Talent Acquisition Leader s Guide to Recruitment Agency Planning. Setting Your Agency Recruiting Strategy for 2017

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1 Talent Acquisition Leader s Guide to Recruitment Agency Planning Setting Your Agency Recruiting Strategy for 2017

2 Introduction Recruiting agencies are a big business. In fact, Staffing Industry Analysts reports that it s an $8 billion a year business in North America. Yes, that s billion with a B. Bersin by Deloitte estimates that recruitment agencies make up 20 to 30 percent of the recruiting budget for the average organization. That s a significant portion of the budget for recruiting departments. There are two realities in most recruiting organizations: 1. Recruiting agencies are responsible for a lot of important hires. 2. Agency use, rates, and processes vary across the organization. Many organizations simply have no idea how their company uses recruiting agencies. That means 20 to 30 percent of your recruiting budget disappears without any understanding of how and why it was used. Most recruiting leaders have a deep understanding of how their internal recruiters are being used, have tools to measure their performance, and have consistent usage across the organization. When it comes to setting your recruitment agency strategy, it can be much more difficult than understanding your in-house team. These are third parties, often used by hiring managers directly, and the decisions that are made on how to use them are out of your control. In 2017, it s imperative that your organization takes a closer look at how recruiting agencies affect your organization and how you can manage them as closely as you do your internal recruiting teams. When you bring together your business outlook, talent initiatives, and recruitment agency strategy, you can plan and execute to drive your organization forward. The starting point is gaining an understanding the present situation. IN THIS GUIDE, WE LL COVER c How to understand the current state of your recruitment agency use c Five things to look at in 2017 c How you can get started today 2

3 Understanding your current recruitment agency reality Ideally, talent acquisition leaders would be able to track and optimize each aspect of their recruiting spend so it could be planned for, and optimized. In reality, however, most organizations don t have a full picture of their recruitment agency use. You may find different challenges as you dive deeper into understanding how you re using agencies: Rogue hiring managers are using agencies. Instead of coordinating through talent acquisition, hiring managers have cut their own deals with recruiting agencies. They sign the contract, stay in direct contact with the external recruiter, and even navigate the selected candidate through the hiring process. Agency spend is nearly impossible to nail down. Because of this reality, it s impossible to track your agency spend is across the organization. Talent acquisition leaders may be surprised when they start looking at how much is being spent on recruiting agencies. Which agencies are doing good work for you? When you take a siloed approach, recruiting leaders don t know which agencies are top performers, and which are not the best fit for their company s hiring needs. If this current state sounds familiar, don t panic. You re not alone. This is very common for organizations of all sizes. You ll need to take some steps to get a more complete picture of how you re currently operating, so you can plan for

4 Here s where you can start to look: WHO IS USING AGENCIES WITHOUT OUR KNOWLEDGE? You need to understand who is using agencies. Some hiring managers may hesitate to share this information, especially if they know they are supposed to go through you first. WHAT S OUR ROSTER FOR APPROVED PROVIDERS? Compare which agencies are being used versus who you have contracts with, and determine where there is a disconnect. Are there multiple contracts with the same firm for different rates? HOW MUCH DID WE SPEND, AND ON WHICH POSITIONS? Recruiting agencies make sense as part of an overall talent acquisition strategy. You need to determine if they re being used on the right types of positions and if you re spending the right amount. If you have internal capabilities that an agency doesn t need to take care of, it can help you get a feel for where changes can be made. HOW WELL DID OUR AGENCIES PERFORM? This will be a tough one to measure, especially if a hiring manager has a good relationship with an agency. Any metrics you can pull concerning the number of interviews or the time it took to fill roles will help you evaluate possible changes for We understand that you might not be able to get a complete picture. Organizations have practiced decentralized use of agencies for years maybe even decades. But get as complete of a picture as you can; it will help give you a baseline to compare shifts in strategy that might happen in Most common challenges organizations identify with current recruiting agencies include: c We spent too much on agencies and we think we can optimize it. c We spent the right amount on agencies, but we got poor results. c We don t know exactly what we spent, but we didn t get the results we need.

5 What five things should you be looking for in 2017? Regardless of whether you have a centralized or decentralized recruiting organization, there are steps you can take to get your recruitment agency use in line with the rest of your organization.

6 Here are five things to look at for 2017: 1. Align talent acquisition with business changes Take a step back from talent acquisition and look at the big picture across the business. What changes are coming your way in 2017 and how should agencies be used or not be used? Understand where your organization has used agencies in the past whether for specialized roles or simply added recruiting capacity for a big project and plan now for the coming year. You also might be looking at a different budget for talent acquisition based on these changes. You could also have talent-related issues in 2016 that you need to alleviate in the coming year. Either way, you must have a strong understanding of where the business is going and how you re expected to operate in the coming year. IF YOU CAN ONLY DO ONE THING: Bring top stakeholders together to understand the business changes taking place in the coming year and make proactive decisions on how agencies should fit into your overall talent acquisition strategy. 2. Estimate next year s agency spend Once you understand how agencies fit into your talent initiatives, look at the budget range you re aiming for when it comes to agencies. This is where knowing roughly what you spent in 2016 will be helpful, so you can minimize any looming surprises. Even if you have a hazy understanding of this year s spend, you can still do some rough projections. When a budget is handed down to you, you re going to have to be able to talk about it with some hard numbers and manage it. For example, the dollar amount spent on fees might go up because the market is demanding higher salaries to recruit and retain talent. There is a limited candidate pool, so companies are always competing against one another, especially in major markets. If you were starting a new project or opening a new location in a competitive area, you should anticipate an increase in spend. The most important part is that you track every dollar being spent on agencies in 2017 so you can make better-informed decisions in IF YOU CAN ONLY DO ONE THING: Have a conversation with your organization s leadership to learn how the business is growing and where to collaborate on recruiting agency spend for the year. 6

7 3. Understand the market rate for fees The market rate is changing for certain types of talent or in certain geographies. Understanding what you ve spent on fees per position is going to be helpful as you re planning for the coming year. For example, if you re projecting two executive hires and five director-level hires and you know the going rate and expected compensation level, you can estimate your recruiting agency cost pretty well. Fees have been fairly stable over the past few years, hovering around 21 percent. You might be surprised that the going rate of 20 percent might be low for more competitive roles and industries, while 25 percent might be high for urgent openings. Arming yourself with accurate market data can help you have more strategic discussions with business leadership. IF YOU CAN ONLY DO ONE THING: Download the BountyJobs Agency Recruiting Benchmark Report to get a level set on the rates that others are paying in your industry. Case study: Paying less for the same quality A Fortune 500 healthcare client with an average posting fee of 20 percent noted that the trend they have started to see throughout the industry and implemented in-house is to not automatically go to the highest fee approved. Instead, they are conscious of the quality of agencies and candidates needed in order to make the best possible fill, and then arrive at a number for a fee. By being mindful of the quality needed to fill the role, the company has been able to lower its average fee by 3 percent, all while maintaining the same quality of agencies and, most importantly, hires.

8 4. Evaluate your current agency partnerships Although there is a high focus on cost, it s not all about money. Evaluating agencies should also take performance, ease of use, and compliance into account. Without the right data, you might be using under-performing agencies on a regular basis, while those that produce consistently good results are being overlooked. Depending on your strategy and budget goals, you might need a full evaluation of which agencies are doing the work and how well they are executing on it. An agency that can execute quickly at a higher fee might be worth it for the right position. Understanding who has what terms and conditions can help you avoid unpleasant surprises with higher-than-planned fees or out-of-compliance candidate guarantees. IF YOU CAN ONLY DO ONE THING: Get a handle on the different terms and conditions each of your current agencies is working under, as well as the general effectiveness of those agencies across the organization so you can make smarter decisions about which agencies to use this coming year. Three criteria to evaluate your agency partnerships 31 $ Time to hire Spend per hire Candidate quality 8

9 5. Measure success moving forward As a recruiting leader, you need all the information you can get at your fingertips. For recruiting agencies, that information can fall into two categories: data-driven key performance indicators (KPIs) and subjective measures of agency success. Although spend is important to track, you also need to know which agencies are performing well. An agency might have a slightly higher than average fee, but deliver superior results. You won t know that unless you use effective KPIs. You know the KPIs you use for internal recruiting, so measure your agencies by the same yardstick. In addition to evaluating your agencies based on spend, you should also be watching their effectiveness based on whichever KPIs are most important to you: c Time to hire c Time to hire c Interview rate c Interview rate c Number of fills c Number of fills c Number of jobs taken c Number of jobs taken c Number of candidate submissions c Number of candidate submissions c Average days to submit c Average days to submit c Average days to interview c Average days to interview Subjective measures of agency success should look at which agencies are following processes and compliance measures, and making it easy to work together. IF YOU CAN ONLY DO ONE THING: Pick KPIs that you can track and that align to your business and talent acquisition strategy, and apply them across both your internal recruiting and recruitment agency teams.

10 How to get started These five areas are a good place to start for next year, but you may be thinking to yourself, There s no way I can do all of this in 2017, and even 2018 looks iffy! We get it. Recruiting agency use isn t the only thing on a talent acquisition leader s plate. You re managing staff, working on relationships in your organization, and have pressure to perform, regardless of the circumstances. Agency use is one of the least understood parts of the talent acquisition equation, and you owe it to yourself to get started. First of all, don t worry about what you can t do; focus on what you can do. Get a handle on the one or two things that can help you today with the expectation that you can expand. For some organizations, it s just getting a better understanding about how their budget is being spent. It won t impact any decisions for Others will want to use the information to evaluate agencies and revisit their preferred partners for the coming year. Still others will want to start investigating options for recruitment agencies in areas they haven t worked in before. It s smart to vet and set up agencies the right way, before you need them. Bountyjobs works with many organizations on their recruitment agency strategy and spend. We have a wealth of information that can help you: c Benchmark Compare your recruiting agency performance to others in your industry and area. c Understand market rate and budget information If you re expanding to a new location or just want to understand your current agency program, we can help you understand market rates and give you the information to build a better budget. c More easily manage your strategy and day-to-day agency execution BountyJobs helps many organizations manage their recruiting agencies more effectively and efficiently. 10

11 Conclusion: better-informed talent acquisition strategy Even if you don t use BountyJobs, we re passionate about equipping you with the knowledge you need to understand your recruitment agency strategy. Too many leaders let it fall by the wayside, and we want to help you make smarter decisions. When agency recruiting makes up 20 to 30 percent of the average budget, we think it s time to take a responsible approach to agency spending and there s no better time than Today, too many organizations don t have a firm grip on their agency spend. Inevitably, someone in your organization the CFO, CHRO, or even CEO will want to know what your hiring costs are, and why. We ve seen too many recruiting leaders get caught off guard by this question because they only have 70 to 80 percent of the answer. It might not be your fault since the information can be buried across dozens of departments, but you owe it to yourself to get the answers you need. Using this guide, you can understand the current state of your recruiting agency use, plan ahead to 2017, and get started. And if you need any help thinking about your strategy or simplifying the management and reporting on recruitment agencies, BountyJobs is here to help. Contact us: Looking for more information about BountyJobs or the data contained in our marketplace? Please contact us via at info@bountyjobs.com or phone at AUSTIN 1114 Lost Creek Blvd, Suite 420 Austin, TX

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