Who's the fool?

Sunday, April 21, 2013

William Osler (founder of Johns Hopkins Hospital and who many have called the “father of modern medicine”) famously said, “A physician who treats himself has a fool for a patient.” That statement begs the question; does a company who recruits solely “in-house” have a fool for a client?

While Osler was clearly pointing out the need for objectivity, the answer as it relates to recruitment is somewhat more complicated. As I have done (or tried to do) in earlier posts, I will “KIS” the subject (“keep it simple!”). Let’s start out by looking at an employer’s motivation for handling their own recruiting needs. First and foremost, there is a belief (which I will explain is a mistaken belief) that internal recruiting will save money: “If we don’t have to pay ABC agency a placement fee, we will save 25% of the candidate’s first year salary.” Unfortunately, what Joe CEO is missing is that he is not saving money at all. Exactly who is paying the TEAM of in-house recruiters their salaries?

For the most part, it actually costs more for an in-house recruitment arm of a company than they would have had to pay to a recruitment agency. Aside from salary, what about the other in-house costs? Hey Joe (CEO), have you thought about the burden, office space, recruiting tools, time (a biggie…time to write job ads, review job ads, review resumes/transcripts/writing samples, in-person interviews, etc.), IT related costs? There is no question that at the “end of the day” (insert your own cliché here) it will be less costly outsourcing your recruiting needs than keeping them in-house. While the “cost” argument is clear-cut, there are other, softer, intangibles that also make outsourcing a no-brainer.

Now that I have Joe’s attention, I will follow-up with more reasons why outsourcing makes more sense. By the way, these comments are certainly not a knock on in-house recruiters (most are professional and good at what they do), and in the best of both worlds, “in-sourcing” and “outsourcing” work together to find the best candidate. However, let me pose a question: the last time you needed surgery, did you go to a specialist or did you settle for a first year med student? For those of you wondering, that question was rhetorical. Of course you would go to the specialist. By analogy, agency or third-party recruiters are the recruiting specialists. They have market insight (on salaries, etc.) and information that is generally not available to in-house recruiters.

At this point, Joe is standing and says, “You’re crazy, anyone can recruit for an open position.” Well Joe, actually, that’s not true. Let me ask another question: how long has your company been “recruiting” for that position? Do you know? Have you calculated the cost of the vacancy? What are your in-house teams’ “time to fill” metrics? Don’t know that either? Well Joe, I will give you all the answers: the reason is that the in-house time to fill, on average, does not measure productivity down to the granular level the way an agency does. That is simply not their business. Remember what we said above, you need a recruiting specialist!

After Joe regains consciousness, I continue giving him all of the value-add reasons (after all, the name of the game is value-add!) to use an agency or a third party recruiter. I explain that recruiting specialists specialize in targeting passive candidates and how recruiters seek those candidates who aren’t looking (and how his in-house crew simply does not have the time to identify passive candidates). I go on to explain that recruiters have many sources to undercover top candidates (social media, niche job boards, database, referrals, etc.) that may not available (i.e. cost prohibitive) to the in-house team.

At this point, Joe is starting to see the big picture. To make sure, I ask him…Joe, what’s important to you in making a hire? “Well, obviously I want someone who can contribute and add value to my business.” Okay, if that’s the case, then I assume you want to hire the best person you can for the position, right? “Um, I guess.” Not happy with Joe’s wishy-washy answer, I pose the question a bit differently, “Joe, can you AFFORD to hire a second-tier candidate?” Now, in a booming voice, he responds, “of course not.” If that’s the case, than you (Joe) cannot afford to treat your recruitment efforts as an afterthought. You need the best candidate possible, and you need help finding the best. By the way, when you only recruit in-house, what kind of guarantee do you have in your new hire? The answer is NONE, so don’t be penny-wise and pound-foolish (insert your own cliché here).

So Joe, when you need the best candidates, think twice about cutting corners. You will pay more in the long run!

Steven Levine, Esq. is the Managing Director for Compliance Legal Search Solutions, a System One Services Division. You can reach him at slevine@compliancestaffing.com, and follow him on twitter at slevineJOBS

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