Why will AI change or replace the contingency recruiter?
Mark Stephens
AI & Hyper Automation | Business Technologist | DIY & DWY AI Marketing Technology | Growth Strategy | Sales & Marketing
Will AI assisted tools signal the end of contingency recruitment?
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I'm anticipating a varied response to this article, because I have been socialising this topic for some time, and when I speak to contingency recruitment businesses, they either go one way or the other, in either agreeing that that significant changes are imminently inevitable, or they are locked down in denial, refusing to believe that after 30 years of contingency recruitment, that the model is now bound to change.
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Why will AI replace the contingency recruiter?
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It is almost impossible to read any recruitment article these days that doesn’t mention AI in some capacity.
I even read a state of the industry report this weekend, that mentioned AI more than 50 times. (I stopped counting at 50)
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From most recruitment business owners that I speak to, my own anecdotal experiences is that, they are mostly still trying to work out the true potential of how AI can support them in their effort to make what they do more efficient and more effective, but most are not considering how it will radically change what they do.
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There will always be an underlying argument, that AI cannot replace the human element that is so fundamental to recruitment. But I sometimes question how much confidence people really have in that statement, and do they really understand what human elements are actually ‘essential’, and that most aspects could probably be replaced by some form of automation.
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However, if we look at the very essence of what AI assisted automation brings to the party, and it will nearly always focus on how it can replace mundane, mechanical and repetitive tasks that can be delivered more efficiently, more accurately and more effectively than a human being can.
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The optimist in us will say that this will create increased opportunity for more 'meaningful human engagement' and that could be true in many facets of the recruitment process.
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The real concern to the professional staffing sector, I believe, is the impact that AI can potentially have on the contingency recruitment model, which is adopted by over 80% of the professional staffing sector in the UK.
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Contingency recruitment has often been criticised and summarised as a 'CV transactional service', where multiple agencies are provided with a brief and then compete with one another to quickly find the best matched candidates available in the market, with only one winner.
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Many clients like this model, especially for mainstream recruitment around medium level difficulty roles in the ￡40-75k salary band, because it’s a relatively quick turnaround, and the naive perception is that you get several recruiters working flat out on your role to find the best people, and they only have to pay once for the successful hire.
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In the vast majority of cases the contingency recruiter is only responsible for sourcing candidates and for the relatively basic assessment and evaluation of the applicant’s skills and experience. This includes vetting candidates against the list of essential and desirable requirements within the clients job brief, as well as establishing their notice period and salary requirements. ?
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And it is the client, in the majority of campaigns, who is responsible for the more challenging aspect of reviewing and assessing the shortlisted candidates from within the talent pool generated, against a wider set of criteria including cultural and behavioural suitability. Basically, everything beyond experience and relevance.
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Given that automated evaluation tools, can now make faster, more accurate, non-biased assessments of candidates, the risk presented to the contingency market is absolutely evident and real.
If you don’t believe me, these tools are already available within most good ATS systems, and independent tools such as Fetcher, Rolebot, hireEZ and SeekOut are entering the market.
Just run a search for Scholarly articles for candidate sourcing and evaluation tools , and you will get an idea of what is coming.
The use of AI is moving beyond simple evaluation of candidate relevancy, and is no longer restricted to individual talent pools either.? It can also provide a deeper layer of understanding and assessment and deliver insights into why a candidate might be most suitable to a position. And that fundamentally, is why there is a very real risk that the entire contingency model for anyone not moving beyond the transactional aspect of providing relevant CV's, will likely be replaced within the next few years.
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We only have to look at how far automated marketing communications have come in the last few years. And I think that we can realistically anticipate these same advancements finding their way into the mainstream recruitment aspects of screening prospective candidates across multiple talent pools in a fraction of the time that it takes a human recruiter to do the same job, and most importantly, at a fraction of the cost, with higher levels of accuracy, and avoiding any conscious or subconscious bias.
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I'm sure you get where I am going with this...but here it is in black and white…
Option 1; Recruiter, takes several days, open to human error and bias, charges ￡5-10k fee. Verses...
Option 2: AI assisted CV sourcing and screening service, takes seconds, uses multiple databases, highly accurate, void of any bias, and at very low cost.
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For the majority of contingency recruitment agency businesses, it looks blatantly obvious, that they are highly at risk from this most recent wave of technological advancement, especially, if they are unable to find new ways of adding value to the recruitment process on behalf of their clients.
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In response to this significant and imminent change, the smarter recruiters that I talk to, are already rethinking their model, with many gravitating towards a more complete end to end service, that includes more of the candidate screening and assessment, and going beyond skills and experience.
It is effectively, a shift towards the retained model.
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Retained recruitment specialist have always implicitly understood, the added value of doing this, to justify both the exclusivity and the charging of higher fees, in return for delivering a quality candidate assessment process, that focuses more on behavioral characteristics in alignment with the role, the team and the company.
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If, as I anticipate, the current challenges surrounding the sourcing and assessment of candidates for relevant skills and experience, is to be replaced by automation and AI, then this will ultimately lead to a significant reduction in the perceived value of a contingency recruiter that only provides CV's.
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Of course, the exception to this will always be aligned to niche markets with applicants that are incredibly difficult to find. But there wont be enough of those jobs to go around, for the 130,000 recruiters that need feeding.
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I see a number of parallels to the shift in client behavior, that took place between 2007 and 2009 when job boards opened up their doors directly to clients, and in a very short period of time, a significant shift towards in-house recruitment for mainstream positions took place. Clients attitudes towards the professional recruitment marketplace is likely to significantly change again during this paradigm, and if history repeats itself, in a very short period of time too.
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Winning new clients is likely to become more challenging too, as clients will need to look for exclusive relationships with professional recruiters that they can trust with the critical aspects of candidate assessment, that go beyond assessing skills and experience.
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The contingency model presented very few barriers to entry for almost any Recruiter that had a modicum of intelligence and good communication skills to generate opportunities to issue CVs against a live job opening. And in this new world, the Recruiter will find winning new business, that will only be on an exclusive or retained basis, to be far more challenging.
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It isn’t all doom and gloom though, and I won't be alone in thinking that a shift away from the contingency model is long overdue, and will potentially lead to a better, fairer and more equitable approach by all parties towards one another in the world of finding and hiring talent.
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The relationships between client, recruiter and candidate within contingency have always been fraught with underlying conflicts of interest, and especially from the perspective of the recruiter, who is constantly challenged by their tenuous relationships they have with clients, who generally see them as a last port of call, where there is often little loyalty, and where the commercial arrangements between both parties are a metaphorical roll of the dice, each time the recruiter takes on a new assignment.
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These changes will also impact the professional recruiters' growth and new business strategy? Because the role of the recruiter will undoubtedly have to change, as clients requirements and needs move away from sourcing talent, to evaluating it. And where a professional recruiter is used, clients will only be able to commission one recruiter, to do that job.
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The competition to find and win jobs and new clients in this new era, will likely see the need for most recruitment companies to up their game, especially when it comes to marketing of their services, and that is likely to lead to increased marketing budgets and changes in tactics.
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And then finally, there is the acquisition of a new suite of tools and services, that will be required, to better support the evaluation and screening aspects. Individual tools such as video profiling, psychometric and behavioural assessment tools and background and reference checking, or tech-enabled combined solutions like i-Intro, are all likely to become standard within the recruiters tool-set.
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So just to try and finish on a positive point. Those companies that get ahead of the game can start to reap the rewards of a shift towards the retained model quite quickly.
And this shift has the very real potential to improve recruiter and client relationships, getting paid on every job you do, and increase both placement fees and overall company revenues.
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I have been working with several companies this year, already committed to making the transition, and they are all, already seeing multiple benefits in doing so, not just commercially either. But there are some fundamentals that you need putting in place, around changes to Marketing and lead generation strategy, sales acquisition of a new customer, website content and communications, and even contracts need updating.
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However, the first and most important aspect in making a successful transition, is a genuine acceptance of what is happening, and adopting the right mindset and the commitment to making the transition, and then having the discipline to stick to the plan.
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I'm more than happy to offer a free consultation with anyone who is looking to make this transition or who wants some help in getting started or pointing in the right direction.
And our lead gen and appointments setting services at BookMyDemos is proving a great success in generating inbound client inquiries for recruiters that want to pitch for more exclusive and retained business.
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Use the Calendly link here to schedule in a call at your convenience.
Mark Stephens, Founding Director, BookMyDemos and Tec2i Ltd
I’ll even generate 1000 free leads for you, from within your ICP, as a thank you for meeting me and to demonstrate some up-front value.
This Calendly link will ask you for the data that I need to generate your leads, which I shall ensure are sent across to you before our call.
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About the Author
Mark has been a business owner in the Marketing, HR and Recruitment space for over 25 years, founding five companies and exiting three.
His experience spans across Marketing and Recruitment Agency, developing Recruitment and HR Technology, and as a consultant and advisor to business and senior teams in both early stage technology and service companies.
Areas of expertise are across business technology, Sales Acquisition, Marketing and Lead Generation, growth strategy and scaling at pace, and in maximising company valuations.
Mark is obsessed by behavioural science, and data and research in the pursuit of optimising performance and excellence, at every stage of the buying and hiring cycle, and has worked alongside several universities and academics to uncover powerful insights, industry secrets, and the truth.....
Connecting organisations with top-tier talent, services such as permanent, temporary and contract placements, executive search, (SOW) projects, and offshore/nearshore.- Contact me on [email protected]
7 个月Another thought to this, is with Ai coming back to the market, what segments will be hit and not only reduce demand for a job outcome, what will be the jobs created and new markets, a good example is back in the day BA, now data science, now AI, what next? prompt engineers? etc
Helping Recruitment Firms transition from transactional CV supply, to consultative Retained Recruitment
7 个月Nice post Mark. Here is another one that will hopefully do two things for the people who read it… the first one will make you smile and the second one will hopefully make readers think: https://www.dhirubhai.net/posts/plamenivanoff_learntocode-activity-7182418637129957376-ns7v?utm_source=share&utm_medium=member_ios
Chair / NED at Smart Recruit Online, The Recruitment Events Company & Get-Optimal
7 个月The contingency recruiters will have to raise their game and embrace/master all of the software tools out there to help them exceed customer expectations. They should be way ahead of their customers in adopting the new tools to add value. Simple!