Make agencies work for you

With
thousands of recruitment firms clamouring for your business, how do you find
and manage the most suitable?

One
of the most irritating daily chores for HR professionals is fending off the advances
of over-eager recruitment consultants desperate to foist their latest
conscripts on to you.

Many
of these CV-pushers get the swift brush-off they deserve. But the irony is that
most organisations are increasingly turning to such external recruitment
specialists to solve their recruitment woes.

In
job markets such as IT and communications, it seems almost impossible to find
staff without using an outside provider. Skills shortages and intense
competition have put power into the hands of candidates, who prefer to use
agencies to tout their talents to the highest bidder.

In
other sectors, however, traditional methods, using in-house teams, could be
equally successful and much less expensive. The importance of recruiting the
right employees to achieve business success is well chronicled, and
demonstrated by the fact that employers are still loath to outsource all of the
search and selection function. This means HR has to manage a delicate balance
between recruitment consultant use and in-house provision.

So
how do you decide whether to turn to an agency to take on some of your
recruitment? Also, there are thousands of recruitment companies, each providing
apparently identical services, all keen to win your business – how do you know
which is the right one for you?

The
answer to both questions is it depends on the type of organisation and its
needs, so, simple as it sounds, it is vital you know what those are before
sending for outside help.

“The
company has to ask why it is doing this in the first place,” says Neil
Macmillan, managing director of HR consultancy Macmillan International. “It
should not be doing it just because the whole world is doing it – only if it
makes sense from an economic point of view or a results point of view. Unless
you get that clear sense of purpose, the chances are that it will all end in a
mess.”

Often
the reason it is necessary to bring in a search and selection firm is that HR
simply does not have the resources. The sudden requirement to hire 35 new call
centre staff or a marketing director can be just too much for HR to cope with
in the midst of end-of-year salary reviews or a new job evaluation scheme.

A
need to bring new personnel in quickly is another valid reason for using
agencies. Consultants have quick access to a pool of talent and the good ones
will know which of those on its books will suit you.

The
continued failure of in-house recruitment to hire and keep staff is often the
catalyst for looking elsewhere. As well as tough job market conditions, there
may be other reasons for such failure, such as the company’s image in the minds
of potential applicants. Using a dedicated recruitment provider can help
overcome both problems.

“Recruitment
advertising is a PR exercise and employers have to be mindful of that,” says
Victoria Phillpot, managing director of Professional Pre-Selection Services
(PPS), a telephone-based search and selection agency.

“If
the candidate doesn’t have a good feeling about the client, then they can be
put off the client’s products,” says Phillpot. Sometimes in-house teams just
don’t have the time to do this, so they are not giving out a professional image
of the company. Because it is our core job to recruit, we can put a new
perspective on things.”

HR
departments often overlook simple factors, such as including the location of
the job in an advert, because they are too busy, says Phillpot. A recruitment
agency only has to concentrate on search and selection, so these faults should
not occur.

Once
you have decided to take on an agency, it is relatively easy to put together a
list of recruitment consultants that can explore relevant job markets –
personnel departments receive several calls from these prospective suitors
every week.

The
trade press will also offer up several names, as will the recruitment sections
of national newspapers and Internet job sites. Most important, ask your peers
in personnel about their experiences of recruitment companies. Word of mouth is
the best way to trim the list to manageable proportions. “You must get
objective advice from out in the marketplace, via networking, to get a feel of
what the market is saying about certain organisations and what they are like,”
says Macmillan.

For
example, if you need to hire call centre staff for a specific area, a local
agency may be more appropriate than one of the national firms because it knows
the regional job market more intimately.

At
this stage, it is essential for HR to involve line managers in the process.
Phillpot says this is one of the major areas where prospective clients are
under-prepared when they approach consultants.

“The
HR person says, ‘The line manager will know it when he sees it’, when
discussing the requirements for the candidates that the company wants to find.
There is always a problem where desire and essentials overlap and this has to
be sorted out.”

Once
everyone is clear what they want, the difficult task of narrowing down the
candidates begins.

Recruitment
agencies and HR professionals experienced in using them agree the most
important factor in choosing the right provider. If you want staff who fit your
company culture, you need a search and selection company that fits it too.

“Getting
an agency which understands the culture of the company is critical, which is
why we do not use a lot of agencies,” says Ralph Tribe, vice-president of HR
for Getty Images.

“It
means a lot to have a relationship with an agency because you don’t have to
continue to brief them for every hire.”

Prêt
à Manger, the sandwich chain, ditched six of the seven recruitment agencies on
its books 18 months ago because it felt its culture was becoming diluted by too
many unsuitable recruits. It has since brought recruitment of shop staff back
in-house and uses just one agency, Berkeley Scott, for some difficult in-store
managerial positions and senior executives.

Prêt
HR director Bruce Robertson says Berkeley Scott was retained because it
understood the company’s culture. Agency staff spent time in Prêt outlets and
customised their interviewing techniques accordingly. If your prospective
supplier is not willing to do this sort of thing for you, says Robertson, it is
probably not worth considering because it will never understand what kind of
people are suitable for your company.

As
well as understanding the company, it is essential for the recruitment supplier
to be an expert in the relevant sector. For general positions such as
administration and secretarial staff, there are many big-name agencies that can
do the job. But if you need particular IT skills, marketing managers or senior
executive expertise, you have to turn to a specialist.

“There
is no such thing as a broad, catch-all agency that can do everything in every
sector,” says Macmillan. “Anyone who says they can should be treated with some
scepticism.”

The
next decision to make is whether to use an agency that works on a contingency
basis or on a retainer fee. Agencies that operate on a retainer basis take a
fee, usually one-third of the advertised salary, paid in three instalments, to
find suitable candidates. Contingency agencies work from a database of
candidates on their books and take payment when the appointment is made.

In
theory, retained consultants offer a more bespoke service because the search is
made from scratch. However, many of these firms’ fee structures mean they take
none of the risk if the candidates they present are not suitable.

Wendon
Sherrell, vice-president HR services for communications giant Nortel Networks,
says he has ended relationships with search and selection consultants that are not
prepared to take on some of this risk. “They were taking more of a placement
fee structure rather than wanting a longer-term relationship set up. As a
result, all of the risk was with Nortel. Now the agency will be paid on
completion of certain steps in the process, or they will be working on a
longer-term contract.”

Sherrell
says it is essential for Nortel that agencies supply it with candidates who
have a strong Internet capability. The type of people the company needs are
doing their business on the Net and are therefore looking for job on the Net,
not in a newspaper, he says. Agencies using traditional search methods do not
fit with Nortel’s company culture.

Tribe
points out an added problem that HR must be aware of when managing recruitment
consultants – they can be reluctant to pass on cost savings to clients that
come from increased use of the Internet. Getty Images ended a relationship with
one of its suppliers for this reason.

“If
you are in a Net-savvy company, you know it shouldn’t cost as much [to find
candidates], so the agencies look like they’re just engaging in profiteering.
If they really cared about us, they would pass on the obvious cost benefits of
this.

“HR
people should be saying that as the world changes and technology makes it easier
for the agencies to do business, then they should be passing on those
benefits.”

So
what can you expect for your not-inconsiderable spend on recruitment agencies?
One thing is sure, say HR professionals and recruiters – the agency will not
present you with the successful candidate, ready to start the next day. Their
job is to present HR and line managers with three or four candidates who meet
the requirements of the job description. Only in-house members of  staff can make the final decision.

“However
good you are as a consultancy, I don’t think you can ever understand the
company’s culture as much as internal people do,” says PPS’ Phillpot. “Getting
down to this stage is the most you can do. They have to decide if they will be
able to work with that person.”

In
getting down to those three or four people, the recruitment agency should do as
much or as little as you require. This can include consulting on the job advert
or website, handling the administration of applications, notifying unsuitable
applicants and carrying out first-stage interviews and psychometric tests if
required.

All
of the jobs that in-house recruiters would have done, the external provider
should take on if you request it – apart from the final interviews and
decision.

The
ultimate test of the arrangement is whether the agency is supplying your
business with a greater number of better candidates who fit the culture of the
company and stay for longer. All this should, of course, be done at lower cost.
Other benefits, such as a quicker response to unsuccessful candidates and an
improved brand image in the job market, should follow if the agency is meeting
these criteria.

Restaurant
chain Chez Gerard uses half-a-dozen firms to recruit chefs and other kitchen
staff. HR director Nick Hoad says he lets agencies know each week what the
company’s needs are. “We then judge them on the speed and quality of their
response, the evidence that they have actually met the candidate, the feedback
on the candidate, whether the agencies have given a quality discussion with
them so they know what we are like and whether they a fit with our culture,” he
says.

“Inevitably
some are keener than others, some are more productive, some keep their
promises, some do not, some want to build a relationship with you and make you
feel as if you are the most important client they have got.”

The
crucial aspect is a clear and frequent communication of recruitment needs to
the agency. Not only is it essential to get the ground rules into place when
you choose a recruiter, HR needs to tell consultants whether they are meeting
the requirements for each hire they make.

That
way, if you are seeing short-listed candidates who are wholly unsuited to your
company culture, you can correct the mistake immediately. If it keeps
happening, then it’s time to consign that agency to the fate of the other
CV-pushers who cold-call HR each week.

Recruitment
ready reckoner
A rough guide to what you can expect for your money when using a search and
selection agency

Secretary/administrator

Salary
£18,000        Approximate fee £1,825

Visit
the client, meeting both line manager and HR. Handle the response from the
advert/website. Competency-based telephone interview of the applicants,
providing a shortlist. All unsuitable applicants are notified          

Sales
manager

Salary
£35,000      Approximate fee  £4,700

As
secretary (above), plus competency-based telephone interview of the applicants,
providing a matrixed shortlist. Arrange first-line interviews and second if
required

Marketing
director

£60,000               
 Approximate fee  £7,750

As
secretary, plus write confidential advert and place in house style.
Competency-based telephone interview of the applicants, booking them in for a
consultant to interview face-to-face. At interview, conduct
psychometric/personality profile. Send shortlist including test results to the
client

19
graduates

Salary
£20,000      Approximate fee  £10,250 = £539.47 per person (this cost
includes the first 500 applicants)

As
secretary, plus handle response from websites/recruitment fairs and speculative
enquiries. Competency-based telephone interview of the applicants, providing a
weekly pack before the company’s assessment centre for each job function over a
six-month period. Send company literature to graduates and assessment centre details.
Update client with statistical information, eg ethnic monitoring, university
attended          

35
claims handlers/customer service

Salary
£14,000     Approximate fee  £14,250 = £407.14 per person + language
testing if required

As
secretary, plus competency-based telephone interview of the applicants, booking
them straight on to assessment centres. For customer service, if languages
require testing, there is an additional fee. The tests are carried out by
relevant nationals of the country who can ascertain fluency, grammar and level
of understanding           

New
store opening 80 FTE (full- and part-time)

Salary
range £5-£12 per hour Approximate fees 
£28,500 plus five days at £400 for testing = £2,000 Total cost £30,500 =
£381.25 per person

As
secretary, plus competency-based telephone interview of the applicants, booking
successful ones in for a consultant to test on numerical/verbal reasoning. Book
applicants who have passed the tests into interview/assessment centres for the
client, send out an application form and company literature if required

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