Moving from Dinosaur to Dynamic
The recruitment industry is frequently accused of being slower than most
sectors to adapt to change, both in terms methodology and technology –
and generally with good reason. Many changes have affected the
recruitment landscape over the last decade or two, yet recruitment
agencies doggedly adhere to their traditional methodologies, with only
small adjustments and very little in the way of major innovation.
There is a school of thought which predicts that in the face of rapidly
evolving Artificial Intelligence (AI), the role of the recruiter will become
redundant, and recruiters will be replaced by technology. Is this the case?
I doubt it, but more on that later – let’s look at how the recruitment industry
has changed over the years….
A mere 17 years ago, there were still recruitment companies delivering CVs by means of fax machines. And this was in London, one of the recruitment capitals of the world. I was there at the time (giving away my age here…), and email became the de facto delivery method shortly thereafter. But that was how it was done not too long ago….
Agencies have always been database driven. You placed advertisements in the local career papers, interviewed as many potentially suitable candidates in person as possible, populated your Customer Relationship Management (CRM) system, and in the process generated walls full of paper files large enough to have been responsible for the decimation of a rain forest or two. Companies had minimal choice but to make use of agencies, as they simply didn’t have access to the depth of available talent that agencies had. Yes, they could place their own advertisements in the aforementioned career papers, but publication lead times rendered that approach as effective as a glass cricket bat. So agencies ruled the roost, and recruitment fees were easy to justify.
Next came the online job portals, such as Career Junction, PNet and Careers24 in the South African context. The nature of advertising changed in favour of the digital space, as jobs could be advertised and applications received in real time. From an agency perspective though, not much changed at all – ad spend and copy merely moved from print to digital format.
Initially utilisation of the job portals was reserved for recruitment agencies, but as the portal owners’ looked for increased monetisation of their platforms, it was only a matter of time until companies had access to the portals too. And therein began the steady decline in the power of the agency database. Companies who had previously had no choice but to use agencies, now had the ability to develop their own. The suitability of LinkedIn as a recruitment tool caused a further weakening of the previously invincible agency database.
In turn, this lead to companies setting up their own in-house recruitment teams, in an attempt to both reduce recruitment spend and increase recruitment efficiency. After all, who better to recruit for a company than someone who works for it, and (hopefully) understands the culture, the company structure, and the roles themselves?
This led to continual downward pressure on recruitment fees, and agencies in some cases cutting corners in order to reduce their costs accordingly. Where companies were still using agencies (and of course there were, and still are, many), they typically appointed several different agencies. That competition led to a lot of jobs being worked by agencies that they had a slim chance at
best of filling. Quality became compromised under such
circumstances, as the race to deliver candidates to the client became a greater priority than actually delivering quality – the best person for the role.
Ok, that’s the background. So, what has the recruitment agency industry done to reinvigorate their relevance? Not a whole lot in reality. There are some that have embraced the Recruitment Process Outsourcing (RPO) concept, and effectively become the in house recruitment team for some of their clients. Others have focused on increasingly niched “scarce skill” business areas. But there are many who continue with the 1990’s methodology, and expect the same results, usually in vain.
So – are the recruitment naysayers correct? Will recruiters be replaced by robots? I don’t believe so, although some basic recruitment functions will indeed become automated. The following are the trends which I believe will shape the industry over the next few years:
The agencies which embrace AI, and use it to improve their efficiencies, will enjoy an increase in market share. There is an ever-growing availability of software becoming available which (amongst other functionality), can create order in agency databases, and predict a candidate’s readiness to move. This cuts the time it takes to search for candidates dramatically, and results in a shorter time to create a higher quality database. There are tools that allow recruiters to easily access potential candidates’ contact details. Others scan social media and predict when people are getting ready to move on. The tools are out there, and growing by the day – adapt or die.
The contractor market – there always has been, and always will be, a need by companies for contractors to work on projects/outsourced contracts. In many cases the companies have no desire (and sometimes headcount availability) to employ these resources directly. Accordingly, they actively seek out contract houses to source and payroll the individuals required. Recruitment agencies operating in this space must have the financial means to payroll these contractors, as well as the administrative rigour to comply with all legislative requirements, but there will always be a market for them.
Retained Search – traditionally the preserve of the upper end of the recruitment market. Could an algorithm be relied on to secure the services of a CEO for a listed company? Certainly not for a good many years, so the true headhunting firms with a database of personal contacts at C-Suite level are safe for now.
In conclusion, my belief is that the recruitment industry will continue to have relevance, but only if it adapts to change and isn’t threatened by it. If it is open to change, open to investment in technology, AI will be an asset to the industry and not a threat.
The Volkswagen Beetle was once the best selling car in South Africa. If VW had been resistant to change, they wouldn’t be around today. The same applies to the recruitment industry – let’s move with the times and prosper.