Hiring the right people is as significant to the success of a company as the business model and health of the balance sheet.
Recruitment is a highly lucrative unregulated and fast growing industry. It is important therefore for companies to understand the different options available to them, the costs as well as the benefits and any downside of the choices they make.
Some Key Facts
The findings of the latest Labour Market Outlook from the CIPD and the Adecco Group demonstrate how important this is. They surveyed 2,182 employers on their recruitment, redundancy and pay intentions for the second quarter of 2019.
Pay outlook– pay growth largely limited to key staff and new starters
- Despite rising recruitment and retention pressures, median basic pay expectations in the 12 months to March 2020 remain at 2%. However, pay expectations have fallen back in the private sector from 2.5% to 2% and have risen in the public sector from 1% to 1.5%.
- Inflation is continuing to put upward pressure on pay for some organisations. Recruitment and retention difficulties are also a key factor in driving pay decisions, affecting new starters and key staff in particular. More than half of employers (53%) said they have increased starting salaries for at least a minority of vacancies and one in four (28%) have increased salaries for the majority of vacancies in response to recruitment pressures.
- In addition to hiring challenges, a third of employers (33%) said that it has become harder to retain staff in the last 12 months, particularly in the public sector (42%). In response, over half (54%) of organisations have increased salaries in some capacity and one in four organisations (25%) have increased salaries for key staff only.
Skills shortages– employers are having to be more flexible to find candidates
Skills shortages are particularly being seen in professional occupations (e.g. scientists, engineers) where 50% of employers report that applicants don’t have the required level of skills needed.
The Labour Market Outlook found that:
• Two in five employers (43%) are upskilling existing staff to offset hard to fill vacancies
• 23% are hiring more apprentices
• 19% are recruiting from outside the UK
• 1 in 7 (16%) are lowering their recruitment standards
In line with recent ONS data*, the report also found that employers were making greater efforts to hire those aged over 55 (8%) and those from disadvantaged groups (6%).
What is the difference between Executive Search and Recruitment Agencies?
The aim of Recruitment Agencies is to fill a position with the best available person. Recruitment agencies source from a pool of candidates that are actively looking for a new challenge by advertising on various platforms. This leads to a group of candidates that are “self-selected” of which the selection was not pre-determined by the company.
The aim of Executive Search consultants is to locate and recruit the best person, regardless of whether he or she is already employed or seeking a new position.
This approach can broaden and deepen the talent pool available to a search firm’s clients and places the control of who should be part of this talent pool, squarely in the hands of the client company.
There may also be the use of specialised pyschometric tools, resources and skills to enhance the selection process.
Executive Search and Recruitment Agencies tend to charge a percentage fee or a retainer.
The percentage fee is based on the starting salary of the candidate and is normally payable once the candidate starts work with you. This form of charging is most common and if you don’t find a suitable candidate, you don’t have to pay the agency anything.
However, fees can vary from 8-25% depending on the agency and the salary. If you choose a retainer fee, it is agreed at the outset; with a percentage being payable upfront and the remainder due when the candidate starts their employment.
What are your recruitment options?
Your network– Many companies use their personal network to find staff and this can be very effective. However it can also lead to skills shortages and complications with personal relationships.
Advertising on line– Companies may advertise via online sites such as Linkedin, Indeed, Monster, Fish4jobs and even Facebook.This has the benefit of advertising that your company is busy and hiring but can create a lot of administration.
Recruitment Agencies– You won’t have been in business long before the sales calls start. When choosing an agency, try and get a recommendation and check their credentials. Anyone can set an agency up with no qualifications or experience. If things like diversity and inclusion are important to your company make sure you ask about this.
Executive Search or Headhunters– This is usually used for senior or specialised roles due to the cost. Finding a firm that understands and challenges you is worth a lot. Meeting a few firms and interviewing them can be helpful.
De-constructed recruitment– A key component of recruitment is identifying the passive candidate. You pay a day rate for experienced researchers to find and speak to candidates for you. A cheaper option but requires internal co-ordination.
Independent HR company or individual– Many experienced HR professionals have strong recruitment experience. They can also manage the whole process for you, even if you work with an external recruiter.
Common recruitment mistakes
Organisations in high growth mode often run very inefficient and costly recruitment processes with little thought for the candidate experience even though it is a seller’s market. Multiple repetitive interviews, waiting until vacancies have been created to start a process and failing to assess candidates thoroughly are typical.
It is important for companies to understand and cultivate their ability to read market conditions, trends, movement and fluidity in order to develop and manage effective recruitment strategies. Needs changes as companies grow and it is important to regularly review this.
Ruth Cornish (FCIPD) is the Managing Director of Amelore an HR consultancy. Amelore provide exclusive HR and OD services to high growth and ambitious companies.