Recruitment Insight – Why are we intent on limiting choice?

Posted by admin, April-27-2010

I am very passionate about the recruitment industry, having been a fully paid up member for over 20 years.  For most of that time, I have also been an employer, sitting on the other side of the fence.  As a consequence, whilst I know that recruiters can add tremendous value to their clients business, the vested interests of recruiters and other industry participants are not always as closely aligned to the interests of employers as one might hope.  Whilst this may not come as any great surprise, it is worth noting the hard truth that it is ultimately the choice of employers how they access the market and they must accept the responsibility of effecting the changes to the way that they access the market; maintenance of the status quo has real implications for both the cost of recruiting and the hiring choices open to the employer.

Two years ago, I undertook a significant research project based on how companies recruit and also what they wanted to achieve from their recruitment strategy.  Some of the key themes were better price control, more choice, more structure and reducing the burden of administration.  On a closer analysis, it was evident that many of the existing strategies  actually attempt to achieve better price control (although they don’t necessarily achieve this goal effectively) and a reduction of the administrative burden, but have the side effect of limiting  hiring choices. However, our experience is that these strategies, which generally involve a substantially single channel approach, have the side effect of limiting hiring choices and, often, an increase in the overall direct, variable, cost of hiring. Worryingly, most of the employers we spoke to seem to be unaware that they are approaching the war for talent through a strategy of ignoring potentially great candidates.

A solution is to employ a deliberate and effective multi-channel recruitment strategy which would reopen recruiting options and give scope for more intelligent focussing of recruitment.  The challenge is to find a way to do this without increasing the administrative burden on the employers’ HR function.  Perhaps most interesting, in addition to increasing the choice of quality candidates, the flexibility of a managed multi-channel approach implicitly results in a significant reduction in the overall cost of recruiting.

Looking at some of the recurring key themes that  limit choice will also lead me to tell you about  what I have done to help solve the candidate attraction conundrum and to ensure that all the options are always available to the employer.

Firstly the recurring themes

Attend any industry conference and you cannot fail to notice the dissatisfaction amongst employers with what is perceived to be the regurgitation of the same old candidates that appear on their shortlists time after time, the emphasis here being on the lack of choice, the lack of quality candidates, etc.

Interestingly, you also hear the same employers talk about the strong relationships that they have with the headhunters who continue to supply them with those regurgitated lists of candidates. You also hear a lot of talk about the PSL lists which now dominate the recruitment industry and which actually restrict the supply of candidates, to those supplied by the chosen few on the PSL.

Then there is another wave of choice limiters, the mantra of the internet recruitment gurus who, I can only imagine, must have been terribly upset or damaged so severely by their previous recruitment experience as recruitment consultants, that they now wish to show the world how to recruit without using a recruitment agent ever again.

Taking the phenomenon of continuing to use a supplier who fails to provide a fresh added value short list for each assignment first, it is easy to dismiss this as a real limit on choice by recalling that often quoted Einstein analogy that “the first sign of madness is to continue to do the same thing and expect different results.”  So, if this is a condition that afflicts you and it’s the main topic of conversation the next time you are struggling with a recruitment project – just use someone different and don’t repeat the same mistakes expecting to get a different result.

One could additionally question what the purpose of this strong relationship with the supplier is, since it clearly does not help the organisation to hire better people.

Moving on to PSL’s, I have never quite understood what this is about, mainly because, if its more choice that you want, then opening up your candidate supply options is logical – businesses want the pick of the best people.  But then, for an employer to say that “we are only going to use 10 suppliers”, so if Agent X has a really first rate candidate, but the employer has decided not to use them, then they are closing their candidate supply options and this is tantamount to putting a sign up asking Agent X to send that candidate to any or all of their competitors.  This is bizarre.

Many people talk about the candidate experience and how important it is to ensure that the candidate always has a positive impression of your employer brand. This is often used as a reason to go down the route of PSL’s, but I don’t understand how this works, how does the candidate know which agency is on your PSL? Are we suggesting that candidates should find out who you have chosen to deal with if they want to apply to you for a job? Let’s say that a candidate has a relationship with their favorite agency and enquires about an employer and the availability of roles with that employer. The agent would usually just introduce that candidate and that employer has the choice to interview and hire, but in this case, as the agent is not on the PSL, he simply advises his candidate that there is nothing on the books and to look elsewhere.  That employer has lost the opportunity to se the star candidate who could have made a difference to their business. This limits the employer’s choice and also does not do anything for the candidate experience as they simply don’t have an experience.

The conclusion that I have come to is that the true justifications for PSL’s are firstly to negotiate better prices with suppliers and secondly to be able to have fewer suppliers in order to reduce the administrative burden. The side effects though are a limit in the choice of quality people to just those who are registering with your PSL.

I think you become a preferred supplier, mainly because you treat your clients like preferred clients. Surely in the current business climate we should be more open to new ways of conducting business; and with new people. PSL’s may be putting limits and constraints on your ability to hire; you may not be getting the pick of the best people by sticking to your list.  So why limit yourself with a select few?

Competition is good for business and in this current climate many new and existing agents are willing to be much more flexible on terms and price. This means you could be getting much more competitive terms with someone outside of your magic list. And it’s worth thinking about the fact that candidates do not always throw themselves into the arms of every large agency in town, sometimes candidates prefer to go to a niche recruiter who understands their particular industry, which means you could be missing a future asset to the business that may not even appear on the radar of your PSL. When a candidate on the open market looks promising, they look promising to you and to your competitors. To put in a deliberate policy of not interviewing that candidate because the candidate chose not to use your PSL is rather baffling and, in my humble view, a choice limiter.

Looking at the “direct” only brigade, “let me show you how to use social media”, “let me “train you to get more out of job boards” let me …..etc. If your requirements are pretty generic, then there may indeed be a better way for you to recruit rather than paying a recruitment fee to fill roles such as, customer services, general sales, or non-technical roles and you could save yourself from spending thousands of pounds that you do not need to spend. In this current climate, getting candidates through your door should not be the issue. So I can definitely see a huge value in the direct strategy, but only as part of a balanced diet, as they say. To limit the choice of candidates by only going direct is potentially very harmful to your business. But it is happening. Very recently, one of my colleagues went to see a potential client who had been told that the CEO had hired a “direct” trainer and decreed that the recruitment team had to stop using agencies immediately as a cost cutting measure and must have a direct strategy only. So this team has to go from making sure they hire the right people for the business to actually spending day and night finding people. They will be woefully resourced (believe it or not hiring an ex recruiter is not enough) to be able to deliver this strategy and are doomed to fail.

So, where am I heading with all of this, it’s simply to point out the obvious that there are so many vested interests at play.

The larger the agency the more likely they are to try and sell you a preferred supplier agreement which cuts out the competition and gives them a clear income stream. I have noticed that many recruiter courses have sprung up over the years on selling your way in to PSL’s and sole supplier agreements. Agencies are actually training their people to go and sell restrictive practices that limit choice because they can make more money out of it.

With the direct crew, what’s their vested interest? They make their money from running training courses to show you how to recruit using twitter and Facebook and then they have revenue share deals with the job boards that you are encouraged to sign up to. The more you spend the more they make. Once you have chosen to “go direct” they come in and train the additional staff that you will need to hire in order to deal with the volume created by your new strategy.

So, step back in time to when there wasn’t much choice around and we all spent time trying to increase our choice, now fast track to present day and you will no doubt have noticed that at each stage you are being advised to reduce your options, to go single channel rather than multichannel for your recruitment.

And here I must confess my own vested interest and what I did to solve the issue of choice limitation.

Having been in the recruitment industry for many years and having been lucky enough to work for some great clients gathering extensive experience in retained search, traditional recruitment as well as online methodologies. I spent some of those years thinking about how the recruitment industry could be more effective and also provide better value. This has culminated in the creation of Mypeoplebiz http://www.mypeoplebiz.com/ with the aim of providing a simple to use multichannel recruitment platform that allows you to introduce and implement an innovative and efficient, process driven, recruitment function, where you can manage your cost to hire very easily.

Central to the mypeoplebiz offering, is the ability for employers to access not just one recruitment channel, but all recruitment channels from one place. You can access a huge network encompassing traditional methodology such as recruitment agencies, as well as referrals, social networks and a range of previously untapped, conduits for talent, whilst providing greater control over costs.

As I have already highlighted, our multichannel approach is in contrast to those who continue to espouse the virtue of the “one channel” approach, but I believe that you have to achieve balance and that all candidate supply channels are valuable and need to be available depending on the circumstances, so that the employer has the choice. To limit choice unwittingly or not, is not going to help a candidate attraction strategy.

Mypeoplebiz is a totally impartial platform and, to ensure that it always remains so, we have built in to our model a set fee structure so that regardless of where the candidate comes from mypeoplebiz always charges a flat fee for the service we provide. We really are not biased as to through which channel the candidate arrives at your desk, but we are concerned to make sure that it DOES arrive at your desk.

Indeed to increase choice and reduce cost, we have introduced a huge previously untapped resource in the form of the “social network referrer” and given clients the ability to stipulate what they want to pay for each vacancy that they recruit, we have provided an easy way to create and implement an e-recruitment strategy as well as providing an agency management system that will help you achieve the goals that you set and stay within the budget that you set.
It is a choice enhancer not a choice limiter.

We can only do this by being independent, pragmatic, process driven and bringing a level of expertise that encompasses experience from expert recruiters.

The idea was to make this platform suitable for any organisation and that is what has been achieved already. We are helping large corporates and small start ups alike to access a talent pool of hard-to-find passive candidates whilst helping them to reduce recruitment costs and increasing the recruiting performance for their business.

So far the results are as follows:-

• Reduced recruitment agency spend by up to 50%.
• Reduced recruitment advertising costs.
• Reduce time-to-hire for high volume roles.
• Increase the number of direct hires.

It’s amazing what you can achieve if you set out to increase the choice rather than limit the options. The war for talent will be won by organisations that do not limit where the candidates come from, it will be won by organisations who manage the cost to hire in a practical way rather than trying to achieve it through the creation of inefficient strategies that create more work for their already overworked recruitment teams.

Multichannel recruitment – keeping your options open – is vital in this day and age.