It’s a staggering figure: more than 200 million people around the world are unemployed, according to the United Nations International Labour Organization. That number, still well above pre-2009 figures, reflects the continued repercussions of the global economic crisis.
As governments struggle to reduce unemployment, they are increasingly tapping the private sector to manage the vital task of helping job seekers find employment. The hope: that the private sector not only improves the value-for-money trade-off for these services amid budget pressures but also innovates to provide more effective and efficient employment services.
Unfortunately, governments often don’t know how to work successfully with private-sector employment-service providers. Many stumble. Among the common pitfalls: setting up agreements that allow private-sector providers to “game the system” through moves such as cherry-picking the most easily placed job seekers and “parking” candidates who are particularly tough to place.
To address the challenges, The Boston Consulting Group has identified five success factors for governments that are working with private-sector employment-service providers:
- Focusing on the right objectives based on the goal, which might be to increase placement rates or to reduce overall costs
- Maximizing the effectiveness of job seeker segmentation to match the right resources and services to the right groups
- Designing compensation rules that block gaming of the system and promote success
- Understanding and enhancing the power of competition in the employment services market
- Managing vendor relationships effectively and comprehensively
Deploying these best practices consistently can help governments maximize the impact of the employment services they provide. Some governments are finding reasonable success in this area now, but few are realizing the full potential of those relationships—and others are failing outright.