The ongoing conundrum of in-house recruitment versus external search and selection is an oldie but a goodie. A recent article published on the AESC website  stated “employers almost exclusively used retained executive search firms for $200k-plus roles; however in-house recruitment and executive search teams were an increasingly attractive option for roles in the $100 to $200k salary range.”  

This got me thinking.  There’s no doubt that there’s an extremely good reason why many corporates revisit the subject frequently without necessarily resolving their indecision.  As a firm which is asked to work on both internal recruitment roles for corporates as well as partner level assignments for search firms, we see both sides of the equation every day.   From my unusual position of one foot in each camp I ruminated the 'for' and 'against' of having a dedicated internal search function as opposed to engaging an external search provider  and now I’m throwing it open to you. 

The case for: 

Cost.  Most companies can see an instant reduction of cost by hiring an internal recruiter in comparison to the large fees that occur when a search firm has successfully reeled in a big fish.  There are many ways of measuring cost and of course, time and efficiency must be included in the equation. 

Keeping the company’s IP is another good reason to manage the process internally.  Human Resources Directors and Heads of Recruitment often have a preferred methodology that may differ from search firm’s and taking control of the process yourself is one way to ensure that your processes are followed precisely. Having your own recruitment team also shouts from the rooftops that you are committed to your people – a great way to demonstrate to your staff, your leaders and your competitors that you believe in your human capital and will invest heavily in them. Moreover, if your company is viewed as a positive place to work then it should be easy to build a referral program that provides a steady flow of like-minded individuals who are quick and easy to convert to placements.  Great news if you change your mind about your hiring strategy as it eradicates the cancellation fees that could ensue having engaged a search firm on a retainer.

Is it absolutely necessary for the company to engage a search firm to run a full process for a role paying $150,000 when a well worded advert and a quick scour of the usual networking sites by the internal recruiter should highlight some relevant names.  Of course not. Generally, at this salary level, the expectation from ‘management’ is to fill the job with the best person who happens to be available and interested, not to go out and entice the best possible person, regardless of  whether they happen to be based in Outer Mongolia and not looking to move. 

It’s all sounding pretty good so far, isn’t it?  So why then do search firms still thrive? 

The case against: 

In –house teams are usually pretty small and can be highly dependent on the power of their own brand.   Great if you’re big and sexy but not so much if you’re a new kid on the block or if your business has been going through some well publicised issues recently.  Whilst they may have a decent researcher and a blossoming database it is unlikely to match the breadth of ability that a dedicated search firm has at its fingertips.  A specialised, global or domestic firm must have a wider reach – it is their core business, after all.  Most search firms have partners around the globe and the fee split system ensures that everyone works in conjunction to deliver that perfect person. 

Identification of talent is generally the easy part though.  Let’s not forget that the ideal person is usually already employed and often not looking to move.  This is where a search firm can offer something in-house cannot.  Anonymity.  Senior ‘C’ level executives are unlikely to take calls from what may be a competitor company whereas they are far more likely to entertain a call from a reputable search firm.  This ‘filtering’ effect can play a vital part in bringing the candidate to the table. 

Search firms also exceed their in-house competitors during the selection and acquisition phase. They are able to impartially assess the company’s internal talent against the external talent pool, a skill which is often glossed over by their in-house counterpart. Relationships are critical.  An external recruiter also has the edge over internal here as they can spend time building the relationship with the candidate in an impartial supportive way, which is improbable with an in-house recruiter due to their own allegiances.  This can make all the difference in closing the deal by truly understanding the candidate’s emotional, personal and professional drivers. 

Is there a right answer? I think it is safe to say that there is definitely a place in many organisations for a sourcing specialist (or five) and many of our clients have gone down that path, some with huge levels of success. Other clients who are highly confident in their own firm’s EVP and employer brand will certainly fare well in the ‘war for talent’, too.  However, experience has led me to conclude that there is potential danger in relying too heavily on  in-house organically-grown search teams as a long-term sustainable model to consistently hiring outstanding talent, especially at the senior executive level.  Which side of the fence are you?