Is recruitment a commodity?April 3rd, 2012 by Richard Lawrance
The answer to this is yes and no. A product or service becomes a commodity when it becomes the same or has few differences to other available products or services on the market.
In recruitment this fundamentally comes down to the question of whether a company wants anyone capable to do the job, or the best person that can be attracted to do the job. Usually this will depend on the nature of the job itself, the skill level involved, and the degree of creativity and autonomy in performing the responsibilities.
The first and most familiar stage of commoditisation is when clients believe that many firms are capable of offering the same service. All are equally well-qualified and are therefore interchangeable, allowing clients to substitute one firm for another. Price competition and falling margins are the obvious results. The key here is innovation and differentiation: if firms have something unique to say or do, then companies will be inclined to use them.
But not all recruitment is the same
Different companies will invest differing amounts in their attraction strategies and their employer branding. Employer Branding is not about creative changes to logos, creating a vision statement, or even advertising. It’s a collective perception of what it is like to work for your company. This might also be referred to as the Employee Value Proposition.
If you want the best staff, choose the right recruitment partners
A company is likely to need to invest more in their mission critical disciplines and niche skill sets, especially where the impact of getting the hire wrong can have a catastrophic effect on the business. Focusing on the cost per hire and the time to hire is important, but many organisations overlook the cost of mishiring.
Where demand is high, and the supply pool limited, the brief needs to be more elaborate, the recruitment exercise more forensic, and a much greater degree of collaboration is required between the hiring company and its recruitment providers in order to source and attract this talent to the hiring company, whether on an contract, interim or permanent staff status.
Finding where talent lives is no longer the challenge it used to be. However attracting it requires longer term nurturing strategies in order to engage and develop an appropriate relationship. The best candidates often come from the passive candidate supply pool. One reason for this is it is a much larger pool than the active candidate market, which is estimated to be 10%-15% of the work force at any point in time.
Commoditised recruitment certainly has its place where human interaction can afford to be minimal in the recruitment process, and an ‘off the shelf service’ provides the adequate solution.
Attracting highly sought after skills in a competitive marketplace is much more difficult to commoditise, given that the recruitment process often needs to be far more proactive, the recruitment processes more sophisticated, and the employer brand of the hiring company will dictate who wins the war for talent. Many recruitment consultants are capable of delivering so much more value through interacting, advising and collaborating with their clients on attracting the best talent to their organisations, yet many companies choose not to engage with their recruitment providers and as such do not extract the true value that they could.
Recruitment can be a risky business without expert help. If you want the best staff, then choose the right recruitment partners, define a clear recruitment strategy and have transparent relationships. It is critical to commit and invest time into the supplier relationship as this will lead to a better level of engagement, and in turn lead to a better service. Give them access to the information and key influencers in order to allow them to make the impact you need them to within your business.
Set them up to succeed
Subservience in a supplier client relationship will haemorrhage value. The best suppliers are the experts who tell you as it is, not just what you want to hear. Organisations must empower their hiring managers to deal directly with their chosen recruitment providers. A supplier who feels more valued will deliver more value.
Can recruitment be commoditised?
Undoubtedly yes, but much more so in discipline areas where there is an abundant supply, and where recruiters can easily tap into the supply source. This tends to apply to the lower skilled workforce where they are a job title or a CV which could readily be replaced by someone else of the same job title or another CV at short or no notice.
The war for talent is returning, particularly to the engineering and construction sectors Natuarally the market forces and rules of supply and demand will apply. Commodity recruitment providers will continue to provide low cost solutions for readily available disciplines. However, providing high demand hard-to-find skillsets is a whole different ball game. It is essential that both hiring companies and recruitment firms are able differentiate and segment these separate challenges in order to procure the most appropriate solution to each.
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