The word ‘austerity’ has become a common feature in our day-to-day lives. We are constantly being forced to cut back our spending due to the poor economic climate and yet despite some hints that job creation is creeping into positive rather than negative figures, there’s still a feeling that employers are tightening their belts.
In the same way that the economic climate has led the average person to become more focused on low prices and special offers, small companies, recruitment departments and HR professionals have been looking at lower-cost ways of attracting employees to work for them. In a recent Resourcing and Talent Planning survey from the Chartered Institute of Personnel and Development, half of the companies said that the economy has had a negative impact on their recruitment budgets.
Not surprisingly, the popularity of flat- or fixed-rate recruitment services, where a (low) price per placement is guaranteed rather than paying an agency a commission fee upon successful placement, has grown. Compared to the traditional, agency fee model of between 12-15% of salary, these flat-fee companies appear to offer an attractive saving.
A CEO of a flat-fee recruitment provider explains why he decided to move into this area four years ago – bang in the middle of the recession. “I felt that if recruitment became so low cost that it was a non-budget item, it would encourage companies to employ more people, and therefore indirectly achieve our aim of getting people into employment. We wanted to make it so low cost that no-one would ever think, ‘we can’t afford this’.”
The advantage a low- or fixed-cost recruitment approach can provide, according to the companies that offer it, is that employers can effectively ‘dip their toes’ into the jobs market without taking on too great a financial risk.
Where’s the value-add?
But with many recruitment forecasters predicting that agencies will need to offer a higher-value relationship with clients, rather than a low-cost, fixed fee approach, what can these companies bring to the recruitment process?
Using flat-rate recruitment companies can help organisations try the market out, and they are sometimes one of many tools they can use, combining them with using traditional agencies and their own in-house recruitment methods.
That same CEO also believes that the flat-rate model works best in a climate where candidates are in abundance and the key role of their recruitment system is to match relevant candidates with the right roles. “At the moment we’re enjoying success because there are lots of candidates available. The only challenge we face is filtering them. In the future, there may come a stage when it’s harder to find candidates, and that’s where the agencies and headhunters may be able to charge those fees again.”
Michael Spiropoulos, Managing Director of The Recruitment Alternative however, believes that this model works at any level of recruitment if you have the right recruiters working for you.
Over the coming months and years, employment trends may be a factor in the fortunes of flat-rate recruitment companies. But for the companies offering this service to businesses right now, they offer a valuable addition to their recruitment arsenal.