"We're saving about 8% of the
recruitment costs per hire,"
reports Jon Fuller, co-founder of
Centrix, a management
consultancy and software
company with about 100 staff.
It decided to outsource
recruitment to Igloo RPO about
18 months ago.
"We had used agencies and
our own staff before we decided
we needed something quite
different," says Fuller. "We
need a range of people from
sales managers to software
experts. Recruiting is a long
process."
Igloo visits the Centrix offices
in Newbury, Berkshire, about
once a fortnight, more if needed,
and is involved in all stages of
the process, sourcing candidates
and managing any recruitment
agencies that may be hired.
Fuller says: "Igloo has a web
management process that we
can use to keep track of the
jobs. It uses agencies for only
about 5% of hires, negotiates
their fees and charges 1% on
top of their finder's fee for
managing them."
Outsourcing has worked well
for Centrix, he says. "We have
one full-time and one part-time
HR person. Now they can
concentrate fully on training and
career management."
Candidates
for change
Small firms may
have most to gain
-- and lose -- by
outsourcing, finds
Diana Bentley
R
ecruiting the right staff is a
key component of corporate
success -- and arguably even
more important for small and
medium-sized businesses.
"Recruitment has a huge
impactonSMEsbecausethepresenceof
individuals is highly felt. It is a high-
riskenterpriseforthem,"saysScottRus-
sell, director of CPH Consulting, a
recruitment outsourcing (RO) firm.
Recruitment, however, can be tricky
for SMEs. "They don't have large brand
names or reputations that attract the
best candidates for jobs," Russell says.
"They can struggle to get attention at
recruitment agencies, which may not
send them the best candidates. They
usually can't negotiate volume dis-
counts so they are lumbered with the
fees the agencies want to charge. Also,
seniormanagement have to devote a lot
oftimetorecruitingsothetime/costfac-
tor for them is huge and good candi-
dates can be lost if managers lack the
time needed to follow up interviews."
Regulation is increasingly an issue.
Stephen Alambritis, spokesman for the
Federation of Small Businesses, says:
"We've had 17 new pieces of employ-
ment-related legislation in the past 10
years or so. Some of it has veered into
therecruitment area and we also have a
more litigious culture. SMEs can strug-
gle to keep up."
Alambritis and Martyn Hart, chair-
manoftheNationalOutsourcingAssoci-
ation, believe that SMEs can benefit
from using RO specialists. "Very small
organisations can use trade associa-
tions for advice on matters such as the
legislation that affects recruitment,"
Hart says. "Once they get to about 250
employees, they have to decide if they
needahumanresourcesmanagerthem-
selves. Then they have to ask what that
willcostand whether thepersonwill be
abletokeepabreastofthelatestdevelop-
ments in recruiting."
Some RO operations specialise in
SMEs. Russell, of CPH Consulting, says:
"We work with companies that have a
turnover of up to �250m a year and have
about 15-150 hires a year." CPH and the
client agree on the recruitment process
to be used for each job and CPH largely
uses its own staff to source candidates.
"We try to help clients to sell their
organisations,whichoftenthebigagen-
cies don't do. We get them to present
their strategy, growth plans, service or
productsandwegiveallcandidatesposi-
tive feedback to create a good impres-
sion of each company."
Clients typically sign up for six
months to two years. For larger clients,
CPH usually places consultants perma-
nently on site, while smaller organisa-
tions may get a consultant two or three
days a week. "Effectively it's on-site
head-hunting," Russell explains. "For
less senior roles we use job boards
[online recruitment sites] and advertis-
ingusingthecompanybrand.Forallcli-
ents we directly source candidates too."
Agencies charge about 22%-25% of the
basesalary,saysRussell,butCPHcharg-
es a monthly service fee and a place-
ment fee for each hire, which equals
about 12% of the base salary.
Internal referral schemes, whereby
staff recommend relatives and friends
forposts,areanotherwaytoreducehire
feesandhelptoincreasecandidatenum-
bers. Russell says: "SMEs often don't
have time to develop an internal refer-
ral scheme but we design and manage
that for them. We can lift the recruit-
ment level from internal hires from
5%-10%to25%."ROconsultantscanalso
help to educate staff: "We run work-
shops for hire managers. Often they
have not been trained at interviewing
and don't know what questions they're
not supposed to ask under legislation."
Igloo RPO is a small consultancy that
specialises in SMEs. Louise Whitehead,
managing director, says: "We work for
organisations with head counts up to
250 and have worked for one with only
five staff. We provide people on site as
andwhenrequired." The company han-
dlesthehiring of everybody from finan-
cialdirectorstoreceptionists."Weoften
dothefoundationwork for theposition,
from writing the job description to
advising on the salary and conditions."
Igloo's charges average about 12.5% of
the base salary per hire.
Large RO organisations are also turn-
ing their attention to SMEs. Carlisle
Managed Solutions, which works for
big companies such as Friends Provi-
dent and Ernst & Young, introduced its
On Demand service to provide flexibili-
ty for businesses of all sizes. "Compa-
nies can buy our services as and when
they need them," says Katie Wingfield,
head of On Demand. "If they're recruit-
ing 10 people in a year they may want
the whole service, or they may want us
just to design a job profile, plan an
assessment day or do the interviews at
the offer stage." Carlisle charges a
project fee based on the work to be done
rather than a percentage of the annual
salary,and Wingfield says thistypically
adds up to less than what recruitment
agencies charge SMEs.
While the variety of RO providers
and services available is useful for
SMEs, they still have plenty to think
about when assessing whether to go
ahead and outsource recruitment. "You
have to put in the effort upfront to
choose the outsourcer carefully," Hart
says. "Get one that suits the culture of
your business. It's no use getting a large
company whose methods of working
aren't suitable to SMEs."
Potential RO providers should be
asked whether they work for rival com-
panies and should be able to explain
theirworkingprocessesclearly,hesays.
"SMEs can present a model case and ask
them how they would approach it. How
would they go about the search? Would
they operate as head-hunters for the
higher roles? How should their success
be measured? Which management
meetings would they expect to go to?"
Whitehead advises SMEs to concen-
trate on ascertaining whether an RO
firm understands their particular mar-
kets. "Don't be afraid to ask about the
experienceoftheteamandgetclientref-
erences. Understand how they will
work for you. Will theaccount manager
look after you or will it be someone
else?" Also, with an SME, the RO staff
will need to be comfortable working
with senior management, whereas
with big organisations they may liaise
only with lower-level executives.
Flexibility is key to the arrangement,
says Russell. "Big RO providers often
present clients with complex and
demanding service level agreements,
which an SME may struggle to meet in
terms of things such as response and
turnaround times on CV and interview
feedback. The RO provider needs to
develop the working processes with the
SME over time. The SME has to be flexi-
ble and responsive too."
Businesses will judge their RO firms
on the number of good hires they pro-
vide and the savings they deliver. Rus-
sellsaysstaffattritionrateisagoodindi-
cator of success: if the number of
employeesleaving declines,theRO pro-
vider is doing a good job of matching
the right applicants with the company.
Lightening
the load
Jon Fuller's software company
is cutting costs after calling
in external recruitment experts
Dwayne Senior
"WE'VE HAD 17
NEW PIECES OF
EMPLOYMENT
LEGISLATION IN
THE PAST 10
YEARS. SOME OF IT
HAS VEERED INTO
RECRUITMENT"
timesonline.co.uk/outsourcing 30.11.08 5

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