After a tumultuous year that saw many sadly lose their jobs and unemployment spike at levels not seen for a generation, a successful vaccine programme has seen business confidence improve since the end of January. Indices show the intent to hire now outweighs intent not to or to make redundancies and this is driving salaries in the private sector which is up 1.5% in the last quarter. Public sector pay is largely frozen and if the private sector continues on its upward trend, we can expect to see the battle for talent further accelerate with wage inflation a likely outcome.
What Struggles do Businesses Face When it Comes to Hiring?
With a decreasing pool of talent and employers keen to invest in calibre individuals, this will make hiring conditions ever more competitive. At this time of corporate budget constraints, however, many companies are understandably trying to avoid agency spend by hiring themselves. The pressure on internal recruiters who often have limited time and resources in terms of market access will be further challenged.
Why do Recruitment Agencies Reach the Best Candidates?
Most candidates are what the sector calls “passively looking” and often are only included in shortlists if they are approached, which most internal recruiters simply don’t have the time to do. These passive candidates often sit on agency databases or in other contingent data banks, but they tend not to apply for jobs.
It is in an agency’s interest to manage the candidate journey from research and sourcing to consultant delivery, an agency has a lot more capacity to drive value through the recruitment process and thus generate the higher calibre candidates. Candidates view agencies as advisory whereas internal recruiters are inherently biased to their company brand.
What are the Limitations of Using Internal Recruiters?
Internal recruiters are generally as equally competent as agency recruiters. However, if they are asked to recruit all job categories for a company, they will most likely lack vital recruitment experience in some technical areas. This will make it less likely to be effective in key hires. For example, if a company recruit 20 administration staff a year, they could save agency fees by hiring someone skilled at recruiting administration staff. It is unlikely that an internal recruiter who is skilled at general office recruitment will understand the specifics of IFRS accounting standards or the complexities of cybersecurity or GDPR.
The agency models need to continue to evolve as tech blurs lines and to adapt to the “new normal”. As the battle for talent hots up again, companies who genuinely want to access the best talent available will have to invest in agencies to complement their efforts. After all, it costs nothing unless you hire from an agency yet benchmarking internal recruiter performance will ensure the best outcome for companies in the long term.