Is the move away from Shared Services a sign that external recruitment is back for good?
First, let me apologise for being absent from the blogosphere for some time. It turns out the doing part of being an executive search recruiter and business owner occasionally takes precedence over writing about it!
One of the consequences of being heads-down, though, is that I’ve been happily involved in the minutiae of everyday recruitment, and importantly I’ve noticed a surprising trend: The age of internal recruitment teams, and perhaps even RPOs, may be coming to an end.
The origins of this thinking don’t lie just in recruitment. Organisations in the post-GFC economy continue to aggressively pursue cost savings, and while the Shared Services model in many senses is designed to maximise efficiency across business units (and thereby save on resource costs), it can also lead to bureaucracy overload, with ever increasing layers of reporting, sign off, and delegation authorities. When shared services sign-offs become more important than the business outcome, something has to give.
This is especially the case in a moderately growing economy. It might be okay to clamp down on costs when businesses are struggling, but in pursuing growth it is counterproductive to overly limit the power of the business unit in making spending decisions.
Any so, in corporate after corporate, from Aussie Post to the Big 4 Consulting firms, the shared services teams are being wound back, sometimes so viciously that they return to nothing more than an administrative support function for the business.
This extends of course to the once mighty internal recruitment team or Recruitment Process Outsourcing team. Anecdotally, we are aware of at least a half dozen situations where internal recruitment teams have been wiped out. RPOs have been insourced, or cancelled altogether, and all that has been retained are the transactional, administrative Recruitment functions often handled by junior HR generalists.
The power is returning to the business in making decisions about how to handle its recruitment, and even the procurement community is beginning to see the benefit of letting executive search and senior recruitment decisions rest in the hands of the person who is ultimately responsible for the hire.
One Chief Procurement Officer of a multi-billion dollar Australian organisation recently affirmed this, saying “Why would I try to put a clamp on senior recruitment when I’ll just have to deal with non-compliance, and further, they’ll get a better outcome anyway than if I try to lump them with a multinational to save on costs!” Given that they had just removed $100m in spend from that organisation (some of that in reduced shared services spend!) it is refreshing that executive recruitment is seen as a valued and specialised field again!
It’s not all sweetness and light for us in agency-land, however. Now, more than ever, we need to present as credible experts in our field, provide exceptional customer service, and continue to differentiate from transactional models of recruitment. A return to business-led decisions may mean a move away from PSA agreements, meaning an increase in competition and a higher likelihood that your ‘best’ clients are being courted by your competitors.
That’s certainly my strategy.