Industry
External or Internal Recruiting: Who Does it Better?
It has been debated many times, but the question of whether recruitment is best done with internal or external resources can only be answered at an organizational level, based upon a cost-benefit analysis.
When doing this analysis, consider which method of recruitment scores higher on the following metrics:
- Quality of hire
- Time to fill
- Culture fit
- Candidate experience/impact on EVP
- Cost
It’s time to take a close inspection of each of these areas.
Quality of Hire
Most internal recruiters, at least in medium- to large-sized companies, rely on Web-based systems to do the initial screening and culling of applicants. They lack incentives, and also lack penalties, for how well they recruit. With external recruiters, there are often no metrics in place at all, other than time to fill. If metrics for quality of hire are clearly tracked and compared between internal and external recruiters, it can help identify the best recruitment model for your business because you will be able to tell who is providing the highest-quality candidates.
Linking recruiter pay to quality of hire is a critical step in ensuring that recruiters make solid recommendations to line managers, who ultimately make the hiring decision. Agency recruiters can be measured based on client feedback and the number of times roles have to be re-filled at no charge to the client, which can happen if the wrong hire is made and if the client organization does not have a formal way to measure its recruitment suppliers on this metric.
If you use a hybrid model, consider measuring and comparing both your internal and external recruiters on the quality of new hires. After implementing such a metric, measure them upon their first placement, at six and 12 weeks, again at six months, and then at regular intervals.
Time to Fill
Jobs can often be filled faster by using agencies (particularly within specialized industries) because they have large applicant pools. Good recruiters will always have warm candidates they keep in touch with.
Often, when external recruiters are pre-screening and presenting candidates, it’s internal recruiting teams that hold the process up. It’s not necessarily their fault, as priorities sometimes change, putting recruitment on hold, or as role requirements are revised, but it speaks to a core challenge facing the recruitment community today.
One key reason recruitment is delayed is that budget for a role has not been approved prior to beginning the search process. As everyone knows, you shouldn’t go to market until you’re certain you need to fill a role and that money is available to do so. It seems that many companies still retain search firms, spend money on advertising positions, and start seeing candidates without a confirmed internal agreement. This has a decidedly negative impact on both the brand and the relationship with any candidates you have engaged if you withdraw from the process.
A second reason for delaying the process often has to do with how companies operate internally. While a new role may be budgeted, conflicting schedules, agendas, or priorities can mean delays in seeing candidates, or extending the number of interviews or assessments beyond what was originally planned.
Not only does this increase cost and time to fill the role, it also antagonizes candidates and may mean you secure the runner-up instead of your preferred applicant, or worse, you’re left with no suitable candidate at all, forcing you to begin the process anew.
If you’re using agencies that have pre-screened candidates for you, move those candidates through the internal process, make decisions about individual applicants, and follow up quickly. Given the shortage of candidates in the market, this should be a given.
The need for speed in recruitment, to manage costs and to fill roles, especially empty ones, must be balanced with the need to find the best candidate for the role, considering all aspects, including culture fit.
Culture Fit
Internal recruiters will be able to articulate and respond to questions about what it’s really like to work in your company in a way that external parties won’t. External recruiters will never know your business as well as your own staff, try as they may, because they don’t work in the organization on a day-to-day basis, experiencing all its nuances and political challenges. As a result, many organizations think that recruitment can be done better by an in-house team who know and live the corporate culture and understand stakeholders best.
In the model where external recruiters are placed on-site, they work with your teams every day, but they are still removed from the employee experience to a large degree. For them to hire for culture fit is a particularly difficult task.
One way to track success in this area is to measure culture fit, and there are a number of ways to do that. Compare success rates between your internal and external recruiters to see who is making better assessments of culture fit.
Candidate Experience/Impact on EVP
Every time you go to market under your own brand or someone else’s, you send messages about your organization to potential candidates. How you do this could impact the way your firm is perceived by candidates, so understanding the impact of what you do is important.
If you use blind ads through a recruitment firm, you won’t build or add to your own brand recognition. Any external agency efforts to co-brand or represent your business must be handled correctly or the brand can be damaged. For example, if external recruiters don’t respond to candidates, or not quickly enough, people will forever tie that response to your brand, leaving a negative image in their minds about your company.
Pointing would-be employees to agencies through your careers website makes an impression on candidates about your organization, good or bad. Investments in a career website are better realized if you make the effort to engage with candidates directly at some level. This direct communication puts you in control of your candidate pool and is particularly helpful when there are jobs in the pipeline that haven’t been advertised yet.
Cost
An important cost consideration is related to the number of recruits. If you don’t hire a lot of people each year, it’s probably not worth having in-house recruitment staff. If you do, it’s worth measuring the cost effectiveness of outsourcing against the cost of having an in-house team and a well-developed career site with a front- and back-end recruitment system.
Using external recruiters can be expensive if you are a small company and do a large number of hires per year. Invest in some sort of recruitment technology, as well as a good recruiter or two on site who know your business, your brand, and your culture.
Whichever method you choose, or if you use both internal and external recruiters, the most important things to remember are that you need great people for your company, you need them now, and you want to spend as little as possible to get them.
Great candidates don’t need your job. Making the process as smooth as possible will go a long way to building relationships with candidates for the long term. Star candidates often have multiple offers, and will move on if you can’t make decisions quickly enough, even if they would rather have worked for your firm.
By delaying the process, cancelling searches, and not replying at all, you are sure to damage your employer brand and your reputation in the market.
