FROM MARCH 2014's RECRUITER MAGAZINE

New recruitment technology and a need to tighten belts have seen the number of companies favouring in-house resourcing strategies over agency recruitment significantly increase in recent years, says Alastair Cartwright

Evidence is provided by recent research from the Chartered Institute of Personnel and Development’s (CIPD’s) 2013 ‘Resourcing and talent planning’ survey: 66% of employers are looking to develop their own in-house recruitment function, 50% of employers are focused on reducing spend with recruitment agencies and 49% of employers are committed to using new media/technology to recruit.

Although reducing costs has been a main driver, other factors have been a desire to adopt a more strategic approach that is aligned more closely to overall business objectives, as well as a wish to support and develop the increasingly important employer brand. 

Some agencies have done little to defend their position. As a result, some agencies have struggled to deliver on increasingly sophisticated client requirements. In response, HR directors have been unwilling to pay premium rates and have negotiated hard, leaving those agencies with a dwindling bottom line. 

Agencies that have stayed ahead of the game have done so by identifying where they can add value to the recruitment process. For instance, agencies, particularly those with proven specialisms, can be a great source of market intelligence: they understand the industry, constantly talk to candidates and can offer a useful overview of recruitment trends. Agencies are often also better placed when it comes to fulfilling niche or senior appointments. 

The most successful agencies today invest time and commit to building relationships with both clients and candidates to work out what makes each tick. They understand that it’s not just about finding the candidate with the right skillset but also the candidate best suited to the culture and ethos of an organisation. 

By adopting this approach the recruitment industry will be better placed to encourage even more organisations to adapt their recruitment strategies and embrace the benefits offered by a dual force of a strong in-house team and the right agency.  

Of course this more targeted approach comes at a cost, and businesses must be willing to commit to paying higher fees for the right level of advice. For example, this new way of working may see an HR director identify the two or three agencies that have a proven reputation in their particular sector, and then agree to pay 1-2% over the current market rate for key appointments. 

This motivates the agency to ensure that they deliver on the chosen assignments. For the HR director it offers the peace of mind that a mutually beneficial partnership with an agency is less likely to result in their own talent being approached with the offer of positions elsewhere. 

In essence, this creates a partnership between client and agency. Agencies should be confident in their offering, positioning themselves on par with other professional services bought by large organisations such as accountancy or legal support. This will involve creating a niche role for themselves that focuses on the qualities and strengths that in-house teams are unable to provide. 

By using agencies less but paying them more, organisations encourage agencies to take a more targeted approach to candidate selection. The lesson for agencies not yet doing so? Work towards becoming a trusted partner rather than simply another name on a list of suppliers.

Alastair Cartwright is managing director of Ingenium People, a training company dedicated to in-house resourcing professionals

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