Inject will never be amongst the top 10 recruitment agencies in Melbourne. In fact, we should never find ourselves on a list of recruitment agencies at all, because we are not, in fact, a recruitment agency. We might look similar and perform similar tasks, but we are a Recruitment Process Outsourcing company – which is fundamentally different. As a business owner or hiring manager, it’s important to know what you are getting and not getting with each, as this will help you to make the right decision on which option will suit you.
How do recruitment agencies in Melbourne work?
Recruitment agencies generally charge a fee for placement, which means they get paid when a business hires a candidate they put forward. The agency essentially receives a finder’s fee for their work. It’s fairly simple in nature – if the business hires the prospective employee then they pay the recruitment agency a commission. This model places the onus of selection on the business, because the recruiter is highly incentivised to “place” the candidates they have to win their fee. If they cannot convince a manager to hire their candidates, they generally don’t get paid.
What’s important to understand with this model is that you should not be expecting the recruiter to be fully transparent with you on the process they undertake or the details of the candidate. It is a fairly standard practice to edit resumes to suit the brief, which makes sense because this is essentially a marketing document for the recruiter. Think about a real estate agent selling a house – they are obliged to inform you of certain information legally, but other than that they will present each property in the best possible light to gain their commission.
How managers and recruitment agencies engage with each other
When you engage a recruitment agency, they will note down your requirements and try to place a candidate who fits what you are looking for on paper and who they think you will like working with. If you want 5 years of experience, skills in a particular software and a quirky personality, then that’s what you will be presented with in most cases. You should not expect them to challenge your thinking too much.
The recruitment agency model is heavily based on resumes and reference checks. This is because many managers still assess using these two items and their gut feel on the candidate. Managers feel good about ticking off in their mind that they have selected on the right basis: the right experience, a former manager who vouches for them and they seem like someone they can work with.
Sometimes managers will ask two or three agencies to bring them candidates, making it a competitive situation. This approach is based on who can send the right resume first. Recruiters will forward who they think may be liked by the manager, ensuring they highlight any skills or experience that the manager has mentioned as being favourable.
One thing you need to accept with many (not all) agencies is because they get paid based on placing candidates, once their guarantee period has been completed (usually 3-6 months) your new hire is at risk of being poached by that same recruiter. Again, not all of them do this, but you have validated that this candidate was good (sort of) and they have a relationship with them already. So it’s not uncommon for your employee to receive a call asking them if they are happy or not and if they are open to a new opportunity elsewhere. The recruiter is often not breaching any of the terms of their agreement and will more likely happen when the employer has an arms-length relationship with that recruiter. That is, there is no particular trust or equity in the relationship to lose.
Problems with the recruitment agency model
The recruitment agency model works for many people who view their supplier relationships as being a master-servant type of arrangement. That is, we have a need and you find that person, we will give you a reward. If we don’t like them, you get nothing. This is not the case with all engagements with agencies, as some will have strong relationships. However, you should not blame the agency if they poach your staff when your back is turned, especially if you have treated them this way.
Similarly, the recruitment guarantee can be very attractive for managers who see this as a safety net in case they make the wrong decision. This works by requiring the recruiter to replace the employee for free if it doesn’t work out in the first 3-6 months. As with most things, this is not really free because it needs to be costed into the price. That’s fair enough for the recruiter, who may find themselves working for free one day. The bigger issue though, is that anything that promotes making cavalier hiring decisions is value-destroying for businesses. If you are spending 3-6 months paying, training, introducing and trusting a person who ends up not working out, you have spent much more money than what the fee cost you and you are now 3-6 months behind in your plans. Taking a risk on the wrong person just because you get a free replacement is like going to an all-you-can eat buffet that has poisonous food on display.
One other important issue is that the assessment of candidates in a recruitment agency model rests with the employer. Whilst the agency presents a resume and reference checks, both of these have been proven to have a low level of predictive validity when it comes to performance in the job. They continue to be highly valued though by many managers, because it is human nature to make decisions based on stories we make up in our heads about people and we value the opinions of others. Also, many managers inaccurately view themselves as being able to read other people just by talking with them. Because they are not educated on the many biases that are at play, they make a judgement on how they feel about a person, rather than using a robust assessment process.
What does a Recruitment Process Outsourcing (RPO) business like Inject provide?
One fundamental difference between a recruitment agency and a recruitment process outsourcing business is that the RPO is an extension of the employer’s team. This means that the people in an RPO work on behalf of the employer to find and accurately assess the right people, as opposed to looking to place candidates in any employer. As part of the engagement and contract, the RPO needs to be always acting in the best interests of the employer. This doesn’t mean they are not good to candidates – in fact it’s quite the opposite. Because the RPO is the custodian of the employment brand, the requirement for them to treat candidates well is significantly greater. It is that they are aligned to that employer in an (almost) similar way to an employee working as a recruiter in that company.
One thing that is absolutely essential for an RPO is to behave in a transparent and open manner with their clients. As they are trusted with finding the right talent for that business, they have to be honest and objective in their approach. This means they need to be competent in using assessment methods such as behavioural interviewing and psychometric testing. They need to also have the ability to challenge the thinking of hiring managers and implement strategies designed to find the best performers, rather than getting bums on seats. Most importantly, they need to tell the truth and not hide things from their clients.
An RPO will tend to manage all or most roles for a business. This includes situations when there are referred candidates through the employer’s network and they want that person to participate in the same process as everyone else, so that they can assess their fit for the role and company. They may also manage internal positions so that existing employees have a fair chance of applying for positions internally. In some cases, the RPO may even work with recruitment agencies in situations where they have been engaged to find candidates in addition to the RPO.
Because the RPO is responsible for managing the recruitment process for a business, they end up working with fewer companies for the same amount of roles. That is, they will hire more people per business than recruitment agencies typically will. This means that they forge a close relationship with hiring managers and gain a deep understanding of the business. They may also become involved in activities such as job analysis, developing job descriptions, talent management and workforce planning.
One final difference that is important to mention is that the payment methods are usually quite different. Whilst the recruitment agency gets paid a commission for placing a candidate, the RPO gets paid for the work they do. This could come through an hourly rate or in larger companies it could be a monthly fee. At Inject, we work off an hourly rate model and also provide a maximum spend budget so that our clients know the maximum cost possible for hiring each role.
Which should you choose?
If you are reading this article, you may have been looking for the top 10 recruitment agencies in Melbourne. If you have kept reading up until this point, you may be starting to ask yourself what is the right option for your business. Whether you should work with a traditional recruitment agency or a recruitment process outsourcing business depends largely on what you believe.
List A: How many of the below do you believe?
- Years of experience, technical qualifications, and references are high on my list of priorities
- I can tell whether someone will be suitable for a role just by meeting them and relying on gut feel
- I believe that recruiters have a database of the right candidates just waiting for me to come to employ them
- I prefer to have an arms-length relationship with my suppliers and have them compete with each other
- You just hire the right people and let them go, they shouldn’t require much leadership or training
List B: How many of the following do you believe
- Attitude, aptitude and behaviours are far more important than how many years’ experience someone has or what another manager who I have never met happens to say about them
- I am very interested in learning more about assessment tools that will help identify if someone is the right person for my company and the position
- I would prefer my suppliers to be transparent with me about how things actually work
- If I work collaboratively with professionals who have the right strategy and process, then together we will outperform the competition
- Employee performance is based on both whether the right person is hired and how we lead, manage and train them
Which list did you score more on? If you scored more Yes’s in List A, then a recruitment agency is for you. If there were more on List B, then a recruitment process outsourcing (RPO) might be a better option.
Still unsure? Please feel free to reach out to us for a discussion on the topic, we would love to hear from you.