I’ve been asked this question on numerous occasions, both by peers and recruitment partners. While there are many differing views on this, many of which are dependent on the industry you’re in and the type of roles you’re hiring for, I thought I’ll share some of my thoughts on how I go about navigating this.
The role of external recruitment partners (agencies)
First and foremost, as a Talent Acquisition (TA) professional for your company, your bread and butter task at hand is to acquire the best fit talent for the role you’re looking to hire for. There are a variety of sourcing channels you can leverage, and the use of external recruitment partners would be one of the many.
A lot of TA professionals resist the use of such external recruitment partners as they come with a much higher cost relative to the other recruitment channels. Coupled with the likelihood that it is an internal KPI to reduce the company’s agency spend making it a tough decision when we are deciding if we should take a role out to an external recruitment partner.
So, what’s the value in engaging with these external recruitment partners? What’s the role they play in a company’s Talent Acquisition function setup?
The answer to the question is actually very simple and straight forward. The role of the external recruitment partners is to augment your TA function’s capability and capacity.
So, what do you mean by that?
Understanding your current setup
One of the very first step in establishing an efficient Talent Acquisition function for your organization is to understand current setup.
I look it with the following parameters:
Capacity and Load tolerance of the team. Every team setup has its own limitation to how much requisitions it can handle. I like to keep the team operation at 80% of its full capacity (optimum capacity), leaving some time for projects and team development. This also gives me some buffer when the spike in hiring comes in.
The load tolerance refers to the additional load that the team can take on top of the full capacity. For me, this is usually an additional 20%.
For example, if you’ve got 10 recruiters and each have a capacity of 100 requisitions a year:
- Total capacity = 1000 requisitions
- Optimum capacity = 800 requisitions
- Load tolerance = 20% (1200 requisitions)
Turnaround time/ Time to fill (TTF). This is a love hate stats for many TA professional. I’m not a big fan of using this to measure performance as there is no clear benefit if you close the position faster. Yes, every position ideally should be filled yesterday, but that also creates a paradox that as a TA professional, you also need time to source, access and acquire the best fit talent for the role.
For me, TTF is use as a control stats to manage SLA. When you’re running a TA team, you need to take a macro approach to accessing how much your team can deliver (as described in the above paragraph on capacity), and how fast they can turn it around.
I’m not too hang up over the actual number of days as we measure TTF differently. Some of us stop the count when the candidate signs the offer, and some only stop the count when the candidate starts.
What’s most important is the consistency of the measure. Measure it the same way as you always had, and take a snapshot of what that average is over a period where the team is operating at optimum level (not too high load or too low a load).
This will establish the baseline.
With this baseline, you can start contracting with your hiring manager on how long it would take to turn the position around based on current load that the team is carrying.
Domain expertise and geographic coverage. I guess this is self-explanatory. Everyone in the team has their own strengths and weaknesses, and we need to be realistic about the team’s limitation when taking on roles that outside the comfort zone. Especially so when there is a very short runway to deliver.
While the above parameters are sufficient for managing the day to day operations in a TA function, you will also need to factor in projects and other out of the norm hiring.
- New entity/ Site setup
- Critical/ Time sensitive hire
- Confidential searches
- Project ramp up
Such projects or initiatives often disrupt the operational efficiency of team as it creates a spike in the load on the team.
So, with a good understanding of your team’s limitation, it becomes easier to take a decision if you should take engage the help of an external recruitment partner.
Getting to the real work
Now that you’ve decided to take the hiring external, checked that you’ve got the budget to use an external recruitment partner, what are some of the things that you need to look out for?
Selecting the right partner(s)
There are so many ways to do this, and so many ways to get it wrong. For me, I look for partners that can plug the gaps in my team. There are essentially three things I look out for. Domain (and geographic) expertise, process and the opportunity to work out a win-win arrangement.
I guess domain, geographic expertise and process is quite self-explanatory. Let me elaborate more about the “win-win” arrangement below in the pricing section.
I’ve omitted the “relationship” factor deliberately. I do think that it is important to maintain a strong relationship with the existing partners that’s been giving good support. Another benefit is the familiarity of their setup. Sometimes it’s very hard to differentiate real ability from sales talk. However, I would try to keep it as objective as possible when it comes to selecting the right partners to go with.
So, how many partners should you appoint? I tend to go with one partner first and move on to adding not more than two more if the first partner fails to deliver. I am rather careful with having too many agencies working on the same role, as they could potentially reach out to the same candidates. Not only will this cause a lot of confusion and frustration, but also make the search process a nightmare to manage.
I’ll discuss more about the rationale of limiting the number of partners in the pricing section below.
Working out what type of services you need
The services offered are generally categorised into the contingent and retained searches. The key difference would be they payment schedule. Although all retained searches would/ should come with a more comprehensive search management methodology, I’ve also seen some of the contingent searches providing as good a search management methodology as the retained ones.
There’ve also been a variety of other search services such as industry mapping which can be useful when you want to do an assessment of the available talent in the market. This is very helpful when you are looking to define the role and wants to get a gauge of the available talents in the market.
Normally, I would sit down with the partner with the best domain/ geographic knowledge for the role that I’m hiring for to discuss and tailor the approach.
Getting the pricing right
This should be easy, right? The cheaper the better? Apparently not.
I tend to be quite particular with this. One of the things that I look out for is the partner’s ability to hold their pricing. There is usually a standard range of pricing in the different countries. If the consultants working on my role are really that good, they would have no problems charge standard or even premium rates. So, if an agency readily drops their pricing below market rates, this is a signal for me that I might not be getting the services of their best resource. You pay for what you get.
I am also rather mindful about over negotiating the pricing. Not that I’m generous with my partners. You need to first understand how the consultants are being incentivised for working on your job. Especially when you’re engaging them on a contingent search. Any good consultant would have more than one jobs on hand. They need to turn in a revenue and have a monthly sales quota to hit. So, if they can make more money on the other job, how would you think they would prioritise their work?
By the same token, I try to keep the number of agencies working on the same job to as little as possible. Think about it, if there are 5 agencies working on the same job, the chances of them closing it, and bringing in the revenue automatically falls to 20%. Once again, a good and smart consultant would de-prioritise such jobs.
Many TA professionals would think that they’ve gotten a great deal when they walk away from the negotiating table with an obscenely low price and have a ton of agencies working on the role and sending them CVs.
That for me is the worst possible outcome. First, with the number of agencies that’s working on the role, I am less confident that they are representing my company correctly. Secondly, with the low rates and low chances of closing the role, agencies wouldn’t invest too much resources into sourcing and screening the candidates. I’ll end up having to screen all the CVs and do all the heavy lifting for them.
So, for me, getting the pricing right is critical to a successful win-win partnership.
Managing the search
Getting the search out is the easy part. Managing the search is like managing any other projects. It is important to set out the milestones and deliverables.
For me, I tend to view my external recruitment partners as part of my TA team. Thus, setting up regular review on the progress with updates is essential. It is also good to have the hiring manager sitting in these reviews. This will also help to minimise the number of updates as you don’t have run these updates separately.
Closure could mean two things. Either you made your hire, or not. Whatever the outcome, it’s always good to do closure and a review of what went well or not.
As part of closure, it is always a good practice to do some housekeeping. A lot of work had gone into the sourcing and assessment of the candidates. All this are valuable insights and intel that would come in handy when you do your next search.
Also, do take note of the agreement that you’ve got in place as agencies would normally have a duration for ownership of the candidates. So, always document the agreement you’ve got against the candidate that they’ve presented and don’t just rely on the current agreement you’ve got in place as that might change over time.
Candidates usually have a special relationship with the recruiter that places him/ her. Always maintain an open line channel with the external search partner and leverage on that relationship they’ve got with your new hire to gather feedbacks on how they’re doing in their new job.
Personally, I’ve gotten some very useful feedbacks which resulted in a more positive experience for the new hire. So, make use of that “service” as much as possible!
Longer term relationship
Building and managing a long-term relationship with your external recruitment partners is essential to any TA function. You can forecast your hiring requirements, but more often than not, you will need to look at scaling up or down your internal capacity.
I tend to be a little more conservative with adding permanent recruiting resources especially when there is huge fluctuation in requisition load. External recruitment partners (and contractors) provides me with a viable alternative to scale my hiring capacity.
There are a lot more to this such as measuring the performance of the different agencies and managing your preferred supplier list etc.
I hope this article had provided you with some useful insights. Please share your thoughts and comments with me, or perhaps an idea for the next article!
Thanks and happy weekend!
Opinions expressed are solely my own and do not express the views or opinions of my employer.
Eric Wong is APAC Head of Talent Acquisition Leader at Fitbit. His experience spans across the various human resource functions such as HR Information Systems, Business Partnering and Talent Management. Eric currently sits on the Advisory Board of the Management Development Institute of Singapore (MDIS). Connect with him on Linkedin or follow him on Twitter @ErickyWong.