How recruitment agency marketplaces can save time, costs in talent acquisition

New research from the University of Queensland has found that technology like recruitment agency marketplaces can play a critical role in improving talent acquisition.

These are online platforms where employers and agencies register to work together, similar to Uber to Airbnb. An employer posts a job position and the recruitment agency marketplace will connect the job with recruitment agencies able to fill it.

The research found that such technology can accelerate the time to hire by four times and reduce the costs of acquiring a candidate by more than 12% compared to a recruitment agency.

“In the past, it was a game of trade-offs,” Evan Shellshear, adjunct professor at the University of Queensland told HRD Australia. “Either you got a really expensive big agency in the door and paid them an absolute fortune to find someone quickly who meets the brief. Or you simply just said, ‘Look, we're not going to get someone who’s going to fit the requirements, we're going to sacrifice some capabilities.’”

Instead, with this technology, a company can have a high-quality candidate within a short period of time, he said. 

“Especially for smaller teams like for SMEs, tools like these will be their competitive advantage to beat the enterprises where they can't beat them on wage and benefits,” Shellshear added. “Things like this will be their breakthrough to be able to compete with the global giants.”

Challenges in recruitment

The research aimed to understand the challenges facing recruitment teams, particularly when trying to hire people from recruitment agencies.

“Typically, you will receive demands from the business around all sorts of things they want,” Shellshear said. “They want the candidate now but they don't want to pay any agency fees. And they want the best quality candidate on the planet and they're just demanding all these things that are paradoxically impossible.”

The researchers adapted a concept from project management called the ‘iron triangle’.

“Initially, the idea was at a high level, you've got three constraints, three trade-offs,” he said.

“One’s time, one’s the scope of the project and the other one’s the cost. So you can reduce the time by increasing the cost ie. putting more people on the project to get it done. You can reduce the time by reducing the scope, so doing less, or you can reduce the cost by reducing scope. But you can't do all three at once. It's effectively the ‘iron triangle’, it's impossible to do all them at once.”

The researchers wanted to help recruiters see that the work they’re doing is similar to a project that a project manager faces, where they have to bounce off the constraints of time, scope and cost, Shellshear explained. So they named their concept the ‘recruitment management triangle.’

“The three elements are in recruitment,” he said. “The cost ie. the fee you pay to hire an individual, whether it's an ad on LinkedIn or a recruitment agency fee. The timeline to hire, how long it takes to find that individual. And the scope in the recruitment sphere is the candidate requirements.

“It gives recruiters and talent acquisition teams around the world that framework to be able to say, ‘No, if you want this, there's a trade-off. We have to have a trade-off between all these different factors’.”

The research findings

The researchers also wanted to determine the impact technology, particularly recruitment agency marketplaces, such as Ubidy, Hiring Hub and TalentVine, have on those three key constraints HR managers face.

“By setting up a technology and marketplace like that, what we discovered is that you can break right through the constraints and at once impact two of them without having to have a negative impact on the third,” Shellshear said.

“And those two that we saw you could break through was an ability to accelerate the time to hire by about a factor of four to five. So if historically it took four or five weeks, you're looking at now it takes one week, when you're using a tool like this to get a high quality candidates.”

And by high quality candidate, Shellshear is referring to candidates who would at least get to the interview stage.

The second constraint the technology can also be helpful with is when it comes to cost savings.

“Simultaneously…we found that it was at least 12% cheaper as well,” he said. “You can reduce your agency expenditure by 12%. And the huge finding at the end of this was that these results are independent of the seniority of the role.

“Whether it's a VP or a mid-level role within the business, these results hold. No one expected that, that was a real breakthrough.”

Benefits and challenges

Shellshear highlighted that for HR teams, it can be beneficial to use such technologies to broaden the pool of sourcing when it comes to talent acquisition. And save costs.

If, for example, a company is looking to hire 1000 people a year through a recruitment agency – at an average agency fee of US$15,000 – using a recruitment agency marketplace could lead to a saving of US$1.8 million US dollars annually, Shellshear said.

“So the practical implications are very significant,” he said.

But on the flip side, Shellshear acknowledged that these technologies aren’t perfect.

“When you're doing scale like this, it becomes a broad brush,” he said. “You’re losing some of the fine detail nuances. And so if you're potentially looking at this really specialised, super nuanced role, it may or may not succeed. In the data we looked at it succeeded, but there could be cases where it could be challenged.”

The other aspect to consider is user acceptance, he added.

“How willing are the talent acquisition teams to trial new technology?” he said. “So that could be a challenge – that change management piece.

“Agencies are very good at establishing strong relationships with their clients. That's what they do very well. What this is asking companies to do is to take a step back, be data-driven and remove those comfortable relationships they may have and leverage technologies to replace that. And that can be very hard for organisations to do.”