Banks turn up heat on recruitment agencies

The economic downturn is forcing investment banks to take a fresh look at the way they hire staff, with several saying they plan to increase direct hiring and restrict their use of recruitment agencies.

Julie-Ann Goddard-Harding, an HR executive at BNP Paribas, said some managers had in the past hired staff &quotas though they were buying double-glazing. In other words, they haven't managed the process as carefully as they should have done.&quot

At a meeting of bank HR executives in London organised by the Penna Consulting group, she said BNP Paribas aimed to hire more people directly and through employee referrals, in which existing staff recommend people they know of outside the bank.

BNP Paribas would also operate tightly controlled 'preferred supplier' lists of recruitment agencies, to ensure it received CVs of only the highest quality.

Goddard-Harding said that in some cases that could lead the bank to use some of the less well known recruitment firms, as better known ones might channel their top CVs to other employers.

Terry Goodger, a recruitment manager at Merrill Lynch, said her bank was very reliant on recruitment agencies and would examine how effective its hiring processes were.

&quotManagers (at Merrill Lynch) have tended to pick up the phone and talk to any agencies, agreeing to fees of 30% - 35% (of first-year compensation),&quot she said. &quotSometimes as long they get the talent, that's all that matters to them.&quot

She said a survey of hiring at Merrill had shown that 26% of IT staff had arrived through employee referral. Only 4% had arrived through direct recruitment. &quotThis was not as successful as we would have liked,&quot she said.

She added that banks sometimes spent millions of dollars on new kinds of recruitment technology. &quotThen after a couple of years we throw them out because they haven't met our needs.&quot

Other banks, not at the Penna meeting, also say they will increase direct hiring, using their own websites and advertisements placed on other sites and in the press. But their ability to do this may be limited at the moment, as many have reduced the size of their human resources departments in order to cut costs.

Banks also say they will continue to seek reductions in fees charged by recruitment firms, which in many cases have fallen considerably since the slowdown in hiring began last year.

Goddard-Harding said BNP Paribas expected to spend 10% less on hiring staff this year than last year, through improving its hiring methods. Further savings of at least the same amount could also be made in future, she believed.

Amanda Whiteford, a former HR director at DrKW, said the bank had found psychometric testing extremely useful in the hiring of graduates.

The results of personality and skills tests corresponded closely with performance assessments by interviewers, and with decisions about which students to offer jobs to.

Such tests saved the bank money by eliminating unsuitable candidates at an early stage, and reducing the number of unsuccessful hires.