How banks plan to cut recruiters out of the equation

21 January 2010

3 minute read

How banks plan to cut recruiters out of the equation

On one hand, things are looking good. Most people seem to think there will be more hiring in 2010.

On the other hand, recruiters have reason to fear the resurrection of the, 'internal referral programme.'

In truth, internal referral programmes never really went away, but now that banks are hiring again, HR people say they're being emphasized more heavily.

"They're a lot cheaper than using recruiters and are seen as a low cost alternative to using agencies," says the head of recruitment at one US bank.

"The last 18 months have been about layoffs, but now that we're hiring again referrals are the cheapest and most effective way of finding people," confirms the head of recruitment at another international firm.

The last time we wrote about internal referrals was 2007 when people were apparently being offered 2-3k and the chance of winning a BMW if they referred someone who was hired.

The amounts on offer appear to be higher than that now. "The average for a junior referral is probably around 5k," says one of the recruitment heads. "It goes up to around 7.5k for a VP and around 10k for an MD. That compared very favourable to the 25-50k you'd spend on a headhunter."

Below we have added, a possibly spurious but nevertheless totally conceivable email apparently sent to employees at an unnamed bank in an attempt to elicit referrals. It was left as a comment on an article earlier this week.

Lateral Recruitment Pipeline

All,

It may be an understatement to say that the workload over the past few

months has been extremely heavy and that we have all struggled to

cope.

The good news is that help is at hand as the department has received

authorisation to make a number of hires at the Analyst, Associate and

VP levels. The bad news is that we are not seeing enough strong

quality candidates.

We are turning to you and would like you to help us help you. We would

like you to get in touch with your classmates, flatmates, friends and

family who you believe are of high quality and believe may want to

join the firm. We have opportunities throughout IBD and GMSG and have

a particular interest for anyone with experience in a bulge bracket

firm and / or linguistic skills (in no particular order: Russian,

German, Spanish, Italian, Polish, Hebrew speakers, amongst others).

As a reminder, there is a referral programme in place so if you manage

to refer someone successfully, you may enjoy both a lighter workload

and some extra money.

Please pass on all résumés to [...] and myself.

Thank you.

AUTHORSarah Butcher

Global Editor

Po
Pondlife
11 February 2010
Unless of course the employee is from an ethnic group? Have you looked around the IT department of most Banks ?
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Be
Benedict
28 January 2010
One of the problems with referrals is that they are from the individual's peer group with a similar profiling and so the process itself does not promote equal opportunites for minority groups.
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I_
I_love_HR
22 January 2010
Of course most people who commented negatively are NOT recruiters who would be negatively affected, and those who are are being very objective despite their interest, right?
Internal referrals needn't always be about competition: you may well refer someone for a role different from yours, and who will therefore not be directly competing against you. A trader might know a sales person, a structurer may know an accountant, etc...
The biggest problem about recruiters is that most of them did not work in the field before, and therefore know next to nothing. As a result, they will just look for matchink keywords in the CVs, but that's about it. It's as tough a banker were to recruit engineers or surgeons: how can he/she assess a candidate's experience? I still remember about a friend of mine in IT who got rejected by a recruiter because he wrote about his "SQL experience" but didn't mention the keyword "database". The joker who interviewed him didn't know that SQL happens to be THE database language!
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Wi
Wizard of EC1
22 January 2010
The main problem with referral schemes is that you put YOUR reputation (and bonus) on the line for 5k. If the candidate fails at interview, YOUR rep is tarnished, if they fail to perform YOUR rep is effected - is it worth the risk for a taxable 5k? And the caveats! If you don't inform the HR at the right time and the right manner, payment is void ..... and they may still hire the candidate and YOUR rep is still at risk, but you don't see a penny! Tricks of the trade.
Direct approach - the mantra of outsourcing consultants, but why go through the often un-navigable, poorly designed, user unfriendly websites to send your CV to persons unknown? I like to know who my life history is being read by. And all just to be considered for one job, cos the HRBP won't think to put you up for related roles. So all the work is with the candidate for minimal return.
Or speak to a person, chat about what opportunities are about, send your CV in ONCE for a range of opportunities and have an expert arrange the interviews and negotiate your package.
Think about it for a moment.
Smells like and Accountants solution to a Business problem. I don't think good HH need to worry about the future
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SG
SGP Banker
22 January 2010
I just think employees have a conflict. You will never refer to somebody that will be a direct competition to you, as such it is not the most efficient way in my view. Headhunters may be expensive, but at least they are independent (sort of).
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