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In-House Recruitment Vs External Agencies: Why Agencies Are The Best

24 May 09:00 by Mark Baker

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Having access to the best candidates is a priority for any business, but the question is whether the vital task of sourcing these individuals should lie with an in-house recruitment team or an outside specialist recruitment consultancy.

Each type of business model has its own pros and cons, but here are some key points to consider when it comes to enlisting invaluable external agency expertise. 

Costs

A core argument in favour of having an in-house hiring team is avoiding the cost of a recruitment firm’s fees. However, it is crucial to look beyond the upfront expense of making a hire. Any savings or shortcuts made in the recruitment stage are likely to be null and void if a recruit does not perform well in their new role. Having this realisation weeks or even months later can be costly for any business, regarding time lost and the financial ramifications of starting the hiring process from scratch again. In fact, according to accountant Accounts and Legal, the average employee costs UK SMEs £11,000 to replace. Senior members of staff will incur the highest turnover costs, due to the position they hold. The cost to replace a senior staff member can be anything between £40,000 and £100,000.

An external agency cannot always guarantee that their hire will be more successful than a candidate selected by an in-house team. What they can bring to the table is a niche level of expertise and a considered approach to searching for candidates. This means that using an external agency can result in a better investment, even if the initial cost is higher.

Moreover, external firms are paid on a contingency basis, whereas a skilled in-house team will need constant payment, even if they are at times surplus to a firm’s requirements.

In-depth industry knowledge

While in-house recruitment teams gain a good understanding of their own company and its culture, they tend to try and cover all the different job vacancies that the firm needs. This can result in them becoming thinly spread across many varied and disparate roles. That said, an in-house team is best suited to less specialist, high volume roles that are easier to fill and come complete with a large pool of suitable candidates.

By contrast, agency recruiters often specialise in one particular niche area, which means that they are perfectly placed to search for and fill specialist or technical roles that only a relatively small scope of candidates are qualified for. They are also able to cultivate a rich network of candidates and contacts within their chosen field over a long period of time. In addition, agency recruiters are more likely to quickly identify relevant top tier candidates, regardless of whether they are actively looking for other jobs or not.

This makes them specialists in their field, complete with an in-depth knowledge of the market they recruit in and each particular type of role. This means they are more likely to understand how well suited a candidate is to a particular firm. Roles that require a more niche skill set will often require in-house recruiters to use an external agency to support them.

Building relationships

Identifying a strong list of candidates for a role is only half of the recruitment journey. The next hurdle is contacting them, which is no easy task for a cold caller. External specialists have the advantage here because they are able to take the time to develop genuine relationships with candidates, meaning that they can discuss roles as a trusted advisor, as and when required.

They might call someone with a specific role in mind about several options or simply out of courtesy to provide an update. This means that the candidate will be willing to listen to and engage with the recruiter. In turn, the recruiter will get to know the candidate on a personal level and have a feel for their aspirations and the roles they are most likely to excel in.

Incentives to perform well

In-house recruiters are more likely to receive a higher basic salary than an external recruiter, but this tends to go hand in hand with reduced commission potential, making them arguably less hungry for success.

By contrast, agency workers might be under more pressure to hit targets and deliver on roles, but the rewards on offer are greater. This also means that they should be more tenacious when it comes to filling roles. In addition, agency workers have to compete with other agencies, again driving that competitive edge. This proactive approach means that talent pipelines are firmly established and vacancies filled quickly and efficiently.

To conclude, while in-house recruiters do indeed serve a purpose, more often than not, there will come a time when they need the external support of an agency to expertly fill certain specialist roles. Furthermore, an agency can be called upon to provide a complete and independent range of services across multiple disciplines at any time they might be required.

Stay tuned to the Claremont Consulting blog for other key insights into the recruitment process and our specialist sectors.