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How to hook good employees: here's how to land good recruits without overfishing the waters of professional search firms.


Here's how to land good recruits without overfishing the waters of professional search firms.

Recently, the president of a mortgage banking company was surprised to learn that in the last six months more than half of the managerial and professional employees hired by his company had been referred by professional recruiting firms. The cost of these placements exceeded $100,000--almost enough to double the size of the company's in-house recruiting staff.

Such use of recruiting firms to fill managerial positions is not an uncommon practice. In fact, mortgage companies pay these firms millions of dollars each year for locating and referring job candidates. Many in the industry believe that the fees paid are entirely justified and strongly support the use of professional recruiters. Among the most commonly heard arguments favoring their use are:

* Recruiting firms have access to

individuals not actively in the job

market; * Recruiting firms can locate

candidates more quickly than the

in-house employment staff; * Recruiting firms understand the

unique nature of the mortgage

industry and are specially qualified to

recruit the kind of talent needed.

Those supporting the use of recruiting firms also contend that the fees paid are more than offset by savings on the lost opportunity costs of having the position go unfilled until the in-house recruiter can find a qualified candidate.

Each of these arguments has some merit. Recruiting firms can and do provide a valuable service. At certain times, they represent the most effective and efficient way to find a particular candidate.

In-house overload

Utilizing professional recruiting firms becomes a problem when companies routinely rely on them as their primary recruiting source, and in doing so, incur substantially higher recruiting expenses than are otherwise necessary. Given the costs involved, why do some companies become so dependent on recruiting agencies?

Typically, companies begin to rely on recruiting firms because the in-house employment group cannot fill positions quickly enough to satisfy hiring managers. The difficulty in filling positions arises from any one of three conditions. First, the in-house recruiting function is not adequately staffed. Second, company recruiters are not properly trained to locate and attract qualified candidates for professional and managerial positions. Third, the company itself lacks an established policy governing the use of recruiting firms.

In many companies, the recruiting function is simply not staffed to give hiring managers a high level of service. According to a 1986 national survey conducted by Costello, Erdlen & Company, the average in-house recruiter works between 25 to 40 job openings at any one time. Moreover, these jobs are not usually concentrated at a single organizational level or in one functional area. As a result, the in-house recruiter is forced to conduct simultaneous searches in unrelated areas (e.g., underwriting, production, loan administration). This process increases the amount of time needed to fill positions because candidates located in one search are not usually qualified for another opening. Finally, in-house recruiters have other duties that divert attention from recruiting activities. They conduct exit interviews, orient new employees, assist in relocations and counsel employees. This kind of workload severely limits the internal recruiter's ability to respond quickly to the needs of each hiring manager.

In contrast, outside recruiters work far fewer jobs. Many have trained research assistants helping to locate prospective candidates. They also tend to specialize in particular functional or geographical areas. These practices enable professional recruiters to dedicate more time to each search, find candidates more quickly and allow their recruiting efforts to gain synergy as candidates may be presented to multiple companies.

Experience counts

While adequate staffing of the in-house recruiting function would permit more individual attention to be given to the hiring manager, companies may still become dependent on recruiting firms because their own recruiters lack the knowledge and skills needed to find qualified job candidates. Without proper training in alternative recruiting methods and sources, internal recruiters often restrict their efforts to placing help wanted ads in newspapers and asking hiring managers for referrals. If these methods produce an inadequate supply of candidates, which is frequently the case, typically the internal recruiter knows of only one alternative--hire a professional recruiter.

The professional recruiter, on the other hand, uses a variety of recruiting methods to find candidates for his clients. Of course he advertises, but if that fails, he has alternatives. He calls individuals at competing companies, solicits referrals from industry sources such as brokers, real estate agents, PMI representatives, networks with colleagues at other recruiting firms and/or hires a private research firm.

The best policy: To have one

Given proper training, the internal recruiter can also learn to effectively use a variety of recruiting methods, thereby increasing his chances of presenting the hiring manager with an acceptable candidate and reducing the company's reliance on outside recruiters. But the truth is, proper training is not always accessible to him or her and so the decision is often made to turn outside the organization for help.

Moreover, nothing does more to encourage use of outside recruiters than the absence of an established policy governing the role of recruiting firms in the employment process. Without such a policy, hiring managers are free to work directly with outside recruiters. When this happens, a myriad of problems arise. First, recruiting firms learn about job vacancies weeks before the in-house recruiter receives the requisition to begin recruiting. By the time the company recruiter contacts the hiring manager, the recruiting firm is discussing the position with prospective candidates. Second, the absence of a recruiting policy results in recruiting firms being used for positions that could easily be filled through other means. Through experience, the in-house recruiter learns that for certain positions, the number of qualified candidates greatly exceeds the available vacancies. For these positions, traditional recruiting methods such as newspaper advertising or employee referrals are effective and far less expensive than outside recruiters.

One way to prevent the widespread reliance on outside recruiting firms is through the development and implementation of specific policy and procedures. At a minimum, a policy to regulate the use of recruiting firms should identify human resources as the only department authorized to request and contract the services of an outside recruiter. The policy also should stipulate the commission rate the company will pay to recruiting firms and the level of positions for which recruiters will be used. Most importantly, the policy must have the support of senior management if it is to have the intended effect.

Without established controls, the use of outside recruiters can proliferate to the point where the company's own recruiters spend a substantial part of their time dealing with agencies and performing clerical tasks. Agencies call for status reports on resumes sent and candidates interviewed. They call to describe their latest find. They request brochures, annual reports and explanations of company benefits. Others phone to solicit business. In between taking calls and handling requests, the in-house recruiters set up interview schedules and make travel arrangements for candidates. Becoming mired in such clerical activities hinders the company's recruiters from assisting managers who are not using agencies. It also diminishes their future effectiveness by reinforcing the "paper-pusher" stereotype that many managers have of the in-house recruiting function.

If companies want to reduce their dependency on outside recruiting firms, they need to have an adequately staffed and trained internal recruiting function. One staff recruiter for every 12 to 15 job openings should allow the internal recruiting staff to be responsive to the needs of each hiring manager. In-house recruiters must also be trained to use alternative recruiting methods such as direct candidate sourcing. Finally, the organization must adopt policies restricting the uncontrolled use of outside recruiting firms. At a time when company profits are squeezed by intense competition, escalating costs and an unfavorable economic climate, controlling unnecessary costs becomes imperative. Reducing recruiting firm fees is one practical way to improve the bottom line.

John L. Nolan, Ph.D is currently director of graduate programs in business and an associate professor in the school of business at Western Carolina University, Cullowhee, North Carolina. He is also a vice president of Waddall and Associates, an international sales and human resources consulting firm located in Kennett Square, Pennsylvania.
COPYRIGHT 1990 Mortgage Bankers Association of America
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990 Gale, Cengage Learning. All rights reserved.

Article Details
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Author:Nolan, John L.
Publication:Mortgage Banking
Date:May 1, 1990
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