The Feasibility of Using Recruitment Agencies

recruitment-agencies

Private recruitment agencies started operating commercially in Malta in the 1980s, offering recruitment services of a general nature, and in 1995 specific legislation was introduced to regulate the duties and obligations provided by such agencies and there are currently more than thirty local organisations that have a licence to provide recruitment services on a commercial basis. Most recruitment agencies provide specialist recruitment services, such as accounting, finance, IT and gaming, whereas there are still a number of recruitment agencies that provide general recruitment services. The rise in popularity of recruitment services may be attributed to the overall general success of such organisations to identify and source appropriate human resources to client organisations within acceptable timeframes and in a much more efficient way than had such organisations sought to recruit new employees using traditional recruitment processes.

Advantages and Disadvantages of using Recruitment Agencies

From a client organisation’s point of view, a significant advantage of using Recruitment Agencies is the fact that these organisations are specialised in understanding business requirements and sourcing potentially suitable candidates. Moreover, most recruitment agencies will carry out the initial screening of candidates and ensure that client organisations only meet those candidates that may potentially fit the organisation’s needs.  From candidates’ point of view, being registered by a recruitment agency means that the candidate is being recommended for employment, which for all intents and purposes, is at least equivalent to a reference from a reliable source.

Both client organisations and prospective candidates also benefit from two key factors. First of all, confidentiality is key, as recruitment agencies guarantee this to both client organisations and candidates. More importantly, client organisations are saving on time, effort and resources that would otherwise have to be devoted to the recruitment and selection process if a recruitment agency is not used; similarly prospective candidates get to know of career opportunities that may possibly not be advertised through other means. On the other hand, since recruitment agencies are outsiders to the organisation, they are at a disadvantage in interpreting business requirements unless they are made aware of these.

Costs and Benefits of Recruitment Agencies

Having worked for over fifteen years in Human Resources Management within a number of organisations, the recruitment agencies fees always seemed very high. How could an organisation charge such a fee for receiving applications, identifying potential candidates and putting these forward for consideration? Having now worked for the past year within one of Malta’s leading recruitment agencies, we can now safely say that the costs involved for an organisation that decides to carry out its’ recruitment without the aid of a recruitment agency is as costly as the recruitment agencies’ fees, without the guaranteed benefit that leading recruitment agencies offer of a free replacement or a partial refund of the fee should the employed candidate leave the organisation within the first six months of employment.  

Whenever an organisation considers carrying out the recruitment process itself, there are a number of inherent specific costs that are normally incurred up to first interview stage. When considering these costs, one has to also remember the additional costs that would be incurred if:

  1. No suitable candidate is found from the above recruitment and selection process
  2. A suitable person is employed yet for any reason this person leaves the organisation within 3 to 6 months
  3. If one had to take a conservative estimate of the guarantee offered by leading recruitment agencies, one can safely say that this guarantee would equate to at least one-third of the total estimated cost of €2,400 that is an approximate opportunity cost of €800.

Considering the costs involved in the recruitment process, and without considering the possibility that undertaking this process may not result in filling the respective vacancy, the total cost that an organisation is incurring when carrying out its’ recruitment amounts to approximately €3,200. This is excluding potential opportunity costs, such as the lost income, output or performance that the organisation is incurring from the unfilled position. If such opportunity costs were included in the total cost estimate and equated against the placement fees of recruitment agencies, clearly the financial benefits of using Recruitment Agencies are significantly greater than the cost involved. One has to also consider the fact that leading recruitment agencies operate on a no-placement, no fee basis; in other words, if the client organisation does not employ any of the prospective candidates put forward, than there are no fees charged by the recruitment agency.

Costs

Decision and preparation of job requirements
Cost of collation of job requirements, administering the recruitment process
Preparation of person specification and job description
Preparation of advert for media
Preparation of advert in media
Placing of advert in media – contact with media
Cost of advert in media
Receiving, acknowledging and sifting through CVs
Checking of CVs and references
Letters of regret to unsuccessful candidates
Scheduling of interviews
Carrying out of preliminary interviews
Decision on who to shortlist for 2nd interviews
Selection Board Report
Personality assessments, background checks
Letters of regret to unsuccessful candidates
Updating of internal records on recruitment

Additionally, it is also a fact that when the same recruitment agency is used repeatedly, a business relationship and better understanding of the organisation is developed by the agency, which is subsequently able to provide a personalised and even more efficient service.  Further financial benefits may also be obtained if the organisation decides to use the same recruitment agency on an exclusive basis.

All these facts prove the feasibility of using the services provided by recruitment agencies, who are undeniably becoming a fundamental business partner to turn to for all Recruitment and HR requirements.

 

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