9 Advantages and Disadvantages of Working With Recruitment Agencies

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The Advantages and Disadvantages of Working With External Recruitment Agencies

the advantages and disadvantages of working with a recruitment agency

If you’re looking at the advantages and disadvantages of working with recruitment agencies, then you probably should work with a recruitment agency. Because the advantages of recruitment agencies far outweigh the disadvantages (in our unbiased opinion).

The short version is:

Advantages of External Recruitment Agencies

  1. If the recruitment agency works on a contingency basis (which the majority do), then you only pay when you’ve hired the right candidate and you’re happy.
  2. It can save you days or even weeks of work.
  3. Saving you time saves you money, and lets you grow other areas of the business.
  4. Candidates aren’t always honest in interviews, but they are more likely to be honest with a recruiter.
  5. You receive better quality candidates than you are likely to find on your own.

Disadvantages of External Recruitment Agencies

  1. It costs more money than using just your own internal recruitment team.
  2. There’s no such thing as a guarantee when it comes to recruitment.
  3. You need to have the time to commit to the partnership.
  4. Poor communication wastes everyone’s time.

The Different Kinds of External Recruitment Agencies

  • In-house or Internal Recruitment.
  • Exclusive or Retained Recruitment.
  • Contingency Based Recruitment.
  • PSL – Preferred Supplier List.

Advantages of Working with an External Recruitment Agency

There are many misconceptions of the recruitment industry owing to it’s history; old school, bullishg recruiters and sales people who would do or say whaetevr they need to get someone into that job.

Thankfully the recruitment industry has changed massively since then. Here at Herd our focus is on building lasting relationships with clients and candidates by offering a level of service that makes them want to work with us again.

Despite this change, many businesses still have misconceptions and aren’t aware of the advantages of working with an external recruitment agency.

1. If you’re working on a contingency basis, there’s no cost until you’re happy

One of the biggest advantages is that there is little to no risk for you as a business. When you work with a recruitment agency on a contingency basis (which is how we work here at Herd Digital), then you don’t pay anything at all until the agency or recruiter finds you a candidate that you hire.

This means you get the highest quality of service possible. Because the recruiter knows, if they’re not finding you the best person for the job, you’ll just look elsewhere.

2. It saves your team time and effort with CVs and Interviews

Recruitment is a time intensive process. There are CVs to screen, candidates to reach out to, interviews to organise and conduct, decisions to make… And of course, it’s crucial you make the right decision. Or you’ll be repeating the process in a few months time.

Which is one of the greatest benefits of working with a recruitment agency. Having a recruitment expert who screens candidate CVs for you, to make sure that you only see the most relevant candidates.

Let’s take a look at some interview statistics from Zippia

The average job advert gets 118 applicants. Twenty percent of these applicants receive an interview on average: So 24 interviews to conduct. If you don’t use screening software, that’s 118 CVs to sort through. If you do, then that number is cut down by about half.

Compare this to our work here at Herd Digital. 

For the average successful placement, our recruitment consultants send 5 CVs to a client for a specific role. 4 of these 5 candidate CVs receive interviews, with one of them being offered the job.

This is an increase from 20% of applicants receiving interviews to 80%, because of the screening we have already done. This is also a massive reduction in the amount of time you’ll have to spend looking at CVs, and interviews you’ll need to conduct.

3. It speeds up the hiring process; which saves you money in other areas

And speeding up this process reduces the risk of not having someone in the position when you need them. Which is often the biggest and sometimes unseen cost of recruitment, the cost of not having someone.

Filling the role faster means you will save money that might be spent on outsourcing to freelancers: Your team will be less overworked and you’ll be less likely to lose additional team members: And you’ll run less risk of potentially losing client contracts that you can’t fulfil.

Additionally, the less time you spend interviewing candidates, the more time you have in other areas. Whether this is growing your own business by winning new business, or managing your team.

4. Candidates are often more honest with recruiters

Candidates are often more open with an external recruiter than with a company they are applying for. After all, interviewees often say what they feel is the answer an interviewer wants to hear, not the real reasons they left their old job or what they’re looking for moving forward. Because a recruiter knows exactly what they do and don’t want from their next job, you will only be receiving candidates who want to work for your business. 

And the recruiter you’re working with knows what is most important to the candidates you want. Which means they can advise you on how to make an offer that the candidate is more likely to accept.

5. A recruitment agency reaches more people than you

Herd Digital is a boutique recruitment agency. We are experts in taking a role out to the market and finding the right person for the job. On top of this, we have a pre-existing and established network of digital marketers that we network with.

Digital marketers work with us to help them find their next job. So we don’t have to rely on job applicants interest in a specific company, industry or attracting them with a job advert.

A recruiter or agency whose sole purpose is to fill this job for you, is going to have a larger reach and access to a larger pool of potential candidates than your own internal recruitment team will. 

Because your internal recruitment team are only going to be able to attract candidates interested in your specific company. Recruitment agencies work with a variety of clients and companies, so they aren’t restricted to working purely with candidates interested in a specific industry.

If a candidate is open to opportunities, they can be more likely to speak to and work with a recruiter who has a wide variety of different roles. From there, they can sell the role and your company to the candidate.

Disadvantages of Working with an External Recruitment Agency

While the benefits and advantages of working with a recruitment agency are numerous, it’s also important to consider the disadvantages of working with an external recruitment agency to support your recruitment efforts.

1. It Can Cost More Than Using Your Own Internal Recruitment Team

One of the immediate disadvantages of working with an external recruitment agency that people think of, is cost. Why splash out on an external recruitment agency when you have your own hiring manager? After all, not every position needs to be filled with urgency. 

And as most agencies work on a percentage fee basis. So the higher salary a position you’re filling, the more you’ll have to pay. If you’re working with an agency that has a 20% fee and you hire a Head of Digital Marketing that you pay £100,000, then you will pay £20,000.

But despite these sometimes high costs, it’s often the hidden costs that make working with a recruitment agency worth it.

If you need a position filled urgently, instead of thinking “can we afford this”, sometimes it’s better to think “can we afford not to fill this position”. What does it cost in terms of: extra workload for the team, client projects and deadlines, a decline in the quality of work or expensive outsourcing of work to freelancers.

2. There’s no such thing as a guarantee

While working with a recruitment agency can speed up the recruitment process, there’s no guarantee. Especially for those difficult to fill senior-level and competitive positions. 

But working with a recruitment agency doesn’t mean you need to halt your own recruitment efforts. They can be used alongside your own to speed up the process. And if you work with recruitment agencies who work on a contingency basis, it doesn’t cost you anything.

3. You need to have the time to commit to a partnership

When you work with a recruitment agency, you need to have the time available to dedicate to the process. This means having regular catch up calls with your recruitment consultant, screening the CVs you are sent, committing time to interviews and giving prompt feedback.

Working with a recruitment agency is a commitment to a partnership. If you don’t have that time to give, you could damage your relationship with the agency you’re working with. As well as tarnish your reputation in the industry and find recruiters less likely to work with you in the future.

4. Poor communication wastes time and money

To pitch the role and your business effectively, the recruiter needs to understand your business, your company culture, and everything there is to know about the role. Why do you need it filled? How urgent is it? What flexibility is there in the requirements, or salary of the role?

A good recruiter will ask the questions they need to, to get a deep understanding of all the requirements and your business. 

But it takes strong communication and commitment from you at the start. Otherwise you’ll waste the recruiters time, and your own, by screening applicants who aren’t what you’re really looking for, and won’t be a cultural fit for your business.

The Different Kinds of External Recruitment Agencies

But first we’ll give you a quick breakdown of the different types of recruitment agencies, so you can understand which might be right for you.

In-house or Internal Recruitment

This is your business’s hiring manager or internal recruitment team (if you have one). Not every business needs its own dedicated internal recruitment team, but there are some advantages. Because no one understands your business needs, brand, company culture and plans for growth like you do.

Who is Internal Recruitment for?

If you’re constantly hiring, have high turnover, or are looking to expand the business significantly, having a dedicated internal recruitment team is a great start.

Exclusive or Retained Recruitment

Retained recruitment is where a recruitment agency is paid a retainer fee to recruit exclusively for them. The business will pay an amount upfront to the recruitment agency with the rest being paid when the business makes a hire. For low skilled jobs this type of recruitment is unnecessary, usually being reserved for senior-level and harder-to-fill positions. 

This is often the most expensive form of recruitment and is reserved for the hardest-to-fill positions: But you will get first dibs on the best candidates and gives you access to a pool of potential candidates that the agency will have and be continuously curating.

Who is Retained Recruitment for?

Those who are looking to fill a senior position, are recruiting in an extremely competitive market, or those who have exhausted all other options.

Contingency Based Recruitment

Contingency recruitment is typically used instead of, or alongside your own internal recruitment efforts. Unlike retained recruitment, contingency doesn’t require an upfront fee. But recruitment agencies that work on a contingency basis do work for multiple clients simultaneously, so you don’t get the exclusivity you do with retained recruitment.

This form of recruitment agency is often called “No Win, No Pay”, because you don’t pay the agency anything until you hire one of their candidates. This means it comes at almost no risk and cost to you as a business until you’re happy.

Who is Contingency Recruitment for?

Because you only pay when you’re happy with the results with contingency recruitment, it’s a great choice for anyone who has the time to work effectively with an agency, wants the role filled quickly, but doesn’t want to pay as much as with retained recruitment.

PSL – Preferred Supplier List

When a business needs to hire, they will typically go to their ‘Preferred Supplier List’ first, if they have one. A preferred supplier list is a list of pre-approved recruitment agencies that a business will work with, usually for a discounted fee. 

These lists can sometimes come with a clause of exclusivity for this discount. Because the recruitment agency is working for a smaller fee, they want the security that you’ll only be working with them.

Who should work with a PSL?

Preferred Supplier Lists are best for companies that hire for the same position repeatedly, and for those with a limited recruitment budget. 

At Herd Digital we try to remove the negatives of working with a recruitment agency. We take the time to understand the intricacies of the role you need filling, your business needs, and your company culture. If you’re looking to hire your next digital marketer, contact us here for a discussion about how we can help you.

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