Recruitment

The Growth of “Recruitment Alternatives”

By November 14, 2013 9 Comments

The battle for recruitment agencies these days seems to have become one of relevance.  To be viable, you need to be an expert in your niche, well-networked and knowledgeable about the market.  You need to demonstrate value for money otherwise clients these days have too many options and ways to just do it themselves.

This state of affairs has given rise to an increasing number of opportunistic recruitment alternatives.  Most are fuelled by the same sense of hunger and greed that witnessed the explosion of non-regulated recruitment activity in the 90’s to mid noughties and as such most are destined to stumble along and eventually fade away once the seed money has disappeared and reality bites.  Because the reality is that it is very, very difficult to conjure up an alternative to (quality) agency recruitment that can have the same impact, the same effect, the same outcomes.  Even many internal recruitment functions still have some way to go, although I sense some have caught up and are now overtaking, despite the recent blog from Greg Savage (and interesting comments that are well worth a read too).

I spied an article announcing the launch of another such “alternative” this week too.  Described in Australian’s popular business publication BRW as a “Game-Changer” for the recruitment industry, this week saw the launch of The Search Party.  The general ruse seems to be that recruitment agencies tip their CV databases into a central portal, where the identifying candidate details are removed and clients are able to then search for and access CV’s.  Should the procurement of a CV result in an eventual placement then the recruiter who provided the CV gets to negotiate a fee with the client.  I particularly like the quote from the founder Jamie Carlisle:

“Recruiters work for free 75 per cent of the time; they only place one out of every four roles they work on,” he says.

“The huge fees are to cover the costs of the work that didn’t result in a placement. We are offering a profitable and sustainable business model for recruiters, which allows them to bring down the fees and still be very profitable – which they are not at the moment.”

Several undeniable truths to be digested there:  We do undertake an awful lot of work for nothing.  That is the curse of the contingent recruitment model we have created and that probably is why we manage to justify the seemingly high placement fees when one does eventually come off.  As for profitability, well I suppose this will help the more desperate, directionless, generalist recruitment businesses claw their way back towards profit… But surely this will be profit gained at the expense of satisfactory and fulfilling recruitment work?

Should this take off then what are recruiters to become?  Administrators plastering ads across job boards to trawl up shoals of CVs to then dump into a faceless database with no consulting input?  But then maybe that is the path we already embarked on a few years ago, especially when supplying to large PSA accounts, and this is just a smart way of  making something approaching a silk purse out of the pigs ears our databases have become.

Because that is generally what agency recruitment databases are.  A pigs ear, a dog’s dinner, an irrelevance.  LinkedIn has made sure of that and that also leads me to wonder whether any client worth their salt would be better off signing up to LinkedIn Recruiter rather than buying access to this CV landfill.  Any CVs worth accessing are probably authored by people with a LinkedIn profile too and at least their online profile will be kept constantly updated.

I wish Jamie well with this venture because it does seem to be offering a lifeline to a large part of the agency recruitment world.  But if I’m being honest, most of the part needing a lifeline might be better off having the life support switched off.  There won’t be much growth in the agency recruitment sector over coming years.  Whilst there will be winners, there will be the equal amount of losers, and the ones sucking on oxygen generated from this scheme will only find it tougher and tougher to remain relevant.

So will it work?  What do you think?  The answer might be found by looking at the level of success experienced by NBR Talent right here in New Zealand over the past couple of years.  This was designed to give recruitment agencies access to corporate clients (for a subscription fee) that they might not otherwise have done, albeit at a reduced placement fee of 10%.  This scheme was accompanied with similar types of press releases to The Search Party’s with statements like:

“Employers and recruiters say they are beating the ‘Talent War’ by using NBR’s uniquely-developed New Zealand website.”

I’ve struggled to garner much positive sentiment about this offering from my contacts in the market, even from ones whose brands still appear on the website’s homepage.  But then maybe they want to protect their secret that is doing very-nicely-thank-you-very-much.  But the dated looking website and last tweet sent over a year ago does make me wonder…

Some feedback in the comments would be welcomed.  Especially for The Search Party to read, who seem to have taken this concept a step further, but still have the jury out on whether this will indeed be a game changer, as so many of these recruitment alternatives profess they will be.

Jonathan Rice

Jonathan Rice

MD at New Zealand rec-to-rec firm Rice Consulting and co-founder of on-demand recruiter offering Joyn. Recruitment agitator and frustrated idealist, father of two, husband of one, and lover of all things Arsenal and crafty beer.

9 Comments

  • I believe most clients still value the “consultant” part of recruitment. Dealing – as you say – with a real person who’s knowledgeable, trustworthy, honest and can provide valuable market intel.

    As for the seemingly high fees, clients don’t just pay for an eventual placement, they also pay for service as in: consultancy, advise, sourcing, short-listing, (initial) interviews/screening, negotiation and – in some cases – testing and after-care.

  • Avatar Fran Hume says:

    I agree with Sebastiaan, that many clients continue to value the relationship and consultancy part of a recruitment process. Our new business, NZ Wants You; has been created to work, not as an agency, but simply to interact personally with overseas candidates who are often pushed to one side, and into the ‘too hard basket”. It is a constant topic that NZ still has a high shortage of highly qualified individuals, and we are hoping to assist with filling some of the gaps.

    There are a number of agencies who recruit overseas candidates very well, however, there are many others (often unique or smaller agencies) who shy away from the perceived difficulty hiring someone from overseas. We are simply offering an opportunity to make it seamless for those people who need the skills, but do not understand the process. We believe our model is a very good, value added opportunity for certain clients, and we expect to work with agencies too. We also do not offer high percentage fees, but simply a cost per activity of the work required, which also provides value for money.

    With talent shortages, businesses do need to be creative themselves, and also seek alternatives to standard recruitment.

  • Avatar pk says:

    “Recruiters work for free 75 per cent of the time” – yet you still do it, so it can’t be all that bad, can it? Surely if you were suffering that much, then as an astute business person you would shut up shop and move into a different industry.

    @Sebaastian – yes, us clients/internal recruiters very much value the “consultancy” approach, it just sad that it seems to be so few and far between these days…

  • Avatar David Swift says:

    I have never dealt with a client or candidate that not only wanted my opinion on the market, but also (and arguably more importantly) on the candidates/clients I was representing. All to often both parties aren’t hiring/searching on a regular basis and as such appreciate the insight a seasoned recruiter can give them into the softer factors and E.I. that go along way to making a successful placement.

    Those that believe recruitment is merely an administration exercise, and so people can select random CV’s from a pool in order to reduce costs are really missing the point of what GOOD recruiters provide.

    Those who use this service with any minor success will herald it as the future of recruitment (again!!). However long term, as always, it will be those that can connect with candidates in a skill short market and build firm relationships with clients who have a multitude of stack in high sell it cheap options that will still be flourishing.

  • Avatar Renny Hayes says:

    I just don’t see it being a game changer if the ‘game’ is still essentially one flawed, sentient, changeable, miraculously unique human being trying to find another to work with.
    This is just another large lucky dip to wade through.
    Good recruiters can and do save clients wasting their valuable time on recruitment – this has the very real potential to have exactly the opposite effect.
    I mean, would Steve Hansen pick his squad based on years-old still photographs of players?

  • Avatar Kirsty Spears says:

    It is difficult to draw a conclusion on a site/service I haven’t used, but it seems to fall into the same trap of focussing on servicing our client companies rather than our candidates. I work in an area where my candidates would be horrified to think their details were being corralled together with many other industries and professions in an anonymous space, and as we know a CV seldom does the full job in accurately conveying the unique mix of experience, skills and attitude that make up a strong candidate.

    As for the consultancy element I agree with David that not a day goes by without my opinion being sought – although admittedly the weight given to that opinion will likely vary. Perhaps I am old school but I strongly feel that as long as our industry deals with the ambitions, dilemmas and needs of human beings, then the instincts, emotional intelligence and advice of other human beings will still have an important place.

  • Avatar Sally Read says:

    This seems like a very disjointed way to work with very little relationship building, especially with the candidate. Remember your candidate will possibly be one day be your client and vice versa.

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