In this PESTLE analysis for a recruitment agency, I’ve identified how the many political, economic, sociocultural, technological, legal, and environmental factors impact this job-focused industry.
What is a recruitment agency?
Recruitment agencies match potential candidates with employers. It’s not the same as an employment agency. When a candidate lands a job through an employment agency, the candidate is employed by the agency. However, if a candidate lands a job by a recruitment agency, the candidate is passed along to a company and employed by that company, not the recruitment agency.
In this article, I’ll be referring to recruitment agencies only.
Political factors: Understanding policies and regulations in different countries
The political factors of any given state or country affect the recruitment industry, especially when recruiting a candidate from another country. The recruitment agency must acknowledge the health and education of the candidate, as well as the stability of their country prior to connecting them with an employer. If the candidate is expected to relocate, it’ll also impact when the candidate can start working.
The stability of the country can impact or even impede the recruitment process. For instance, most people working outside of the employer’s country will need a work visa before they can relocate. How the visa will be obtained is important — will the candidate apply or expect the company to file for it on the candidate’s behalf?
Understanding the financial challenges the candidate may face is also important. For instance, if the median hourly wage is $16.00 but the employer is offering $25.00, the agent will know the importance of framing this pay gap to the candidate. Salary might not be the only important point, as health benefits, stock options, and vacation time should all be discussed too.
Economic factors: The impact of exchange rates on profits
The economy’s condition is critical for both the businesses using the recruitment agency and the candidates. The economic climate, such as exchange rates, will affect whom a company hires.
For instance, because of the weakened Canadian dollar, a Canadian company hiring an American contractor will be hit by high exchange rates when paying the contractor in USD. The company’s overall profit will be lower than if they hired strictly Canadians charging in CAD.
Recruitment agents must understand the economic factors impacting companies before reaching out to candidates. Otherwise, the two parties might not match values and ideals. Additionally, the recruitment agency must be mindful of the interest, inflation, and tax rates.
Sociocultural factors: The culture of employee vs. employer
Recruitment agencies will need to know more than the educational background of a qualified candidate. They must also understand the cultural and social identity of the candidate too. Many candidates will decline or accept a position based on the company’s values. It’s helpful if the recruitment agency also understands (and explains to the candidate) the company’s culture.
For example, many businesses are adopting remote employees. Rather than having a specific office, all employees work from home and use communication tools like Slack and Zoom to communicate. This company culture values freedom; you have the ability to work from anywhere, any time, so long as you abide by deadlines.
Some people love this culture, but others don’t. If a candidate values a traditional workplace — in that they travel to an office, start and end at a specific time, and work closely with others — the candidate won’t enjoy working in a remote location. If they do accept, they won’t last long.
Another type of culture is the startup culture. It differs from medium and large businesses in that one person will have multiple responsibilities. Although you may start with one, such as a graphic designer tasked to create graphics, it won’t be long until they’re asked to do more, like public relations or writing. While some thrive in juggling multiple responsibilities, many are stressed by such a hectic work environment. The agent should reveal how the company works to candidates ahead of time.
Technological factors: Accessibility issues and expectations
Businesses rely on a variety of technology. Some countries are more technologically advanced than others. If a team relies on a certain app for communication but the app isn’t available where the candidate lives, this will interrupt communication. Likely, the candidate won’t be the right choice even though there’s nothing the candidate can do about the availability of the tech.
Accessibility of technology won’t affect companies and candidates who are in the vicinity. But the candidate needs to understand what types of technology they’ll be expected to use when hired. Not everyone is particularly tech-savvy, so if the business relies on complex infrastructure for day-to-day operations, they’ll need an employee who can match their needs. Recruitment agencies need to explain to candidates the technological expectations.
Recruitment agencies often use technology to reach candidates. They will either post an advertisement on job boards like Indeed, or directly reach out to qualified candidates on social like LinkedIn. The internet has made it much easier to connect agencies, candidates, and businesses.
Legal factors: Corporate regulations can impact expectations
Employees must follow specific laws and regulations, some of which may impact the values of the employee. This includes the company’s dress code, expectations about drinking, and public behavior. Additionally, some companies don’t allow employees to work side businesses. Recruitment agencies must have access to these laws and regulations.
Environmental factors: Sharing climate information
Recruitment agencies should acknowledge the climate and environmental laws. What environment is the candidate moving into? The agent will pass along this information to ensure the candidate is on the same page.
Recruitment agencies have many responsibilities and expectations to relay on between candidates and employees. They are the “middlemen” between both and act as a liaison when necessary.
Recruitment agencies are expected to know the politics and regulations which could prevent a potential candidate from working with a company. It’s up to the agent to find the right candidate based on the employer’s expectations and list of responsibilities. The only way to achieve this is if the agent understands the candidate’s culture, education, and expectations when working with a company.
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