

I beg to differ.

The general perception about recruitment is that it is an expensive and abusive service, because what goes on behind the scenes is not usually factored in to this paradigm. The process of sourcing a candidate pool, the consultant’s experience to spot a suitable candidate, the time put into phone calls and interviews to screen the candidates all takes place without the client’s knowledge. The client only sees a list of candidates. So all the background work, digging, networking and associated legwork involved goes unseen and therefore, falls outside of the client’s experience of the service.

Partly, it’s our own fault as Recruiters. For us the sales pitch is so important that we forget that clients need to see ROI (Return on Investment) on their spend. And let’s face it: Sometimes, whisking a candidate off the database and into the client, and then slapping a full fee on it, doesn’t really represent best practice.

Ask any junior recruiter why they charge their particular % fee, and they are likely not to have a clue. The fee is the fee, isn’t it?

The fee in recruitment is actually representative of a service charge for the management of a process. This process includes sourcing a candidate pool, and backtracks extensively into the work that actually goes into establishing a contact base or database of potential candidates. Realistically, this source can go back years and it is impossible to quantify the value of such contacts.

But to get back to my original point: The fact that there is a migration away from traditional recruitment services into more value based, solution driven offerings is a positive development. The fact that many recruiting clients still think recruitment is an unneccessary expense that can be avoided through “on the cheap” solutions, is not. The automotive industry seems particularly susceptible to this at the moment, following the dreadful 2009 we all suffered.

The problem is that, due to the many redundancies and business restructures of 2009, the employment market is burdened with much of the dead wood that companies will remove when they have to cut costs. No struggling business is going to get rid of its star performers unless it is absolutely forced to do so.

Businesses are under pressure to deliver turnover, but haven’t recruited for extensive periods due to recruitment freezes to limit cost during these harsh times. Now, as the market is coming back to life, competition for outstanding employees will be huge. Yet, the risk aversity robs organisations from actually limiting spend by  bringing on board excellent new employees through a structured and targeted recruitment process. Instead, they opt for word of mouth and other grass roots methods and  although this does result in job offers, the quality of those hires may often be suspect and retention rates poor.

This traditionalist approach will no doubt haunt businesses in the medium future, when the sweetness of avoiding a recruitment fee is tempered by the bitterness of limited skills and lack of retention rates through sourcing from a limited candidate pool.


2 Responses

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  1. Hi Cath
    Couldn’t agree with you more on this. Well done! Good article.


    Marcello Cedrola

    January 18, 2010 at 9:25 am

  2. Great blog! Some very good points Cathy

    Barkery Jammeh

    January 18, 2010 at 2:56 pm

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