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External vs. Internal Recruiting: Who Does it Better?

by
Laura Randell
Jun 13, 2007

It has been debated many times, but the question of whether recruitment is best done with internal or external resources can only be answered at an organizational level, based upon a cost-benefit analysis.

When doing this analysis, consider which method of recruitment scores higher on the following metrics:

  1. Quality of hire
  2. Time to fill
  3. Culture fit
  4. Candidate experience/impact on EVP
  5. Cost

It’s time to take a close inspection of each of these areas.

Quality of Hire

Most internal recruiters, at least in medium- to large-sized companies, rely on Web-based systems to do the initial screening and culling of applicants. They lack incentives, and also lack penalties, for how well they recruit. With external recruiters, there are often no metrics in place at all, other than time to fill. If metrics for quality of hire are clearly tracked and compared between internal and external recruiters, it can help identify the best recruitment model for your business because you will be able to tell who is providing the highest-quality candidates.

Linking recruiter pay to quality of hire is a critical step in ensuring that recruiters make solid recommendations to line managers, who ultimately make the hiring decision. Agency recruiters can be measured based on client feedback and the number of times roles have to be re-filled at no charge to the client, which can happen if the wrong hire is made and if the client organization does not have a formal way to measure its recruitment suppliers on this metric.

If you use a hybrid model, consider measuring and comparing both your internal and external recruiters on the quality of new hires. After implementing such a metric, measure them upon their first placement, at six and 12 weeks, again at six months, and then at regular intervals.

Time to Fill

Jobs can often be filled faster by using agencies (particularly within specialized industries) because they have large applicant pools. Good recruiters will always have warm candidates they keep in touch with.

Often, when external recruiters are pre-screening and presenting candidates, it’s internal recruiting teams that hold the process up. It’s not necessarily their fault, as priorities sometimes change, putting recruitment on hold, or as role requirements are revised, but it speaks to a core challenge facing the recruitment community today.

One key reason recruitment is delayed is that budget for a role has not been approved prior to beginning the search process. As everyone knows, you shouldn’t go to market until you’re certain you need to fill a role and that money is available to do so. It seems that many companies still retain search firms, spend money on advertising positions, and start seeing candidates without a confirmed internal agreement. This has a decidedly negative impact on both the brand and the relationship with any candidates you have engaged if you withdraw from the process.

A second reason for delaying the process often has to do with how companies operate internally. While a new role may be budgeted, conflicting schedules, agendas, or priorities can mean delays in seeing candidates, or extending the number of interviews or assessments beyond what was originally planned.

Not only does this increase cost and time to fill the role, it also antagonizes candidates and may mean you secure the runner-up instead of your preferred applicant, or worse, you’re left with no suitable candidate at all, forcing you to begin the process anew.

If you’re using agencies that have pre-screened candidates for you, move those candidates through the internal process, make decisions about individual applicants, and follow up quickly. Given the shortage of candidates in the market, this should be a given.

The need for speed in recruitment, to manage costs and to fill roles, especially empty ones, must be balanced with the need to find the best candidate for the role, considering all aspects, including culture fit.

Culture Fit

Internal recruiters will be able to articulate and respond to questions about what it’s really like to work in your company in a way that external parties won’t. External recruiters will never know your business as well as your own staff, try as they may, because they don’t work in the organization on a day-to-day basis, experiencing all its nuances and political challenges. As a result, many organizations think that recruitment can be done better by an in-house team who know and live the corporate culture and understand stakeholders best.

In the model where external recruiters are placed on-site, they work with your teams every day, but they are still removed from the employee experience to a large degree. For them to hire for culture fit is a particularly difficult task.

One way to track success in this area is to measure culture fit, and there are a number of ways to do that. Compare success rates between your internal and external recruiters to see who is making better assessments of culture fit.

Candidate Experience/Impact on EVP

Every time you go to market under your own brand or someone else’s, you send messages about your organization to potential candidates. How you do this could impact the way your firm is perceived by candidates, so understanding the impact of what you do is important.

If you use blind ads through a recruitment firm, you won’t build or add to your own brand recognition. Any external agency efforts to co-brand or represent your business must be handled correctly or the brand can be damaged. For example, if external recruiters don’t respond to candidates, or not quickly enough, people will forever tie that response to your brand, leaving a negative image in their minds about your company.

Pointing would-be employees to agencies through your careers website makes an impression on candidates about your organization, good or bad. Investments in a career website are better realized if you make the effort to engage with candidates directly at some level. This direct communication puts you in control of your candidate pool and is particularly helpful when there are jobs in the pipeline that haven’t been advertised yet.

Cost

An important cost consideration is related to the number of recruits. If you don’t hire a lot of people each year, it’s probably not worth having in-house recruitment staff. If you do, it’s worth measuring the cost effectiveness of outsourcing against the cost of having an in-house team and a well-developed career site with a front- and back-end recruitment system.

Using external recruiters can be expensive if you are a small company and do a large number of hires per year. Invest in some sort of recruitment technology, as well as a good recruiter or two on site who know your business, your brand, and your culture.

Whichever method you choose, or if you use both internal and external recruiters, the most important things to remember are that you need great people for your company, you need them now, and you want to spend as little as possible to get them.

Great candidates don’t need your job. Making the process as smooth as possible will go a long way to building relationships with candidates for the long term. Star candidates often have multiple offers, and will move on if you can’t make decisions quickly enough, even if they would rather have worked for your firm.

By delaying the process, cancelling searches, and not replying at all, you are sure to damage your employer brand and your reputation in the market.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  1. John DePolo

    Nice article with good points and observations, but I would have to echo the comments that Mike had concerning the Quality of Hire measurement. The recruiter (either an internal or an external recruiter) can not be held responsible for the adaptation of the candidate to the company’s culture and individual management style. Great companies with very strong and identifiable cultures still have poor managers, and those poor managers drive off good hires or make it difficult to succeed in their environments. I just don’t buy that argument- let us put the responsibility for a quality hire where it belongs- at the individual hiring manager.

    Thanks for letting me give my .02.

    Best,

    John DePolo
    (919) 595-0700
    john.depolo@gmail.com

  2. Ronald Katz

    Laura, very nice article with lots of good observations. Thanks for putting this so concisely. My personal takeaway and caveat is, in order to determine which is ‘better’ you first need to be clear about how you will measure the performance of your recruiters, whether they are internal or external. Once you have defined the criteria for success, then you will be able to make a better choice as to whether internal or external is the way to go.

    And I agree with Mike, in almost all organizations, there is a need and room for both. Recruiting is not black and white and what is better today may not be tomorrow, or in your next search. Know what you’re looking for and how you will measure and you will likely make the ‘better’ choice of how to proceed.

    Thanks for your article,

  3. Rich Goldberg

    Having worn both hats these are very different roles.
    3rd party firms have niches where you don’t have a pipeline. Corporate recruiters have the different role of getting the candidate through the process. Often there are fights between these 2 groups on false arguments and people not understanding the value of each sides role. So saying VS can continue this.

    Rich Goldberg
    SR Recruiter Thomson Scientific
    (prior to that 15+ years agency and contractor)

  4. Narsing Konduru

    This is a excellent discussion which takes us to the CORE business strategy, ? DO WHAT YOU ARE GOOD AT ? rest send it to people ?WHO ARE GOOD AT IT? – Law of Competitive advantage in loose terms.

    This philosophy only works if the external or Internal sourcing team is treated at true partnership level. This is the Missing link.

    Most of hiring practice limits at sending an email or a Note telling the sourcing team what they need. This is not enough to qualify a candidate. Business Manager must give a detail walk through the functional aspects of the unit and explain the nature of candidate they would like to hire. This will give a 360-degree perspective of the need to the sourcing team. As long as this process is not improved to bring in the efficiency there is no plain field to judge whether internal or external recruiting is effective.

  5. John Goodman

    Laura,
    I agree with most of what you’ve said and as an external recruiter appreciate a healthy, communicative relationship between the internal recruiting team, the hiring manager(s) and the outside recuiter agency.

    While I can only speak for myself and the people I work with I must take exception to your comment ‘For example, if external recruiters don’t respond to candidates, or not quickly enough, people will forever tie that response to your brand, leaving a negative image in their minds about your company.’ Contingency recruiters are paid for performance and our candidates are our resource. When my client company shows an interest in my candidate I do everything I can to move heaven and earth to faciliate bringing them together. We have an expression in our industry that says it all ‘Time kills deals’. Personally I hate this phrase as I consider my candidates people, not ‘deals’. On the contrary, one of my biggest frustrations is my client company not getting back to me on candidates I have presented, good or bad, so I can give my candidates closure. I always tell my candidates the name of the company I’m recruiting for and go over the position in detail with them. When I don’t hear back from the hiring manager or his/her representative it only reflects poorly on the client.

  6. Jean-Paul Renard

    Excellent points in this article and amazingly true comments from the readers. Coming from the agency side and successfully representing so many companies througout the years, I must say that there are many pitfalls that the corporate side creates. Many of these points were already made so I will not repeat. Nevertheless, it really comes down to commitment and respect. Corporations (internal recruiters and HR pro’s) should hire agencies like they are hiring internal personnel. With this philosophy, the internal recruiters would be able to build strong relationships with talented agencies by commucincating company goals, sharing company culture characteristics and yet still be able to take advantage of the amazing resources great agencies have. Instead, many corporations may lack the good business sense of developing excellent relationships with talented agencies by: communicating poorly, create unnecessary delay’s and mis-out on the opportunity to continue to brand their company even though a third party recruiting company is representing them. Successful recruiting is a true team effort that is often not respected enough by corporate HR/recruitement. The most successful clients I have represented throughout my years are companies that view my company in as an external extension of their company. They treat 3 party vendors with respect, hold 3 party recuiters accountable for failures, reward success appropriately and communicate in a timely fashion. Choose your agencies wisely and then treat them like one of your own.
    Thanks for reading my comment,
    Jean-Paul Renard
    Vice President
    Distinctive Personnel.

  7. Karen Price

    So many times I read these articles and just shake my head. To discuss the merits and issues with internal and external recruiters and then decide which one is ‘better’ is just wrong. As Rich so very well articulated, each has a very different role to play in the success of a company’s recruiting efforts. They are not and should never be mutually exclusive. The finger pointing and name calling needs to cease and a new discussion needs to start — how we successfully play together for the same team.

  8. Mike Tiffany

    Some good points but to put a major judgement of a recruiters performance based on ‘quality of hire’ can be a slippery slope. Most of this time, it’s a very subjective metric based on the quality of the management staff over the new hire. In my experience, external recruiters better perform in volume and speed and internal recruiters are better (because they are insiders), do a better job of moving the candidate through the interviewing maze.

    Best case? Use both! Just make sure you’ve got a good work flow process in place.

  9. Thomas Mulhearn

    Well said, Karen.

    As an external recruiter, spending nearly 2 years as a contract recruiter in a mid-sized consulting firm was one of the most valuable things I have done in my business life. I appreciate the knife edge that corporate recruiters walk on all the time. And, in most cases, they do it well. Let them do what they are good at and let us do what we are good at, which is focusing on those positions which need to be filled and which cannot be filled by ‘the process’.

    To my fellow external recruiters… if you don’t think you are part of your clients’ teams, find some new clients. We are all here to succeed, and for us that means helping our clients succeed. If we give them the respect they deserve, they will give us the respect we deserve. And if they don’t, move on to another one who will.

  10. Neil Vaughn

    While both share the title ‘recruiter’, agency and corp recruiters are two totally different jobs.

    Agency recruiters have a very focused and specific job: find people. Doesn’t matter how or why, just find people to fill the positions that are open. A quality agency recruiter is probably on the phone talking with potential candidates 90% of the day.

    A Corporate recruiter’s job has many parts: manage the hiring process but also find candidate, deal with compliance issues, handle ER issues, handle new hire orientation, etc.

  11. Mark Carlson

    Neil,

    You are correct that on the surface these two ‘recruiters’ are separate however; any agency recruiter worth their salt to their corporate counterpart is also part of the internal hiring process.

    My organization works to assist its clients with all of the issues that our internal bretheren face, that’s why its a partnership rather than transactional.

  12. Rachel Schneider

    Just a quick comment for better or worse -

    I agree with the commments that agency recruiters and corporate recruiters are on the same team with the same goals – that is to find quality talent (as defined by the client) to fill positions. I disagree with Neil’s comment that it is ‘apples and oranges’, both are recruiters with the same goal, whether corporate recruiters are ‘doing other things’ – which, they shouldn’t be. If a recruiter is doing too many other things like sourcing, compliance, etc – then a separate position needs to be created to handle that.

    Because Agency recruiters are on steeper commmission basis, they have a greater motivation to find and ‘close’ candidates. And, they likely do have a greater focus. Agencies tend to invest more in training and skill development, technology, and look at ways to improve their recruiting/sourcing capability. Not every agency just ‘throws out candidates’, many have processes and do a lot of due diligence.

    In fact, given Neil’s comments, one wonders if corporate recruiting departments are as effective as they should be. I know from other discussions corporate recruiting departments are very reluctant to invest in training, usually believing their team is ‘the best’ or ‘the most seasoned’. I have heard that directly from multiple companies – meaning, they are nowhere near the best and the most seasoned. Everyone can’t be so advanced!

    My two cents.

  13. Kristy Oliver

    I must say that I thought the article combined with the feedback from all was the best lesson in selling the agency side that I may have ever received. All I can say is that there has to be responsibility on the agency to set expectations and expect mutual respect. If you don’t let a hiring manager know how you perceive the partnership working…shame on you. And yes, I am guilty as charged. But thanks to you guys, I am on my way to more solid and lasting client relationships. Thanks again.

  14. Shanil Kaderali

    I’ve worked in the RPO space as well as internal corporate environments for Fortune 100 companies and frankly, the comparison needs to include:
    as to other metrics noted,

    Cost – RPOs are more cost effective but many have hidden costs. Outsourcing admin activity from staffing process is wise. Depending on level of experience, outsourcing screening activity makes sense also. But I’ve seen RPO’s whose sourcing models are post and pray – nothing elegant or strategic about it and many of the talent within are either kids or inexperienced in being consultative with hiring managers. For high volume transactional positions that don’t require targeted sourcing, RPO’s can seriously benefit a company

    Quality – oooh, holy grail stuff here. I like to review turnover compared to source – ie, company, college, etc to view trends as well as performance scores. Corporate Leadership Council has a post-hire survey that goes to hiring manager that is interesting and am using but it’s still too early to evaluate

    This aligns to culture fit as well.

    I look at comparing external vs internal dependent on level and type of process for the positions. Cost is a factor but industry plays a role in this

    I’d also say, that how well does the staffing department (recruiters) impact bottom line in way of:

    candidate experience
    candidate and employee engagement
    competitive intelligence gathering for future talent management planning

    2 cents

  15. Michael Rosmer

    I’m ultimately a fan of fundamentals in order to bring simplicity to topics, which is how we operate in my company. In this sense I think we need to recognize two things:

    1. Trying to compare internal to external recruiting is like trying to compare Shiraz to Pinot Noir, there is too much variation in either to make an effective comparison. The reality is a great external recruitment option is better than a poor internal recruitment option and vice versa, so the question really becomes what are our specific options and how can we improve them.

    2. The second component are the inherent advantages available (note, just because they are available doesn’t mean they are always exploited), and these depend, in my view, primarily on one factor – company size.

    In a large organization where it is cost effective to have full time, focused recruiters to cover off the various internal specialties, where the company can gather data on top performers, etc. an internal recruiter has a lot of potential advantages that an external recruiter will have a difficult time gaining (such as liasing internally with the staff to recruit, better connection with the corporate culture and players involved, etc.)

    Our business focuses on serving smaller organizations precisely because we find this is where external recruiters offer the greatest value. Where it is easier to get to know the corporate culture and players involved. Where the company can’t possibly invest in the kind of sourcing pipelines available to a company that recruits day in and day out, and can’t possibly gather the same level of performance data that an external recruiter can when this is their sole occupation. Nor can small businesses have a strong employment brand that a recruitment company can create within the job market through her singular focus on the issue.

    Finally, how the external recruiter interacts with the client (on both sides) becomes a make it or break it factor.

  16. Stephanie McDonald

    Having us recruiters debate this is akin to having Red Sox and Yankees fans debate which team is better. (Red Sox, of course)

    Better to ask hiring managers and candidates. I think candidates would hate on all of us equally, which they have a right to do. Ask the business? I’m not sure what you’d get.

  17. Jason Keough

    “Jobs can often be filled faster by using agencies (particularly within specialized industries) because they have large applicant pools”

    Jobs are sometimes filled faster by Agencies but it isn’t because they have a larger applicant pool. The in-house ATS, combined with a robust CRM, give the in-house Recruiter the edge. In past markets, the in-house team has been buried with 50 plus openings per Recruiter, which prevented quality pipelining. The expense for a couple more internal Recruiters to even the load and allow for
    networking and pipelining will easily off set the large Agency fees.

    A quality Agency can help tremendously, I just see them being mis-used.

  18. Jason Mathues

    I guess before the question is commented on, the role of “recruiter” needs to be defined. I look at it as this; if you do ANYTHING other than recruiting (sourcing/cold-calling, answering job questions, presenting the candidate, and making the offer), you are not a “recruiter” to the true sense. Admins/Coordinators can schedule interviews and handle paperwork, and generalists do a combination of them all, but only “recruiters”, recruit.

    Now that the role of a recruiter is more defined, it honestly doesn’t matter if it’s an internal or external person that does it. Internal people have he luxury (end sarcasm) of the politics involved, external people can just put their nose to the grindstone and work. Both should have direct access to the hiring manager (communication is key), and both should be able to easily follow along with the hiring process.

    The discussion about the internal person getting mad at the external person….probably happens because the external person is better at “recruiting”.

    As for the 5..

    Quality of hire – recruiter

    Time to fill – hiring manager

    Culture fit – recruiter and hiring manager

    Candidate experience/impact on EVP – recruiter and hiring manager

    Cost – if your company plans to hire more than 5 people per year, save the money and hire a recruiter. If there is a very hard/impossible position to fill, use an agency.

  19. Jared Shaw

    I just finished off a contract with Disney where I had worked contingency for 2 years and flat rate contract for 1. I have a new found respect for internal recruiters having experienced it.

    Here it is simply put. When you are external you can pick and choose what you work on and when you work on it. When you are internal theres not saying no, you work everything and generally have way more reqs on your plate. I think quality suffers because of this, but you can some traction with candidates being from the company instead of an external consultant.

  20. Keith Halperin

    @ Jason: well said.

  21. Morgan Hoogvelt

    With not bothering to read the article and only going off the title, you are not comparing apples to apples with the two environments.

    Way too many variables on how internal and external recruiters operate and work.

  22. Dina Natale

    I find a lot of things wrong with this article. I came from staffing and now work in corporate so I have seen two sides to the coin. I find it disheartening that this article is purely written from a staffing perspective and written by someone who own’s their own staffing consulting company (http://www.laurarandell.com/) . Its extremely biased towards staffing companies and does not paint the reality of internal corporate recruiting agencies accurately. I think both channels are needed in the industry but one is not better than the other. Most of corporate internal recruiters came from staffing – its the same players just different venue.

    I also find fault in thinking that staffing companies have a massive database any different than a large corporate entities HR/Recruiting database. The only difference would be if that named staffing agency was more of a niche market, such as only recruiting for Enterprise Architects. Also I worked under very strict metrics when I worked in staffing (time to fill, interviews, pipeline, closes, etc) but I have had no metrics in corporate so your data is incorrect.

    This article is biased towards staffing to increase her share in her own consulting company. I think we can all get along and each entity is needed and well versed in recruiting and talent management.

    I would love to see an article written with true/unbiased statistics.

  23. Terry Correll

    I think what’s missing in this discussion is that it’s not who does it better but what kind of recruiting do you need to find the right person for the role. Corporate recruiting is positioned to actively recruit on a job order. Find a candidate for an open requirement. Most corporate recruiters in my experience focus on the active channels, screening candidates who apply to their ads, or candidates who have posted on the job boards. Although a lot of agency recruiters do this as well, the good ones understand that it’s really about creating a network of strong professionals in the vertical you serve. Sure there is some “just in time” recruiting on the agency side but if you are not doing a fair amount of “inventory recruiting” then you’re missing out on the true benefit we provide to the market. Through this network angency have the ability to uncover candidates who are happy where they are at but open to hearing about a better opportunity. Agency recruiters have an inherit advantage to accomplish this because we represent many clients and even if we have to tell someone they didn’t get the role they know we will be looking for other opportunities that might be even better down the road. Because of this candidates are more willing to help the agency recruiter in building their network of great candidates. It is more expensive to use an agency but when it is imperative that the client get the best quality available in the market and not just the best candidate that is actively looking for a new role, then it makes sense to spend the extra money. Not all roles fit this scenario so there is a role for each side to serve. The best collaboration is when both sides appreciate the challenges that each face and agree that the company wins when the best candidate is hired.

  24. Keith Halperin

    ISTM, companies should use agencies to perform work that’s worth paying 30-35% for. Almost anything that doesn’t require this level of expertise and selling-skill can (and should) be done for MUCH less by non-contingency resources.

    -kh

  25. Laura Randell

    As the author, I wanted to respond to this flurry of activity and to set something straight about who I am and what I do. This article is very old, but I’m pleased it has gained so much attention and has caused so much debate.

    The intent of a short article style like this is to engage and inform but also to allow for expression and get people thinking, not to be the definitive answer to every situation.

    When I wrote this, I was actually in transition from Australia to Canada. I am a Senior HR Executive (SHRP Canada) and have never been a recruiter in an agency. I’ve come up from the corp side over 15 years and I have also been a consultant, which I am again at present. I have built and led large staffing functions around the world (50,000 hires annually). I do help people with recruitment strategy, but not exclusively and not with a bias towards or away from outsourcing.

  26. Carl Ding

    Laura;

    The whole topic raises penetrating questions for both internal and external recruiters.

    Most of the headings and responses are quantitative rather than qualitative. Metrics should instead focus on qualitative, POST-INDUCTION KPI’s.

    Ideally there should be a weighting “shared accountability” for sustained outcomes, after induction day one

    Ascertaining actual fit, actual performance & behaviour, development, contribution/achievement/potential in a sustained ‘model’ is the best way to measure ongoing successful hires.

    both internal and external should focus on the company’s agenda through challenging briefings and ensuring that the hiring managers align their decisions to the Company’s prime drivers, rather than on “inputs” during the recruitment & selection process. It’s fine to review what went well and not so well through the process ( in order to take corrective action) but this should be shaded by qualitative measures after induction.

    cheers

    Carl

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    [...] cuts down on your time to fill. 5. RecruitAlliance literally automates the process of working with external recruiting vendors, while providing hiring companies with real-time reporting and on-going results. RA removes the [...]

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