Cheap Recruitment - a false economy?

In the begininng of 2010, a major talking point will be the cutting back of costs and the minimization of any extraneous expenditure that isn't absolutely required. 2009 was a tough year for us all and especially those of us working in financial services. For many companies, the start of the year and the uplift in the economy will prompt a rethink on their recruitment strategies and how much they are paying overall for securing their advisory staff.


With regards to recruitment in the financial services industry there are two distinctly different schools of thought. The first and often thought of, wrongly, as the cheapest method, is the low cost, high volume method employed by many recruitment agencies and prospective financial services employers. Involving the sourcing and production of large numbers of CV's by agents, that are then pushed forward to the prospective employers, in the hope that at least some of them will stick, this method although cheap is not actually the most cost effective, professional or time efficient.

The second method is the employment of a financial services recruitment company that practice a low volume, high quality submittal process. Although these organisations will often charge a very small percentage more at the outset for any aplicant employed, it is quite often the quality of the work done in qualifying and pre-screening to ensure that the candidate is of the absolute right calibre for the role, that eventually demonstrates the overall cost effectiveness of this process comparitively to the 1st method.

The process itself if done correctly, saves the potential employer money in man hours spent sifting through CV's and interviewing candidates in order to qualify them as, of the right calibre for the role, and time in interviewing the candidates face to face, not to mention less training costs. Many proponents of the high volume low cost method of recruitment are often faced with the tasks of sifting through large numbers of poor quality CV's and of interviewing potential candidates up to 3 or 4 times in order to ensure they are the right fit whereas with the 2nd, low volume method, the employer will be sent one or two CV's that have already been qualified by the agent to make sure they are the right fit. This saves the employer the time of having to screen the applicant themselves and also the interview process can often be cut down to just two interviews, a face to face and a competency assesment because the potential employer can be safe in the knowledge that the candidate will be of the right calibre and will be able to hit the ground running, needing less training and less money spent on the training itself.

Another facet often offered by the recruitment specialist operating the 2nd method is the clawback schedule. A system whereby if the financial adviser were to leave employment over the first 6 mths employed, the employer can claim a percentage of their recruitment fee back on a sliding scale. Beginning with 80% paid back if the employee leaves within the 1st month employed, 60% in the 2nd, 40% in the 3rd and 4th months and 20% in the 5th and 6th months employed.

Proponents of the high volume, low quality method of recruitment will often have no clawback so if the employer pays, as an example, £1000 for a financial adviser, if that employee leaves within 2 months, the employer has lost that £1000 and will have to go through the whole process again. With the method employed by recruitment companies such as ourselves, although slightly more expensive at the outset, that employer would recieve 60% of any fee back. Using £2000 as an example they would receive £1200 back therefore saving £200 instantly. Its not until months 3 and 4 that the employer woud face any real expenditure.

So, the upshot is, take a litle time to think about your recruitment process. We all had a tough year in 2009 and we can all do with saving time and money. Sometimes it pays to go with the agency that seem to be charging a little bit more at the outset. Quite often the quality offered by that agency will far outweigh the time, effort and cost expended in using, on face value, a cheaper agency.