E-auctions are paperless auctions where everything from the advertisement, short listing of suppliers and even the tendering process takes place online. An e-auction differs from a conventional auction wherein the vendor sells to the highest bidder, in that here the buyer purchases from the lowest bidder (the recruitment company) inferring that cost is now the most important driver in the recruitment process.

At the same time there is now a greater focus on the need for the agency to find not just a technical match, but a cultural fit to their clients business. Recruitment 2020 - an independent survey by Demos - studied the underlying changes in recruitment today. The research revealed that today's recruitment market is moving further away from the industrial revolution ideals of standardised jobs. Roles are becoming less specialised and businesses are looking for people that are more creative and demonstrate more initiative. As recruitment becomes less and less about volume and more about the right match, businesses are concentrating more on 'soft skills' so that they can ensure the candidate is the right cultural fit for their business. This means in turn that for many businesses their procurement methods will have to undergo scrutiny. How well does a recruitment agency know the business they recruit for and can they guarantee to supply a candidate that is a cultural fit to the business as well as a skills match? And how much time do they put into the process to ensure they are delivering?
 
Add to that the current candidate shortage means that retention of talent is now a high priority. There has been a tightening in the labour market since September 2006 and vacancies have recovered to pre January 2005 record levels; the reality is there are more and more jobs and fewer candidates.

So what does all of this mean?

A recent CIPD survey estimated that the average cost of turnover per employee is £8,200, rising to £12,000 for senior employees. Therefore increasingly HR are focussed on retention, while procurement is primarily concerned with initial costs; cue the e-auction! This conflict in interest becomes a problem if the two do not work together side by side.

Shaun Greenfield, Sales Director at Poolia UK Recruitment Ltd identifies that procurement should work closely with HR and not independently from it: 'A drive for efficiency in recruitment has meant that the process will have to be more about value and less about cost. Businesses need to have more focus on the retention and value of employees rather than simply having a 'bums on seats' mentality.'
Poolia offer a 100% rebate within 3 months of the candidate start date, by doing this Poolia support HR by spending more time and concentrated effort on fitting the right person to the right business, and not just supplying skills matches.
'Choosing a recruitment company carefully is imperative for any business; what is short term gain can mean long term loss if you are employing the wrong people.' Says Shaun Greenfield.

So how much can a recruitment agency value their own offering when they sell their services for rock bottom prices? If an agency has reduced the margin so dramatically in an e-auction how can the client be guaranteed the best service, and expect the same time and attention as another client who has paid the agency a fairer price?

Shaun Greenfield doesn't think they can: 'There is an increasing trend for recruitment companies to reduce their pricing to beat competitors to the deal. Therefore the service must change in order to ensure a return for the agency on their contract and more often than not it is the crucial 'quality' aspect that is affected. Agencies are forced to concentrate on the volume of recruitment rather than focusing on the right people for the right roles.'