I recently received an email from a CEO asking the following question: “My HR department isn’t producing the quality of applicants we need. Should I use outside recruiting firms?” Since N2growth has a talent management practice which includes a practice group that provides retained search services, in order to be transparent I must disclose my bias before answering today’s question. While I clearly have a strong bias favoring an outsourced recruiting model, the question merits a bit of exploration in order to provide a fair answer. In the text that follows I’ll do my best to manage my bias and provide a transparent and authentic answer to a question I’m sure most of our readers have asked themselves at some point in time.
Let me begin by providing some historical background on organizational behavior which might serve as a useful backdrop for today’s post. While I could go as far back as Aristotle’s lectures on the topic of persuasive communication and self-awareness, to Plato’s writings on the essence of leadership, or even refer to Machiavelli’s work on organizational power and politics, for the sake of brevity and relevancy I’ll fast forward the late 1800’s in America. It was during this period of time we can find the roots of modern HR. It was during the late 1800’s industry recognized people problems were a very real and rapidly growing concern in the workplace. It was also during this time the US Government stepped-in to provide the first real legislative protections for the workforce.
As time has continued to march forward America has moved from the concept of “personnel administration” to “human resources administration” to “human resources management” and now we are moving on to “talent management.” Nomenclature aside, the biggest challenge that HR departments face today is that of multiple and often competing agendas, which in turn tends to cause staffing inefficiencies often resulting in lackluster performance. As with the evolution of most functional departments in the corporate world, with the passing of time has also come some empire building and title inflation. The HR department is no exception to this regrettable state of dysfunction.
Let me ask you to think about your HR department for a moment – How large is it, how big of a budget does it command, and most importantly how productive is it? Upon reflection you’ll find that much of your HR department is likely charged with defensive posturing associated with managing compliance and litigation risk. Other staff members are likely charged with training and administration activities, some have fallen into IT roles developing applicant tracking systems and other support infrastructure, while others perform marketing and research activities surrounding candidate development. How much of your staff is actually charged with recruiting, and how senior are these people?
It is not that HR departments are incapable of making high volumes of consistently great hires, it’s just that most or not organized to do so. If your executive level recruiting is being handled by staff level HR shame on you (see “Who Should Do The Hiring“). Following are just a few reasons why I believe in most cases a company is better off leveraging the services of an outside recruiting firm:
1. Outsourcing allows companies to focus on core business while leveraging a broader, deeper and more senior recruiting talent pool than they normally can manage organically. The real issue isn’t internal vs. external, but internal and external. Talent organizations which collaboratively partner with executive search firms produce better results than those who don’t’. It simply doesn’t matter who makes the hire – what matters is the right hire is made.
2. When payroll costs, ad budgets, job posting fees, research costs, IT costs, lost opportunity costs, etc. are considered it is more affordable to leverage search firms. Why dilute your internal budgets on redundant efforts when you can leverage the budget of a search firm?
3. There are many benefits associated with using an outside recruiting firm including realizing the benefits of a confidentiality buffer which keeps the employer in relative anonymity until they are ready to engage with a candidate. Managing the noise of a high profile search is better handled externally leading to fewer conflicts, political hi-jinks, and the potential for leaks.
4. Recruiting firms have existing long-term relationships with passive job seekers not readily known to most HR departments. A broader talent pool simply results in better talent being acquired. Recruiting firms also have broader access to a wider range of candidates who may not have ever considered working in a particular industry or for a specific employer.
5. No charge replacement guarantees makes using an outside recruiter a very low risk proposition.
6. Recruiting firms normally have access to a broader array of tools and information which can often be useful to employers in terms of efficiency, benchmarking and analytics.
Bottom line – the best results come from combining the knowledge and skill possessed internally with the competencies of external resources. Think collaboration – not isolation. Good luck and good hiring!