Reed Exchange…another Talent Puzzle? Good or bad for Agencies and Employers?

For those of you who don’t know the gist of it is this:

1. Employers post jobs anonymously for free

2. Approved recruitment agencies put themselves forward

3. Agencies are selected by Employer based on track record

4. Agencies deliver talent, interviews begin

5. Employers pay only when candidates start

Reed makes its money by taking a % of the agency fee before passing it on.

Reed is following in the footsteps of others most notably Talent Puzzle in the UK and Bounty Jobs in the USA. They are certainly approach this market from a position of strength and the economic timing couldn’t be better but the question is who is going to benefit: Employers, Agencies and/or Reed?

1. Employers get access to Agencies with a measurable track record,

2. Employers control their vendor relationships via a piece of free software,

3. Agencies get access to new work with zero up front cost,

4. Reed collects a % of the agency fee (2% of candidate’s basic salary).

I can see some benefits for Employers and Agencies but these are overshadowed by the way the relationship is enshrined. It reminds me of the relationship between Tesco and its suppliers: the supermarket effectively controls the supply chain and uses this power to control supplier prices.

Recruiters with strong client demand are unlikely to work via a middle man that takes 10+% of their fee (25% in the case of Talent Puzzle) and doesn’t pay out the balance until the rebate period is over.

Employers suffer because they won’t be able to attract the better Recruiters to service their jobs. The one thing working in the Employers favour at the moment is the deteriorating economic picture which may force more Recruiters to consider this option.

However there is another important factor and that is the question of “relationship”. If an Employer engages with a Recruiter in such a way that there is little or no personal contact, no “Consultancy”, no valued professional opinion, the Recruiter will feel devalued and de-motivated.

The fact that  Reed is entering this space suggests it believes it has legs. 

What’s your view?

Mine is that it does not.

Selling a commodity or providing a service?

Human Resources ….that’s what we’re all called. We’ve got feelings and can be unpredictable but in commercial and economic terms we’re just another commodity.

So are recruitment agencies selling a commodity or providing some other service?

If we’re paid on results it sounds like we’re selling a commodity against other competing suppliers and with no guarantee of being paid. Yet bizarrely there is no single market for this commodity just a multitude of unconnected PSL mini markets. That doesn’t sound very efficient and where there’s inefficiency costs are high!

If you provide a service, shouldn’t you be paid for the work you do and not just on results? In-House recruiters have replicated what agency recruiters do but are paid salaries not fees. Now agencies should replicate what In-House recruiters do by charging day-rate not fees. This is both commercially and morally right!

In fact I believe the future of agency recruitment lies in providing both commodity and service offerings but first we need to make some changes.

If we’re selling commodity we need to build a market that is capable of connecting demand and supply quickly and efficiently. This will allow Employers to source some of their more straightforward hires from the market immediately rather than having to wait around until their recruiters, In-House or Agency, has gone out and found them. This is something that In-House recruitment cannot replicate.

If we’re going to provide a service at a day-rate or project price we must offer more than just the recruitment of candidates. We must build and manage a client’s recruitment function including: tools, templates, training, branding, social media platform, employee referral schemes etc. It’s about providing recruitment consultancy in its most literal sense.

At the moment the traditional recruitment model is beginning to look unfit for purpose. It’s neither one thing nor another. It’s neither efficient commodity market nor high-value consultancy provider. It’s based on fees which are too high because the PSL model is inefficient, it offers no USP the In-House model cannot match and it is beset with service quality issues at the bottom end.

If Recruitment Consultancy is to make itself more desirable it will need to redefine its USPs and to do this will require both an individual and collective effort.

When the going gets tough, the tough unite.

I am at my most animated when watching a great game of rugby or watching Ed Balls being interviewed. The first fills me with good feelings about skill, sportsmanship and what can be achieved by a truly motivated team. The second, a display of political points-scoring at a time when we need unity, drives me mad.

Professional team games are not just about winning, they’re also about working collectively to make sure the sport is attractive and run properly otherwise the fans will start to drift away.

Most sports have reached this understanding and they try to promote a positive image, interact with their communities, manage individual player behaviour and encourage spectator participate.

Elsewhere we see Journalism, Politics and Banking all acquire terrible reputations as a result of selfish self-interest similar to that shown by Mr Balls. They don’t manage themselves very well and the consequences are there to see. People stop buying Newspapers, start hating Politicians and despise Bankers.

There is a message here for the recruitment sector where for years individual firms have had little regard for how their actions impact on the reputation of the sector. Consequently as the goodwill of employers and candidates drifts away, it becomes increasingly difficult to trade through the head-wind of negativity.

Up until now the recruitment sector has not managed its PR well. This is largely because firms are fiercely independent, don’t collaborate and there is little or no central leadership. It’s also fair to say that when business has been so good the eye has been distracted from the issue of reputation.

Well the tide’s turned and we can now see how damaging that loss of goodwill is becoming. To my mind the solution has got to be to all pull together and collectively re-brand the recruitment sector. Play your part, however small-it’s in everyone’s interest.

Here are some ideas that I’m sure you could add to:

1. Trade Associations.
Join and actively support one of the main recruitment bodies: IOR, REC, ATSCO etc. Support initiatives even if it’s just adding your email address to a group, take part in the 5 minute polls or attending a breakfast meeting in your area. By doing so you’ll strengthen the ability of that body to: provide tangible benefits, improve professional standards and influence change.

2. Local Networks.
Set up a Networking group in your local sector. Put together a website designed to link you and your members with the Client and Candidate markets locally or sectorally. Make it easier for Employers and Candidates to connect/interact at a group level. Give the group local buying power with Job Boards, Software vendors etc. Collaborate on projects with other group members you meet and empathise with.

3. Good PR.
Undertake initiatives that do not have a direct impact on revenues but do raise awareness and improve perceptions. These could be joint-initiatives with Clients or other Employers and other recruitment firms like: Job Centre workshops, school Careers office drop-ins, Charity events etc.
See: http://ukrecruiter.typepad.com/uk_recruiter_blog/2011/11/uk-recruitment-squash-tournament.html

All of this will take up relatively little of your time but the size of your UK team is some 50,000 consultants. Collectively you could make a big difference. It’s a simple choice now: do you want to go down with the Bankers and Journalists or do you want to pull together as a team and turn things around?

In 2005 Liverpool played AC Milan in the Champions League final. At half-time they were losing by 3 – 0 and all but written off. Famously they went on to draw the game at full time and win on penalties. For me it showed everything that’s good about team spirit. We could definitely do with this attitude now in the recruitment sector and as George Osborne attempts to plot a path through the economic rapids, perhaps someone, other than Ed Balls, could step up and galvanise TEAM UK.

The difference between linear recruitment and spot recruitment- a story about Tesco lettuce.

This is an analogy between Tesco lettuce and recruitment.

Tesco choose their lettuce producers first, agree a price and a service level agreement with them and then wait until the lettuces are market-ready before they take delivery, select the ones that are acceptable and reject the rest.

This is the same with linear recruitment. It has always been done this way.

However where lettuce and humans differ is in the predictability of outcome. Candidates change their minds, join other Employers at the last minute and sometimes the entire crop can fail. Tesco can predict demand for lettuce months in advance so the growing period can be factored in without affecting sales adversely. Demand for staff is less predictable and the cost of the time taken to hire can be huge.

Take for example an oil company. They are part-way through a multi million pound project and the Project Director leaves abruptly. The project can continue but a replacement must be found as quickly as possible. How long will this take using the traditional linear recruitment process? Months perhaps! But is there an alternative they can turn to in order to fill the role more quickly?

This is where the spot market comes in.

Recruitment firms can join an online market like Vacancy-Clearing. The oil company can post a requirement for a Project Director. The message can be communicated to suppliers in seconds and if one of the recruitment firms has a matching candidate on their books the problem can be solved. Please note In-House recruiters do not have this option it’s a recruitment agency USP.

The solution is not limited to when things go wrong either. If you really want to find the “best” available candidate you need to leave no stone unturned. Using a few well-chosen agencies to do this is going to take a lot of man-hours. With a Spot-Market you can do it much more quickly and cheaply.

So if you’re a bit short on quality lettuces this winter and you need to explore availability on the Spot-Market, please join us at:

http://vacancy-clearing.com