The total recruitment industry
turnover reached £26.5 billion in 2012/13, a growth of 3.1% since 2011/12,
according to the Recruitment and Employment Confederation (REC’s) latest annual
Recruitment Industry Trends Survey http://www.rec.uk.com/press/news/2428
More employers are looking to
hire staff as employment confidence has reached its highest level since 2008,
according to the CIPD’s latest Labour Market Outlook (LMO) survey http://www.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2013/08/12/recruitment-grows-to-highest-level-since-recession-finds-cipd.aspx
So if you are looking to hire
staff and recognise that your current in-house processes are cumbersome, costly
and inefficient and you’re looking for a supplier to assist, then what type of
suppler would you choose?
The recruitment industry has
consolidated into four classifications of supplier with four different business
models. This White Paper describes the
basis of their business models and how to easily identify the type of business
you are currently engaging, or are thinking of engaging with.
The Service-led Recruiter
The Service-led suppliers are the
traditional recruitment agencies, specialist agencies and head hunters. In this model, companies are reliant upon the
specialist knowledge and capabilities of individuals to act on your behalf. One
of the oldest references to a recruitment consultancy or agency service dates
back to 1650. Since then recruitment agencies have become commonplace and many
companies are heavily reliant upon their services. They provide a low risk but
high cost solution. The agency gambles
that they can fill your role otherwise they will not get paid. Upon receiving
your job requisition, their consultant will provide a selection of what they
believe to be the most suitable candidates for your position and you will
select the candidates you would like to interview for the job. It sounds simple and low risk, but is it
really? As the agency is not getting paid until the placement is made and
unless you have engaged them exclusively, they will sell the best candidates
they can find to the highest bidder using whatever leverage they can to get
their candidate to accept the job. Your recruitment and indeed your business’s
growth, is in the hands of a third-party or, in the worst case scenario, a
salesperson. The last few years have been particularly difficult for
recruitment agencies due to the recession and businesses tightening their
belts. This has led to many recruitment agencies focusing heavily on employing
sales people as consultants.
Service First, Technology Second suppliers
This category can be considered
as the “online” recruitment agency.
During the recession, recruitment agencies saw a large reduction in
revenues from their existing client base through cut-backs and the commensurate
reduction in recruitment. Recruitment agencies
have been one of the first suppliers to be cut when budgets are tightened. Many agencies have responded with a cheaper
cut-down service offering which usually consists of your vacancy advertised on Job
Boards for a fixed price. The agency
will use a basic third party applicant tracking system to present the
candidates or simply email the responses directly to you. Again, looking at
this model from a distance it has its advantages, providing some transparency
to the work in progress and doing so at a significantly reduced cost against
the standard percentage-based recruitment model. Also you gain better
visibility of the candidates assuming they are using an applicant tracking
system. However most of these suppliers are still reliant on their old business
model to make a profit, so if you don’t get the candidates that you need
through the fixed cost advertising option, you can upgrade to the traditional
agency service. Looking on the internet,
you will find dozens of companies with this offering. There are, however, a
number of disadvantages to this model. You are not building your own talent
pools and all the candidates are still going into the agencies first. Whilst some agencies provide tools to find
and qualify the candidates, you have limited support to identify the quality
candidates you need and the agency will always be tempted to increase their
margin by pushing the full recruitment agency service so they make a profit.
Technology Only providers
Most technology providers that
have recruitment functionality fall in to three clear categories. The first is the extension of the existing HR
Management System (HRMS). The second Applicant
Tracking System (ATS), developed specifically for recruitment and the third
category are Job Boards themselves, with varying degrees of functionality, who post
job advertisements directly. All three
have varying degrees of integration with social/business networking sites.
Hundreds of companies have sprung up over recent years and have different
commercial models from simple Pay-per Campaign (PPC), Software as a Service
model or on a Subscription basis.
Business software these days is increasingly hosted in the cloud and
available on-demand rather than on-premise.
This means that there is not the IT management overhead attributed to on-premise
systems. Whether an organisation adopts
a Pay-as-you-Go model or invests in a software Subscription - often as a term
licence - largely depends on how many times an organisation recruits in any one
year. The more advanced ATSs integrate
mobile, candidate testing, video interviewing as well as posting to Job Boards
and social media and tend to be purchased on a Subscription basis as
organisations will recognise that these systems will largely form part of a
bigger HR strategy. In contrast, PPC
systems tend to be a tactical approach to fulfilling roles. (Please see Vacancy
Filler’s White Paper PPC vs Software Subscription which compares these models
in more detail). Either way, purchasing
software only means that the recruitment process is largely managed in-house
either through a dedicated recruitment team or individual.
Service Enhanced Technology Providers
This model is the most recent to
appear in the recruitment market, these companies have invested heavily in
technology and also offer all recruitment support you need, or may need,
included in the subscription. These companies have no hidden agenda; they offer
the best recruitment tools and resources so you can recruit directly. These
providers will however, wrap a service around the technology if an organisation
does not have a dedicated recruitment team or resource. This works well either as a safety net, just
to help out if organisations who are going through a particularly busy period,
where the provider can step-in to offer assistance either on an ‘ad hoc’ basis
or part of a more formal arrangement under the governance of a Service Level
Agreement.
These vendors will often have
in-house recruiters themselves who can resource candidates on behalf of an
organisation so that if a particular campaign is not doing so well, they can
assist their clients by bringing in their expertise, anywhere from optimising
job advertisements, proactively searching for candidates or re-qualifying some
of the early applicants who may not have fully included their experience or qualifications
at the time of application. These
services can often be negotiated separately as either a one-off or on an
on-going basis, depending on the scope and volume on offer.
Conclusion
In conclusion there are many
different companies that you can engage with, you don’t have to settle for the
high recruitment agencies costs and as the topic of recruitment heats up over
the coming months, companies now have more choice than ever before to recruit
their own way.
About Vacancy Filler
Vacancy Filler Ltd falls into the
latter category of Service Enhanced Technology Providers. The company was first
established in 2008 and has since moved from strength to strength through
re-investing in the development of our product and business. The Vacancy Filler
software platform has been developed from first principles based on an original
idea from a local recruitment company dissatisfied with the then current market
offerings.
The software continues to be developed by Vacancy Filler’s
own in-house software developers against a product roadmap which is driven by
our direct engagement with HR and Recruitment professionals across both Private
and Public Sector. Since then, the company has invested in Recruitment Support
Services providing advice and guidance ranging from job advert creation to
managing entire campaigns. It is important that each campaign is successful in
its own right, so that our customers continue to receive value from the system
and fill roles.
If you are interested in learning
more about how an ATS could work in your organisation or would like further
information on how Vacancy Filler can help you with a your business case, then
please contact us.
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