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5 Misconceptions About Reducing Spend on Agency Labour

16 August 2023

Efficiently managing agency labour spend is a priority for organisations aiming to optimise their hiring processes. However, there are several common misconceptions that hinder effective cost reduction strategies. In this blog post, we will debunk five prevailing myths surrounding reducing recruiting agency spend, empowering you to make informed decisions and implement practical measures to maximise your recruitment budget.

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1. Cutting Agency Labour Spend Compromises Quality

One common misconception is that reducing agency labour spend equates to compromising the quality of candidates. However, the key lies in optimising your hiring process and leveraging technology. Develop clear job descriptions, define desired qualifications, and establish effective screening and interview procedures. By aligning your expectations and requirements with the agency, you can ensure that you receive high quality candidates who match your organisational needs without inflated costs.

2. Internal Recruitment Can Not Fully Replace Agency Support

While internal recruitment can be a valuable resource, completely replacing agency support may not always be feasible or cost effective. Agencies bring expertise, industry knowledge, and an extensive network of potential candidates that internal teams may not possess. By striking a balance between internal and external recruitment efforts, you can achieve optimal results, reduce costs, and leverage the unique advantages each approach offers.

3. The Agency With The Lowest Charges Isn’t Always the Best Option

Selecting an agency based solely on the lowest cost can be a short sighted approach and may leave you exposed to legal risks. It is essential to consider the agency's internal processes and procedures as well as their ability to candidates within specified timelines. Collaborate with agencies that align with your organisation's culture, values, and recruitment objectives. A thorough evaluation of agency performance, client testimonials, and negotiation for value added services can help you strike a balance between cost and quality. A neutral vendor managed service can help you liaise with various recruitment agencies as well as cost savings.

4. Paying More Yields Better Results

Some organisations believe that paying higher hourly rates to agencies  will result in better candidates. 

However, this is not always the case. It is important to ensure that a higher rate is being paid to the worker themselves rather than the agency taking a higher margin. Increasing pay rates to workers is the most effective way to get better candidates, but paying a higher margin to the agency makes no difference whatsoever. 

5. Reducing Recruitment Agency Spend Requires Significant Effort

The misconception that reducing recruitment agency spend requires extensive effort and resources can deter organisations from pursuing cost saving initiatives. However, simple adjustments can make a substantial impact. Regularly review your agency contracts, negotiate pricing terms, and explore volume discounts. Implement efficient applicant tracking systems and streamlined recruitment processes to minimise administrative burdens. By taking small, proactive steps and staying vigilant, you can effectively manage agency spend without overwhelming your team.

Reducing recruitment agency spend is not an insurmountable challenge. By dispelling these common misconceptions and adopting practical strategies, organisations can optimise their recruitment budgets while maintaining the quality of candidate selection. Embrace a strategic and balanced approach to maximise cost savings and achieve successful hiring outcomes.



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