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In-house versus agency recruitment

By JAMES COAKES Published 26th Mar 2015
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When does it pay to bring recruiting in-house, and when is it better to use an agency? It's a question that's often on the minds of HR execs looking to improve recruitment and hiring methods, and cut the costs associated with hiring new employees.

In general, in-house recruiting teams can perform the job well, and there are some big advantages to going this route. Many companies say that taking recruitment in-house is less costly, with positions being filled more quickly, and less employee turnover.

How far can you reach?

It's always been the case that an experienced, established recruitment agency has superior reach in comparison to most in-house recruitment teams. Agencies thrive on creating and maintaining extensive networks of contacts, and the average agency is much larger than the average in-house team. These days the gap is even wider, with agencies expanding into new markets and new countries, partly fueled by the drive towards industry consolidation.

Reach is an aspect of recruitment where agencies really shine, but in-house teams can partially bridge the gap by making heavy use of social media and digital technology to expand their sphere of influence.

Confidentiality and impartiality

Many global corporate giants use in-house recruitment teams for all lower, middle, and executive-level hiring, but when it comes to the top jobs, they go to agencies. Why? Because only an agency can provide the high level of unbiased confidentiality that's needed to recruit from competitors. In-house, there's always the risk of an information leak, but in an agency, with the company's reputation staked on discretion, leaks are much less likely to happen.

Filling niche roles

As well as those top-level jobs, there's also considerable advantage in using agencies to recruit for highly specialised niche roles. It's something that few in-house recruitment teams will have experience with, but for established agencies, it's their bread and butter.

Company culture and branding

In-house recruiting can reduce employee turnover, in part because these recruitment teams are well-versed in company culture, and they tend to be much better at hiring employees who are a good fit in this regard.

It's also a good brand-strengthening exercise, but only when the recruitment and hiring process proceeds smoothly and quickly, with clear, helpful feedback provided to each candidate at every stage. Otherwise, there's the risk of candidates becoming dissatisfied and disappointed, and word of mouth always travels quickly when it's negative. On the other hand, for a lengthy candidate search, an agency can serve as a useful buffer, and help insulate the brand against these kinds of problems.

A hybrid solution might be the most effective one

In-house recruiting has some definite advantages, and for some companies, reduced hiring costs will outweigh any of the drawbacks. Others may continue to outsource all of their recruiting to agencies—particularly those small and medium companies that don't need or can't afford to have a dedicated employee (or team of employees) for the hiring process.

However, for companies that are willing to think outside the box, the most effective strategy is likely to be one that embraces a hybrid approach to recruiting, where the majority of hiring is done in-house, and certain specialised or top-level roles are turned over to an agency for recruitment.

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