If your organization is like many large companies, you have adopted a “do it yourself mindset” and have become more resourceful to cut costs. In past economic recessions, many corporations built a more robust internal recruiting function in an effort to contain their talent hiring spend. By doing your own research, utilizing employee and alumni referrals, and posting open positions on your website in lieu of retaining external recruiting firms; your HR Department can demonstrate “savings”. While such measures may help you meet budget, this mindset is somewhat one-dimensional because it lacks a holistic view of the hidden costs that could be eroding your organization’s brand.
I recently had the opportunity to discuss the effectiveness of a major global firm’s internal recruiting department with a senior line executive. When I asked him to comment on the differences between their internal recruiting department and external retained search firms, he admitted there were major gaps. Among them was the fact that he was still receiving calls from candidates who were not selected six months after the search was filled. These individuals were earning $400,000 to $600,000 in compensation and were gainfully employed. The senior line executive felt the mishandling of these senior level candidates had a devastatingly negative impact on his company’s brand. He added that there was indeed a hidden cost to using the internal recruiters for executive level searches and that the cost was hurting the organization badly.
As I reflected on his response, I began to think more broadly about the value add of retained search firms in comparison to internal recruiters who use social media like LinkedIn, online job boards, and employee referrals. Rather than rely on my gut feeling, I wanted to apply some rigor to this issue and conducted a survey of my executive placements for the past eight years. The survey focused on the organizational impact of my placements compared to executives hired at my clients’ organizations through other means ranging from internal recruiters, website advertising, employee referrals, etc. The focus of the survey was to develop metrics around the impact the placed executives had on their respective company’s revenues and profitability and if there was a difference in their career trajectory and responsibility when compared to the other recruiting methods.
The results from the eight-year post-placed executive survey revealed a common finding. 82% of the respondents stated the impact on profitability was more significant from the external recruiting approach. Likewise, 76% noted a more significant impact on revenues from our retained search approach. 67% of the respondents noted that the career trajectory and increase