Category Archives: Ombudsman

The Recruitment Industry – Do we need an Ombudsman?

Anyone that knows me or follows me on Linkedin is probably aware of how passionately I defend the recruitment industry. Don’t get me wrong, I’m not that blind and naïve fool who thinks everything in the garden is rosy, not by any stretch of the imagination. Let’s face it those do exist in all industry sectors and walks of life.

I do however believe that the recruitment industry is unduly maligned, vilified and chastised as the Pantomime Villain of the job market and the world of employment. Surprisingly more often than not it is by the people who work in it. I am absolutely not one of them. But I’m not wearing rose tinted glasses. There are issues, there are rogue elements and there are undoubtedly the unscrupulous and the exploitative. In all walks of life, in every profession there are those who cause problems, have a different set of ethics and morals, narcissists and commercial sociopaths who thrive on doing things the wrong way, who think that financial gain and acquisition of a fast buck is the testament to success. Unfortunately in recruitment because of who we are and what we do a little bad news can travel very fast, especially in the social media world we now live in where a single incident which had no original malicious or unscrupulous intent can be rapidly exaggerated as catch all testament to the industry as whole

Earlier this year a debate raged on the Institute of Recruiters (IOR), Linkedin Group. I spent a week or so defending criticism of my industry from a certain quarter. These people (one individual in particular) were suggesting that the recruitment industry needs licensing. It was quite a lively debate, and in all fairness I suspect the real context was lost due to the misleading opening point of the discussion where it was implied that virtually all recruitment businesses are worthless, because they don’t have a license. Suffice to say that this angle was robustly defended by many and some including myself rather took offence at the insinuation. But maybe in hindsight I should consider eating some humble pie.

I was recently asked for advice from a former client on a serious recruitment issue they were trying to deal with. Basically they use a number of recruitment firms to recruit highly skilled and pretty rare technical engineering staff. Much of this is on an ongoing contract basis which is very lucrative for the recruitment firms involved. Some however is permanent recruitment, which of course from a one off fee perspective is particularly rewarding.

My client has discovered that one of their suppliers has been responsible for some rather unethical activity within their organisation. Basically the recruiter has been placing candidates on a perm basis and then soliciting the same candidates immediately they are out of their probationary period or to clarify, once the rebate period on the fee has transpired. This hasn’t happened just once either. My client has undertaken a solid investigation and it appears that this activity has taken place on at least 5 occasions in the last 12mths across their various business areas and departments.

Worse still! Yes it can get worse. The same recruitment firm provides a lot of contractors, but what they have been doing is poaching other recruitment agencies contractors out of the company and its projects and placing them with competitors and visa versa. What makes it worse still is that they have been paying referral fees to their own contractors for names and phone numbers of competitor’s contractors, effectively undermining their own client’s projects by extracting their skilled agency contractors!

Now, if you work in recruitment and have ethics and morals you are probably squirming in your seat at the sheer audacity of this. If you don’t work in recruitment or don’t understand how this market works you may not really appreciate how bad this scenario is, let me explain.

The recruiter gets paid a fee for a perm placement of for example £8,000 for placing Bill Smith in a job with Oxygen Power Services. 3mths later when there is no rebate clause period remaining so the recruitment fee is banked and safe. The same recruiter goes back to Bill Smith and offers him some more money to move to another firm down the road. He gets another £8’000, but at the same time he gets to fill Bills job at Oxygen again with a candidate he previously placed at another firm and gets another £8’000. In reality there is no limit to how many times he can do this, well until he runs out of companies and candidates. If he moves 5 candidates through 5 companies and they all work in the same place once, then over a period of 12 – 18mths he can replicate the same fee up to 25 times! Unlikely but it is mathematically possible.

The same kind of formula can be applied to the contractor side. He is basically shuffling contractors from one recruiter to another project and has created a merry go round type scenario, which is also pushing up pay rates or reducing everyone’s margins. This is basically ‘Sharp Pracitice’ and was traditionally the holy grail of a few firms of cowboys and charlatans in the Sales Recruitment sector in the 80’s and 90’s who oddly always had a tendency to emulate Gordon Gekko. Image

My client has asked me who they can escalate this unprofessional conduct to in terms of a serious complaint. The problem is he can’t really! Okay if the recruitment firm in question were part of the REC or the IOR or similar then he could complain to those industry bodies. But they aren’t a member and to be honest, industry bodies don’t usually have much bite, although the recently formed Institute of Recruiters has promised to be robust. He can complain to the governments Employment Agency Standards office, but technically what this recruiter is doing is not illegal and they are not really responsible for commercial disputes. The EAS is really about enforcing protection, fair play and rights for workers.

What this recruiter is doing may be unethical, it may be considered bad practice by 99.9% of an industry worth an estimated £20billion+ a year to the economy, and it may even be in contravention of the terms and conditions of business of supply. But as far as I know it is not illegal. It should be but it probably never will be.

So maybe there is an argument, a case or at least a point worthy of consideration in regards to licensing the recruitment industry. Maybe there should be a government ombudsman who can rule on customer complaints with an iron glove, there is in just about every other people business. The healthcare, utilities, financial services, legal and accountancy and others all have some kind of Ombudsman set up, who is responsible for handling complaints and hold an entirely objective and impartial stance.

Maybe this could even be a more practical solution to the candidate ownership and fee debates and incidents that invariably turn legal. Yes, there would of course be a cost to set up and run an Ombudsman but if the end result is a cleaner, more robust and business conducive environment that engenders trust and thus increases positive perception could it be a win win for everyone?

What do you think?

On a final note, in reality the true scale of issues, bad practice and or intentional malpractice in the recruitment industry is actually very small. Genuine complaints, by this I mean those that are found to have grounds and be reasonable as opposed to being merely a matter of perception are relatively rare. I have worked in this industry for nearly 20yrs and the vast majority of people I have worked with or have been acquainted with are immensely passionate and ethical about what they do. But it only takes a couple of bad apples to spoil a barrel. No industry is perfect and every industry can be improved of course, but genuinely I think the industry has never been better.

So is a real licensing strategy based upon protecting hiring companies, candidates and the industry actually a good idea, it has been debated for years and historically did exist, should we bring it back? If we did, who would police it and how would it work? Would an Ombudsman suffice?