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Mar 01 2017

The Value of Strategic HR

Recently we’ve had a couple of situations where the value of a strategic approach to human resources – and I particularly mean recruitment – is showing itself to be of great benefit.  Let me explain.

The value of strategic recruitment comes in being able to manage a client across several countries and to have one senior HR contact point at the head office.  This is especially important if line managers want to work with their favoured recruiters: HR can step in to make sure that there is consistent quality of recruitment and, importantly, the processes that back that up to ensure that the best talent is recruited and then – of just as much importance – retained.  Remember my column last month where the company had a retention problem?  Until recently that was partly down to a haphazard recruitment policy where managers could do what they wanted.  It looked good from a pure recruitment point of view, but translated poorly when they analysed talent retention.  And there is the real cost: losing people is more expensive than bringing them in.

Most companies – and I'm not exaggerating – will accept candidates from almost any source, whether that be direct applicants (advertised or not), internal staff referrals (watch out for relatives with different names!) or from agencies (usually involving a fee).  Naturally I'm going to focus on accepting candidates from agencies – and explain why using multiple agencies is, generally, a bad idea.

Success-based agencies work on the principle of ‘no placement, no fee’.  Now that sounds good for an employer, but let’s look – strategically – at what it really means.  For starters, they don’t really care about the employer; they care about placing a candidate and collecting a fee.  It doesn’t matter to them whether this is the best candidate, or whether the cultural fit is right – they only want to have that candidate hired.  And you can bet that a good candidate will be sent to many prospective employers; one of them is going to bite so they might as well send it to more to increase their chances.  There's no loyalty there; it’s a transaction, not a relationship with a trusted client.

The flip side, of course, is that while the contingency agency is busy sending resumes to the HR department, they are probably equally busy identifying the best staff at the same company so that they can send them to their other clients.  So much for loyalty.

A smart and strategic HR department will sit down with a handful of agencies and clearly establish expectations – in both directions.  In return the agency should undertake not to solicit that client’s staff (if they respond to an advertisement that’s usually ok).  As a retained executive search firm we don’t advertise, so our proposition to a client is simple: you pay us to put people in, and we simply don’t take people out. 

As usual, let me know if you have any particular topic you would like to see covered here.

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