Believe it or not, the first ever recruitment firm was established in the 1650s in England. More traditional recruitment agencies are actually a by-product of WWII, to fill the gaps left by soldiers going off to war. The staying power of recruitment firms in society demonstrates a true need for this partnership in modern day workforce recruitment. While it is an invaluable resource, that doesn’t mean it’s a silver bullet. So, let’s talk about what works, what doesn’t, and how to know what to choose.
Benefits of Recruiting Firms
Team productivity and morale is directly impacted by the duration of time taken to replace lost talent. According to the Society for Human Resource Management (SHRM), the average time to fill a job is 42 days. When teams are short-staffed, the extra work can lead to disengagement, burn-out, and attrition; which only worsens as the problem persists. Now more than ever, HR departments are stretched thin. While many companies have in-house recruiters, the ability to quickly scale a workforce takes time and energy. For those companies whose HR teams are lean, finding the right talent quickly can be a herculean effort. This is where recruiting firms can shine.
One main advantage of this type of partnership is flexibility. Staffing firms are great for scaling up and down based on anticipated hiring needs; without needing to add additional headcount to the recruitment function. A typical source of candidates for most employers is referrals. While these are a great avenue, they are statistically homogeneous to the existing employee demographic. Any company trying to improve their diversity should consider recruiting firms; as they typically have broader pools of both active and passive candidates. This will expand what the top of the funnel is capturing: a wide range of expertise, backgrounds, and ages. These agencies may also be able to scrape resumes to remove details such as name, locations, profile pictures; thereby providing more neutral candidate profiles for review.
Companies may face the challenge of early turn-over. Staffing agencies can help reduce this risk factor with temp-to-perm. This allows for companies to bring onboard a resource for a trial period before extending them a permanent offer. This can be advantageous to both the contractor and the employer as both are being provided an opportunity to assess the fit early on. This also provides potential cost and time savings, as early misalignments can be caught before considerable investment into training and onboarding occur.
Additionally, expansion into new geographies is a great use-case for staffing agencies. Each country has its own unique labour laws. Instead of trying to navigate hiring talent in a country you are not familiar with, having a critical partner can be invaluable to global expansion in the search for talent. These agencies will have an established talent pool, and a strong understanding of the local labour market.
In-House Recruiting
Let’s talk about when leaning on your in-house recruiting team may be the better option. Predominantly, for cultural and business alignment. When you build and invest in amazing in-house recruiters, they will know the ins and outs of your business, the team dynamics, and the real non-negotiables that may not come through in job descriptions. When thinking through the cost of hires and attrition, having your own recruiters may lead to higher success rates. Great recruiting teams will serve as thought partners on developing talent strategies for bench strength, talent density, co-op and new grad programs, talent marketing campaigns or events, and succession planning. They will have access to internal metrics to ensure that the talent strategy is paying off.
According to a Gallup survey, the cost of attrition can range from 1.5 to 2 times the employee’s annual salary to replace and train. In-house recruiting teams are able to tap into internal talent pools, helping to facilitate promotions and lateral transfer opportunities. By placing an emphasis on this, you can improve employee engagement and satisfaction. Alumni networks accessible to your recruiting team, can also be a great resource for getting talented individuals that will more likely be a cultural fit. Your alumni will be able to speak to people in their networks and give them an honest view into what the company is like. This will help new hires have a better view of the role, the culture, and can potentially mitigate early turn-over.
Internal partnerships can help to improve the candidate experience, as in-house recruiters will be able to more seamlessly guide the hiring process. Helping to navigate the expectations of hiring managers, assessing the talent pool to identify the right talent for the business needs, keeping the candidates informed about the next steps in the process, and setting realistic expectations of the job and culture. This can drastically help to improve the calibre of talent applying. Internal teams will likely be more nimble and adaptable, changing rapidly to market conditions, and evolution of company strategy.
So where does that leave you?
The reality is that there are pros and cons to both approaches. Companies need to be thoughtful about where to invest their time and money when it comes to finding talent. Most critically, you need a clear talent strategy. Take the time to identify if you want to focus on internal promotions or adding external skill sets. Identify if you want to look for talent in specific geographies and whether the existing recruiters are equipped to search for talent in those regions.
Remember to evaluate the success of your recruiting efforts. There are key metrics that should be assessed regardless of approach, such as time to fill and early turnover. Look also at calibration of candidate profiles, i.e. how long did it take to get the right type of candidates in front of hiring managers. Assess if the diversity of candidates presented aligns to the values of your organisation. Once you have carefully considered these variables, it will guide you to know when and where to deploy each type of recruiting approach.
