Banks add staff to cut costs
In an attempt to improve cost – income ratios within the financial services sector, the buzz – word “simplification” is on everyone’s lips. Few firms (except for maybe Goldman Sachs) still claim to be ‘all things to all men,’ selling any financial product that a client could possibly desire. Most banks have found that the easiest way to simplify has been to cut jobs. At the end of 2015 Credit Suisse unveiled plans to cut 30% of its London headcount, Morgan Stanley cut staff from its ailing Fixed Income Division and this month Nomura announced that it would slash its European Equities business with 500 equities jobs set to be lost. However, as Board Members and CEOs role out plans to cut poor performing business lines and reduce staff, ironically, they are hiring in HR recruitment; more specifically, they’re hiring in – house recruiters.
Why hire in – house recruiters?
- The most obvious reason that banks are hiring in – house recruitment professionals is cost containment. A typical contingency recruiting fee is about 25% of the candidate’s first-year cash compensation. That includes salary and bonus, but not stock options or other long-term incentives. This cost can really add up after a number of very senior – level searches.
- Second, firing third party recruiters is one way to reduce complexity. Reducing the number of recruitment firms eliminates time with contracts, administration, billing etc., leading again to costs savings but also reductions in operational complexity and wasted time.
- Third, it can be argued that in – house recruitment eliminates growing concerns with the off – limit constraints of search firms; retained search firms typically cannot recruit anyone who works at one of their client companies. In contrast, in – house recruiters believe that taking control of the search process internally will expand their candidate universe.
- And forth, advances in technology have now made it easier to harness the power of social media to increase the speed, adaptability and creativity of execution. LinkedIn, for instance, is changing the way organizations connect with talent, giving them unprecedented access to both active and passive candidates. Many organisations believe that it is much cheaper and more efficient to hire internal recruiters and have them scour LinkedIn in search of the best candidates.
Although internal recruitment has its benefits, there are two sides to every story (and the truth usually lies somewhere in the middle). Whilst technology has given in – house recruiters access to a seemingly infinite candidate pool (without the same off – limits that constrain third party recruiters) what good are thousands of potential candidates if they don’t respond, are uninterested in the position or turn out to be unqualified?
A good recruiter / head hunter will pride themselves on clean and well – run search processes. If a head hunter is lucky enough to walk away from a client meeting with a new senior – level mandate, he / she should have a pre – vetted shortlist of suitable candidates in mind within a couple of hours. This reflects a thorough understanding of his / her own business and the years spent traversing the marketplace while developing relationships with a wide variety of people and business – types. A savvy head hunter will already know all the major players personally including: what motivates them (money, status, new challenges), whether they are married, how many kids they have, their sense of humour and how likely they are to relocate. Neither LinkedIn nor a siloed in – house recruiter can give you this level of detail. But now that LinkedIn has made candidate information publically available, people are bombarded with offers for which they have absolutely no interest. This is the opposite of a clean and well run search process.
Making executive search personal again
In executive search, strong relationships with both clients and candidates allow head hunters to effectively sell an opportunity. It is the head hunter’s job to relate the benefits of working at a particular organisation. Head hunters should, therefore, aim to embody and communicate all aspects of their client’s brand. The most effective way to do this is in – person. Building relationships with promising professionals cannot be done by LinkedIn, email or phone calls alone. Yes, using technology might save costs in the short – run, but to get ahead companies must take a look at what worked in the past – namely, the human touch – and leverage today’s technology to make recruiting personal again. Employers now have a growing number of channels and tools to connect with talent; they need to make sure that they are combining it with real human interaction to make sure their candidates have a positive experience during the hiring process.