The corporate black hole

Recruitment managers are under pressure to cut costs and increase efficiency, but the legacy of the 1990s economic boom sees millions of pounds wasted each year, says Rosaleen Blair

On the face of it, recruitment management should be a pretty straightforward, process-driven exercise - especially for large financial services companies with all their sophisticated resource-planning and communications technology.

A manager puts in a request for a new person, appropriate candidates are found and interviewed and finally one of them is offered the job. It should be like falling off a log.

If only it was that simple, you can hear countless embattled recruitment managers chorus throughout the industry. Many of them - particularly in the insurance and banking sectors - are under extreme pressure to cut costs, improve quality and deliver process efficiencies across the board.

But making headway in just one of these areas is presenting considerable challenges for several reasons.

The problem stems from the 1990s economic boom bringing on seemingly insatiable appetites for more and more people, as companies of all sizes in the financial services industry expanded. Many under-resourced recruitment managers consequently lost control of their processes as they struggled to keep up with the demands of department heads and other hiring executives throughout their organisations. In some cases, they would deal with hundreds of recruitment companies, thousands of contractors, working with almost anyone who could produce the right candidates. As long as people were coming in through the door, almost nothing else mattered.

These days, however, those recruitment managers are paying a heavy price for this loss of control and are finding it a major challenge to provide a cost-efficient service. Having scaled up their operations, they are now struggling to scale them down without completely rebuilding their relationship with the recruitment industry, redesigning processes, contracts, workflows and so on.

All this is further complicated by the growing need to look at managing internal mobility as the first route to filling vacancies. Many recruitment managers are fighting a losing battle trying simultaneously to transform their operations and still provide a cost-effective, high-quality and efficient service.

It is little wonder then that outsourcing this function has proved to be so attractive. Specialist firms can support organisations by demonstrating their ability to achieve substantial cost savings, while providing a state-of-the-art recruitment function.

However, many insurance companies, mortgage lenders and banks have seen an even bigger problem evolve in the field of recruitment management.

As these organisations merged, expanded and diversified through the white heat of the 1990s, many of their subsidiaries and business units found the best way of keeping up with their constant need for new people was to establish their own recruitment functions rather than rely on head office.

Almost inevitably, they started chasing after the same people in the employment market - even competing for them - often unaware they were vying with another part of their own organisation for the same candidates.

There have been numerous cases of these separate recruitment operations poaching staff from other subsidiaries using external consultancies as intermediaries.

Thus, many large financial services companies suddenly found themselves with many different recruitment functions. In the case of one leading UK financial institution, there are no less than 22 operating divisions, each with a separate recruitment process and all performing exactly the same function across the group. Each of these handles their own attraction, sourcing, third-party management redeployment and outsourcing.

The waste, in terms of duplication, is simply mind-boggling: it can run into tens of millions of pounds a year in unnecessary cost. Why, you might well ask, has the problem not been dealt with long ago - indeed, as soon as the market entered the downturn and this glaringly obvious opportunity for saving became apparent? The simple answer is that it is easier said than done.

None of these HR professionals, with responsibility for recruitment, or their colleagues are going to volunteer to be thrown to the lions - especially not in the current economic climate; they are hanging on to their specialist livelihoods for all they are worth. Equally, the senior management of these subsidiaries are loathe to lose ownership of this function, which they see as a key part of their infrastructure. Consequently, there is a real battle on between the subsidiaries and their head office counterparts over the future management of recruitment and outsourcing.

This situation, unknown to shareholders, is not uncommon within many large organisations throughout the financial services industry and other sectors.

One solution that many of these companies are considering is to hand the function over to a specialist recruitment and resourcing process outsourcer.

Such firms have considerable experience of building corporate recruitment functions and developing processes in a way that meets every stakeholder's needs, delivering, at the same time, significant cost savings. But it takes experience, the right technology and a strong relationship with the employment market, as well as considerable reserves of tact and diplomacy to make it successful.

Whether outsourcing is the chosen route or not, all large companies - especially in the financial sector - recognise that they must develop efficient, robust and scalable recruitment and resourcing functions.

When the economic recovery comes and the war for talent starts again in earnest, every company should avoid a repeat of the recruitment management challenges created during the boom, and for which so many are still paying such a very high price.

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