15 April 2004 | Andrew Golder
Unnecessary procurement costs in recruitment could be removed by outsourcing the process, new research suggests.
A survey by employment process outsourcing company PSS suggests a lack of communication between HR and procurement departments over staffing arrangements, coupled with a dependence on preferred supplier lists, costs UK industry billions of pounds a year.
PSS found 84 per cent of the 200 firms it contacted said they relied on preferred lists for hiring staff instead of using other methods and 30 per cent of the lists had not been reviewed in the past year. Sixteen per cent of companies admitted they did not have a recruitment strategy in place.
Paul Riordan, head of outsourcing for consultancy The HR People, said there was a growing trend for small and medium-sized companies to outsource their staff recruitment functions.
He said: "From a fairly low base there is now a number of companies offering this service.
"It is safer, simpler and, quite often, if you add up the direct and hidden costs, much cheaper to outsource. Once you do some digging, it is frightening what a company spends on recruitment."
He said factors such as the amount of time spent by HR and line managers interviewing and managing the recruitment process added to overall cost.
"If you don't do recruitment well, it can cost you a great amount," he said.
But Simon Pugh from the Brite-HR consultancy said the best way to cut costs was to have an effective HR team and for individual managers to take a hands-on role with recruitment.
He said: "The real cost is the cost of the agency not finding the right people. Communication between the managers and HR people is vital because the cost of bringing in the wrong person is around 15 times greater than recruitment costs alone."
Last year, a report by employment consultancy Reed found nearly half of HR executives and purchasers said a closer relationship delivered better value on HR for their organisations, although their relations could still improve (see Features
, 3 July 2003).