· 6 min read · Features

How to recession-proof - Make every penny count

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When economic conditions are tough employers must make sure that what they spend on attracting talent is really delivering. Mary Cowlett looks at the cost-effective options available.

If evidence were needed that recruitment is sailing into choppy waters, KPMG's latest National Business Confidence Survey (published in July), does nothing to disprove it: it shows 52% of businesses are planning a hiring feeze, with other firms such as Ernst & Young reportedly telling graduates that starting dates might be postponed until next spring.

The irony in all of this is that the CIPD finds barely half of UK companies actually know how much they spend on attracting talent or know which parts of their recruitment strategy work. But, if projections from the UK Recruitment Consultant's Market Development Report are true - which is that, overall, recruitment will still need to grow by 15% by 2012 - employers must ensure that what they do spend on attracting talent is truly delivering. If only HR directors had a better sense of the money they spend on recruitment, perhaps they could recession-proof it against budget cuts more easily.

Some are leading the way. As a result of analysing exactly where its recruits came from, Yell (see page 5) has dropped all press ads and agency recruitment, ditched some of its large job-board packages and now relies entirely on its online careers site and other tailored web-based advertising and social networking sites such as LinkedIn for sales vacancies. "We're also measuring how many offers we make at the final interview stage and have set a target ratio of one in two," says Yell UK's head of resourcing, Isabelle Hung.

Other organisations are looking to technological solutions. Last year, direct and online building supplies retailer Screwfix opted for an online recruitment management system, TalentTracker, from Logical Innovations. While it was mainly bought to allow the retailer to handle larger volumes of applications as it sought to expand, 12 months down the line Screwfix's talent manager, Emma Bateman, says it has delivered a 50% reduction in candidate application costs and a 20% cut in recruitment administration time.

There is no single solution to recession-proofing the recruitment process though. Virgin Mobile is turning to another area, working with employee retention specialist TalentDrain to identify how candidates' expectations are met once they come on board with the firm, and thereby eradicate some of the waste around recruitment.

Ultimately, recruiting better people more cheaply is a question of balance. "There is definitely a place for recruitment agencies, press ads and job boards, but firms could do a lot more in terms of developing and leveraging their own employer brand online," says James Saunders, managing director of recruitment website developer 4MAT. He highlights that the name of the game is not to slash the recruitment budget completely and disappear off the map, but figure out how to compete with other employers on a level playing field and make every penny count. So what are some of the options?

Outsourcing

The arguments in favour of outsourcing recruitment are many, but considering the fees involved and in the case of technological solutions - the upfront investment - can it really save money?

Two years ago Marlow-based voice-to-screen messaging firm SpinVox, which at the time only had 50 employees, decided to appoint a recruitment process outsourcer (RPO), Project IT Resource. "We were in fast-growth mode and my remit was to take the firm global and create a presence in Germany, France, Spain, Australia and North America within six months," explains global director of HR Jeff Wellstead. At the time Wellstead was also trying to implement an overall HR infrastructure, so decided he needed help to attract the best people, many of whom required specialist software skills. "I looked at appointing a couple of recruitment agencies, but decided that a better quality solution would be a third-party RPO. However, there were very few to choose from as most focused on mid-sized to larger organisations," he says.

Today the software services provider boasts 330 employees and Wellstead says he has reduced the firm's external recruitment fees from around 25% of base salary for each hire to 15%. Direct recruitment costs are now down to 13% of base salary. Meanwhile candidate quality and staff retention rates have both improved.

"The big advantages of using a RPO are reduced fees and the reduced time to hire, which is now an average of 30 rather than 60 days," says Wellstead.

He is so confident in the outsourced solution that, although Project IT Resource was initially hired for positions offering under £100,000 remuneration, the RPO now handles more senior vacancies, most recently securing the firm's new head of development.

An alternative outsourcing option for employers looking to slash budgets is to plump for a cost reduction recruitment consultancy. De Poel, which is vendor-neutral and works with firms including Sainsbury's, Carlsberg, MFI, and TNT, boasts an average 8% saving for clients recruiting both permanent and temporary staff. This saving is delivered by streamlining procurement processes and service-level agreements with suppliers and reducing administrative burdens. It is also driven in part by De Poel's purchasing power:

"Around £26 billion is spent on recruitment fees in the UK each year, £23 billion of which is on temporary labour," says sales and marketing director Alison Harter. "We're now channelling £350 million of that spend, so are able to negotiate with suppliers on the basis of offering them more strategic relationships with employers."

However, the firm also sources software solutions where appropriate and works with clients' preferred suppliers. "This means rates are standardised and fees negotiated in advance, but control is still with line managers," says Harter.

Chris Kennard, network development manager for logistics firm GEFCO, says this approach has helped deliver 12.4% in overall gross savings at one of his firm's sites. "This success has encouraged us to investigate similar opportunities within our automotive division and consider the implementation of additional software solutions."

Moving recruitment in-house

The flipside of outsourcing is bringing the recruitment process in-house and cutting down on the expenses associated with advertising vacancies and agency fees. Recruiting around 20,000 staff each year - including 6,000 temporary staff to meet its seasonal Christmas business uplift - in July, Boots implemented an e-recruitment solution from StepStone.

This platform is designed to direct all recruitment through one web-enabled channel to reduce the time to hire, increase the quality of applicants and create a simple and consistent process nationwide, enabling the organisation to abandon paper-based systems completely.

"Most organisations look at cost and efficiencies first, but our decision was primarily driven by improving candidate care, to ensure that we attract and select the best people who will deliver the best possible customer care," says head of recruitment Mark Gilbertson. He makes the link between customer experience and company profits and adds that the new system is also a way of lifting a huge administrative burden off individual managers.

Previously, each store manager was responsible for recruiting new employees, while head office staff and specialists such as pharmacists and opticians were recruited online. This led to a number of inconsistencies in the screening process and candidates' experiences. "Now we've centralised all that and introduced online psychometric testing to identify and prioritise candidates who match the profile we've benchmarked against our top performers," says Gilbertson. "This means line and store managers still conduct the face-to-face interviews, but they're only spending time on the people who are most likely to be successful and not having to deal with things such as sifting through CVs and applications and making the final offer."

- What you can get for free

Free? Yes, believe it or not, recruitment doesn't have to cost the earth.

Ajobcy.com is a free service that brands itself as a one-stop shop for HR managers looking to source recruitment agencies. Organisations post a job by assigning it to one of 34 different categories, where it is instantly processed and forwarded to all the appropriate recruitment agencies that have paid a £100-£200 annual subscription to register in that category. If this sounds too hit-and-miss, there are further refinements available including facilities to create a preferred supplier list, choose a national, regional or local agency and highlight agencies that have done a bad job in the past. In addition, the site allows HR managers to compare the market, by either requesting quotes or setting a fixed fee, while all jobs and candidates can be managed online.

"We do all the research about what agencies exist and what sector they cover, so you don't have to," says founder Stefan Kyriakides. This is a sector that is booming. Also launched this summer was peoplecompare.co.uk - the comparison site for recruitment sites.

Bearing in mind that most educational institutions seek to maximise career opportunities for their students, there are also a number of free options that can be explored with universities and colleges. The University of Leeds, for example, has a dedicated careers centre that offers a free online recruitment service for employers. The centre also provides a number of other cost-effective services, including lunchtime and early evening presentation opportunities - both on and off campus - plus employer-led talks and workshops, all of which are promoted to students by the centre for free. It is worth remembering that many students are keen to help fund their studies and prepared to take on both responsibility and unsocial hours. The University of Birmingham, for example, has a Job Zone based in its Guild of Students building, promoting part-time and temporary vacancies in the local area.

- Other ways to save the pennies

Established in 2002, NORAS is the National Online Recruitment Audience Survey that provides independent and objective information on job-board audiences, so that employers can compare job boards and choose the one that is right for them. This helps maximise applications from the right candidates and, what's more, the information is free. The data provided is based on questionnaires completed by 40,601 online jobseekers across 25 of the UK's leading job boards, including Reed Online, Brand Republic, OfficeRecruit.com and Fish4jobs and shows the profile of each site's audience and size. Results are published monthly and can be downloaded as a pdf, while there is also a free interactive service.