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“Back to the Future” of recruiting

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Posted by Matt Rivera

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May 25, 2010

I just realized that in my last post on interviewing, I might have been putting the cart before the horse. So, allow me to momentarily engage the flux capacitor to take us back and look at an issue many companies are facing today: What if I don't even have a recruiting staff to begin with?

You see, we're living in an interesting time. There are literally millions of people out of work, and we're seeing that many of those with jobs are generally unhappy and actively looking for a change. More than ever, it's critical to look at your recruiting strategy and your ability to get quality candidates in your pipeline, rather than spinning your wheels with droves of unqualified candidates.

Certainly, top of mind right now for many companies is how to ease into hiring again, or how to quickly ramp up as parts of the business begin growing again. There are tough decisions to be made, and if you aren't already working on them, in the words of Jedi Master Yoda, "You will be."

One of the first steps is to evaluate the costs and risks related to building an in-house recruiting team, outsourcing it, or using contract workers or independent contractors. Here are some things to consider for each option.

In-House Recruiting
Bringing recruiting back in-house means you will incur the cost of hiring and managing a recruiting staff. This is often a hidden cost of hiring employees versus employing contractors. The costs for salary, benefits, incentives, management, and facilities/equipment can be quite high for a fully-staffed internal recruiting department.

What is more common today is that since budgets have not been reinstated, there are limited funds available for recruiting. The trouble is, trying to establish a recruiting team "on the cheap" usually leads to longer hiring cycle times and poor quality, resulting in higher costs related to turnover, vacancies, and lost productivity. Even more typical is to simply try to add to the bandwidth of an already over-burdened human resources staff, with similar results.

Outsourcing

The costs related to a Recruitment Process Outsourcing (RPO) program are usually measured by the cost-per-hire versus what you would pay if you had the recruiting in-house. We generally find that taking into consideration all the elements and costs related to staffing and managing an in-house recruiting team, it is usually more cost effective to go with an RPO program.

However, it's important to know why you are outsourcing and what results you expect. A good RPO program can provide better quality, process improvements, a better employment brand, or improved responsiveness.

All of these things can provide value in the form of reduced turnover, increased productivity, or increased manager satisfaction. However, like many things in life, you can't always get all of them at the same time. So it's important to understand the things that are important to you and have your RPO provider develop a program to target those key areas.

Contract Workers and Independent Contractors
One of the most over-looked elements in the discussion of the costs of contractors and independent contractors is an understanding of the risks involved. For contractors, if a consistent and compliant process or even a well-managed outsourced program is put in place, co-employment, misclassification, and other risks (and thus potential costs) can be greatly reduced, along with realizing the traditional savings associated with temporary workers such as no recruiting costs, benefit costs, wage taxes, or termination costs.

On the other hand, we see that if proper procedures are not set up and monitored, risks and costs can actually increase, negating the savings typically associated with these workers, especially in the area of independent contractors.

So while it's generally more cost effective to use contractors, it's not just a matter of calling up any staffing agency and ordering a temp. Vigilance is required to ensure costs and risks remain low, especially for large companies who use a large volume of contractors across their organization.

So, those are a few things to think about as you get back to recruiting. Right now, I'd wager that it's more cost effective for most organizations to outsource this activity or engage a staffing provider to find contractors, or even employees. My guess is that investing in a large recruiting staff is not going to be an easy case to make right now.

Whatever you decide, now's the time. There are good people available, and there are companies out there formulating strategies to capture them. If you don't think so, then you're just not thinking fourth-dimensionally, McFly.





























Topics: Staff Management

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