Internal vs. External Recruiters

The age-old debate of whether it’s better to use an outside agency or go with an internal team to conduct your company’s recruiting is full of pros and cons. It’s a decision most companies and organizations must face at some point, and the choice depends on a number of factors: the company’s recruiting needs, the potential cost comparisons, and the industry knowledge required, among others.

Company needs. The first factor to consider when deciding whether to use internal or external recruiting is what your company needs. You need to find the sweet spot. If your company conducts a lot of recruiting on a regular basis, it may be that in-house staff is the best solution. If the hiring is more intermittent, and your company hires a new employee every five years, farming the job out to an agency may make the most sense. And the needs have to be balanced by the resources. If your company has a robust HR department that can conduct recruiting effectively, you may be able to keep it in-house. But if there’s no one available to conduct candidate searches, you may have no choice but to use external recruiting. Considering what your company needs and whether you can accomplish it in-house is step one.

Time to fill. Another factor is how much time you have to hire a new employee. There are times when you may need to fill a position immediately. Maybe it’s for an upcoming project, or maybe it’s a position that simply can’t stay vacant for long. Whatever the reason, relying on an external recruiting agency that has a Rolodex of candidates all ready to go might be a good option if you need someone fast. They will have the back work already done—a pile of resumes, candidates with strong skills, established contacts—making the process much faster for you.

Cost. Perhaps the biggest factor when considering whether to hire a recruiting agency is the cost. Hiring an external agency is something that must be budgeted for, so it needs to be a justified expense. If you need to hire a lot of people, the cost may be easily justified due to sheer hiring volume. Without the help of a recruiting agency, you’d waste time—and therefore money—trying to research and narrow down good candidates for all of the positions yourself.

For companies that don’t have big hiring needs, using a recruiting agency might still be a good bet when you factor in the total possible cost. Consider a company that only needs to hire employees a couple of times a year. They may think that hiring a recruiting agency is a waste of money; but if they don’t have the proper hiring procedures established in-house, they may end up hiring the wrong candidates, leading to higher turnover rates. This means more time and resources spent looking for replacements, and it can cost the company even more money than a recruiting agency would have charged them.

A good fit. Hiring is all about finding the right person for the position and the company. Some prefer to do their own in-house recruiting because they realize that an internal process—with hiring managers who know the company inside and out—will yield employees who fit in better overall with the company culture. The company’s own employees can more easily identify the right candidate based on their knowledge of the company and the position’s needs. An external agency is not as familiar with the inner workings of a company and therefore won’t pick up on slight nuances between the candidates.

On the other side of that coin is the advantage that external hiring agencies have in knowing candidates beyond their paper resumes. Since agencies tend to build a relationship with their candidates, they get to know them better and can assess when a candidate has something truly of value to offer a company that may not be obvious on their resume. They could suggest a great candidate who had his resume just been passed along to an in-house recruiting team, might have fallen through the cracks and never been called for an interview.

Industry. Companies should also consider their industry. In the case of very specialized industries, like technology or engineering, it might be useful to hire an external agency that specializes in that industry, because chances are they already have a lot of good candidates lined up. If the company’s industry is less specialized, like sales or marketing, then an in-house recruiting team might be able to quickly get a lot of resumes from great candidates by posting the job on their website and a few job search sites.

While each option has its advantages and disadvantages, there’s no reason why a company has to choose just one. Many external recruiting agencies allow companies to pay them only when they need them, making it much more cost-effective for those companies that don’t have a large hiring volume. A good strategy could be to have a strong in-house recruiting team that works with a recruiting agency when needed, say when they need extra support for a lot of hires or if they need someone very specialized. This way, your company could benefit from the best of both worlds.