It is a case of “back to the future” in the IT recruitment business for Russell MacDonald, the owner/director of his own Melbourne-based recruitment agency, RMA IT Recruitment, with offices in Sydney and Singapore.
In the current environment, with many agencies in the recruitment sector in Australia feeling the pinch as clients tighten budgets and cut back on hiring of new staff, Russell MacDonald says agency recruiting is returning to the pre-job board days where a recruitment consultant had to be well networked, able to link high calibre individuals with a range of clients and offer value and “great service.”
By “back to the future” MacDonald is reflecting on the fact that at a time of cost-cutting and a retraction in hiring across both the private and public sectors, recruiters are having to deliver greater added-value than they might have done in the so-called good times when business was booming and hiring was moving along at a rapid pace.
Russell MacDonald’s recruitment agency, RMA, is one of the many small to medium agencies in Australia servicing various business and industry sectors, and in RMA’s case, specialising in the IT industry.
While MacDonald acknowledges that there’s clearly a place for companies – big and small – to handle their own recruiting, he is of the view that the best approach to hiring for any company is to have good, in-house people manage the process, balanced by the use of the “experts” in the company’s appointed recruitment agency.
“The ability to be quick to market, provided by job boards, social media and other channels, has created its own set of problems, particularly around volume and quality of candidates,” MacDonald cautions.
“Those organisations with thorough candidate management, interview processes and their own internal databases and networks are best placed to be efficient in the hiring process for their clients.”Public databases are valuable but I wouldn’t want to rely on them,” MacDonald points out when talking about clients who may want to handle their own hiring through the use of job-boards, rather than the specialised internal database of their recruitment agency.
“The other big concern for clients these days is compliance, including workplace safety, inductions, and privacy, and recruitment firms are geared to handle these challenges.”
As you might expect, Russell MacDonald believes small to medium sized recruitment agencies, like RMA, are better equipped than some of its bigger competitors, particularly in the current tight economic environment, to handle the hiring requirements of client companies.
Budget cuts by client companies, and the need to keep staff procurement costs at the lowest possible level over recent years, has put great pressure on recruitment agencies to lower their costs, something which MacDonald says ignores the importance of the added-value services, responsiveness and market knowledge that an agency brings to the table.
“A purely cost-base delivery exercise as far as hiring people is concerned simply doesn’t work. If it did, we wouldn’t have a growing business. As I say you can’t buy people like you buy your pencils. Some of the smarter procurement teams are now factoring in ‘value’, and I think that’s a challenge for some of the larger players who have had to accommodate the low cost model. But, in the small to medium-sized sector, trying to compete on the low cost model has been a real stretch for many of the agencies.
“I think the value you get from recruitment firms is now being better recognised, but at the small to and medium sized end we’ve never been chased down to the lowest point on price. In fact, we have often walked away from the business even though we have been invited to participate, but we have said we can’t deliver quality service with that pricing model.”
“External recruitment firms are only going to be used by clients now, particularly in this cost conscious environment, where we actually deliver greater value than clients can do by using their own resources.”
MacDonald acknowledges that internal HR and hiring teams have got “smarter tools” than HR teams had in the 80s and 90s, and also have “good people” who have learnt how to do recruitment. Indeed, it’s quite common practice now for companies and organisations to build their internal teams by hiring from the recruitment sector itself.
“The point is, if you can do it yourself and you can do it in a cost effective way, okay. But, in IT a lot of internal teams, just like the old HR teams of the 80s and 90s, are working in a field that is fast moving with rapidly changing technology, so it can be new and unfamiliar territory.’
MacDonald explains how the recruitment added-value processes delivered by agencies is far more complex than may be appreciated by some companies and their internal teams. It’s the intimate knowledge the recruiters have about the market and the best available ‘off-line’ candidates he cites as some of the areas where agencies can add a value, and that a client can’t always get from their own internal team.
“You actually need to know a lot about the person’s soft skills and their cultural ‘fit’. The importance of assessing a person is not just about their technical skills, you have to put a value on a broad range of skills and personal attributes and judge whether they would be the right candidate to recommend to a client for an IT project, or any other role.
“We do a lot of work in the professional management and business analysis space and the ramifications of a poor hire, not even just a bad hire, but a poor hire, can be really very significant. In IT, most business delivery type projects are high cost, big ticket items and so, therefore, what you want is the best person that you can possibly find to do each job on that project.
As MacDonald explains, his own agency and no doubt other recruiters too, has its candidate management function “ticking over all the time whether we have roles for those particular individuals or not. So, that sort of work is proactive rather than reactive. We are in the market, if you like, keeping in touch with people every day. That’s a different model than most internal models.”
“Now that’s a full time job keeping contact with that sort of candidate pool, something which an internal client can’t, or can’t afford to do. We have to manage our candidates, and we have our candidate management team doing that all the time, even when people aren’t on the market.”
By way of example of a recruitment agency adding value for a client, MacDonald cites the case of his own agency.
“We had a situation with one client, and we’re not talking a small client, who hadn’t been active for 12 months and became extremely busy and in a hurry with new projects. Now, our team, who had worked with them for many years, placed 17 project managers and business analysts in a month. They were all high calibre professionals, all well suited to their roles. We were able to supply those sorts of people quickly because we knew the candidates, we knew the client very, very well, we knew the culture of the company, , we knew everything about the client, and we didn’t have to be briefed on every role.”
“That’s where you can have the jump and advantage over the internal team,” MacDonald says, emphasising the value-added role the small to medium sized recruitment agencies should be performing for their clients all the time, not least of all in the current economic climate.
MacDonald also makes the point that it is in tougher economic times, like now, that client companies employ people internally to manage their recruiting and hiring.
But, he stresses, when the market turns-up again, and there is greater competition for various candidates requiring greater expertise and knowledge of the market, those internal people, including Hiring Managers, may well be caught short without the skills, experience and market knowledge of an external recruiter, to back them up.
Regardless of his concerns about the use of internal teams by clients rather than recruitment agencies, MacDonald does say that he thinks the internal teams are here to stay, but stresses that management will have to be careful that they just don’t establish “another fiefdom or a large department which starts to justify itself.”
“I think the balance may be getting to where it should be with the combination of an internal team and the use of an external agency,” MacDonald says, but also re-emphasises the need for agencies not to sit back and do the least amount of work, rather than continuing to add value beyond what the clients can do themselves.
“Where we have to add value is in ensuring that the candidates that we put up are excellent candidates. Every candidate we put forward we must believe them to be a good fit, and be likely to accept the job if they are offered it. So, we have to very, very focussed and, if we don’t do it well, we won’t survive. Remember, recruitment agencies are only paid for ‘success’.”
MacDonald also has a timely piece of advice for all those recruitment agencies competing for business in a much tighter market: “If small to medium sized recruitment companies expect in future to just put advertisements on job boards, do an interview, and sometimes not even do that, and then send a CV along, and think that justifies being paid a $10,000 recruitment fee, I’m afraid they don’t have a very fruitful future.”
Not surprisingly, MacDonald takes his own advice about the importance of any organisation using the services of a good recruiter to manage its hiring requirements: “When we are recruiting for our own company, whether for the administration or recruitment teams, we use external recruitment consultants - for exactly the same reasons.”