The traditional recruitment model is broken


However, it is a rarity that an SME will have a staff member who is focused completely on hiring, let alone a fully-functioning talent team that many larger corporations do. Instead, the business owner is usually in the driving seat of recruitment processes and decisions. Whether this task needs to be scheduled into an already jam-packed work day, or even into personal time in the evenings, it often doesn’t get the dedication it deserves. 

The problem with hiring

There’s no two ways about it – the traditional hiring process is broken, particularly for SMEs. These businesses find themselves between a rock and a hard place – either take a ‘post and hope’ attitude with a job board, dedicating time they don’t have to sifting through endless (unfiltered) CVs, or take the financial hit of working with a recruiter. This second option – finding the right (even specialist) recruitment partner, or working with multiple agencies – is not only costly, but time-consuming in its own right.

We’ve seen various shifts in the industry in recent months, as agency services, job boards and employer review sites converge – often, with the aim of eliminating recruiters. This is missing the point, and trying to fix the wrong aspect of the problem. It’s not the value chain that is broken, it’s the engagement model. 

Marketplace marvels

The marketplace model has already revolutionised several consumer-facing sectors, harnessing the power of technology to fundamentally shift the way that we connect global supply and demand. Fashion and retail sites, such as ASOS, Amazon and eBay were some of the first to introduce this model, and we can hardly finish a paragraph on this topic without mentioning Uber and Airbnb – the latter is now the frontrunner in giving established hotels a run for their money without even owning a single hotel.

This model allows players in the ecosystem to be more efficient, and encourages competition. We are now seeing the application of this logic to the recruitment industry. Employers make up the ‘demand’ side – they care about a fast, quality outcome, via a tool that is easy to use. The suppliers – of talent in this case – are the recruiters. The reason that recruiter fees are traditionally so high is that they’ve had to spend all their time on lead generation. A marketplace model presents them with a constant pipeline of qualified, inbound employer leads, meaning they can spend less time working on securing a job, to deliver competitively priced candidate placement – good news for SMEs. 

SMEs in charge

This model puts small businesses back in the driving seat, and able to control their own fees and terms. It gives them a quick and efficient way to get multiple recruiters on the job, who are incentivised to deliver a wider pool of quality candidate options. Without a guaranteed ‘exclusive’ on the job, the onus is on the recruiter to deliver – if they want their fee.

We no longer live in a world where it is more efficient for transactions to take place through a centralised hierarchy between the buyer and the seller. Marketplaces, through their transparency and their economies of scale, are able to create incomparable value for all participants, including great savings in terms of time and money. We are looking at the next frontier for professional services.

From a recruitment perspective, we’re not talking about ‘cutting out the middleman’, but re-thinking the status quo to streamline and optimise the (often fractured and frustrating) relationship between employers and recruiters, which comes from the inefficiency of the existing model.

Ben Hutt, CEO of Search Party