As the use of professional online networking and personal branding mushrooms, does this signal the demise of the volume contractor recruitment agency?
The agency model is one of brokerage. Organisations seeking skills are on one side and workers seeking an outlet for their skills in exchange for reward are on the other. In the middle we find the recruitment agent, acting as a common touch point and brokering arrangements.
Granted, that’s a hugely simplified model of what can be a process that adds high value to both parties, which is often performed by agents who are professionals and with a high degree of skill in their own right. But, at its core, brokerage is what the recruitment agency sector is about.
As with many pre-internet era models, particularly those based on brokerage, the model has both gained and lost as a result of the web. If a business is essentially a data hub bringing people together, then the internet allows a high degree of automation – this is true whether you’re talking about recruiters, dating agencies, estate agents or equity trading services.
However, the danger of automation is the loss of personalisation. Increasingly, a common criticism of agencies by contractors is along the lines of: “Agents don’t really have a clue what it is I actually do; they just match CV keywords to vacancies using a database.” While this is an unfair criticism of the recruitment sector in its entirety, it certainly reflects the reality of many recruiters in the high-volume ‘bums on seats’ model, even when those ‘bums’ are senior, experienced, highly skilled and very high earning contractors.
Ultimately, agencies work for those who pay them, the client, So, unless the law changes and work seekers can be charged by agencies for their work-seeking services, it seems that will forever be the case. But the internet has thrown us a curve-ball: online professional social networking and online personal branding through sites like LinkedIn and Xpert Profile.
This is a real danger to recruitment agencies adopting the high-volume, depersonalised model. That’s partly because the person best placed to judge a candidate contractor is the person hiring, or the team in which the contractor will work.
Agencies can provide useful ‘filtering’ process, but at a price. With the agency model, a project manager needing a £500-a-day developer for a year would pay the agency say 15%, or £15,000 – that’s quite an overhead. And does that overhead still reflect the services the client is paying for?
When you get down to it, many contractor disciplines are actually quite small and specialised. If the project team is highly networked with special interest groups on sites like LinkedIn, these small communities become highly connected.
It then becomes not only possible but highly probable that candidate contractors could be sourced either through networking, or even by incentivising referrals from members of the network. Add another step where contractors can be rated, through sites like Xpert Profile, and you have a self-policing network that conducts its own ongoing quality control.
Although as yet lacking empirical research to validate the effectiveness of this approach, it does seem likely it will produce better targeted and matched contractor candidates for client assignments. And this approach bypasses the recruitment sector entirely. So, in the example of that £15,000-a-year overhead mentioned above, there could be tremendous savings to organisations that find their own contractors through networking. And for canny contractors who have taken the time to hone their sales and negotiating skills, they could find some of that client saving in their own pockets.
Of course, agencies do much more than broker. They also perform the increasingly important and time-consuming process of compliance and, for contractors, agencies act as a sales and marketing team, a credit control department, a banker, a colleague and sometimes even a friend who might negotiate them out of sticky situations with clients.
Still, agencies using the high-volume database matching model should beware. With budgets under pressure, clients looking for highly skilled specialists have every incentive to look online now, rather than going through agencies. And contractors are getting wise to the alternatives for finding contracts and won’t forever put up with being treated as a keyword in a database.