Impact And Influence Without Authority – Reducing Agency Spend.

Getting people to change how they do things is probably one of the greatest skills a leader can possess in business. Actually, it’s a skill that even if you are not in a direct position of authority, it can be a powerful tool to know how to influence those we interact with in business to see things a different way.

I get asked all the time to help put the business case together about building an internal sourcing team. Or, have worked with HR Business Partners who want help with a strategy on influencing their hiring managers to stop spending the amount of money on 3rd party agencies that they do.

Let me tell you a quick story on the case for influencing change in agency spend by the business. They owned the budget. They owned the spend. They owned the decision.

Here is a historical example that I am sure you have seen play out in the business in the past..

The 7.5 million dollar elephant in the room

We had a situation in the past where agency spend was quite significant for this company. The challenge was that both the local recruiters and HR Business Partners struggled to convince their local leadership to even consider strategies that could identify talent beyond the traditional approach of engaging 3rd party agencies. At the same time, local and regional leadership were complaining that the overall cost per hire (CPH) was way too high.

Bit of a pickle right?

HR and recruiting leadership in the past had suggested alternatives like dedicated sourcers, leveraging an RPO, employee referral campaigns, but none of these got the necessary traction to make it a reality to help reduce the use of agencies. Business leaders were used to doing it this way and did not want to change.

Yes, people had modeled and presented to leadership that 350 hires where made through agencies, that equaled 7.5 million in spend. Yes, people had also historically shown that if you hired ‘x’ amount of dedicated sourcers at ‘y’ cost to produce ‘z’ hires, then the CPH would be significantly less than that of overall agency spend.

That had all been tried and did not influence the change.

Making it real vs hypothesizing

I realized that we needed to make this problem more real in a tactical way to influence the change that people wanted. Not just hypothesizing on a PowerPoint slide that if you hired a few local sourcers or more proactive recruiters to find and make the hires vs the cost of an agency fee.

So myself and one of the people on my team researched in the ATS all the candidates’ names for all the agency hires in the last year. We then cross referenced those candidates’ names online to find that 90% of them had a profile on LinkedIn, and 5% more had some type of reasonable public footprint about who they were with a way of contacting them. Keep in mind, that this scenario was way before we had the social aggregation tools that we have today that can make finding people online even easier with contact details.

After doing the research I went back to leadership with one slide. I did not talk about hiring dedicated sourcers or increasing employee referral bonuses, or any other strategy for that matter. All I did was present these simple points:

• You all have told me that CPH is way too high.
• 7.1 million dollars in candidate spend was in the public domain for everyone to find.
• How much of that spend did they think was worth saving?
• What would they invest in if they could reduce that spend?

By tying the agency spend to the public candidate profiles helped leadership connect the dots to make it more real vs a historical modeling exercise.

Final thoughts

Agency people reading this will say, and rightfully so, but just because you can find them Rob does not mean you have the skills to engage them and convince them to move. No disagreement there.

IMHO leveraging agencies is a necessary partnership and strategy where it makes sense. In this particular case, did I think that engaging agencies for all 350 hires at 7.5 million in agency fees made sense, heck no, as that’s a 21k CPH.

After presenting the one page slide, the dialog changed to: What roles did it absolutely make sense to continue to engage agency expertise vs what roles did we think we could fill with alternative strategies that did not impact speed or quality, but lowered cost. 

Building internal capability around identifying, attracting and engaging talent was the agreed to position from leadership at the end of that discussion.