Bersin & Associates’ New Research Finds U.K. Talent Acquisition Spending Rose Six Percent in 2011

Bersin & Associates’ New Research Finds U.K. Talent Acquisition Spending Rose Six Percent in 2011 Research Shows U.K. Companies Spend Twice as Much per Hire as Their U.S. Counterparts

Oakland, CA – December 13, 2011 -- Bersin & Associates, the premier research and consulting firm empowering Human Resource (HR) organisations to drive bottom-line impact, today announced its first-ever  “U.K. Talent Acquisition Factbook®”  a study that shows spending by U.K. companies on talent acquisition rose 6 percent in 2011, primarily driven by expectations for business growth. This new Factbook is part of Bersin & Associates’ series of Factbooks that helps member organisations improve performance and efficiency by benchmarking their spending, staffing and resource allocations against peers and best practices.

The study, U.K. Talent Acquisition Factbook® 2011: Benchmarks and Trends in Spending, Staffing, and Key Recruiting Metrics, contains responses from nearly 100 organisations and was conducted via qualitative interviews and online surveys of organisations from the Bersin & Associates database and the LinkedIn network. The study found through qualitative interviews that many U.K. companies are increasing their hiring and talent acquisition spending to support international growth.

“Our research indicates that forward-thinking companies are shoring up their talent acquisition investments so that when things do start to take off, those organisations will have the right infrastructure in place to facilitate hiring,” said Josh Bersin, chief executive officer and president, Bersin & Associates. “As firms adapt to today’s job market, they are funding initiatives to reduce cost, improve the quality of their hires, and enhance recruiter productivity.”

The study found that current U.K. talent acquisition cost stands at

£5,311 per hire. Cost per hire is a key metric of talent acquisition spending since this measure indicates hiring efficiency and productivity. While spending on talent acquisition also rose 6 percent in the U.S., companies there spend $3,479 per hire, or the equivalent of £2,226. Much of the difference in cost is due to the U.K.’s heavy reliance on agencies, which are very expensive – charging as much as 20 percent to 30 percent of a new hire’s salary in the first year.

 “U.K. companies tend to use agencies to source broad ranges of candidate populations, whereas U.S. companies use agencies more selectively for senior-level and hard-to-fill positions,” said Bersin.

“To bring costs down, U.K. companies are starting to diversify their sourcing strategies to embrace new social media tools, professional networks, and candidate relationship management (CRM) systems as sourcing alternatives.”

Over the past year alone, one-half of all U.K. companies said they reduced their spending on agencies, the research showed. These include a large retailer that has completely changed its recruiting processes, renegotiated its agency contracts, and embraced new social media tools, reducing their cost per hire 70 percent to £1700. Other progressive companies are following a similar path.

In addition, the study found that:

In general, U.K. companies have yet to fully invest in a broad range of recruiting practices and tools to find quality hires efficiently.

Agencies still account for 35 percent of all positions in the U.K. By comparison, agencies account for just eight percent of positions in the U.S., where companies source candidates from a variety of lower-cost tools, including the company web site, job boards, employee referrals, professional networks and social media.

Job boards are not dead, but dying. While job boards don’t enjoy the same popularity as in the U.S., they still are used to fill nine percent of open positions in the U.K. Job boards have been most successful in attracting “active” candidates – those looking for jobs.

However, as the global war for talent heats up, progressive organisations are reducing their spending on job boards in favor of new tools that source both active and “passive” candidates – those not actively seeking jobs.

Most firms are trying to evaluate new-hire quality by measuring metrics such as new-hire turnover, new-hire performance, and the satisfaction of both the candidate and the manager. The most prevalent means of measuring quality is through a 90-day new-hire assessment, used by nearly one-half of all U.K. companies. Firms with advanced recruiting practices continually measure new-hire quality and use that information to fine-tune the recruiting process.

As U.K. companies diversify their sourcing strategies, in-house talent acquisition staff will play a broader role. U.K. companies already have added staff to their recruiting teams, with headcount up 14 percent in 2011 over the previous year. Today, these staff members manage agency contracts, oversee agency staff, track key metrics and conduct some tactical recruiting.

 “Going forward, firms will need to build out their recruiting processes, acquire new tools and develop internal recruiters to source and recruit talent more strategically,” said Karen O’Leonard, principal analyst, Bersin & Associates and author of  the report. “In this new role, recruiters will act as true consultants to hiring managers. They will need to understand trends in the labour market, use various sourcing tools to build talent pipelines, and be versed in engaging and converting high-quality candidates. This will be a significant transition for U.K. recruiting teams – one that will take considerable time.”

CH2M Hill, a full-service engineering and construction firm, switched more than 50 percent of its recruitment advertising budget from job boards to professional networks such as LinkedIn and Viadeo, and to general social media tools including Twitter, Facebook and blogs, to secure higher-quality candidates.

Recognizing the costs of external recruiting and the difficulty of finding qualified candidates, recruiting teams increasingly are finding qualified candidates within their own firms. These employees may move laterally to another unit, function or job role; or they could be promoted. For example, a global financial services provider is staging its first-ever internal career fair in London.  The one-day, employee-only event aims to make employees keenly aware of opportunities outside of their individual departments, while keeping them within the corporate “family.”

“Our research found that about at least one in every five U.K. and U.S. open job requisitions is filled by an internal candidate,” said O’Leonard. “Today, retaining top talent is difficult and will grow even more difficult when there is a broad economic turnaround. In anticipation, progressive companies are creating and promoting internal mobility programs – not only to fill vacancies, but also to bolster employee engagement and trigger an influx of new ideas.”