The top 3 recruitment methods: pros and cons

Natalie Toniotti
AUTHOR
Natalie Toniotti
    7 minute read

30% of companies are able to fill a role within 30 days, while the rest take one to four months. So, how can your business recruit and onboard employees quickly and effectively? What recruitment methods are available to your business? And how can you lower your cost-per-hire and time-to-hire metrics?

We’ve created the ultimate pros and cons guide to three different recruitment options available to businesses. These strategies are great alternatives to hiring directly for organisations that do not have internal recruitment teams but still want to ensure quality candidates.

Recruitment agencies

An external recruitment agency purely focuses on sourcing, interviewing and finding the right candidate for an organisation. They are mainly responsible for pre-employment processes and once the organisation is happy with the sourced candidate, they will request a fee for their services.

Pros

  1. Hiring Speed

    Recruitment agencies usually have specialisms. For example, say you are looking for an accountant, large recruitment agencies will have a recruitment consultant dedicated to sourcing accountants. This accounting recruitment consultant will have up-to-date candidate pools and usually knows who is available, what skills they possess and whether they will fit your business needs.

    This can lead to quicker recruitment hiring turnarounds in comparison to your organisation starting from scratch each time you require a new employee.

  2. Quality candidates

    Recruitment consultants are professionally trained to source quality candidates. This is their full-time profession and is a valuable skill. This means you are getting expert advice and guidance in choosing the right candidate for your business needs.

  3. Temporary recruitment options

    Recruitment agencies can recruit full-time, part-time or casual roles for a business. If you are not seeking a full-time candidate, you can actually source a contractor through some recruitment agencies. An example would be a receptionist calling in sick for the day. Recruitment agencies can provide quick turnarounds and have a skilled receptionist come in just for the day to cover.

Cons

  1. Can be costly

    As with any service, there is a cost. The average recruitment fee can be 21.5% of the chosen employees remuneration package. For larger organisations, this may not be that significant, but this can amount to quite a lot for smaller or medium-sized businesses.

    On top of this, recruitment fees can be higher for more hard to fill roles. It’s important to establish a detailed contract outlining all fees with your chosen recruitment agency before engaging.

  2. Cultural fit issues

    Recruitment agencies go off a job description and set of skills required for the required position provided by an organisation. As they are external to the organisation and may only deal with a business on a one-time recruitment hire basis, it’s hard to ensure the cultural fit.

    Some recruitment agencies can provide psychological assessments to understand better whether a potential candidate will be the right fit for the team. It’s best to engage with a recruitment agency that makes an effort to understand your company values, team dynamic and mission.

  3. Missed branding opportunities

    Using an external recruitment agency means they will take care of advertising. This can take away an opportunity for your organisation to build upon its brand strategy. Each step of the recruitment process is an opportunity for a business to promote its reputation as an employer of choice.

    However, as external recruitment agencies take care of advertising and sourcing, you won’t control how your brand is perceived to potential employees. In other words, potential candidates' first impression of your business will come from secondhand information.

Outsourcing providers

Outsourcing is a process where organisations engage a third party provider to manage services and tasks traditionally performed in-house by the organisation's employees.

In 2019, the global market size of outsourced services was valued at 92.5 billion U.S. dollars, increasing by approximately seven billion U.S. dollars from the previous year. The leading driver for this growth is the 59% share of businesses that use outsourcing services to cut costs.

Pros

  1. You do not need to hire additional employees internally

    The right outsourcing provider will take care of all recruitment costs and onboarding. They will take a job description or ideal candidate profile from you, the client, and go into their available candidate pools and job markets to find you the right candidate to fit your business needs.

    All you need to do is review the chosen candidates. Then your outsourcing provider takes care of costs such as recruitment, human resources, new office equipment, superannuation, payroll tax, workers compensation, IT and overall management supervision.

    Apart from the engagement costs, you would only be sacrificing your time to train your new employees, which is a long-term investment for your business.

  2. Access to a larger talent pool

    Hiring internally can often only mean you have access to a local talent pool. With outsourcing, you can source from a larger talent pool and are not restricted to who happens to be available in your local market at the point at which you’re looking to recruit.

  3. More time to scale and grow your business

    One of the many reasons organisations struggle to grow is a lack of funds to invest in additional resources to support growth objectives. Businesses often don't have the time to recruit a new employee to leverage potential growth opportunities.

    Some outsourcing providers can have your outsourced team member(s) set up in as little as six to eight weeks. By hiring an outsourced team member, you will free up funds that can be used to reinvest back into the growth of your business.

Cons

  1. Control inefficiencies

    Outsourcing does require you to give up a level of control. Your hired outsourced employee will be located outside your organisation and managed by your outsourced provider’s operations team. This means that you will not be physically there to monitor your employee(s) as you might an internal team.

    However, as long as you pick the right outsourcing provider for your business, processes and systems can be put in place to ensure work efficiencies and KPIs are met.

  2. Communication issues

    Your outsourcing provider will set up all operational needs for your outsourced employee. However, this can mean issues such as internet connection, language barriers and timezones can cause miscommunication and, in turn, can put unnecessary pressure onto the business.

    Again, it is vital that you carefully compare outsourcing providers and decide on the one that best suits your business needs. For example, if you require 24/7 customer support and outsource customer service representatives, ensuring that your outsourced team has a certain English language proficiency level would be necessary for this instance to avoid communication issues.

  3. Quality management

    With any employee hire, whether internally or through outsourcing, the quality of work should be consistent. Therefore, you should expect nothing less than the quality you would receive from a local hire in your outsourced team.

    As long as KPIs are managed and regular performance reviews are held, you should be able to measure the quality of work that comes from your outsourced employee. Most outsourcing providers understand this is a priority concern for businesses and will be able to guide you in performance managing your outsourced team.

Offshoring

Offshoring is a subcategory of outsourcing. In fact, their names can be used interchangeably only when you are engaging a provider overseas. An outsourcing provider could be just done the road from you, while an offshoring provider will hire employees for you in another country such as the Philippines.

Pros

  1. Reduce labour costs

    Sourcing staff in a global talent pool means opening up opportunities to lower cost economies and more cost efficient wages, freeing funds that can be reinvested for business growth. Hiring employees in the Philippines is an example of a cost-efficient outsourcing option.

    In fact, offshoring can save your organisation money by having day-to-day tasks completed in a lower-cost economy, where employment costs can be up to 70% less.

  2. Improve efficiencies, quality and staff satisfaction

    The right offshoring provider will help you identify the time-consuming and repetitive tasks that would be best suited to send to an offshore employee instead of your onshore team. That way, your local team can focus on what they do best and what motivates them, while your offshore team member(s) appreciates the opportunity to support your business.

    This combination improves productivity across the board and, in the long run, can also help increase efficiencies and job satisfaction for employees.

  3. Scalability opportunities

    Like outsourcing, with the extra capability of an offshore team member, your staff can collectively work together to increase your organisation's capacity to take on more work. Not only that, hiring help offshore as opposed to hiring help locally will help you free up funds that can be used to reinvest back into other areas of your organisation that assist with growth.

Cons

  1. Language barriers

    Offshoring providers are usually located in low-cost economies. This can directly impact the level of English language proficiency associated with that country as English may not be their first language.

    However, countries like the Philippines actually have English as one of their official languages and is used for verbal and written instruction across the country's educational systems and institutions. It’s important to conduct your own research when deciding on which offshoring location you will choose to offshore your business needs.

  2. Social and cultural issues

    What may be custom in one country may not be in the next. This rings true to both cultural and social customs and can be an issue if not correctly addressed at the start of your offshoring engagement.

    For example, Filipinos have a more reserved nature and are not as straightforward as Australians. To avoid misunderstandings, it’s important to establish efficient ways of communicating deadlines, KPIs and concerns early on.

  3. Data security

    You will likely be sending confidential company data to your offshore team to perform the tasks of their job efficiently. This can introduce data security risks and needs to be managed accordingly.

    Ensuring that your offshoring provider has cybersecurity protocols and management plans in place to lower any potential data security risks.

How to get started...

The one common factor all of these recruitment options mention is costs. And the cost commonly associated with recruitment is cost-per-hire which ultimately comes down to time-to-hire. Reducing both of these metrics will result in more funds to reinvest back into the business and more time to focus on tasks that will positively affect your businesses bottom line.

All of these recruitment methods rely on quality job descriptions. If you provide an outsourcing, offshoring or external recruiter with a job description that doesn’t accurately reflect the desired role requirements, your cost-per-hire and time-to-hire metrics will stay high. You will be presented with candidates that do not meet your standards and will require these recruiters to go back and re-source, introducing further costs and taking longer to get your new employee onboarded.

In other words, starting with creating a detailed position description as the first step of your recruitment process before engaging any of the above recruitment options will lead to a better quality outcome for your business.

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