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Recruiters beware: Cost-conscious banks are in the mood to do more of their own hiring

Getting headhunted isn't easy

Getting headhunted isn't easy

Many international financial institutions in China are on a drive to do more direct sourcing and become less reliant on recruitment agencies, according to delegates at yesterday’s eFinancialCareers roundtable in Shanghai, which was attended by 19 HR professionals.

Although foreign firms in the mainland lag behind those in Hong Kong when it comes to in-house hiring, the current emphasis on cost cutting means they are trying harder than ever to catch up. “Of course we use agencies sometimes, but the trend is definitely towards direct. We are being encouraged to do it globally, and this affects China,” said one of the panellists, all of whom asked not to be named in this report.

However, HR representatives from two foreign banks said the small size of their teams was hampering their ability to hire effectively. “Direct sourcing is a priority, but we have to remember that it doesn’t always create an immediate cost saving and we need to put proper resources into it for the long term.”

Referral power

Roundtable attendees from different parts of the financial sector agreed that employee referrals were crucial to their direct sourcing efforts. “It’s the number-one channel for us; 30 per cent of all our recruitment is done this way in China. We need to think of all employees as potentially being recruiters,” said a delegate from a large global bank.

His counterpart at an accountancy firm used to run a referral programme which only paid out after six months of employment. “That’s been changed to 50 per cent up front and the rest after three months. We’re getting more engagement now.”

Referrals worked well for mass recruitment of call-centre staff who needed to speak good English for overseas customers, said an HR professional from an insurance company. “But we don’t just motivate employees with money. If they successfully bring someone on board, they receive a certificate and a congratulatory email cc’ed to all managers, so they can see that the company appreciates their efforts.”

Recruiters: sometimes useful, but improvement required

Despite the trend towards direct sourcing, recruitment agencies are widely used by foreign firms in China. They are under more pressure to perform, but are not completely marginalised. A representative from a medium-sized European bank said 60 to 70 per cent of her hiring was via recruiters. “But in the current market, because of the emphasis on cost management, we are trying to reduce this.”

In general, there are three main (and often overlapping) scenarios in which recruiters are most often asked to help: urgent hiring; roles that require hard-to-find specialist skills; and senior management positions.

Yet even for these jobs, there is concern that the mainland’s recruitment industry is not developed enough to provide a proper service. Many big-brand international agencies have only been on the ground in China for a few years and some of their consultants lack knowledge and experience of recruitment and/or financial services. “The problem in China is that recruiters aren’t that sophisticated, even in companies with good reputations overseas,” said one delegate.

Another attendee agreed: “The quality could improve. Recruiters generally haven’t been in the sector for very long, so they can’t provide the detailed type of advice we need. They don’t always understand the roles we give them.” Senior managers at recruitment companies privately admit that finding good consultants in China is more difficult than in developed markets like Hong Kong and Singapore.

Ironically, the push for more in-house recruitment may help raise standards at the agencies. “I’m optimistic,” said a panellist, “they have to improve because they know direct sourcing will increase in the future, so they have to offer a better service to compete with that.”

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