Recruitment agencies are the cornerstone of talent sourcing for global organisations. However, managing existing or new agency relationships can be a complex and challenging part of the talent acquisition process, says JP Caffery.

Given the sheer amount of resource involved in recruiting and onboarding new hires, there is naturally several different components and stages that need careful consideration so that organisations are not faced with unexpected costs. With so many parts to keep track of, transparency is critical to ensure that the hiring process runs smoothly. Without it, not only would employers suffer on a financial and time level, but also reputationally.

The cost of poor agency management is substantial when it comes to talent acquisition, so it is important for organisations to understand where the pitfalls usually occur in order to be efficient with time and cost, but still remain highly competitive in the global battle for talent.

A complex process

Almost all global organisations need to use agencies to hire new talent. The process of using agencies typically involves several steps, including sourcing the right agencies, contracting, and onboarding them, as well as building solid relationships when roles are released to fill. At the point agencies are onboarded, there are several administrative steps that must be managed to ensure they are properly set-up, fully compliant and have the right access to receive job roles, typically through an applicant tracking system. This is in addition to agreeing commercials and ensuring that they are set up on the finance systems correctly, so each agency can get paid the right amount on time, for successful placements made.

Organisations have four stakeholder groups that need to work together to manage agencies and the end-to-end process from source-to-pay; these are talent acquisition, hiring managers, procurement and finance teams. Each team needs to align to ensure the right decisions are made and there is minimal if no friction internally, however, things not running to plan is unfortunately very common. With a lack of control, transparency and accountability, together with many voices and opinions, it often leads to chaos over collaboration.

An additional unique challenge associated with global agency management is obtaining local market knowledge. Different geographical regions and divisions often store and organise agency data differently varying from the contracts, fees, specialisms and performance, making it hard to obtain a true and comprehensive picture, especially when multiple stakeholders are involved in managing recruitment globally.

When the process falls flat – and the different elements of agency management work in isolation rather than cooperatively – this is when the unexpected costs start to roll in.

The financial costs

One of the biggest costs of managing agencies is the lack of automation meaning many hours are invested by people and not technology. There are many other significant costs arising from a poor hiring process which lengthens the time to hire, over-paying on agency fees that are not in line with current market rates and finally, poor decision-making in terms of selecting the right agencies from the outset. All of these issues can lead to vacancies remaining unfilled and the longer it takes to fill a role, the more cost an organisation incurs.

Having better oversight of the agencies used by an organisation enables you to see where certain hiring practices are taking longer than they should. This is particularly important in commercial or revenue-generating roles, where leaving vacancies unfilled for an extended period can have a severe impact on the organisation’s bottom line.

The lack of government regulation around consistent terms and agency pricing is another area where organisations are struggling to mitigate costs and manage compliance.

Unintended reputational risk

An organisation’s reputation plays a significant role in talent acquisition and retention. It is crucial to be mindful of how the employer brand is represented to potential candidates. Even if different agencies are working on the same role, they might have different approaches to sourcing talent, so ensuring a consistency is key.

A key consideration, particularly for large organisations, is their reliance on referrals; many companies prioritise internal and external referrals as a source of talent. This means that if someone has a bad experience with the application process, they are much less likely to refer someone else or apply again themselves.

For example, if the application process is lengthy or if the organisation takes a long time to respond to candidates, or worse, if they do not let unsuccessful candidates know at all, this can create a negative employer brand. In the future, those candidates are unlikely to use the agency again or apply for a job directly at that organisation.

Applicant experience and seamless communication are critical: businesses will not only improve their reputation, but also increase their chances of attracting top talent. 

A cornerstone in global talent acquisition

Ultimately, global agency management involves many spinning plates with multiple internal stakeholders. This complexity often leads to disorganisation, lack of visibility and a greater risk of human error, all of which are enemies of success when hiring.

Technology and digital platforms can help organisations gain a competitive advantage by offering complete transparency across the end-to-end management of agencies and the hiring of new talent, in addition to reducing costs, ensuring consistency and optimum agency performance.


By JP Caffery, CEO and Founder of RAMP Global.