Recruitment Process Outsoucing with Recruitment Advisors & HR Consultancies

<div class="grey-callout"><h2>Key Takeaways</h2><ul>
<li>Recruitment advisors: Specialists who provide strategic advice and manage recruitment processes, often saving time and money through effective job advertising and candidate shortlisting.</li>
<li>Human resource consultants: Offer broader HR services, including legal compliance, performance management, and employee relations, beyond just recruitment.</li>
<li>Value-added services: Both roles contribute to better hiring decisions, legal compliance, and overall HR strategy by offering experienced, pragmatic advice.</li>
<li>Cost structure: Payment can vary, typically involving daily rates, fixed fees, or percentages of payroll costs.</li>
<li>Choosing wisely: Select professionals with good rapport, company culture understanding, and practical solutions tailored to your needs.</li>
</ul></div>

What are Recruitment Advisors & HR Consultants?

A recruitment advisor is a specialist that provides commercial advice and practical assistance with recruitment. They work in partnership with employers, often managing multiple recruitment assignments at once. Whilst they prefer cost-effective direct hiring methods such as job site advertising, they may also engage recruitment agencies for specialist and difficult to fill roles.

In contrast, an HR (human resources) consultant provides employers with various HR services, beyond just recruitment.

Recruitment advisors and HR consultants can offer a lot of value when recruiting:

• Strategic thinking: Giving real consideration about what a job will involve, both now and in the future. Their outside perspective and considerable experience should enable them to ask thought-provoking questions that maximise the value of each role.
• Advertising a job in more places, more cost-effectively: Because they frequently use recruitment advertising agencies and job sites, they often get even better deals than an individual employer could. Sometimes, they will pass these savings on.
• Shortlisting applicants: They will professionally shortlist applicants with thorough Telephone Interviews.
• Ensuring interviews are comprehensive: They follow a comprehensive process that increases the chance of selecting the best candidates.
• Providing written job offers and contracts: You must quickly send a written job offer and employment contracts to a candidate. Because they will already have templates, it’s easy for them to manage this process.

For an HR consultant to be effective at recruiting they must have a recruitment mindset and in many instances be happy selling. This includes encouraging line managers to take action and make decisions, whilst not rushing the process and mis-hiring. This style of working can be quite uncomfortable to some HR consultants, and so they might outsource recruitment to a specialist recruitment advisor.

Beyond recruitment, an HR consultant offers other services:

• HR policies and procedures: Developing and updating HR policies, employee handbooks, etc.
• Legal compliance: HR consultancies have a reputation for being a cheaper substitute than using a law firm on employment law issues, employment contracts, etc. In my experience, their advice is also more pragmatic and valuable.
• Compensation and benefits: Advice on designing competitive compensation packages, benefits programmes, and incentive structures to attract and retain staff.
• Performance management: Developing performance evaluation systems, advising on setting goals and offering strategies for managing employee performance.
• Employee relations: Offering guidance and practical solutions on managing employee relations issues, conflict resolution, dismissals, and redundancies. This can include providing employment tribunal representation.

Often, businesses start working with a recruitment advisor or HR consultant on a limited one-off basis. As a professional relationship develops, having them on hand to answer questions and deal with urgent matters is beneficial.

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Which Businesses Should Use Recruitment Advisors or HR Consultants?

Typically, SMEs use recruitment advisors and HR consultants because they want cost-effective solutions to outsource their direct hiring.

Larger companies generally develop in-house recruiters and HR functions. However, recruitment advisors may be required for interim projects that stretch the capacity of internal staff.

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What Type of Jobs do Recruitment Advisors & HR Consultants Fill?

The short answer is almost everything.

Although they don’t have a pool of candidates to draw on like a recruitment agency, they already have established business relationships with recruitment advertising agencies, job sites, recruitment agencies, etc. One moment, they could be filling warehouse roles, the next, a group managing director.

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When Should an Employer Use a Recruitment Advisor or HR Consultant?

They should be used at the beginning of a recruitment process because the entire recruitment process is outsourced.

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How Much Does it Cost to Use a Recruitment Advisor or HR Consultant? Time vs. Money

They will save an employer lots of time.

The most common way to pay is a daily rate, just as you would for other professional services. It’s not uncommon to pay £600 - £2,000 per day, depending on their overheads, length of contract, and general disposition (some advisors and consultants are nearing retirement and love to keep busy!).

A few charge a fixed-fee for recruitment, sometimes over £3,000 per role.

Specific to HR consultants, some may charge a percentage of annual payroll costs. For example, a business with an annual payroll cost of £300,000 may be charged 8%, equivalent to £24,000. In this example, this fee is split over monthly instalments, which would be £2,000 per month. Additionally, I’ve seen some HR consultancies charge a price-per-employee. But this can be problematic if circumstances change; they’re happy to increase the charge as headcount increases but less agreeable to reducing charges as headcount drops! It can also be complicated to cancel contracts without financial penalties.

When discussing price with HR consultants, be wary of anyone using scaremongering sales techniques such as comparing their cost against the expensive cost of an employment tribunal and compensation. Keep it in perspective: employment tribunals rarely happen to good employers. Also, don’t let an HR consultant overwhelm you; whilst there is much to consider when employing someone, it will seldom hit you all at once.

There may also be some additional charges, such as travel and recruitment advertising costs.

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Do Employers Have any Guarantees when Using Recruitment Advisors or HR Consultancies?

From a recruitment perspective, they do not offer any guarantees. If they don’t fill a job, an employer still pays for their time. Additionally, if a new employee subsequently leaves, they don’t give a refund like a recruitment agency. But overall, their success rate in finding the best candidates available in the market at that time is very high.

Aside from that, if an HR consultant offers some incorrect HR advice, an employer may be able to take legal action against them and claim off their professional indemnity insurance. But doing so will destroy any business relationship, and it may result in a long-drawn-out process where only solicitors profit.

HR consultants may also sell an insurance policy to offer some protection from employment tribunals, which may be considered a form of pseudo-guarantee. However, this is very limited in scope and, as I will discuss in a moment, practically useless.

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How to Choose a Recruitment Advisor or HR Consultant

It is best to ask for recommendations.

Be careful when searching the internet, as many sites offering listicles (eg. “7 Best HR Consulting Firms”) are affiliate marketing sites. They rarely research providers and are more interested in spinning “best” content to sell leads.

The size (or number of staff employed) of a recruitment advisor and HR consultancy is very polarised. Several giant firms are recruitment agencies that have diversified beyond their core competency and now offer a watered-down version of recruitment advisor service (aka recruitment process outsourcing), or HR consulting. But then it quite quickly comes down to many much smaller firms and sole practitioners.

I would be particularly cautious of some big legal and HR consultancies. In my experience, they only provide template documentation and offer a very impersonal service – it’s as if they’re in a call centre reading from a textbook. They may also offer a 24/7 legal hotline, which has its place for a quick overview but gives a false sense of security in thinking you’re somehow “covered” by generic advice. Worse still, they may sell an insurance policy against employment tribunals, which is only valid if you follow all their advice (despite the advice protecting mainly their interests and costs).

As with many business relationships, who you deal with is often more important than the company you deal with. I generally recommend working with a sole practitioner, or a small group of professionals working together, similar to a firm of accountants or solicitors. Having a dedicated contact is important because you don’t want to keep reiterating yourself and you need a point of contact for urgent issues. Because they don’t have large overheads, they often represent excellent value for money. A minor downside is that it can be challenging to resolve urgent issues in the limited situations when they are unavailable.

You must meet a prospective recruitment advisor or HR consultant to establish rapport and understand their track record. This might be in person if they are local, but a virtual meeting is commonplace.

Whether using an individual consultant or a large firm, look for these qualities in the actual consultant that you will be working with:

• You should have good rapport: You’ll need to trust them with confidential information, and you may be working with them for a long time.
• They should understand your company’s culture: They’ll need to understand and assimilate into your company’s culture to become an effective adviser. Ultimately, you need a tailored, not a templated solution.
• They should be experienced: They may have experience with the problems you’re likely to face and even relevant industry experience.
• They should offer pragmatic, real world solutions: You should rarely be quoted employment law as it is generally unhelpful and easy to misunderstand. Instead, they should provide solutions in plain English without confusing you.
• They should offer a candidate/employees’ perspective: Sometimes, what appears right for a business might not be great for candidates or employees. By providing a different perspective, you make more informed decisions and reduce staff attrition.
• They should have good communication skills: They should have an informed opinion and give easy to understand practical examples. A good test of their expertise and ability is to ask them about recent changes in law, such as the National Minimum Wage.
• They should show discretion: For example, being able to explain their knowledge and experience without revealing that they work with competitors. If they provide names, do they throw them around or preface them with, “This is in the public domain, so I can say it”?
• They should be available when you need them: This is particularly important as some issues can be urgent.

On a side note, many HR consultants will showcase their “professional” qualifications. With the greatest respect to those who have put in the time to achieve them, they are not a gold standard. I’ve worked with chartered HR consultants and been surprised by their poor judgement and competency. What matters more are the points mentioned above, not a certificate.

Because I have the pleasure of working with many HR consultancies, please contact me if you need any recommendations. Alternatively, ensure you take references from their current long-term customers to understand if they will fit your business well.

At the very least, negotiate a flexible contract initially before committing.

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Additional Resources

• Recruitment Book; The Secrets of Great Recruitment: How to Recruit Great Employees.
• Downloadable PDF guide; The Strategic Advantage of Recruitment Advisors & HR Consultants.
• Article; Recruit Staff Using Recruitment Advisors & HR Consultants.
• Article; Advantages & Disadvantages of Using HR Consultancies for Recruiting Staff.