In-House or Agencies: Who Should Handle Your Recruitment?

The ability to recruit the best candidates for senior positions is absolutely essential for any top performing business. But should the crucial task of sourcing and approaching these individuals be entrusted to an in-house recruiting team, or should an outside specialist firm be brought in to help manage the hiring process? Both have their advantages, and here are some of the key points for a firm to consider when deciding whether or not they need to enlist some outside expertise.

Costs

One of the biggest arguments in favour of relying in-house recruitment teams is that it enables you to avoid the cost of a recruitment firm’s fees. The upfront costs of a hire do not tell the whole story though, because any savings made in the recruitment stage can easily be nullified if a recruit does not perform as well as expected in their new role. Realising a few months down the line that a mistake has been made and the employee needs to be replaced can be hugely costly for any business, both in terms of time lost and the financial implications of having to go right back to square one of the hiring process.

Of course, a search firm cannot absolutely guarantee that a hire will be successful any more than an in-house team can, but they can bring a great level of expertise and thoroughness to the search, and in this context using outside specialists can in many cases be the more cost-effective route, even if the initial costs are higher.

It’s also worth remembering that you only need to pay external firms as and when you need them, whereas keeping a highly skilled in-house team on the books will continue to be a drain on finances even though you may not actually need them all the time.

Industry knowledge

On the face of it the in-house recruiter has an advantage here, because by working internally day in day out, they will have gained an intimate knowledge of their company and its culture, direction and needs. However, while they may know their own company inside out, they may have less of a clear picture of their industry as a whole.

An external recruiter, meanwhile, works closely with a number of companies, and if they are specialists then they will have long-term experience of working within a particular sector. This means that they are likely to have a stronger understanding of what separates one firm from another, and how closely suited a candidate is to a particular firm over another.

Talent

While there are without question many fantastic recruiters working in both the specialist recruiters and in-house environments, the external recruiters tend to get the lion’s share of the stand-out performers, largely because of the greater rewards on offer.

Top recruiters looking for the highest possible remuneration will naturally gravitate towards agency roles, where if successful they can potentially earn the kind of six figure incomes that would be impossible in an in-house position. In addition to the financial rewards on offer is the added diversity of work available to the external recruiter, enabling them to have a much more varied workload than would be possible working in-house.

As a result, if you want the best recruiters in their field working on your hires, there is a good chance you will find them working at a top search firm.

Specialism

Where in-house recruiters can have the upper hand on external ones is in situations where there is a large talent pool of suitable candidates to hire from. These kinds of hires may not require any external expertise, as they could be handled just as well by a good internal team.

Where an external search firm is likely to have the most impact is in recruiting for the very top people to fill very senior specialised roles. They have extensive networks to call upon, and are able to quickly identify the top candidates regardless of whether they are openly looking to move on or not. Search firms also have specialists for each type of role (technical, marketing, sales, etc), whereas it is unlikely an internal team could afford that level of specialism, except perhaps at the largest organisations.

Reach

It is also important to remember that identifying a strong list of candidates for any given role is only half of the battle. The next problem comes when reaching out to those top 10% of senior level executives – will they be willing to listen to an offer from an in-house recruiter calling them out of the blue to discuss a position?

External recruiters have the advantage again here, because they have the opportunity to cultivate genuine relationships with candidates, meaning they can approach them and discuss roles with the authority of a trusted advisor.

Whilst they may call people with a specific role in mind, they could in fact have several roles to discuss, or could just be calling to keep up to date with the candidate, finding out what their goals and aspirations are right now. This means that not only will the candidate be willing to pay more attention to the recruiter’s call, but also that the recruiter will have a nuanced understanding of the candidate as a person, and will only suggest a role to the candidate if they are convinced they will be able to excel there.

Working together

Of course, while this blog post has set internal and external recruiters in opposition to each other, the truth is that these two parties will often achieve the best results by working together. This could mean having a strong in-house team working with the support of a retained search firm, who act as the ‘go-to recruiter’ to be called upon whenever some additional expertise is required in sourcing outstanding talent to fill a highly specialised role. Seen in this way, the relationship between internal and external is not that of rivals, but of partners working together towards the common goal of bringing in the very best candidates as swiftly and as cost effectively as possible.

Paul Rayner is the Managing Director of Oakstone Ltd. He has over 25 years experience in global executive recruitment, and specialises in finding talented technology professionals for UK, US and international organisations.

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