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Start a free trialIf you’ve never recruited before, weighing the benefits of in-house recruitment versus the advantages of using recruitment agencies is a pretty tough call.
When we were just starting out, we really grappled with the in-house vs external agency dilemma — we weren’t even sure of the questions we were trying to answer, let alone know how to decide what was best.
So to save you the time and the worry, I’ve put together this step-by-step guide to the pros and cons of in-house recruitment vs external agencies. And I’ve included recruitment strategies for small businesses based on exactly what we now do at Charlie to help you more easily create and implement your own.
You may end up going down the same route as us (we created a Talent Manager role in order to do all of our recruitment in-house), you might employ an agency, or you may decide on a role by role basis. But however you choose between in-house vs agency hiring, this guide will help make the best choice for your small business.
As a small business, it’s important to weigh up the benefits of in-house recruitment versus the advantages of using recruitment agencies.
Here are the factors we recommend you consider for your company as a whole:
The most obvious factor to consider when deciding between in-house recruitment vs external agencies is cost. But it’s not as simple as an agency always costing more.
Sure, agency costs are going to add up (and usually, pretty quickly). But without solid recruitment strategies for your small business, so too can in-house, and what you assumed would be cost-effective actually ends up being more expensive long-term.
The hidden costs of building your own internal processes include time, resourcing, and trial and error — which can often be avoided if you use an agency.
But the benefits of in-house recruitment for small businesses shouldn’t be dismissed, and there are tools out there to support you.
To help decide between in-house vs agency hiring, we recommend that you research agencies that know your industry and get quotes from at least three of them. Then you can do a cost comparison and work out what’s best for your small business.
In addition, here are some questions to help you calculate the cost of in-house recruitment vs external agencies:
In-house recruitment will always give you greater control over branding and candidate experience than if you recruit through an agency. This is because a recruitment agency is a brand in itself, deals with multiple clients, and will implement their own processes.
If you’re a growing startup and want to build a team that’s aligned with your values, it may be better to manage your recruitment in-house. As a forward-thinking and HR-oriented company, this is one of the main reasons we chose to hire someone to manage all of our recruitment at Charlie.
It’s important to use real-world scenarios to evaluate the time needed to build in-house expertise versus the speed an agency can offer.
For example, if you’re in need of rapid hires for a busy period like summer or Christmas, an agency is likely your best bet, because time is of the essence.
Recruitment agencies have candidates on their books who are looking for temporary work (or are open to it), and can target them quickly and directly. In contrast, you’ll have to spend time finding these candidates in the first place.
And here are factors worth thinking about when it comes to each particular role:
Typically if you’re hiring for a more junior role, you should be able to handle the recruitment in-house.
As you look to recruit more senior people, and there’s more riding on making the right hire, you may want to look for help from a recruitment agency. One of the advantages of using recruitment agencies is that they have a candidate pool and ready-made channels into the main recruiting websites — you’ll want to take advantage of these when looking for senior leadership.
Every role requires different experience, and the level can help to determine your decision around in-house recruitment vs external agencies.
Are you looking for someone with a very particular skill set? If the answer’s yes, then opting for an agency may make sense, as they can tap into their networks and target people who have those skills already listed on their profile.
If the role is more generic and training will be provided on the job, then you may be able to find the right sort of candidates without too much external help.
Understanding the market in relation to the role you’re recruiting for is vital when weighing up in-house recruitment vs external agencies.
For example, if you’re looking for a junior candidate with basic copywriting ability, then there will be a lot of people in the job market. But it's a different playing field if you’re looking for a chief technical officer who understands data science and has many years of experience. Typically, the more technical and specialised the role, the smaller the pot of applicable candidates.
Knowing the market will help you decide between in-house vs agency hiring. Generally speaking, if you’re recruiting for a senior or specialised role, working with an agency is worthwhile.
Before you commit to recruiting in-house, think about who in the company will manage the process and how much of their time it will take up. Once you’re happy that you can dedicate enough resource, here are the reasons why recruiting in-house is worthwhile:
It will always be easier for you to know the difference between the right and the wrong candidate. You live and breathe your business — no one understands what it needs better than you.
Recruiters are more likely to present candidate options who are not the right fit for the role or your business. You’ll avoid wasting time on these if you do everything in-house.
When you recruit in-house, you decide how you communicate the role, how you sell the business, and how you talk to the candidate — ensuring that nothing is lost in translation and a better experience all round.
Recruiters can make the process more complicated than it needs to be.
When you’re ready to make a candidate an offer, a direct person-to-person line of communication is preferable. But the recruiter is an extra layer and things can become more complex and drawn-out. When you’re recruiting in-house, you don’t have to worry about that.
You will save some money if you choose to use a recruiter, but that doesn’t mean you shouldn’t put any budget towards recruiting in-house.
If you want to recruit well, you should be prepared to spend some money to make in-house recruitment work for you. An ATS (Applicant Tracking System) tool like Charlie Recruit automates all your manual recruitment tasks, helps you make better hiring decisions by using AI-powered features, and costs less than a recruiter.
Provided you’ve done your research and have access to the right candidates, one of the big benefits of in-house recruitment is that you’re more likely to find a person who’s the perfect fit for your business.
Recruiting is a skill and recruiting in-house is the best way to learn it.
If you’re looking for a specific individual with a reasonable level of seniority in a niche market, using a good recruitment agency can be invaluable. Here’s why:
A recruiter who truly understands the market can add a huge amount of value to the hiring process. Not only will they have a grasp of the market and requirements, if they’re really good, they’ll have existing relationships with great candidates.
A good recruitment agency will know everything from salary expectations to when it’s a good or bad time to hire.
This is one of the biggest advantages of using recruitment agencies. If you have a recruiter with existing relationships and applicants at their fingertips, they can move things along much faster than you can.
To help you put all the in-house recruitment vs external agencies theory into practice, here’s what we do (very successfully) at Charlie:
Having proper processes in place boosts manager confidence, especially when recruiting in-house.
For example, at Charlie we have a specific programme for managers to go through when they are employed or promoted. This includes the following modules:
Each of our managers goes through this training (which includes tips, videos and a full training package).
By centralising recruitment tasks, our recruiting managers avoid time-consuming activities like screening calls. At Charlie, all of these tasks are all handled by our Ops team.
All of our managers at Charlie benefit from the expertise and systems set up by our Talent Manager. Here are some of the most applicable:
Our initial approach to recruitment reduced our time-to-hire and ensured we were consistently bringing in the right people, but our Talent manager was still drowning in admin.
To cut down on these administrative tasks, our solution was to automate almost all of the manual recruitment processes. This not only changed our Talent manager’s workload dramatically, but became the recruitment tool we now offer our customers: Charlie Recruit.
