I’ll Have A Cheeseburger, with no bread, no meat and no cheese please…

Unbundling - great in telecommunications, can be a hidden risk if you are looking for it in executive recruitment.

With cost cutting high on the corporate consciousness at present, and businesses having to readjust to a world with limited funding for capital development, the pressure to look at all areas of fixed and variable costs has not been this high since the early 90’s for many businesses. We think it is a good thing.

While Gen Y (and Gen X) might be receiving a shocking introduction to market conditions they have never worked in, those of us who were around in this industry in the 80’s and early 90’s know that you have to cut your costs and your cloth to the market.

So how do you do that with your recruitment costs? Many larger firms went through a great period of ‘in-house’ recruitment teams over the last 5-10 years, building internal capability. Realistically for mid to lower level roles it makes good sense in many ways. However with the ‘core business’ mantra now having a more compelling financial backing, and those mid level roles being either thinned out or glad to keep their job, in-house recruitment teams are now often underutilised. Cutting fixed costs except for those that directly contribute to short term revenue would seem to be only sensible, if you think that if you don’t you might not be here next year!

The reality is that people still will move jobs, and good talent is still hard to find. Demographically we have the same issues, and while the OE exodus to the UK has not shown its traditional burst coming into the NZ winter, the Gen Y confidence means that they will still go, but in lesser numbers. Many graduates are staying on for an extra years study, good people are reluctant to look

because good companies are working harder to keep them happy and the ‘devil you know’ might have problems but at least you know what they are!

One of the trends coming out of this is a hybrid approach of ‘unbundling’ recruitment services. Smaller in-house teams, or companies with a freeze on spending for ‘recruitment fees’ may be able to spend less, for screening or assessment and testing services only, and not pay traditional percentage based recruitment fees. This can cut short term costs but does add several, often hidden risks to the recruitment process.

If you pass only the first cut outside, is your provider really going to own the quality of the long or shortlist they provide? In a candidate tight market, it may take several iterations of the process, and quite diverse methodology to find a quality shortlist which need to be clearly specified. So if you pay for one pass only, it might not yield a sufficient shortlist anyway. You also run the risk of building only part of the relationship with the right person needed to get someone to ‘yes’.

If you pass testing and assessment services out, a similar challenge. We stay close to our testing providers because when it comes to reference checking or the offer stage, it is critical to know what nuances of a person’s style will make what to check or what type of offer and package will work to attract a particular candidate.

As a hangover from our period of talent shortage and buoyant employment market, many candidates still feel they have the power to turn offers down. While the market has tightened, that thinking won’t change in a hurry, so you need to really have all parts managed carefully to get to a happy ‘yes’.

We have seen a swing in many company attitudes to where the economic situation has taken them back 20 years, to the ‘you should be damned glad to have us think of employing you’. However, we have a generation of talent who will never respond well to that thinking. They would rather do something else.

So making sure that if the ‘unbundling’ thinking is a possible strategy to manage those variable costs, that you understand the implications of a fragmented process on your business and your focus. Work out what is really unnecessary in your process. If you need to make shorter term recruitment decisions, then make them contract ones and spend quality time scrutinising every permanent role for relevance in the new world order.