Over the past four years, investment banks have been “pioneering” in their approach to recruitment, claims Paul Mallinson, managing director of Hays Resource Management, a company that provides RO and HR services.

“The scope of the contracts we deliver in investment banks are broader and deeper than in any other sector, and retail banks are now starting to look at RO as well, managing temps and beginning to look at talent acquisition on the permanent side,” he says. “Our client Abbey is among the first retail banks to outsource permanent recruitment, and we have inquiries from other banks looking at that operating model.”

And now that the bankers have an infrastructure to support volume recruitment, they are working to cut down the number of transactions, Mallinson adds. “Most organisations would rather recruit less, which would have a positive impact on attrition,” he says. “Then you move from RO into a more consultancy-led relationship.”

Help is obviously needed. “There is a candidate-short market in banking and financial services, so it is potentially hard to get hold of the right candidates, who might well have more than one offer on the table,” says Gill Stewart, managing director of Carlisle Managed Solutions, whose clients include Rothschild, the Financial Services Authority (FSA) and accountancy firms such as KPMG, Grant Thornton and Ernst & Young.

RO in the financial sector is “less stable” than some of the other industries, she adds. “The City and banking are cyclical. In boom times it’s very hard, and equally you have other challenges when there are more candidates than jobs.”

Strict vetting procedures make it even trickier to get the right people, as working in the financial sector mandates a clean credit history and no history of fraudulent activity. Checking gaps in CVs is crucial. “You need to account for every month. If somebody has had time off for six months and said they’ve gone travelling, you need to make sure that they were not really in prison,” says Stewart.

Banks are also stricter when it comes to health vetting, with some carrying out substance-abuse monitoring as standard. “Every branch of RO has its own requirements when it comes to vetting. With banking and financial services, drugs and alcohol are important, as is whether a client has ever been bankrupt.”

As the financial sector employs such a mobile workforce, vetting is further complicated. “That is an increasing challenge, checking people who have not been born in the UK, or worked in the UK before,” says Stewart.

“Transient workforces also have more gaps in the CVs, so you have to allow more time in the process and it can slow you down as you wait for information from other countries.”

As a result, RO providers are themselves beginning to outsource — to specialist organisations for employee screening. “We don’t use any at the moment but it is something I am considering,” says Stewart.

Kroll is one of these corporate sleuthing organisations. About three-quarters of Kroll’s client base is in the financial sector, according to Michael Whittington, managing director of its background screening division. He discovers “omissions” in about 30% of the CVs his firm screens, he says.

“They may leave out a period of previous employment where they have been dismissed, experienced bankruptcy, a county court judgment or adverse debt. They also may mislead an employer about their degree or GCSE level,” he says.

“Vetting potential candidates is very important for FSA compliance and risk mitigation, as these individuals will have extremely sensitive market information at their fingertips,” says Geoff Smith, operations director at ElanRTO, a recruitment company owned by Manpower.

“But there is a little bit of a conflict. The longer and more drawn-out your vetting procedure, the more your ability to secure talent diminishes because of the competition. Those organisations that have a slick but competent rapid-vetting procedure have the upper hand in securing those individuals.

“Gone are the days when the top-tier banks could pick and choose the individuals they hire,” says Smith. “There is still brand loyalty in the City and the top-tier investment banks trade fairly well off their name and reputation. However, in my experience individuals are more attracted to work or projects rather than the name of the institution.

“If you look at the FTSE top 100, at least 60% have some sort of managed service or RO, which is higher than in other industries,” he says.

AXA Sun Life called in Hays Resource Management five years ago to help with its temporary labour recruitment. With 12,000 employees in the UK, the company has about 6,000 in customer service. Of those, about 250 are on temporary contracts.

“It’s harder with a temporary workforce. You might get a requirement on Friday for somebody to start on Monday morning,” says David Mason, group head of resourcing. “Hays helped us not only by setting up a central contract ordering point, but by being able to screen people quickly.

“Part of our duty, particularly working in financial services, is protecting our customers by preventing fraud inside the organisation.”

Hays was able to speed up the screening process and also introduced a standard rate of pay, so that line managers knew how much it cost to hire someone. “The knock-on effect was to reduce the cost of recruitment of temporary labour. You’re talking about £300,000-£400,000 per year more on our cost base if we didn’t have Hays,” Mason says.

AXA Sun Life employs another RO provider, RML (Resource Management Ltd), to work with high-level contractors — people on daily rates of £300-£400. RML is also used as an “overflow measure”: permanent staff are recruited in-house but RML is called in if the workload gets too high.

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