By reducing agency usage, the Australian bank is able to slash cost per hire while improving its branding.
by Robert Marriott
“Good with people. Good with money.” It’s a fitting slogan for St. George, Australia’s fifth-largest bank and one of the top 20 public companies in Australia. Since 1937, the organization has developed a reputation as a grassroots, relationship-focused bank with an extremely loyal customer base. But a strong reputation alone is no guarantee of success. Innovation and growth are essential.
According to recent Australian workforce data, the nation’s finance industry employs just fewer than 400,000 people—a workforce larger than that of major financial centers such as Hong Kong or Singapore. When St. George began refocusing its recruiting processes in 2005, a study by the Australian Bankers’ Association found that the same sector was slated to boost its employment by approximately 70,000 during the next four years. This increase had been predicted in the face of a very strong Australian economy with close to full employment.
At the heart of St. George’s challenges was a recruiting process that, at the time, depended largely on individual hiring managers working with a collection of recruiting vendors. The old model had several shortcomings. First, the decentralized model limited the organization’s ability to ensure a consistent brand presence and candidate experience in the talent marketplace. Secondly, relying on multiple external vendors for the bulk of the recruiting activity was not cost effective. Finally, due to the distributed hiring activity, it was difficult for the company to gain visibility and strategic control over its entire recruiting effort.
To address these issues, St. George launched a strategic recruiting initiative known as careers@stgeorge. The initiative focuses on what the company calls an “engaged people” strategy. This approach is driven by the core philosophy that engaged employees deliver great service, make St. George a compelling place to work and, ultimately, make it a compelling place for customers to do business. The result is an organization that is financially successful. A key ingredient to the initiative was a partnership with an RPO provider.
The company evaluated several choices in its RPO decision. The right provider needed to have depth of experience and service capability. An emphasis on innovation would also be critical for the organization to stay in front of a competitive labor market. Finally, the RPO provider needed to be aligned with the company’s relationship-oriented culture. After considering several choices, St. George selected Futurestep, a Korn/Ferry company. The old managed vendor agency/referral system was re-focused to handle temporary and contract workforce needs. Futurestep was engaged to address the permanent workforce recruiting effort.
The new arrangement began yielding immediate improvement in recruiting efficiency. From a functional perspective, the most dramatic result was the rise in direct placements. St. George established an original goal of cutting its dependency on agency hires by half. The goal was to achieve a 50-percent rate of direct hires. After the first year, direct hires represented 66 percent of the total recruiting effort, and by mid-2008, that figure had risen to approximately 74 percent. With the conversion to direct hires as a measure, the time-to-value from embarking on the RPO relationship exceeded initial objectives.
While cost was not initially the central factor in developing the RPO relationship, improvements in cost-effectiveness were significant. Since implementing the initiative, St. George has seen the average cost per hire decrease 62 percent from $14,500 to $5,500. Much of this improvement is related to the shift toward direct, non-agency recruiting and a focus on a dedicated, multisourcing channel function—a move made much easier and faster by the cultural fit between Futurestep and St. George.
A third benefit is employment branding in the marketplace. Reaching out to the market with an accurate reflection of its unique culture was critical for identifying and attracting the right candidates. The employment value proposition (EVP) had to reflect a culture driven by a commitment to integrity and customer focus. This is viewed as more than a marketing effort; it is a fundamental piece to the HR process and the whole employee lifecycle. Futurestep was key in bringing that EVP to life and supporting its brand with a consistent and positive candidate experience across multiple sourcing channels.
Today, the company enjoys a recruiting operation that has been transformed by the careers@stgeorge initiative. The RPO team at St. George provides a foundation of recruiting excellence that supports the recruiting strategy, delivers the candidate care to support its employment brand, and effectively utilizes multiple sourcing channels including web 2.0. With the right RPO relationship in place, St. George can identify the right candidates to drive the company’s customer brand while maintaining a productive and cost-effective model needed to compete in a rapidly growing financial services industry. That’s good for recruiting, and it’s good for core business success.
Robert Marriott is general manager of HR with St. George Bank.