Posted on October 01, 2015

Do you view recruitment as a commodity or a service? Or have you not really thought about it? It's an interesting question and one which companies in the energy sector need to consider carefully. As the number of recruitment businesses in the oil and gas sector has increased (with at least 80 having a physical base in Aberdeen, for example, and over 250 operating in the city) many companies have, perhaps unintentionally started to view recruitment as a commodity. Price is often the main focus - which recruiter can offer the cheapest rates?

But is that the right approach? After all, businesses are only as good as their employees, so shouldn't more thought be put into which recruitment consultancies are used to source key talent?

If you are currently trying to determine your strategy around recruitment, there are a number of key points to consider.

The first is access to candidates. In order to get access to the best candidates, a common misconception is that you need to go to one of the large and well established recruitment companies. In fact, the exact opposite can sometimes be true; the large recruitment businesses tend to have contracts in place with numerous companies, which then significantly reduces the pool that they can 'fish' from. So it may seem counter-intuitive, but a smaller company with less restrictions can be a significant advantage as they may have a far broader reach.

Larger companies may have the benefit of a much bigger database, but with the latest recruitment technology available today, how much should a recruitment business rely on 'old tech' databases anyway? Certainly not as much as they used to, that's for sure.

The impact of rate reductions is also an important factor. There is a fine balance to be struck here. Whilst we are currently in a challenging market and need to work with companies accordingly, there is still an element of competition between clients in order to attract the correct calibre of candidate. Recruitment businesses will endeavour to meet the needs and demands of their clients but they equally need to protect their own business in these market conditions and will have a focus on servicing those companies which are still offering competitive rates.

Preferred supplier lists are next on the list of considerations. They absolutely have their place in the sector, but what are the implications of issuing a job specification to five or more agencies at the same time? It means that recruitment agencies will be tripping over each other calling the same candidates, which can then have a detrimental impact on reputation of the end client.

The recruitment game is all about conversion and the more agencies working on a role, the lower the chances of conversion. Recruitment consultants will naturally prioritise roles that they have a better chance of filling, so ironically, better service normally comes from putting a job out to fewer agencies.

Last but certainly not least is the issue of quantifying true recruitment spend. We sometimes hear companies and their C&P departments talking about their 'recruitment spend' as being in the millions of pounds. But the reality is that the vast majority of that spend is actually on the salary or day rate cost of contractors and other temporary workers, which they would have regardless of the recruitment provider. The gross margin going to the recruitment companies is a small proportion of the cost of the contractors in comparison and, in my opinion, there are many companies out there that don't have a true understanding of what this cost is. If you don't know the true cost of your recruitment activity, how can you measure success with a new strategy?

So where am I going with all this? I think the industry needs to be very careful that it doesn't lose sight of the fact that the up-cycle will come. And when it comes, companies need to be absolutely clear about their recruitment strategy and positioning. There is a perceived glut of available talent now but this will not last long as a number of people will essentially exit the sector either to retirement or other industries.

At Simpson Booth, we pride ourselves on the quality of the service we provide and the strong partnering relationships we build with our clients. We are not the cheapest provider of recruitment and HR consultancy services in the sector, nor would we want to be. We do however strive to be one of the more innovative and high quality service providers.

Whilst I am obviously going to champion the benefits of using Simpson Booth, there are also many other good quality recruitment businesses in the sector. We need to be careful that the current state of the oil and gas market doesn't force them all to move their focus to another industry, or worse still, out of business. There have been several casualties of the oil price crash in the recruitment sector already, and there will be more to come.

So if you are pondering the future and how best to implement a strategy around recruitment, it's important to think carefully about whether you believe it to be a commodity or a service, who do you want to represent your business in the market place, what price are you willing to pay for it and what value you will be getting?

By Nina El-Imad, of Simpson Booth