Lots of companies are doing recruitment direct – and very successfully too.
Internal recruitment teams have flourished in recent years. Some major companies, such as BP, Vodafone, Amazon and SAB Miller are achieving up to 95% of all hires via their internal recruitment teams. HRD’s and CFO’s can be happy in their drive to reduce costs; but where does that leave recruitment companies?
For big companies with a well organised recruitment process, it makes sense to do much of their recruitment direct. With a well designed multi channel approach: their website, internal referrals, social media, candidates approaching them direct, plus a bit of headhunting etc, it can be an efficient process.
One thing that is surprising is that it has taken this long. Internet recruitment has been with us for a good 15 years so the change hasn’t exactly been revolutionary. First of all, jobsites like Monster came along and changed the model (look at how The Sunday Times Appointments section has gone from bulging with lots of expensive adverts 15 years ago to a sparse smattering of mainly public sector jobs today).
Then came social media. Certainly LinkedIn has shaken things up, it is now a generic tool that everyone can use, and the content is self generating – neat.
I see it as being like many professional services (such as the advertising industry, accountancy, legal etc): large companies will always have their own in house teams, but will rarely have all the expertise they need to fulfil their needs. Also, big companies constitute a surprisingly small proportion of overall UK business. It is estimated that 95% of all companies in the UK are SME’s (there are various definitions of SME, but I will take 250 staff and £40m turnover). Most of them will not have a requirement for an internal recruitment team, or if they do, it will only be for the mainstream recruitment of that company (e.g. an IT Project management company will probably be good at hiring IT Project Managers, but will still need external expert recruiters to hire their accountants, sales people etc)
There is also the chaos factor: I have been struck over the years by companies that have a chaotic internal organisational structure – some companies foster it – better to have a bunch of problem solving individuals rather than have a business over burdened by policies and procedures that suck the lifeblood out of the company.
Also, there are companies going through structural change; such as buying and selling components of the business, or going through a transformation programme. In these situations, often it is not pragmatic for the corporate structure to have a recruitment team.
Is the recruitment business in terminal decline? Definitely not, but it is changing shape.
In the most recent Sunday Times Fast Track 100, no fewer than 9 of the top 100 were recruitment companies, almost 10% of the total – more than any other sector. Last year it was 10 out of 100 - and that was in the middle of the recession!
Fair enough: if you are a company that is hiring and you have LinkedIn, then it should be your first port of call; if you have paid for it (or even the free version) then why not use it and save yourself some money. However, it is not the only method of sourcing candidates, and reliance on LinkedIn as your main method will seriously limit your exposure to the potential market.
Despite the massive growth in usage, many potential candidates are not on LinkedIn, and of the profiles that are on there, many are very outdated, or have very limited information.
There are other limitations: LinkedIn spamming is an issue – you can use Inmails, but the most sought after job seekers get a lot of Inmails, and most are ignored; unless you can come up with a very compelling message and hit the right person at the right time.
Don’t get me wrong, some companies are using LinkedIn very effectively to build relationships with candidates, but in specialist areas, good recruitment companies have got much wider networks and better accessibility to target candidates, even on LinkedIn. Good recruiters will be connected with many hundreds and often thousands of candidates, giving them a very wide reach.
Search consultants also have good researchers (either in-house or external) who provide an added level of expertise that is difficult to build in an internal recruitment team.
Not much has changed: twenty years ago, it was “We don’t need to use a recruitment company, we can place an advert in papers!” Plus ça change, plus c'est la même chose....
Jonathan Ross - executive level recruiter/ search consultant focused on senior appointments in Transformation | Change | Digital | Technology | Strategy | Programme Management.