The Future of Agency Placements

Remember when the world thought that agency placements would be replaced by LinkedIn, Facebook, and heck, probably even that Snapchat thing? Well, that never happened. In fact, the latest survey from CareerXroads suggests just the opposite: placements are up.

The survey covered 50 employers, some with more than 200,000 workers, who collectively reported filling 5.9% of their external openings with candidates from third party agencies. This is almost double the percentage in 2012, in which those surveyed by CareerXroads reported only a 3.1% agency share.

Why are Agency Placements Growing? That Can’t Be Right.

It can be right! There are a lot of theories out there as to why agency placements are on the rise. Here are just a few.

• The balance of power is shifting back to the candidate: Many recent reports are reporting longer times to fill as well as high turnover, clearly pointing to the fact that employees have more confidence, power and willingness to move.
• When candidates get power, headhunters pounce: As Jim Coverdill and Bill Finlay reported in their classic book, Headhunters: Matchmaking in the Labor Market, headhunters thrive in times of change. If candidates are restless, headhunters are best positioned to make the double sell by relentlessly matching open jobs to available candidates.
• The recession culled the weak and strengthened the survivors: In 2007, the market was flooded with too many inexperienced agencies, and when the number of job orders dried up in 2008 and 2009, the pretenders left the profession. Those that remain are strong, specialized, and very good at what they do.
• HR is more powerful and more savvy: Even as they gain more control over big $$$ and roll out more sophisticated recruiting tools, smart corporate recruiters know they can’t hire every candidate. More recruiters are turning to specialist recruiting agencies to fish in candidate pools that are foreign to them.

Agency Placements as a Trend in Recruiting

When asked about their plans for the future, several comments in the CareerXroads study indicate that companies hope to reduce agency spend in the future. No surprise there: few HR departments go to their CEO with a request to increase third party spend.

What strikes us are the number of recruiters planning to take more control of spend, tools and strategy. The real headline about hiring through headhunters is not whether it’s rising or falling; it’s that it’s getting smarter. Many comments read like a manifesto for the control HR is exerting over all aspects of their recruiting efforts.

CareerXroads Trends for Recruiting in 2014

• “Centralizing”
• “Consolidating recruiting resources centrally and unifying tools and processes”
• “We are hiring an external company to do a full TA assessment – it should begin soon. I expect there will be many changes implemented that come from the assessment recommendations.”
• “Expect multiple changes in recruiting strategy – increasing the quality of recruitment staff”

With more ways than ever to communicate and connect, the human relationship is becoming more and more important. At the same time, the need to organize, centralize, save time, and save money are also must-haves for employers to run successful recruiting departments.

The future of agency placements will incorporate technology as a tool while also embracing the expertise and relationships provided by top headhunters.

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