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The Staffing Agency v an Internal Recruiter

One of my industry colleagues was a little taken aback today when a client suggested that perhaps if they hired an internal recruiter they might be able to save on all the fees they pay.

It is a common reaction for clients who don’t understand the mechanics of the staffing world.  In many ways it seems like it makes sense, how hard can it be to find a person anyway?

I thought I would throw down a few thoughts about what actually happens at our staffing agency … vis-à-vis the junior person hired into the HR department to solve all the recruiting problems.

1.  A recruiting agency has structure geared specifically towards its “core business” … serving their clients by finding them talent, when they need it and at the right price.

2.  This is a very competitive world, with a low barrier to entry and hence there are global, national and local players who provide these services … if you are not good at what you do, you are not going to survive.

3.  This is a low profitability business … Statistics Canada suggests the average profit margin for this industry is in the 3 to 5% range.

4.  This is a high volume, high paced, pressure cooker business.  Our company gets more 25,000 resumes a year through online applications and we focus in the professional segment!  General staffing companies, focused on clerical and blue collar will get a WAYYY more than that!

5.  Finding the right resource requires a whole process … sifting through the tens of thousands, down to the maybes, to the “not so short” list and the to the short list.  At each stage it requires a greater effort and focus on detail.  Software can help you to some degree, but it doesn’t help when the resume is a year old or doesn’t use the same buzzword as your client.

6.  Once there is a “not so short list” a lot of telephone conversations can take place.  These a re delicate mix between finding out if the person has the right skills, the right personality and an interest in the role … and at the same time selling them on the opportunity.  These are not 2 minute calls.

7.  Now you might be down to the short list and you need to determine who is the best fit … there is the technical aspects of the role, but also the soft skills.  What about all the other experience the candidate has … how might that be of value to the client?  Same industry experience?  Experience with a competitor?  Knowledge of the geography etc.

8.  If its a very rare skill the potential candidates might be in other cities … which requires a whole other level of screening to ensure that not only are they interested, but their family are OK with the move.  We have all had the “turn down” at the 11th hour because a spouse/parent/partner didn’t want them to go!

9.  There is the negotiation over salaries/hourly rates.

10 The negotiation over contract terms and conditions.

11. Processing of references, criminal checks, credit history, validation of credentials etc.

12.  The agency has access to all of the tools, the job boards, a very large internal database, a team of recruiters with their contacts and years of experience focused on doing just this type of work!

13.  All of our competitors on this order are going through the same process … the client gets to pick from the best of the best.  The losing agencies go back to the next job, without a cent!

I’m not thinking the average junior in the HR department would want to compete with the agencies.  We work too hard, we work long hours, we work under pressure and we might not get paid … so we are very motivated!

This is just a start at what you might get using an agency versus an internal person.

Caveat… obviously there are excellent recruiters working for HR departments but there are many times when they just can’t handle the volume or just don’t have near the reach of a business dedicated to recruiting!