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Pulling power

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<b>Big companies are regaining control of recruitment by using their corporate websites to drive job-seekers straight to them. Lucie Carrington reports</b>

While the recruitment industry continues to navel gaze about when its sector will pick up, it is becoming clear that when it does it will look very different from the industry HR directors have loved to hate for so long. And the real winners in this new-look industry could well be employers especially the really big corporate recruiters while the smaller job boards, the traditional recruitment agencies and print media could find themselves on the the losing side.


Big corporate recruiters are benefiting from three major changes in the industry the expansion of the internet and e-recruitment, the growing sophistication of the HR technology on the back of that, and the economic downturn. Between them these pressures have enabled employers to bring more of their talent spotting in house and helped drive down costs.


As a result, companies such as Scottish & Newcastle (S&N) Retail and PricewaterhouseCoopers (PwC), and even the high-street pharmacists Lloyds Pharmacy are reporting massive reductions in their recruitment bills. Nigel Ward, senior manager, resourcing at Lloyds Pharmacy, for example, predicts that the firm will spent 70% less this year in recruitment advertising and agency fees. Well save 50% less on offline advertising alone this year and these savings wont all be transferred to another intermediary, Ward says.


The downturn has played an important role in forcing employers and, as a result, recruitment firms to slash costs, but the impact of technology has been massive too. Theres no doubt that the past 18 months to


two years has seen a marked change in the way we recruit and the internet has had a lot to do with that, says Charles Macleod, head of recruitment at PwC.


To start with general and specialist job boards have provided employers with a much cheaper source of job advertising than traditional print media. S&N Retail, for example, recently used a graduate job site to recruit four good finance graduates at a total cost of 200.


But it was S&Ns decision to improve its internal succession planning that enabled the company to pull control of recruitment away from the agencies. We wanted to create a talent bank, says HR director Kim Parish. Wed always had one but were not very good at finding people and keeping them warm.


Its something the firm has operated successfully among graduates for several years now. Students who work part-time in a S&N pub or bar have their details transferred to the unit nearest their home when they leave university. Good ones are encouraged to join the graduate programme.


Now S&N Retail calls experienced potential managers on the talent bank every month or so to see where they are in terms of their job search. In some ways its what you would expect traditional headhunters to do, Parish says. But it can be more powerful for us to contact people directly. We can use it to sell the culture and style of


the business.


Parish has had to beef up the in-house recruitment skills and not just within the HR team. Weve honed our poaching skills, especially among our unit management population, she says. For example, we have run poaching programmes for our area business managers so that when they go into a competitor outlet and see someone who might be a good candidate, they know how to manage the situation.


However, as employers become more used to online recruitment, an increasing number of them prefer to put their investment in their own corporate websites and to use advertising to drive job-seekers straight to them. The argument goes that they can use their own employer branding to sell the firm as well as individual jobs, much more successfully than either advertising or agencies can.


In addition, the more sophisticated corporate sites such as those run by Tesco and PwC have some powerful technology behind them. This enables such firms to provide a seamless recruitment system and, more importantly, build up their own talent banks. Both Tesco and PwC are doing this from a mix of people who have sent in speculative applications and those who applied for a job, but perhaps fell at the final hurdle. S&N is also developing a corporate website that will go live this month to support its talent banking. Its important to keep investing in the technology but its also important to be prudent, Parish says. It would be dangerous to rely on technology alone.


Bringing more of this search and consultancy role in house has transformed the skills that successful corporate recruiters now need and is already creating some fantastic career opportunities. Seven years ago in-house recruiters were administrators and now we are skilled in acquisition strategies, says Ward. So at Lloyds we now have our own internal headhunters and two regional resourcing managers out networking in the field.


This is not a trend that will swing back with the pendulum, Ward continues. Recruitment was outsourced because it was not seen as a core function of the business, but now it has a much bigger influence at board level.


Ward uses job boards, including Monster, to search for overseas candidates. A shortage of pharmacists in the UK has led the firm to recruit from Australia, New Zealand, Spain, Benelux and Scandinavia. The firm runs 135 community pharmacies across the country and will recruit about 500 pharmacists this year. Theres a synergy between pharm-acy in these countries and the UK in terms of the qualifications and experience of candidates, says Ward.


Monsters cv database gives us access to a global network of people, he adds. Weve increased the application rate from overseas candidates three-fold. We have also reduced the time it takes us to hire. Where once it took eight to 12 weeks, now it can take just a few days. I have just recruited a pharmacy manager from Australia. It took just one and half weeks from contacting her to her taking up the job in Scotland.


The changes in overseas resourcing are part of a bigger recruitment overhaul at Lloyds Pharmacy that has taken place over the past six months. This has seen Ward move away from an offline system supported by agencies to what he calls a self-sourced system via the internet. He is also chopping in half the offline advertising spend this year.


To do this Ward is having to develop in-house search and selection skills and has hired in some former agency staff. He is also using two area managers who have taken career breaks in New Zealand to propel candidates back to the UK. They are not on the payroll but they have agreed to act for us and will receive the equivalent of the employee bounty payment for every successful hire, Ward says. His ultimate aim is to source people solely via the corporate site and to use it to build a database of applicants. He estimates that he is 18 months away from having a site up and running.


Playing a role on the back of the increasing number of corporate websites could be the only way job boards will find themselves on the winning side in the power battle. Already there have been some major casualties, StepStone being the highest profile of these in the UK. As a result many HR directors have had their fingers burned and even firms that use them regularly are not convinced they have a long-term future in their current format. In addition to Monster, Lloyds Pharmacy uses Totaljobs and Workthing. Job boards will eventually end their usefulness to us not everyone will put their cv on line and not everyone will be actively seeking a job. We will still have to use our own headhunting skills, says Ward.


The competition between the big sites such as Workthing, Hot Recruit, and Monster, is immense, as they prepare for what could well be a market shake-out over the next few years. They have realised that they have to do more than post jobs if they are to hang on to powerful corporate clients. Monster sells itself as an international player offering a global network of candidates and this has proved


highly attractive to firms such as Dell Computers in the US. Monsters biggest client is based in Austin,


Texas and uses the job board to advertise jobs in 14 different countries across the world.


Workthing, meanwhile, is building a name for itself hosting big corporate sites for firms such as Tesco, Arcadia and Whitbread. They are using us to build up their own talent pools, says Andy Baker, managing director of Workthing. We host the service but the data is theirs.


Reed Employment offers an alternative model altogether. It uses its jobs board, reed.co.uk, as a way of driving more business to its core business, its high street agencies. All ads on reed.co.uk are posted for free. Its a win-win situation, says Dan Ferrandino, director of reed.co.uk. Agencies and recruiters win because they dont pay for advertising, job- seekers win because they have


access to 125,000 jobs and we win because our consultants gain access to candidates cvs.


However, Reed Employment continues to make money in the way it always has, he adds, by placing good candidates in the right jobs.


For all their attempts to offer clients more, there are still a lot of uncertainties hanging over the future of job boards. To start with the average age of visitors to most sites is still relatively young 33 in the case of Monster. As a result, the high-value end of the market still eludes them. In addition their prime clients remain recruitment agencies rather than increasingly powerful corporate recruiters. Finally, probably as a result of the downturn and increased competition, their fees havent gone up in the past three years. Some job board bosses believe these low prices are ultimately unsustainable. At the moment, job boards are not getting the remuneration they deserve. But this will change, says Harvey Sinclair, chief executive of Hot Recruit.


So, despite the uncertainty, there is a sense that job boards still have everything to play for. However, more traditional recruitment firms face much more of an uphill struggle if they are to emerge from the current challenges intact. Talk to corporate recruiters and its easy to see why they have not only slashed the cost-per-hire, they have also cut right back on their use of these once crucial intermediaries.


Three years ago we were 75% dependent on agencies. But this year we expect to take only 20% to 25% of experienced hires through cash payments, says PwCs Macleod.


He predicts that the recruitment firms that succeed will, like the jobs boards, be those that can add some value (see box, above). This could be through traditional campaigns or by becoming experts in niche markets.


Other agencies could become employment vehicles to keep the growing band of interim executives that is already becoming a feature of the new recruitment market off


the payroll.


Macleod describes the changing face of the recruitment industry and the rise of corporate recruitment as a more intelligent resourcing approach. It has been facilitated by advances in technology and the dip in the economy, but was probably born out of the 1990s talent war and


escalating recruitment costs.


Its important that employers sustain these new levels of accessibility when the market recovers, he says. We must continue to invest in e-recruitment, and use other media outlets such as magazine articles as well as press advertising to drive people to our sites.


More importantly, he stresses, now that we have taken the market back, we must hold our nerve if the new recruitment market is really to take hold. We mustnt go back to the old habits.