Advertising: Make-up artists
Advertising plays a central part in most employers' recruitment practices, but with costs reaching thousands of pounds in some media, should recruiters call in the specialists? We analyse 80 organisations' experiences of using advertising agencies.
Learning points
Our recent two-part guide to using recruitment advertising, "Putting on a brave face" (see IRS Employment Review issues 738 and 739 ), found that the technique suffers from over-familiarity. More or less every employer will use advertising to fill some vacancies, and readers of most newspapers and trade journals encounter pages of such advertisements in every issue.
Yet producing a cost-effective advertisement is no easy matter. Finding the appropriate media, devising the wording and design of the advertisement, and dealing with often complex advertising rates require expertise, experience and a degree of flair. It is not surprising that many employers turn to specialists for advice.
We contacted 102 employers with experience of using recruitment advertising. Of this group, four out of five (79%) use recruitment advertising agencies, with twice as many doing so for each and every vacancy advertised as those that do so on a selective basis. In this article, we examine these 81 employers' experiences of using recruitment advertising agencies, alongside some background about agencies themselves:
The marketplace
The fortunes of recruitment advertising agencies are closely tied to the health of the economy, perhaps more so than most other sectors. At present, there is a savage downturn in the demand for recruitment advertising and the agencies that provide such services.
The latest figures from the Recruitment and Employment Confederation1 show that, by October 2001, recruitment advertising in the national press had suffered nine consecutive months of decline. Although public sector advertising fell by only 6.8% in the year to October, demand by the private sector has more than halved (down by 52.9%).
The consequences of this downturn are likely to be staff cuts in the agencies, and a restructuring of the industry itself. The latest annual review of the recruitment advertising industry from People Management magazine2, predicted such a shake-out when it was published in the relatively buoyant climate of June 2001. So, even those employers that are content with their recruitment advertising agencies may find that they have to re-evaluate their choice of provider, when a merger or acquisition leads to radical changes in the company they have grown to know, or where their agency is forced to close down.
Certainly, the severe recession of the early 1990s led to such structural changes in the advertising agency marketplace, according to the 1996 issue of the People Management review. But the economic pressures also provided opportunities. Agencies' profit margins were reduced, as increasing competition for a decreasing amount of business forced agencies to compete against each other more strongly. And greater breadth and depth of services were offered, sometimes at no extra cost, in order to attract employers.
The present-day conditions seem to reflect some of this experience. The 2001 People Management review notes that the market is "saturated", and there is a trend towards agencies providing a greater range of services to client employers, such as handling responses to advertisements and conducting the initial sifting of applications.
The review also highlights the sheer size of the industry, with a turnover of some £1.4 billion a year, and some 80 agencies providing recruitment advertising expertise in the UK.
Hidden from view, though, is a parallel industry within organisations, where employers run their own in-house recruitment advertising agencies, or where their recruiters can draw on the expertise of the corporate marketing or publicity department to write and design recruitment advertising, and place it in the appropriate media.
It is difficult to judge the scale of this shadow industry, but it is concentrated in the very largest organisations, of which there are relatively few in the economy. Many of the in-house recruitment advertising agencies, in particular, are found in the public sector, while marketing/publicity departments are likely to be more prevalent in the private sector. There are at least three examples of employers with in-house recruitment advertising agencies in the group of 81 organisations used for our research. All three are local councils covering a city or metropolitan area. Being unitary authorities, they will require a wide range of jobs to provide the full scope of services, and are likely to have substantial recruitment volumes each year.
The services
The main industry body for recruitment advertising agencies, the Institute of Practitioners in Advertising (IPA; its website is at www.ipa.co.uk), divides its members into two categories. First, "full-service" agencies offer a full range of services, from strategic issues, such as employer branding and overall planning of a recruitment campaign, to the design, technical production and placement of the advertisements in appropriate media.
Second, "media specialists" focus, as the name implies, on providing advice on which media to use and on placing advertisements in the chosen sources.
But increasingly, agencies in the two worlds of advertising and recruitment are coming closer together. Many companies now offer a range of services taken from both spheres. An agency that is predominantly focused on recruitment may offer advertising-type services, while, equally, an advertising agency may offer some recruitment-type functions. And, of course, recruitment agencies involved in search and selection have always placed advertising on behalf of their anonymous clients. Candidates must apply to the consultancy, and the employer is identified by no more than a brief description - "a leading global supplier to the automotive industry", for example.
Recruitment advertising agencies can also offer services from the world of mainstream product advertising, such as developing new brands, conducting focus groups and undertaking other market research into how the client is perceived and what messages and images would be most attractive to the intended audience. For a client that is aiming to fill vacancies, the brand will be the employer, the market research will investigate how target groups in the labour market (new graduates, IT specialists, and so on) perceive the client as a would-be employer, and the messages and images will be those that are most effective in encouraging suitable people to apply for jobs with the client.
Brewer and public house owner Greene King awarded its brewing, brands and wholesaling account to recruitment advertising agency aia. This involves the development of an employer brand, a housestyle and a standard advertising manual, alongside more traditional services such as copywriting and the placement of advertisements in appropriate media.
Val Moore, aia's joint managing director, says the agency's role will also be "to set standards and create an easily identifiable look and feel that will attract dynamic fresh thinkers to complement its existing team of loyal, dedicated staff". The agency offers clients a range of related services, from graduate recruitment brochures and mainstream recruitment advertising to employee communications and response management.
Meanwhile, in the NHS, with its endemic skills shortages, Leeds Teaching Hospitals NHS Trust has appointed a regional recruitment advertising agency, Pearsons. The trust hopes that the agency will do far more than just write and place advertisements for nurses, doctors and other staff. The Northern Echo3 quotes the trust's Lynne Rawlings as saying that "we will be using Pearson's expertise to develop a strategic approach to recruitment to help with the ongoing recruitment problems the health sector is encountering".
Employers' preferences
As noted above, many employers using recruitment advertising are likely to retain the services of an agency. Among the 102 employers using advertising that we contacted, four in five (79%) make use of agencies to handle their recruitment advertising. More than two-thirds (69%) of these users have an arrangement whereby the agency handles all their recruitment advertising. In the remaining 31% of users, there is an element of selection and choice in that only some of the vacancies the employer advertises are passed to the agency.
Users of recruitment advertising agencies tend to be larger employers, often because the number of vacancies makes it easier to justify using such services. According to our survey, the public sector is more likely to retain agencies than either private sector services or manufacturers (87%, 70% and 68%, respectively). The reasons for this are not clear, although it is likely that two factors are important. First, public sector bodies are also large employers, in the main - their size may be more relevant than the nature of their ownership. But second, the public sector often has a different approach to recruitment. It tends to be more formal and structured, and emphasises the open advertising of vacancies. Where an employer has a policy of advertising most or all of its vacancies, there may be economies of scale in placing this work with an advertising agency.
To support this possible explanation, our research shows that the public sector does, indeed, prefer to place all its recruitment advertising with an agency, with private sector services and manufacturers being more inclined to be selective and use agencies for some of their vacancies only.
Take-up of servicesThe services that employers expect their agencies to perform involve, first and foremost, placing recruitment advertising: that is, identifying appropriate media for the vacancy in question and, where applicable, the most suitable timing for the advertisement's publication (for example, some national newspapers specialise in certain types of vacancy on certain days of the week).
1. Agency Services used by employers
Secondly, agencies are expected to provide advice on the presentation of the advertisement: its appearance, style, graphics and so on.
And thirdly, agencies are expected to negotiate discounts on the fees that the chosen media charge (and to pass these savings on, in some form, to the client employer). In fact, the ability of agencies to obtain such discounts represents a major attraction for employers. Most employers lack the knowledge and bargaining power to gain media discounts, and this means that agencies' fees are competitive. In some cases, employers may find that they spend no more on an agency's fees than if they had paid for the advertisement themselves, and also receive for the same price a broader range of services.
These three services of placing advertising, advising on presentation and negotiating discounts are used by three-quarters or more of the employers that retain a recruitment advertising agency. Interestingly, though, far fewer - just over half the users -expect or wish their agencies to give advice on the text of the advertisement the employer has written. Fewer still - just over four in 10 - want their agency itself to write their recruitment advertisements.
And despite the growth of full-service agencies, only one in eight users want their agencies to handle responses to their vacancy advertisements. (Within this group, firms in the private sector are much more likely to use such response handling than their counterparts in the public sector. This is another reflection of the differences between public sector recruitment habits and the rest of the economy.)
There are other services provided to employers, but only a few of those we contacted avail themselves of them. One agency retained by a large fire and rescue service, for example, "creates campaigns, designs the ads and organises photo shoots". One retail bank uses "lots of additional services: research, demographics and focus groups".
Choosing an agency
The 2001 review of the recruitment advertising industry from People Management, cited above, observes that many agencies are increasing their range of services towards the full-service end of the spectrum. One of the laws of the marketplace, though, is that a competitive edge quickly becomes blunted when more and more businesses adopt the same tactics. The review quotes Bob Anthony, the founder of the Ri5 agency, to illustrate this: "Many agencies offer the same basic service, so differentiation is the big question". So how does an employer choose between 80 or so seemingly similar agencies?
The Greene King account eventually won by aia, mentioned above, involved a three-way fight between rival agencies. Greene King's HR Manager, Louise Sinclair, explained in July 2001 that the agency won the account because its "approach is straightforward and innovative, and we have no doubt that it will be a successful working relationship. We chose aia because we could relate to them as a company and they were very much values-led."
Leeds Teaching Hospitals NHS Trust was more explicit. In the Northern Echo article mentioned above, the trust's Lynne Rawlings says that it appointed Pearsons as its agency "because of their experience, proactive approach, innovative ideas and hands-on senior management style".
But what of employers in general? Below, we detail the key factors that influence the choice of a particular recruitment advertising agency. It shows that track record (proven effectiveness and/or personal experience) is paramount (being cited by 88% of agency users), far surpassing all other possible reasons.
2. Factors considered when choosing an agency
Allied to this, but still some distance behind, is an agency's general reputation for performance and effectiveness, followed closely by the agency's specific performance when tendering/presenting for the contract that the employer then awarded to them.
No other factors are particularly significant. One in six employers take account of a personal recommendation as a factor when choosing an agency, and a similar proportion place some importance on an agency's commitment to equality of opportunity. But only one in eight say they will choose an agency partly, or wholly, on their tender having been the lowest of those invited to bid for the contract.
Very few employers - one in 25 - take account of kitemarks, awards and other factors that might have a bearing on an agency's reputation or concern for quality. Only 3% of users said that an agency having ISO 9000 approval (the international quality-conformance standard) would influence their choice of agency. And only 4% said membership of the Institute of Practitioners in Advertising would influence them, even though member agencies must observe industry codes of conduct. It may be just as well, as this would act to the detriment of smaller agencies, which are unable to join the IPA if their income is below £250,000 a year.
The same proportion of the employers we contacted - one in 25 - take account of any industry awards gained by an agency in making their choice. This is not particularly surprising as, unlike some industries, there are a number of award schemes with no single one seizing the public imagination.
Finally, a handful of employers gave us further reasons that they used when choosing their agencies. A couple highlighted the agency's ability to be flexible ("able to respond to urgent requests" said one regional building society). One multi-site niche retailer insists on a meeting of minds ("empathy with brand values"), while several public sector bodies told us that agencies must show an awareness of their particular requirements. For example, one borough council mentioned "awareness of best value" and one city council required an "ability to deal with large public sector clients".
Working relationships
But agencies can only deliver such efficient services if their client employers engage in a two-way process. One of our contacts, an engineering firm, points out that "communication is essential. If you don't provide [agencies] with enough relevant information, you can't moan when they don't help you."
Employers may be using a set of criteria to choose an agency, but much of this information will also be vital for the agency to know - for example, expectations about the services required and the priority that should be given to factors such as cost versus flexibility or timeliness.
Much of this background material will have been included in the initial brief or invitation to tender. But it is important to ensure it is up to date - and revised regularly once the contract has been awarded - and that the agency has understood what is required, which seems to be a common problem.
For example, some employers suspect that agencies' enthusiasm for winning new contracts can overshadow their attention to the detail of what the employer requires. And one private sector employer said a "lack of understanding of our organisational structure means lots of rework [and] limited value added when developing ads for technical and scientific positions, usually because they don't understand the role."
So, as well as being briefed on organisational issues, the agency should be informed about the roles, job descriptions and person specifications involved in the vacancy and, if time and resources permit, a briefing by telephone or in person, should be provided by the employer.
Police or partner?
Contracts and formalities aside, the employers we contacted broadly favour one of two approaches towards their relationship with their agency (or agencies).
Some believe that employers should "be firm with agencies or they will take you for a ride", as one of the employers contacted put it. Similarly, one national campaigning organisation talked of the importance of "regular meetings, not accepting poor work, always pointing out mistakes and making sure it's your agenda". More overtly, a contact in an engineering company said their approach is to "let the advertising agency know we have an alternative company ready and waiting . . . [there are] plenty of agencies on our books".
Other employers believe in taking a longer-term view of the relationship between the employer and agency - "making sure you work in partnership, have service-level agreements, have regular meetings and report back on progress" as one major engineering company put it. Another contact, an adult education organisation, emphasised the need for a "good relationship with key personnel, built up over a period of time; mutual trust".
This emphasis on partnership and a longer-term view has led one of the firms surveyed, a transport company, to argue that "you need to treat the agency staff as if they were your own staff; do not underestimate the amount of time required to manage the agencies."
Somewhere between these potentially opposing views lie employers who emphasise mutual rights and obligations. In this scenario, the client should provide clear, adequate information, set out its expectations and provide honest, but constructive, feedback. The agency should then deliver what has been agreed. While frank and constructive exchanges should be cultivated, ultimately an employer should walk away from an agency that seems irredeemably incapable of fulfilling its side of the contract.
Personalities
Many employers we contacted raised other issues concerned with their relationships with agencies. The importance of working well at an individual level was raised by several contacts. For example, "build a good working relationship with one person at the agency," said one contact in a fire and rescue service. Certainly, employers that prefer a longer-term partnership will find it difficult if there is no staff continuity at the agency with whom they work.
The difficulty here may lie in agencies' lack of customer focus; in not giving priority to closer relationships and deploying different personnel to the same account. But it may also be partly for reasons outside the agency's control. As the latest People Management review of recruitment advertising agencies points out, "in the past year, there has been huge movement [of staff] in the industry, driven by rapid growth, skill shortages and escalating salaries. Staff at all levels have been headhunted." A major retailer we contacted has found that "service levels can deteriorate over time, and if the account executive changes."
The easing of labour turnover under current harsher economic conditions could help employers in this respect, although, as we saw, it may also lead to restructuring and closures among the agencies.
Slippage
The sort of deterioration of agency performance mentioned by the retailer above was also picked up by other employers as a problem they have experienced, and one that they advise others to guard against.
An NHS trust found that their agency was gradually increasing the size of the typeface used on the ads and, to accommodate this, had been increasing the overall size of the advertisement - with the result that costs were also rising. Fortunately, the agency stopped this after the trust complained.
More generally, several employers considered that their agency had become complacent as time went on - "loss of enthusiasm/service over time", in the words of one insurance company.
Attention to detail
Some agencies seem incapable of attention to detail - even in areas as fundamental to their business as the wording and accuracy of the advertisements they produce. One charity complains of "typing errors, wrong copy dates and inappropriate copy". Other respondents, including a further education college, an NHS trust and a mobile telephone company, told of textual errors, poor wording and poor proof-reading. Given that many employers will turn to agencies because they expect them to be expert in writing, laying out and proof-reading advertising copy, these experiences are worrying indeed.
In all, in fact, four in 10 (39%) employers we contacted that use agencies report having experienced problems. This rises to half (48%) of the employers that use agencies to advertise just some of their vacancies. Only just over a quarter (28%) of the employers that use agencies for all of their vacancy advertising report experiencing problems. These differences in experience could be interpreted as a vote in favour of establishing close relationships with agencies; employers that use agencies on a more ad hoc basis are likely to find this difficult.
Evaluating performance
Many problems with agencies will be all too apparent to the client. But the overall performance of an agency is more difficult to track without some formal mechanism being in place. For example, systems are needed to gather advertisement response rates. Clients could, for example, compare the response rates for comparable vacancies in an advertisement originated in an in-house department with rates where an agency has been used. Alternatively, employers that use agencies could compare response rates for comparable vacancies with other employers. But assessing this data is difficult, as there are seldom situations where like-for-like comparisons can be made. In this respect, employers that place only a portion of their advertising with an agency, and retain the rest, have an advantage.
Costs, too, are another area where evaluations of alternative approaches to advertising can be made, whether the comparison is between in-house staff and agencies or with other methods of recruitment.
Overall, just under two-thirds (61%) of the employers we contacted evaluate the performance of their recruitment advertising agencies. Employers that use agencies for just some of their vacancies are slightly more likely to conduct evaluations than those that use agencies for all their vacancies (67% compared with 59%). This may be an indication that the former approach lends itself more easily to evaluation, or that this group of employers is more sceptical about using agencies and is more vigilant as to their performance. On a sectoral basis, manufacturers are much less likely to evaluate performance than either private services firms or the public sector (47% against 67% and 66%, respectively). The reasons for this are not known.
Key issues to watch
Many of the employers we contacted for this research went out of their way to share their experience of using recruitment advertising agencies, and of the pitfalls they had encountered. This and other information has been distilled into a checklist (Points to watch, below).
The issues covered by the checklist range from such pre-contract matters as the services the successful agency will be expected to provide and the factors that will form the selection criteria when choosing between agencies, to ways of working with an agency, the possible problem areas with its performance, and ways of evaluating the agency's contribution.
It could well be that, in the current labour market and economic climate, employers will come to appreciate more fully those agencies with rich expertise. Advertisements will be increasingly likely to generate large numbers of responses, as an increasing number of jobseekers seeks a shrinking pool of vacancies. Agencies with the skills to prepare advertisements that appeal to those most suited to the vacancy while discouraging others will save employers time and money in handling unsuitable applications. And there may be a greater use of some agencies' ability to handle these responses on behalf of the employer than the present 12% of clients found in our research.
The key issues connected with using recruitment advertising agencies, according to 81 employers' own experience.
ServicesAgencies offer an increasing range of services, including response handling and sifting/screening applications. Decide which services will be required, and set them out in detail in the tender document or background papers. Decide whether the contract will cover all vacancies or just some, and the criteria for identifying eligible vacancies, if the latter is chosen.
Choice
Determine the factors that
will determine the choice of agency, and their relative performance. Some of
this information will be useful to the agencies bidding for the contract, as it
clarifies the employer's expectations.
Relationship
Decide the desired form
of relationship with the successful agency. Will it emphasise compliance and
control, or a long-term partnership?
Many employers recommend giving time and attention to establishing and maintaining good communication with the agency, including regular meetings, providing frank but constructive feedback, and openness. Productive relationships develop easiest where a few agency personnel provide continuity of service to the employer.
Employers stress the importance of providing full information and briefings about the employer's culture, business activities and types of vacancies. When vacancies occur, employers emphasise the importance of providing job descriptions and person specifications, and ensuring that these are up to date, informative and focus on key issues. Briefing the agency on the minimum selection criteria the employer will use is also recommended.
Agency performanceEmployers have found that the following problems can occur, and advise others to be alert to them:
Evaluation
Establish in advance the ways
in which the agency's performance is to be assessed, and communicate this to the
agency because it further clarifies the employer's expectations. Formal
performance monitoring may require benchmarking data against which the agency
can be compared. Will equal opportunities monitoring be used? If so, decide the
extent to which the agency will be involved in monitoring and, more generally,
advising on choice of media to reach underrepresented groups.
Our research
This article is based on information we obtained from 81 employers that use recruitment advertising agencies. These organisations employ a total of 408,000 people. Just over four in 10 employers (42%) in the survey are public sector organisations. The remainder - the private sector employers - are split between services firms (a third; 35%) and manufacturers (a quarter; 23%). Larger employers tend to be greater users of recruitment advertising agencies; public sector organisations tend to favour open recruitment via advertising. Given that most public sector bodies are also large employers, these factors are a major reason for the public sector's strong presence in our survey.
1 Report on jobs, Recruitment and Employment Confederation, tel NTC Research on: 01491 418700, www.ntc-research.com
2 "Annual review of the recruitment advertising industry, 2001", People Management, 28 June 2001, www.peoplemanagement.co.uk
3 "Pearson gets £1 million contract", the Northern Echo, 26 April 2001.
