2012, Recruiters, Recruitment, Social Media, Social Networking, Social Recruiting

Why three companies stopped using their recruitment agencies [mini case studies]

This week recruitment agencies have made me sad (professionally). At various meetings with clients this week (small, medium and large) I have had to listen to the same story from all of them regarding their recruitment, and to be honest it wasn't easy listening.

I am passionate about recruitment and the industry, and in a time of significant change - technology, social media, candidate expectations and companies doing more direct sourcing - recruitment agencies are more exposed than ever before. It therefore makes it worse when I hear these types of things from companies. Here are three mini-case studies showing why adding value in the recruitment process is essential:

Company One: They are historically a large agency user and even went down the sole agency route a couple of years ago, with the thought they might actually save money and get better service on their recruitment with one supplier. They have now taken the time to look at their recruitment over the last 12 months and realised that all the recruitment agency does is place adverts on job boards, filter CV's, upload to the online recruitment system and arrange interviews. Not one candidate came outside that process. Not one had been briefed properly about the company, opportunity and prospects.

Conclusion made by the company - are they getting a good cross-section of candidates in the market presented to them? (no); are they representing the company and the brand well? (no); they are providing an admin function and process only; and importantly they are adding no value to the company.

They have now given notice to the recruitment agency, and are embarking on setting up a direct sourcing strategy themselves. They will still use agencies, but only when they really have to.

Company Two: They are a mid sized company who use two agencies and give them regular business. They reviewed the candidate experience of their applicants over the previous 4 months and were a little annoyed to say the least. They found that out of 63 people interviewed over that time, 55 had come from adverts they had seen posted on job boards by the agencies. The process had been quick, but there was little company briefing and explanation of the jobs, other than what had been written in the adverts. Of the 8 that hadn't come from job boards, 6 were registered with the agency and the other 2 didn't know how they were found. The upside was that the company did hire 14 people.
Up until the point when the company 'declared their results' (in meetings), both recruitment agencies told them about all the different methods they use to source candidates for them (networking, referrals, database, searching, LinkedIn and of course advertising). After seeing the evidence they both offered assurances it wouldn't happen again!

Conclusion made by the company: why can't they do the same as the recruitment agencies did? They have a recruitment system, and they know the job boards that have produced the best candidates. And they want to try social media because they think that is the future.

Suffice to say, both agencies got the bullet! They are now doing what they said they were going to do, and place more jobs themselves. Interestingly they have gone back to using a recruitment agency - but a more specialist one - for a role that they haven't been able to get candidates for with their adverts. They are now exploring how better to use LinkedIn, Facebook and Twitter as part of their new recruitment strategy.

Company Three: They are a small growing company that recruit are recruiting 1-2 people every month. They use two recruitment agencies as they have little recruitment knowledge. They rely on the agencies to deliver on their original sales pitch to them, which was to find them the best available candidates from a cross section of sources. The company started to get suspicious after a couple of really poor interviews, where the candidates didn't know what the company did and what the job was about. So they did some retrospective homework. It seemed that all the previous interviewees over the last 3 months had come from adverts they had seen on job boards.
The company immediately challenged the agencies and referred them to the initial conversation. The recruitment agencies admitted that unless they struggle to get advert response, they don't bother doing any extra searching for candidates!

Conclusion made by the company: why pay 22% fees when they could place the adverts themselves, and give the candidates good information about the company every time.

The company in question are now looking at their recruitment options after terminating their relationship with the two agencies. They are going to try and do the same as the agencies did and place online adverts themselves. Early days for them but so far it is working.

For me the common denominator with these three companies is one thing - the recruitment agencies were not perceived to be adding value to their clients. Two of the three companies still use agencies but now only if they can add some value to the process, such as being able to find hard to find candidates.

What was clear in speaking to them, was the realisation that they could actually do the same job themselves that the recruitment agencies were doing and charging large fees for. They then just cut them out of the process completely.
Another really important point to understand, was they had no fear in making the decision. They didn't recognise the service these agencies were providing as recruitment, but as an advertising and filtering service which they were paying a premium for.

As I have said here on my blog many times before, the recruitment landscape has changed for recruitment companies. No longer can they do what they have always done to be successful. They need to be challenging the way they work, find new ways to source candidates, learn how to embrace the social networks for recruiting and most importantly ensure that they are REALLY ADDING VALUE to their clients.

Big companies offer low prices and huge economies of scale; smaller niche agencies offer true market/sector expertise, knowledge and access to specialist networks. But what do the rest offer? These three companies all used mid-sized non specialist recruitment companies! Enough said.

I work with recruitment agencies and corporates, and therefore I am in a good place to see the changing market. Of course not all the recruitment agencies are like the ones I have highlighted above, and many have accepted that change is happening and are helping their consultants adapt. But in my opinion, the majority are still sitting there waiting for this bubble of change to burst, so it can go back to the way it was.
That isn't going to happen anytime soon, technology is seeing to that.

Time to change. Remember what Darwin said. "It is not the strongest of our species who survives, or the most intelligent, but the one is most responsive to change."

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Sarang Brahme

Very well said Andy. It’s the story everywhere.

Most of the vendors we have worked with are simply job portal (advertise + search) specialists. Then it just become the rat race if internal recruiter OR external consultant gets to these guys. Very few agencies in our experience have actually shown out of box thinking and adding value.

I guess as most of them think recruitment is easy and anyone with internet / phone can do this job!

P.S. I am not generalizing here as there are always good, bad and ugly players in every industry.
Andy Headworth

Thanks Sarang,

You are right that few are doing things differently. For example, LinkedIn should be the bare minimum that recruiters use and yet most still don’t it effectively.
There is nothing wrong with agencies placing adverts on job boards of course, as long as it is part of a wider attraction and search strategy.
Gareth

A couple of jobs back, I used to tell agencies that if I could find the candidate on a job board cv database (Staffnurse) within 10 mins of receiving a cv, I wouldnt pay for it. I usually found 90% of them.
Ian Harvey

Hi Andy

I don’t suppose anyone will be surprised by the case studies you quote. As someone who learnt recruitment search techniques pre-internet, I find it ironic that what should be such a powerful tool in the right hands is actually responsible for down-skilling many recruiters. Many have clearly found reliance on job boards simply too easy.
Subsequently, the real, value-add skills in candidate assessment, candidate and hiring manager management etc are being ignored.
But don’t clients and hiring companies bear some responsibility for the service that they get? If you are going to appoint agencies where the first 2 criteria on which they will be judged are cost per hire and time to hire, isn’t it natural that they are going to go for the quickest solution, rather than spending more time than the psl sla’s will allow to find the best candidate? I know it isn’t good recruiting, but is it surprising?
Ian Harvey

Hi Gareth

I know what you are saying, but is it 100% fair to penalise agencies for doing something that you could have done yourself, but chose not to?
Andy Headworth

Ian,

No, I agree no real surprise. More worrying though is that sheer number of the recruiters I come into contact with through my training workshops, that post jobs and do little searching. Then they moan because they can’t find people!

Hiring companies don’t actually know what they want half the time, so what chance have recruiters got then? It certainly takes both sides to work together to maximise the effectiveness of any recruitment assignment.

You are right about the measurement metrics - they are very frustrating. How often do you hear quality of hire being measured? Maybe attrition or retention levels if you are lucky!
Ian Harvey

Andy,

Interesting comments. In your experience, do you think that hiring companies really understand what value-add in the recruitment process should look like? Much direct sourcing by in-house depts still looks like posting jobs and filtering CVs, which is precisely the process which many criticise agencies for, as per your case studies.
Mitchsullivan

Most recruiters remind me of frogs being gently boiled.

If you try to tell them they’re being boiled, they respond angrily, saying that you “must have something against frogs”.
Dickie

What puts me off recruitment agencies from both a user and a client is the general disrespect they give to candidates. I continually do mystery shopping with agencies and time and time again there is a total lack of information flow back to the candidate and the worst and most arrogant of all are those that say “if you haven’t heard from us in x days then……” What arrogance and complacency that shows. These are the businesses that will fold earlier than those that see their candidates as long term clients. I personally make it my rule never to engage any agency that follows that particular process.
Steve Ward

Although; being a networking & face-to-face recruiter; I concur with the thought from a personal angle, that these case studies represented what was basically lazy & simplistic recruitment practice - there is still the objective of the recruitment agency saving time, and possibly money in the process. This post is taking something of a one-eye view of agency operation.

If the best candidate is found from a job board, then so be it. I just placed a Social Media Manager job from a job board. I was amazed, this rarely happens to me, I always place through networking - but she was the best candidate, and if my client want to do the research, they’ll find that I found her through a job board. Yet less than 10% of my placements come from job boards.

The reality of being a recruitment agency, is that if you are good, you fill 1 in 4/5 jobs. If you are average or high street, or for that matter high demand/low skills area in specialism - then it could be 1 in 10 or more.

That means recruiters pull together all of the resources available, including job boards, spend a lot of money doing so - and get nothing for it in say 7 out of 8 situations. It’s the bit people don’t realise, Recruiters generally lose more times than they win - and when they lose, they get £0 - so why mock their source of supply when they win?

Sure - the client can use Total Jobs, Reed, JObsite, CV Library and Monster if they like - spend £500-600 - post their job for a Marketing Exec - and have all the pleasure of filtering through the 75-300 applications that arise. Sure, they can do that - as well as potentially network, source, build a database, etc. The reason most don’t, is because it’s numbing and time-consuming.

Recruiters sometimes roll the dice, get all the tools, and sometimes they win, and sometimes they don’t. For most roles, still the greatest volume of applications come from job boards. That’s fact. Therefore heightening the chances that the job boards will fill the larger proportion of roles. That’s not laziness, that’s mere fact.

There are many poor practices in recruitment - reliancy on job-boards is amongst the least of them.

The genuine highlight of the accusations come in the poor preparation. THAT is where recruiters earn their crust. Great selection, and excellent preparation. Sure, the candidate can come from any of the recruiters resources - most likely from the job boards - but it’s what you do with them once you have found them that is the real skill of a recruiter.

The judgment of an agency comes in the expectation of each client in it’s own agenda. Most don’t care where they come from, as long as they get the great people.
StephenTurnock

Agree with Steve on the points re jobboards. The source is unimportant and that it’s the great selection and excellent preparation that is the key. The Monday morning for many recruiters is the drudgery of sorting thousands of response from the jobboards – most of which are duplicates, perhaps not suitable or ones you got already last week and the week before. It’s a constant stream of updates however and for many recruiters is still the primary source and revenue stream.

On balance and at the client end, given the people are their biggest asset, they should take care themselves in recruiting the right recruiting partners of value. If they do, they will get some great rewards not least the right people turning up that are fully briefed, qualified and if offered, will most likely accept the job because it is the right move for them.

However the cases highlighted are sadly a typical story today and one in the making over the last 20 years - one in which this en masse CV era has created some wholly transactional recruiter types and one which many of those recruiters have not known any different - having grown up in that land of post and pray, hope and glory. At the same time and over that period, both the client and candidate experience along the recruitment journey has dwindled save for a few exceptions. Quantity over Quality .. and ‘Value’, has also been confused with ‘cheapest’.

That era is soon over as transactional recruiters that are not prepared to put in the effort, the systems and conversations and care back into recruitment, they will not come into the future.

Certainly we are seeing some players big and small setting up direct sourcing to jobs and brand and in social – many are ahead of recruiters. Certainly the opportunity is great for recruiters stepping up in innovation as we are at a point in time where many things meet (as Andy sets out in his ‘perfect storm’ post – eg significant generation shifts, disruptive technology, fast changing skills demands, social, digital, mobile etc). These are huge opportunities to embrace and are an exciting time in creating real differentials going forward.

Recruiters can ignore the Higgs Boson but not the shifting expectations of your savvy clients and candidates. It’s not rocket science - not even to me!
Julia Briggs

It’s the two things though isn’t it. Not enough effort to find candidates and not enough candidate care…..so why pay the 22% etc (or more for search - and we know how ropey the ‘research’ part can be…..) When you add employer branding into the mix then why not take it internally. And HR are constantly saying they want to be taken more seriously in their organisation. Great recruitment is the way to really have an impact and impress your internal client.
Andy Headworth

Ian,

No not all, but they are trying to. They are recruiting better recruiting and resourcing professionals to make this happen.
I think that the whole social change has helped people understand the user experience a little better.

It is never going to be a quick process, but technology is now really helping in this space.

But anyway, if all they did was the same as the agencies (posting jobs), then at least they would be making big £ savings.
Andy Headworth

LOL!

You have way with words, Mitch!
Andy Headworth

Great point Dickie, and one that I agree with.

There is no excuse at all for taking candidates for granted or even taking liberties with their need for a job.

All it does do though is make the good ones (like Steve Ward below) stand out even more!
Andy Headworth

Nicely put Steve.

This certainly isn’t a one-eyed view of agencies. You know that is not my approach. I work on the same angle as you, in that as long as the best candidate is recruited, it doesn’t matter where they come from.

However in these real examples that wasn’t even a consideration!
The agencies in question didn’t bother with any other sources aside from the job boards (and most admitted that).

And I am not bashing agencies either - some of the fault of these situations lay with the companies as well. The other big point of the examples is the way the candidates were briefed and informed about the companies and the roles. Like you say that is where the good recruiters stand out.

We both know that the number of recruiters that go the extra mile, like you, are very few in comparison to the numbers in the recruitment industry.

However, if that is the way that many recruiters choose to operate then they will be having a change of career quicker than they think!
Andy Headworth

Thanks Stephen.

Firstly I like the fact that you believe the Monday morning meeting still happens for many recruitment companies! #wishfulthinking !

I like the simplicity of this - transactional recruiters will vanish (aside from the large RPO providers that is), proper recruitment professionals will thrive and prosper.

I don’t know about rocket science, but I reckon some recruiters could do with a healthy dose of rocket fuel!!
Andy Headworth

Good point Julia.

However we know that the whole company brand, user experience and employer branding has so much potential, but is under utilised bu companies……. so far.
The difference for me is they (HR and Marketing) seem to be wanting to learn and make changes here quicker than external recruiters. They are taking the time to understand the implications of social media, and best to use it to reach out and engage with their potential workforce. Agencies are still very slow to the mark.

HR are never the quickest, but they seem to be moving quicker with this at the moment. And with the potential savings they can make in fees initially, they can make themselves popular with their managers!
Pete

There are good recruitment agents and bad recruitment agents. I would say the ratio is about 1/99. Most of them have little practical experience of anything other than recruitment, no clue about what jobs actually involve and just use keyword searches until they find someone with enough buzzwords.
Anything that adds little value and places barriers between the hiring manager and the (right) candidates needs to go.
Scott Corbett

Hi Andy

I have just come across these comments and, having been in the industry for 12 years, can only concur with most.
Part of the problem though is the naivety of the client. They seem to think that, as an industry, we can provide miracles and sometimes have the perfect candidate with them within a very short space of time.
Clients also seem to be swayed by the “sales pitch’ rather than gathering some important self detection work. I have always prided myself with the ability of providing my clients with the ‘best possible’ candidates available to me and through great relationship building with them (finding out their company ethos, staff relationships etc) and have, I think to my credit, been able to maintain the same client base for a number of years. Why don’t most clients actually ask the agency for names from their present clients so they can contact them and ask any relevant questions - and maybe use this opportunity to network their own company.
I have watched the industry go through some trying times and am still amazed that an individual can be called a ‘consultant’ after maybe a few months of training - most consultants in other industries take years to gain the accolade of this title.
I can say that it is very difficult to reply to every possible prospect although we try to. We are probably receiving approx 250 - 400 applicants per week and are looking at other ways to make sure we respond to all.
My advice to any new person into the industry - Move with the times but remember that sometimes the ‘old’ practices are still the best.
One last comment - The company I work for tries to change ways of working as the market and economy dictates so why do most clients feel that the cheaper the option, the less service they are going to get. We reduced our fees heavily this year due to the ‘double dip’ to try to accommodate the market but have actually found that most businesses still insist on paying up to double what we charge because they feel we will not be offering the same level of service - Maybe MDs or Board members should be questioning the people they have put in charge of their recruitment. Just to give you an example, we spoke to client who had taken on a managed agency and through our costs we will have saved them £102,000 on their current costs in the first year, but their HR department has made the decision to ‘stick’ with what they have got - even if we didn’t get the business would this not ring alarm bells with the client? My rant is over…back to looking after our client base.
Hannu Alatalo

They have both different kind of reason and all have a point however for me it is still better to use in recruitment agency,In Finland country there are a lot of recruitment agency which providing a lot of unemployed people and help business to those people who have potential in business.
Andy Headworth

Thanks Scott for your thought.
I agree with you that clients do think we are miracle workers. I think they forget, they are the ones that need help because they can’t recruit people in the first place.
Well done on the cost savings - that looks like a good case study to me!
Andy Headworth

Thanks Hannu, from my experiences in the Nordics, recruitment agencies do play a slightly different role compared to other parts of Europe - and they do charge more as well, which is no bad thing.
Advisor Databases

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Cyril Kramar

I couldn’t agree more with this article. I work in this ( https://mcroygroup.com/sk/en/home ) agency and I have noticed similar trends here as well.
Adrian Jones

As someone who is looking for a new job I no longer apply for jobs that are advertised via agencies. Every single one that I have had some contact with are nothing short of a shower. The lack of communication is unbelievable, jobs advertised quite obviously did not exist, I could go on & on and raise my blood pressure! Fingers crossed 90% of these so called professional agencies go to the wall.
MTC Australia

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MTC Australia

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Lisa Martin

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