More than eight in 10 UK employers used recruitment agencies in 2004, with 82% using such services for contingency recruiting, a report by the Chartered Institute for Personnel and Development has found.

While the high number of firms using outside recruiters is good news for the recruitment industry, another finding may be cause for concern. Money talks loudly when it comes to choosing a recruitment partner: the most influential factor in a company’s selection was the level of fees, survey respondents said.

The Recruitment, Retention and Turnover Annual Survey Report 2005 examines for the first time in the report’s history the relationship between employers and third-party recruitment agencies. “We sought to find out more about how and why organisations are using agencies, on what basis they select an agency and how they evaluate performance,” says Rebecca Clake, the CIPD’s recruitment and retention adviser.

Among the researchers’ findings:

*63% of respondents said that speed was the top motivation for using agencies to fill vacancies, with the challenge of recruiting scarce skills in second place.

*An average of 56% of firms use preferred supplier lists, with usage lowest among public services (44%).

*Only 26% have a structured approach to evaluate recruitment agencies’ performance.

* Overall candidate quality is the key evaluation factor for those who do measure agencies’ performance.

Clearly, the 74% of employers without a structured approach to measuring agency performance could benefit from such tools. “There’s an opportunity for improvement, potentially something that could help the agency,” Clake suggests.

The report includes the example of T-Mobile, which has dedicated a person to manage the relationship with agencies carrying out volume recruitment for the mobile phone company’s call centres and its retail business. The company has two preferred suppliers and a range of measures to gauge their performance. These include quality, candidate success rates during selection, staff turnover in the first three months of service, and service and delivery against recruitment targets.

T-Mobile plans to take this programme further with a supplier scorecard, on which one category will be innovation, the report adds.

This year’s CIPD data will likely be used as a benchmark in future reports.