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Construction Losses Defy Logic

Monday, September 3, 2007   

The Role : Projects Manager - Construction

 

The Hiring Circumstance –  This major construction company, in common with every construction company in the UK, was having difficulty attracting experienced people with the right skill-sets due to skills shortages. 

The company could be favourably described as having an extremely proactive attitude to hiring and retention issues and were streets ahead of many of their competitors in terms of their HR set-up and appreciation of the importance of using hiring to gain a competitive advantage.

However, despite a lot of very good intention, the way the company approached working with its recruitment supply chain, particularly the way it applied its hiring budgets, is resulting in some vacancies being open for more than a year.

The Strategy – The company understood that recruitment advertising was largely a futile exercise when it came to trying to attract the people it needed, because those with such in-demand skills received a direct approach about alternative employment on average every two months and had no reason to trawl the situations vacant pages.  

The company instead focussed its strategy on recruitment agencies for its hiring capability.  The flaw in the strategy, however, was that the company did not use proactive search firms as policy due to the perceived high level of charges, whilst  also applying a maximum fee  / percentage that it would pay to contingency recruiters.

The Consequence –  The regional commercial director reporting this case highlighted the hiring 'silo mentality' once again, as the savings on the HR budget were having a huge knock-on effect on the profitability of his region that made the 'savings' look like "chicken feed by comparison".

The information supplied to contingency recruiters - job title, salary, job description, company marketing information  - was almost completely ineffective in terms of giving recruiters information with which to attract candidates. 15% fees do not buy much in the way of proactive initiative.

Where recruiters were successful in locating candidates, other construction companies were more than happy to pay what the recruiters would consider their normal level of fees to have first choice of good people.   With their costs escalating at the same rate as the end employer, many recruiters faced the "no brainer" decision of either presenting people to company A, B, or C  - or to the company that is the subject of this case for an average of £2,500 less.

Recruitment supply chain policy was not connected to the operational needs of the business or the dynamics of the labour market.  Giving just one example of a project manager role that had been vacant for over a year, the commercial director reported that directly because of this, the company in his region alone had been forced to walk away from work that would have delivered him £8million worth of margin from his region. 

As the policy was nationwide, he had no reason to doubt that the company was saving a few thousand pounds on hiring fees whilst missing out on £millions all over the country in terms of available work that could not be serviced.

Cost - £8million in lost margin

 

 

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Are some construction companies building a rod for their own back rather than buildings?

 

 

 

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Spending money on recruiters that really understand how to promote an opportunity is most definitely an investment rather than a cost

 

 

 

 

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