In the first of a three-part series, Kevin Kerrigan, managing director of SHL UK, discusses the pressing need for an evolution in the recruitment supply process, and offers an insight into how HR suppliers, employers and the recruitment community can work together to make the hiring of new employees a more foolproof, measurable and successful process.

Part One: Time for change

Quality assurance and results have never been so important. Modern business demands maximum efficiency, and supply chains are designed as such that the room for error is practically non-existent.

In order to make the grade, IT systems have to demonstrate proof of delivery, and manufacturing production lines are timed within fractions of a second. In an age where return on investment (ROI) is king, every supplier, and indeed every business department, needs to justify its existence in terms of cost savings and value add.

Given this outlook, it seems incredible that whilst businesses apply such rigorous standards to supply chains across the board, they continue to miss a trick when it comes to what is arguably the most important supplier of all – the people who bring staff into their business.

Recruitment consultants play a crucial role in helping businesses to find candidates in a cost efficient way, often within a short timeframe. Yet the current ‘supply chain’ is essentially outdated, and is costing organisations millions of pounds. Not only is it struggling to keep pace with the changing work environment, but often, it also leads to the placement of the wrong person in the wrong job.

As we all recognise, not having the right people for the job amounts to lost revenue. This is in addition to the cost of frequently recruiting and re-training people owing to a high staff turnover of unsuitable candidates.

This may seem to be a very forceful opinion, but when you consider the stringent performance measures applied to almost all other suppliers, those applied to recruitment consultants are remarkably lax. Certainly this situation has evolved because of specific market requirements, and all participants have contributed to it. But today’s tightening job market demands new thinking and we need to challenge the accepted practices in order to adapt to these new circumstances.

At the heart of the problem in the recruitment supply chain is the incentive model used. Recruitment consultants are typically rewarded when a candidate is selected and remains in role for a minimum time (often only a matter of weeks). They are not rewarded for the precision, diligence or reach of their searches. Therefore, the supply chain incentivises the recruitment consultant to squeeze existing contacts into roles as quickly as possible, often through simple database matching of role requirements against CVs.

There is no incentive to cast the net wide and attract a variety of candidates – much better to satisfy the requirement from within a small pool of individuals already on the books.

The problem this creates is that organisations end up selecting the best of a limited pool of talent and that agencies are motivated to fit square-pegs into round holes.

But does this matter? Well, our research shows that the cost of managing the poor performers that get into organisations in this way amounts to £12 billion every year in the UK alone. Across the seven economies surveyed in our Getting the Edge in the New People Economy research (www.shl.com/edge) the annual cost is over $150 billion.

Clearly, it is time to re-examine the very nature of the process. Businesses will always require recruitment specialists to help them reach the right candidates. However, it is time that HR professionals start to question the very nature of candidate supply, and bring about a revolution which will not only ensure that the company performs better, but brings HR to the attention of the board as a discipline that will deliver change and tangible business benefits.

What if recruitment consultants were retained as true partners, rewarded for their understanding of the competencies required to succeed in the advertised role. What if they were tasked with overseeing an effective attraction programmes and then sift applicants based on agreed competencies and then rewarded on the contribution their candidate makes to the business? How would this look, and what impact would it have? These are key questions that I will look at in the next edition of this series.