Recruitment agencies: the fight for survival

There have been a number of murmurings among some agency recruiters as a result of Guardian Jobs launching Guardian Jobs Resourcing, which effectively sifts through and shortlists CVs for clients. ‘How dare they, that’s our job,’ say some of the agencies. Well, maybe it was, but not right now.

Like the dinosaurs, agencies have to move, adapt, or die. The job boards are yet again out to kill off the agencies but, like the dinosaurs before them, agencies will not just sit back and let someone eat their lunch. So does this latest move from the Guardian signal the death knell of the industry, or will it fight back?

It’s not just the job boards that ‘agencysaurus’ has to look out for though; employers are gunning for them once again, while some of their own are evolving into lean providers – for example webrecruit, backed by the Dragons’ Den‘s James Caan.

So while many HR professionals hide in the undergrowth hoping to avoid being snared by agencysaurus; putting phones on voicemail and e-mail on out-of-office, those agencies that survive will become as smart as a pack of velociraptors.

These agencies will find a weak spot and attack it to survive. Expect to see a myriad of new breed recruitment suppliers emerge, very different from the fee-driven recruitment process outsourcing vendors who claim to different but in reality are not.

Low-cost fixed fee and 100% guarantees are just the start. Employers know what they don’t want so the raptors will focus on less phone bashing, value-based projects instead of transaction/fee-based placements; client/candidate collaboration instead of secret CVs; managed but client-owned talent pools. It is the traditional fee for volume vacancies that will become extinct, not the hunter.

The conversations I have with corporate recruiters is that they are very focused on reducing agency usage and costs by increasing employee referrals, internal mobility and direct applicants. Cost-per-hire is king and quality is queen (albeit still wearing the trousers).

Corporate recruiters need to get the basics right, and quick. Social recruiting is all the rage this week, but if your career site is pants and your recruitment system sucks, and you think that being on Facebook makes you cool, then you will fail. If HR sits back thinking they are better placed than the agencies, then come the next wave I hope you’re right.

The agencies may be licking their wounds right now but they will be back; smaller, smarter and a damn sight hungrier with fees to match. Many believe agencies will fill the key leadership roles; so don’t be surprised if fees double as quality will count. The real battle for survival will be at the volume end, where HR will have to fight it out with the new low-cost breed that has adapted to the new world.

The Guardian may have dropped the first bomb but it has hardly caused significant collateral damage; come 2012, the horizon will look a lot different. It will take more than an economic ice age to kill off the agencies. They will be around a lot longer than many seem to think, so best to plan and train accordingly.

Peter Gold, founder, Hire Strategies

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