White paper on UK public sector recruitment challenges post COVID-19
Alvius recently published a white paper on the recruitment challenges that the UK public sector will face post COVID-19. It explores the solutions to the current problems within public sector recruitment. Reflecting on its development over the decades, from Preferred Supplier Lists to the Neutral and Master Vendor models, they explore the key issues facing the public sector today. From stagnant salaries, to poor retention rates and increasing recruitment costs, they propose new ways in which the public sector should be embracing technology and altering processes to lead the next recruitment revolution within the sector.
Naturally, one tool that is readily available to those hiring in the public sector is UK Public Sector Jobs! You can post your role for free here.
The Development of Public Sector Recruitment
In order for us to identify effective solutions moving forwards, it is important to understand how public sector recruitment has developed so far. Ultimately, PSOs have consistently outsourced both temporary and permanent recruitment to external partners (RPOs) using a variety of different methods.
The first step was the development of a Preferred Supplier List of agencies (PSL). These emerged in the 1970/80s, fuelling the large-scale recruitment of temporary workers to the sector. This simple structure clearly worked – and persists today – but requires the PSO itself to manage the agencies and carry out all a range of activities from contracting to timesheeting. For temporary recruitment, they also assumed the liabilities associated with employing individuals on temporary contracts.
And so, seeking to outsource not only talent sourcing but also supply chain management, in the early 2000s, the sector transitioned towards the Master Vendor model. This involves a larger recruitment agency assuming responsibility for all of the PSO’s recruitment. Wherever possible, the MV sources candidates themselves. If they cannot find a suitable match for a role, they ‘vend out’ to a supply chain of agencies which they would manage, thereby absolving the PSOs of a wide range of responsibilities; it is incumbent on a Master Vendor to look after all compliance requirements and other employer responsibilities. All the PSO had to do was pay for it.
Master Vendors, alongside Neutral Vendors, account for a significant proportion of all major recruitment contracts in 2020; indeed for many organisations, they fit the bill. There are limitations of the model however, particularly when it comes to costs. Because the Master Vendor is, by definition, not neutral (appointed by themselves as the Tier 1 supplier), they will not necessarily always select the strongest candidate for a role. Nor are they incentivised to negotiate with agencies to minimise fees; if they do succeed in bringing fees down in the supply chain, the expectation will emerge for their own fee to fall.
When the economic crisis struck in 2008, PSOs were pressured to dramatically reduce government spending, which led to the rise of the Neutral Vendor model. Importantly, this approach used third party neutrality to ensure competitive pricing and worker quality. The NV model has proven to be very effective; approximately 25% of all Local Authorities in the UK engage Neutral Vendors and have seen the benefits to their bottom line.
The limitation of the NV model, however, is that it still, for all the cost efficiencies and incentive
alignments, involves recruiters going into the market and finding people for roles; there is a floor to the fees they are able to charge and after the steady application of pressure, they now have little room to move. And because the ultimate commodity being sold by a NV is an individual recruiter’s time, they do not benefit from significant scale efficiencies; that time ultimately has to be paid for.
As seen in 2008, it is often during times of crisis and challenge that we achieve the greatest steps forward. As we explain in the next chapter, the recent coronavirus epidemic has sharply driven up government spending and, at the same time, radically reduced economic output; the result will be even greater pressure to identify opportunities for cost reduction within PSOs.