When it comes to hiring for legal positions, those responsible for talent acquisition strategies should beware of false economies – especially in high-cost regions such as the Middle East.
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Few members of staff are more expensive to take on than an in-house lawyer in the Middle East. However, the question must be asked whether it is sensible to look at squeezing out cost in a world of mounting regulatory pressure and the ever-present threat of unexpected liabilities?
There has definitely been in an increase over the past decade of companies taking on in-house counsel in the Middle East, as they try to move away from the expense of external legal support, and begin to appreciate the importance of having a full-time employee who can mitigate and manage the legal risks a business faces daily. However, in a region where margins have shrunk, and a drop in outward investment has led to a more cautious approach in respect to recruitment strategies, the cost of hiring in-house counsel is coming under scrutiny.
The associated costs of sourcing and attracting talent in this space has become the number one reason why many businesses are beginning to adopt risky hiring strategies which seem – in the short-term – to be more cost effective, but can have negative long-term implications. More importantly, corporates are not giving themselves the greatest opportunity to source the very best talent for their business by focusing on a smaller, selective pool of candidates.
An eye on the bottom line
In less-than-buoyant markets, the perception of departments regularly alters and in times like this, legal functions start to be deemed ‘cost centres’ rather than commercial business enablers.
The recent trends we have noticed coming out of this are not dissimilar to those we saw in 2009 immediately after the global financial crisis.
One example is that roles are not always replaced ‘like for like’. For example, a General Counsel position may be downgraded to a Senior Legal Counsel if a business needs to replace someone. Even if there is no change in title, there is a trend towards hiring lower-cost candidates.
As a result, we have seen more hiring at the mid-level in the past two years across the Middle Eastern markets as our clients look to extract as much value from their hiring as possible.
This has created a number of interesting dynamics at the start of the year within the legal & compliance talent pool. Firstly, there is a surplus of highly competent, senior lawyers finding it difficult to source new employment as most companies are unable (or unwilling) to match or exceed compensation packages that people now deem ‘expensive’. Secondly, the mid-market space (lawyers generally in the 6-12 PQE space) has become much more competitive with companies vying for the attentions of a small pool of candidates who match both the technical and cultural competencies they require and at the right level of cost.
Another set of risks receives less attention, however. These arise when businesses try to make false economies in the recruitment process itself.
A common pitfall occurs when executives assume that social media can make traditional recruiting channels redundant. Let me be very clear here, as I appreciate how biased an article by a recruiter will come across; social media networks – especially LinkedIn – can be an effective and economical tool for hiring. However, it is important to understand the costs and other perils of recruiting solely through channels like this.
LinkedIn: the answer to your recruitment questions?
LinkedIn has a wide user base in the legal community, especially in the Middle East. On the face of it, recruiting through LinkedIn has been a game-changer, a way of reaching beyond immediate “old-boy networks” at less than the apparent headline cost of traditional targeted recruitment channels. Nowadays, everyone has access to a global database (a still-common selling tool of many recruitment agencies – for good reason). Amazing, right?
But while LinkedIn may have a role in a recruitment strategy, too heavy a reliance has significant perils – including large hidden costs.
According to LinkedIn’s own figures from GCC countries, the network has 72,000 professionals in its legal space. Of that number, nearly 9,000 moved employer in the past 12 months. At any one time almost 1,000 jobs are posted online in this sector. To look at a recent example, one posting of a legal job in Dubai attracted 25,000 impressions in two weeks, leading to 250 applications.
Of these, roughly 10% will be of interest to the recruiter. Which begs the question: who is going to weed out the other 90%?
Talent Acquisition functions in-house are overloaded. The TA department can do the basic screening but is unlikely to have the bandwidth to get beyond basic word-matching. Assessing an applicant’s legal professional skills is quite another matter: why should a TA department know very much about what a lawyer does?
The real shortlisting work will have to be passed on to the legal team. Whilst talent pipelining and hiring is certainly part of the job description of a General Counsel, one would assume that a heavy workload would dictate an inability to spend huge portions of time sifting through largely irrelevant and unsuitable CVs. How much is that costing the business in terms of time and output of the General Counsel?
There is a more important point here, and that is an issue with the data-set. Irrespective of the number of applications a job position receives on LinkedIn, TotallyLegal, The Lawyer (and to be clear, we use all of these channels ourselves as recruiters, to varying levels of effectiveness) etc., the applications all share one commonality; these are ‘active’ candidates.
Active candidates are pro-actively on the lookout for new roles. There is nothing wrong with these individuals at all, but they make up a small percentage of the entire talent pool and relying solely on this subset of candidates results in a number of outcomes:
- The same small pool of candidates landing on the same shortlists for roles advertised on social-media platforms. The ‘active’ talent pool then becomes over-fished, and the pool is subsequently depleted.
- A large percentage of the wider talent pool (people who don’t see or look at the job adverts – people we would class as ‘passive’ or ‘inactive’ candidates) not being considered, despite often having more suitable skillsets.
The second outcome here is perhaps the most worrying. Very often, candidates who are passive or inactive are more than open to considering new opportunities. They just don’t apply to adverts. Rather, they prefer to have an opportunity presented to them, either by someone in their network or via a recruiter they trust. Being conservative, even if 50% of the total talent pool are actively looking at and applying to job ads, that means there is another 50% - half of the market – who are not considered.
This can’t be the most comprehensive way of talent pipelining for an organisation. So why do many companies do it? More often than not, the word quoted back to us is ‘cost’.
The cost of recruitment
The US Society for Human Resource Management estimates the average cost of an executive hire to be $15,000. In the context of a high-cost environment such as the Gulf, this looks like an under-estimate.
Taking recruitment in-house may save the headline costs of a recruiter and conventional advertising channels but it will invariably take longer.
Every day of delay in filling a vacancy costs a multiple of the prospective employee’s salary. The direct costs stem from the expense of interim staff or additional external legal spend; the indirect costs come from the opportunities lost by not getting to grips with issues because the new lawyer is not in place (and the existing team’s distraction with the recruiting process).
Moreover, a talent attraction strategy that is effectively ‘post an ad, cross our fingers’ doesn’t seem like the most scientific way of finding the best possible person for an organisation.
One option for reducing the time and cost involved in handling applications in-house is to employ artificial intelligence (or, more accurately, machine learning) at the screening stage. New technology will clearly play a role in recruitment strategies in the future, but it isn’t without its risks.
One such case was illustrated earlier this year by Amazon’s admission that its AI engine for hiring discriminated against women. Lou Adler of the Adler Group says this could be just the tip of the iceberg. “I suspect the AI algorithms used also discriminated against anyone who could do the work but who don’t pass the less-than-scientific screening criteria listed on the job description. This includes all diverse and high-potential talent who accomplish more with a different skillset.”
At a time when recruiters are under pressure to avoid the appearance of unconscious (let alone conscious) bias, reliance on “black box” algorithms is unwise.
The rush into AI is another consequence of the basic problem: too much focus on being more efficient in filling vacancies, rather than hiring the strongest and most diverse talent possible.
A cultural fit and the human touch
I want to be as clear as possible here. Companies should use LinkedIn and other social media platforms when going to market to look for talent. If you want to use AI to filter through a huge batch of CVs as well, sure, go for it.
However, these should only be elements of a cohesive and thorough recruitment strategy. Don’t forget referral networks. Don’t forget the fact that specialist agencies will have extensive knowledge of the talent pool, and subsequently may be able to advise on which individuals are the best possible fit for a given role or company.
Successful enterprises know the value of a rigorous recruitment process.
This may involve an element of standardisation but should also retain specialist human input. It may also involve a mixture of channels, including online specialist media and specialist consultancy.
Your efforts to find the best possible talent shouldn’t be restrictive and cost driven. Finding the right person for the right role will repay any costs of recruitment many times over.
I would be happy to hear your thoughts here.