Why is Recruitment so Broken? (and can it be fixed?)
| 8 minutes
The mindsets of hiring companies, recruitment agencies and recruiters.
Everyone hates recruiters and recruitment, right?
Ask a candidate how they feel about dealing with recruiters. Ask a hiring company about their impression of and experiences with recruiters. Ask a recruiter how they feel about being a recruiter. You won’t hear too many positive responses.
Why is that?
The entire recruitment ecosystem is broken. The way clients companies, recruiters and candidates work together is set up to fail. Based on the collective knowledge and experience from the Confido team we are going to give our view on why recruitment typically fails.
So where to start? … The companies making the hires.
According to the Stack Overflow only 50% of companies feel they have a good relationship with their recruiters.
When people are the number one successful asset of any business, that is a worrying stat. How can only half of companies feel they have a good relationship with the suppliers of their most valuable asset – people?
Surely out of your entire supplier base this would be the supplier category that you would prioritise building strong, lasting relationships with.
So let’s break the hiring process down:
Company X needs to make a hire, they have exhausted all direct routes to candidates, and agree they need to go to external recruiters. Most companies will have a PSL (preferred supplier list), a list of approved agencies that they release roles to.
Now here is where the first breakdown in the process occurs as the company typically focuses on two key priorities: cost and speed of hire.
The way any party is incentivised in a working relationship will dictate the behaviours from both sides. If a company pay a lot for a service, they will be incentivised to put more effort into the relationship to see a return. If the supplier is paid peanuts, they are not going to go out of their way to impress.
Typically the commercial relationship is set up as such:
- The recruiter’s fees are negotiated down as much as possible.
- Fees are only paid upon successful placement.
- The recruiter is working against at least two other competitors on any role.
Now, on face value this looks great from a hiring manager or HR perspective, they are getting the service as quickly as possible and minimising their risk by using multiple recruiters, and only paying once they have a candidate.
Boxes ticked right?
What message does this behaviour from the hiring company send to the recruiter?
- I don’t value you or your time.
- I don’t care where the candidate comes from.
- You need to react quickly, so you don’t get beaten by someone else.
- We will pay you the bare minimum to sign you up.
What behaviours do you think this drives with the recruiter?
I am sure you can answer this yourself.
But in brief: lack of commitment, lazy recruiting, looking for quick / easy to find candidates, sharing their most active candidates, putting the juniors on the role to help train them up.
To be blunt, why should they do anything more?
If we continue to work through the recruitment process from the company side:
Everything else in the process is set up inefficiently too.
- A job spec is shared, something that will be pretty sterile, probably recycled from the last round of hiring 3 years ago and doesn’t tell the recruiter (or candidate) anything.
- 50/50 chance of their being a briefing call, if so, 30 minutes at best.
- The company sits back and wait for the CVs to flood in, typically a huge barrage in the first few days then this tails off as the recruiters' focus on 'better' (or new) business
- They review loads of CVs, interview candidates, reject a lot of people, berate recruiters and re-run the process again as many times as needed until they make a hire. Most likely changing the recruiters along the way.
No word of a lie, most companies still operate in this way.
Is there anything in this process that screams quality? With any process or relationship, you need to consider what is the result you are looking for, then you need to reverse engineer the entire process to make sure everyone involved is incentivised correctly, and the process is set up to succeed in achieving that goal.
When the company focuses on speed and cost as priorities, it doesn’t incentivise recruiters and drives poor quality behaviours.
Let’s move on to the Recruitment Agencies...
Everyone loves stats so let’s start with some to give a picture of the UK recruitment industry:
- 46% year-on-year increase in recruitment company registrations
- 39,329 recruitment agencies registered in the UK since 1990, with 84% registrations in the last decade (2008-18)
- According to REC’s annual Recruitment Industry Trends, the recruitment industry grew its valuation by 11% to £35.7 billion in 2018.
The recruitment industry is worth big money, everyone is getting involved and the number of new businesses opening is increasing year-on-year. These is also little, to no barrier to entry, anyone with a laptop and a phone can call themselves a “recruitment consultant” and start harassing people.
Ultimately like any business, a recruitment agency is there to make a profit.
The agency business model is typically one that is based on high volume.
As per the company hiring section, companies don’t value recruiters, processes are inefficient and so the chance of filling a role with a company is very small. Therefore the agency has to operate on the basis that they will have a large number of clients with a low success rate of placements.
What does this mean?
If the agency is any good, they focus on demonstrating their value and trying to move up the commitment ladder i.e. working exclusively, working retained, higher fees. They will focus on improving the end to end hiring process and making sure they are incentivised to take a quality-led approach.
This means the agency can work with less companies, focus on quality, and have a much higher success rate.
If the agency isn’t very good, they will look to spread their risk as a reaction to the poor relationships they have with the hiring companies. They will work with as many companies as possible, get as many roles as possible, generate as many candidates as possible and play the numbers game.
Unfortunately, most agencies fall into this bucket.
How do they do this?
- Hire lots of cheap resources – grads and juniors and “train” them up. Typically training consists of two things; a quick tour of the agency database and shadowing the “top biller” making a few calls.
- As their ability to influence the outcome is minimal (poor process and no control over the company hiring) they focus on driving inputs. They have heavy KPIs to drive volume-based behaviours: number of calls, number of new roles, candidates generated etc. (Picture the task master, I mean Sales Manager, patrolling the sales floor, monitoring each person’s call time and cracking the whip when people slack off.)
- Incentivise recruiters by giving them low salaries £18-20k, and dangling high “uncapped” commission structures in front of them. Do deals, make money!
- Focus recruiters on the easiest and quickest ways to access candidates: advertising, their inflated database, job boards and mass mailing on LinkedIn. Speed, speed, speed.
- They create the perception of “specialist” recruiters that will focus on a specific area e.g. java. These recruiters aren’t actually specialist in understanding Java, they are specialists in scraping the web for Java adverts, generating more Java roles and mass mailing their Java candidate database with those roles.
This current business model fails miserably as no-one is incentivised to actually care about, or deliver quality to, the candidate or company hiring.
It is all about heavy KPI’s and volume activities to get “deals done” and earn commission. As such, quantity is valued higher than quality of recruiter activity.
Again when you look at how the Agency has set up the business, set up their employees in terms of training and incentivisation it is no surprise that the behaviours driven fall into the high volume / low quality bucket.
Everything is about targets and deals. No one is incentivised to care about the companies or candidates they work with, other than getting the deal over the line. I once heard the MD of a recruitment agency tell off a recruiter for wanting to go and meet a client to understand their business more, as it would be a day out of the office where they could be advertising and mass mailing candidates.
Agencies apply a very basic business model, but it works in the sense that they will make a profit. If you send a Java candidate out to 30 companies that hire Java Developers, you will eventually make a placement. Agencies don’t care if 29 other companies received a candidate not suitable to their needs.
The final piece of the puzzle, the Recruiter
To remind ourselves, the recruiter has two parties to please:
- The clients that are showing them no respect or commitment and expecting the world from them in return.
- Their agency that tells them, “That’s fine, just get as many of those clients as you can to spread your risk. If you send out a candidate to 20 clients, one of them will hire them. Just make more calls!”
Are you really surprised that most recruiters are terrible?
They are incentivised by their agency to fill any role they can, so that they get their commission. Then companies give them no other incentive, than to react quickly the recruiter will do just that, react quickly.
What behaviours does this drive in the recruiter:
- Simple risk vs reward. They will focus on the easiest to fill business, or focus on generating candidates to send out to as many clients as possible.
- Speed over quality:
- They will jump on the easiest and quickest places to find candidates. They won’t go headhunting the best people or spend time networking to find the hidden gems in the market – that takes time and effort, and neither the client or agency care about that (or want to pay for it).
- They will run some basic searches and look to generate interest over the first 1-2 days, after that they will just keep an eye out for advert responses and forward them to the client.
- Screening calls are brief as they are trying to cover candidates across multiple roles, they don’t have much information from each company, and most importantly, they need to crack on with hitting their numbers/KPI’s.
In the ecosystem that has been created, these behaviours are what will get the recruiter paid and keep the agency happy. Sadly, they will also create a lot of negative impressions with candidates and companies they work with.
The unending cycle of broken processes:
When you look at the three parties involved in the recruitment process and why they operate the way they do, it is no surprise that candidates get an awful experience: lack of information, lack of feedback, lack of anything really.
Clients get a rubbish service and CVs, they churn through their recruiters, and moan about how rubbish recruitment is. But the way they engage with recruiters is a major factor in the broken process.
Agencies just want to make money. It is easier to drive high volume activity in their recruiters than take the time to teach them to be better.
Recruiters hate the stigma that is attached to them, but lack the ability or understanding to break the cycle and provide more value to their candidates and clients.
To my point earlier, any service needs to be set up with the end goal in mind. The process needs to be geared towards reaching that end goal and the parties involved need to be incentivised to achieve that outcome.
In recruitment the opposite is happening.
It might seem like this article is primarily damning the companies hiring, which it is, but they aren’t solely to blame. No party in this process is being incentivised properly or demonstrating the right behaviours to help get the right talent into a business.
It is easy for the companies hiring to not look in the mirror, to blame the recruiters and just keep using new companies with the same broken process expecting a different result.
Agencies don’t care where they get their fees from, if a candidate or company get a bad experience they move on to the next. Plenty of companies out there trying to hire and willing to use new recruiters.
Many Recruiters are trained and brought up to believe that the above is the norm, they never progress past being good at being very poor.
Imagine this, a world where….
A company that took the time to properly vet recruiters and appoint one recruiter for each area of the business that needs to hire i.e. IT recruiter for tech hires, sales recruiter for sales etc etc.
Each hiring manager sits down with their recruiter, invests time with them so they understand the business, and together they agree a hiring process that focuses on candidate attraction, process efficiency and overall candidate experience.
The company pays the recruiter in a way that incentivises them to put a concentrated amount of time and effort into finding great people within a reasonable timeframe.
In this scenario what do you think the outcome will be? What behaviours are you seeing or will see from the company hiring and the recruiter?
My advice, ask yourself...
If I am a hiring manager:
- Am I incentivising my recruiter(s) in a way that will drive the best behaviours and practice?
- Is the hiring process geared up to give the recruiter the best chance of finding me top talent?
- Is the recruiter incentivised to give candidates a great experience whilst representing our brand?
If I am an agency owner or leader:
- Are we clear on the value that we bring to clients?
- Are we educating our recruiters on how to build value-driven relationships with clients where they can get more commitment?
- What are we doing outside of generating candidates to show our value to clients?
If I am a recruiter:
- Do clients value what I do?
- Does my agency focus on quality or quantity?
- Do I feel I bring value to the candidates and clients that I work with?
Based on your answers, I think you’ll know if you need to change what you’re doing.
Whether you're a hiring manager, leader or recruiter, we're sure you've got your own opinions and experiences of recruitment. Get in touch to find out how we're doing things differently or just to share your thoughts on this very divisive topic.