The case for Recruitment Independence

It is widely acknowledged - even, in private, by those who profit from it - that public sector recruitment is, at present, absurdly inefficient.

And this is no secret; media articles abound lambasting massive expenditure across government on ‘agency workers’. But in spite of the discomfort felt by both those involved with the system and those who pay for it, nothing has been done in the past two decades to sort it out. 

Let me illustrate the problem as it stands with a fictional - but very possible - scenario:

It is Autumn and Westonville Council needs some extra members of staff to deal with the leaves which are falling on the public spaces for which they are responsible. So they call up a series of recruitment agencies and ask them to submit candidates for a three month gardening contract. Ten CVs are received and, after a selection process, a man called Bob is given the position. As a temporary worker, the agency who put him forward is paid a percentage of his earnings for every hour he works for the duration of the contract. Bob is diligent and does the job well. His manager, Laura, writes him a favourable report. Bob completes his three months and heads off to work for a private contractor over the winter. 

Six months later, it is spring and Westonville Council needs an extra pair of hands to prune shrubs in its parks. Laura remembers Bob and wonders if he might like to come back. She proposes this to her manager but is told that everything has to go through the recruitment agencies. So the open position is sent out to the agencies again and 12 candidates are submitted. Bob is amongst them. After another selection process, Bob is given the position and starts work. Again, the same Agency is paid a fee for each hour that Bob works. The fact that Westonville Council already knew Bob and, indeed, had a positive performance report on him, is irrelevant.

This pattern occurs again and again across the public sector, with cost and efficiency implications which few private sector organisations would tolerate. In some areas, the same worker might be hired on ten or more occasions by one organisation, with the ‘finders fee’ applying equally each time. The absurdity of this is self-evident and need not be explained any more than it needs be said that there must be a better way. Equally, given the public sector in aggregate is the single largest employer in the country the scale of this problem - and indeed the scale of the opportunity in addressing it - is clear. 

Progressives in the industry believe that the time has come for the public sector to reduce its dependency on these companies.

It is important to note that there are other reasons - besides simply finding the candidate - why public sector bodies engage the services of recruitment agencies. They provide what, in effect, amounts to a safety blanket. Once a worker has been found, the agency will then take that individual on themselves, effectively leasing them to the organisation. As such, the end-employer isn’t really an employer at all; they never get their hands dirty, assuming none of the statutory responsibilities that come with having someone on your payroll. They also hand over the administrative duties of document checking, timesheeting and payrolling - all of which carry some risk - to the agencies. It is these factors, and not their service of finding candidates, which make agencies particularly ‘sticky’, all too often resulting in candidates who approach prospective employers direct being referred to apply via supplying agencies (and therefore incurring the associated fees). As such, the agencies effectively become outsourced human resources departments and the would-be employers find it very difficult to extricate themselves often, having shed them years ago, lacking the core capabilities in-house which the agencies provide. The merits of this arrangement are questionable; there is certainly an argument that, of all organisations, government funded bodies should be prepared to assume the risk and cost of employing people themselves - and thus affording them the protections which, under the current arrangements, they so neatly avoid. It is an irony, to say the least, that public bodies outsource to private companies, the direct employment of their workforce in order to avoid statutory responsibilities. Progressives in the industry believe that the time has come for the public sector to dispense with the safety blanket, or at the very least start to peel it back, and reduce its dependency on these companies. But putting this aside, the focus of this article is efficiency and there can be no doubt that it makes little sense to pay a finders fee for the same candidate again and again simply in order to avoid a series of legal and administrative responsibilities. 

Talent pooling is increasingly seen as key to achieving Recruitment Independence

Even before the current crisis, there were signs that the public sector had had enough and, at last, wanted to change - to achieve what I am calling 'Recruitment Independence'. What I mean by this is reaching a position where organisations are no longer beholden to agencies or their supply chain; where they can make procurement decisions freely and indeed are able to engage direct or lower cost channels and have the infrastructure to hire candidates from those sources. ‘Talent pooling’, organisations maintaining their own databases of prospective workers and dipping into these as and when required - thus bypassing agencies and their fees - is increasingly seen as key to achieving Recruitment Independence, both publicly by those on the ‘client side’ and privately on the ‘supply side’. Of course, these will need to be managed and set up correctly, meaning software will have to be procured - always a topic of trepidation in the public sector.  

So even whilst private companies have been building their own ‘talent pools’ for more than a decade, the public sector has remained in the grip of the agencies. 

The trouble, as ever, has been in making the change. The institutional inertia and, indeed, active resistance, is considerable. The status quo has countless beneficiaries and typically they are in a position to block advances. Disintermediation is almost always opposed - by the incumbent intermediaries. Those overseeing recruitment internally have cosy relationships with the agencies, often seamlessly moving between ‘client side’ and ‘supply side’. They also know that their jobs will be at risk if technology is embraced too close - and, worse, if it actually works. Above all, the major recruiters with huge, multi-year contracts have nothing to gain from their customers being able to ‘go direct’; so they smother the organisations with ‘full service’ contracts (such that the employing organisations have no or very limited internal capability), put the brakes on any initiative to ‘source direct’ and maintain an implicit threat to turn off the tap if a serious attempt were made to bypass them. As a result, the perceived risk of a switch for middle and senior management has been too great; nobody wants to have approved a scheme which resulted in - even if for a short period - workers for front line service roles not being hired. So even whilst private companies have been building their own ‘talent pools’ for more than a decade, sourcing workers direct and bypassing recruitment fees, the public sector has remained in the grip of the agencies. 

Readers familiar with public sector procurement will know that, for an organisation to buy anything, from services to equipment, both the supplier and product must either go through an extensive tendering process (an open competition, often lasting many months) or be on a ‘Framework’. A framework is, in essence, the government’s equivalent of an Approved Supplier list. As such the first step in making any change to how or what the public sector buys, typically begins with a Framework. The first indications of a possible major shift in this area came in 2018 when ESPO, one of the largest ‘framework managers’, announced that they were seeking to approve a handful of companies to provide ‘talent pool technology’ to councils across the country. 5 software companies were approved in mid-2019. YPO and various others followed suit, covering schools, universities, housing authorities and more. And in 2020, one company was appointed by a collaboration of London councils to supply ‘talent pooling technology’ in the capital. But things move slowly in the public sector and whilst change is afoot, there has been no reason - until now - to believe that we would see any kind of sudden shift; perhaps in another half decade we would see real change across the board. 

COVID-19 crisis will create the impetus for the move towards Recruitment Independence

However, it seems very likely now that the COVID-19 crisis will create the impetus for the move towards Recruitment Independence which is so desperately needed. Three things are happening which will make the need to move away from the status quo overwhelming. The first is the inevitable forthcoming pressure on public expenditure; ultimately, this is all about money and it is very probable that cash will be in short supply across the public sector by the end of this year; senior management will be looking to cut their spend wherever they can. Fees paid to recruiters to find workers who they already have performance reports for will surely come high on the ‘to cut’ list. The second will be the likely impact on supply and demand dynamics in the sector; in a high employment market, many roles become ‘hard to fill’, meaning that specialist recruiters are called upon to fill niche positions. With lower employment - a probable result of the current recession - the number of applications per role will increase and the ‘hard to fill’ claim will become far less credible. Reliance on recruiters will decline creating the space for talent pooling to be adopted. The third is simply that change is easier in an environment of wider and dramatic flux; in the context of massive restructuring of organisations public and private, and huge advances in how and where we all work, moving away from a model we have relied upon since the 1990s to staff our public services will suddenly seem far less scary.

The agencies will, of course, resist the change move towards Recruitment Independence so will many within the public sector (both actively and passively). But the tide is changing and it may be too much to resist. Agencies will be forced to specialise or change their model to support the building up of talent pools. Some, inevitably, will go out of business; thankfully, with recruitment widely recognised as great training for a career in sales, staff will be well positioned to find a job elsewhere. And we may see fewer headlines on the scandalous public expenditure on recruitment agency fees.