Why your recruitment business has zero resale value and what we can all do about it.

 

Unless you’re a Michael Page your recruitment business is worth nothing should you decide to sell it: which is a great shame because you spend years of blood, sweat and tears to get it going and even if you hired a few Consultants it’s worth little more than a couple of Rec2Rec fees if you do manage to off-load it when it’s time to move on.

There’s a very simple solution that I would ask the IOR to consider picking up and running with.  Licensing!

I have long advocated limiting the number of agencies that can operate in the market at any one time. At the moment anyone can open an agency from their bedroom tomorrow. Some would argue that the market will decide who lives and dies. That’s true but for years it hasn’t stopped the random emergence of agencies of all kinds of quality. There is a way to manage this situation for the benefit of all current owners in a more decisive way.

Think Black Cabs v Unlicensed Cabs and you’ll quickly visualise the problems and solution.

Nearly all the problems that beset the recruitment sector can be traced back to over-supply: volume cold-calling, CV spamming, poor training, corner-cutting , contingency fees, PSLs etc. If there were 5,000 licensed agencies in the UK instead of the widely touted 10,000 unlicensed ones, the average agency income would rise by 100%, the balance of power between client and agency would shift towards the agency and your licence would be worth something when you decided to get out.

Think about it.

How we go about Licensing will follow in another Discussion.

Agency Recruiters need to appreciate the benefits of collaboration.

 

It’s not uncommon for agencies to refuse client work because it’s not quite in their area of expertise. Equally a recruiter can source 10 good candidates knowing only 1 can get the job the rest are discarded.

Imagine you had 2 people on the road: the first is thirsty and the second is hungry. A passerby offers the first a sandwich which he throws away and another passerby offers the second some water which he too discards. A small shift in attitude and communication and everyone would be a lot better off.

This is an area of recruitment that is crying out for change.

Recruitment Consultants are not in the business of serving the interests of other Recruiters. However they are presumably in the business of doing good business and in order the optimise profitability it does make sense to collaborate at some level as the travellers and their benefactors should have done.

This can be achieved quite easily by setting up an independent “clearing house”.

Jobs that come your way but don’t match your expertise should be steered towards the clearing house. Candidates you spent time and effort contacting and engaging could also be placed through the clearing house.

It’s difficult to estimate how big this market might be but let’s try.

If there are 50,000 recruitment consultants in the UK alone and each advised their clients to post 5 jobs per annum (ones you would otherwise discard) on to the clearing house that would equate to 250,000 jobs or on average 5 extra revenue earning opportunities per annum for each and every consultant in the UK.

Remember that these jobs would otherwise almost certainly be lost to the market. The value of this recycling: well you do the maths...£1 billion?

The key is whether Recruitment Consultants can work collaboratively?

Why recruitment is a sales job, why that’s wrong and what you can do about it.

I had a conversation about salesmen and commission/bonus recently. It was actually about Investment Bankers but the principle applies to all jobs where a significant proportion of your income depends on making a sale. The conclusion was that salesmen have an “unhealthy” interest in the outcome of the process.

In recruitment where the product is a person/career/livelihood this unhealthy interest in the outcome of a candidate introduction is universally recognised and simply wrong. Candidates don’t like it, Clients don’t like it and even many Recruitment Consultants don’t like it! So why do we put up with it?

The short answer is over-supply: Too many agencies, chasing too little business.

If there’s not enough to go around, suppliers start to compete on price and eventually you end up with firms “winning” commission-only contracts.

In addition whilst Clients moan about agency fees being too high they must remember that the current model forces agencies to take all the risk. The cost of hiring via agencies could be much lower and outcomes more satisfying if Clients paid well-chosen suppliers less on results and more on effort and expertise.

That’s where we need to get to.

Getting there will take more than reducing the number of suppliers but that’s the start point. To do this you’ll need to split the supply side into “them” and “us”. The “us” will be made up of agencies that start to evolve rapidly through diversification of products and services and up-skilling their consultants.

Those that make up “them” will wither away as Employers start to recognise the benefits of “us” and the dangers of “them”. Those that remain will embed their Consultancies deep within their clients’ structures, they will charge fees geared more to time spent, they will belong to a representative body, agree to a code of conduct and carry a badge showing how and why they are different.

Once there is balance between supply and demand and bearing in mind it’s likely to be the best that survive, agencies will still win new Clients by “selling” their services but will earn revenues that are less dependent on “selling” candidates to clients and clients to candidates.

As always it’s your opinion and observations I’m after.

Imperfect model.

There's a shortage of Talent and the current model used by both In-House and Agency Recruiters is a long way from perfect. Filling roles does not mean you’re getting the best candidates it sometimes reflects low expectations.

This recruitment model is not perfect (though little in life is) because you’re asking a small number of Recruiters to identify, engage and deliver the “best” candidate from a potentially large, shifting and sometimes evasive pool of candidates. Done properly this can take months of man hours or fees.

And what is “best” anyway? Many Recruiters (In-House and Agency) will not be able to connect with all possible candidates so “best” is inevitable “of the ones we could find and persuade to engage”.

There is however a potential solution! It works a bit like a search engine.

If you want to find a webpage that contains the information you’re looking for you use a search engine and it presents you with a list ranked in order of relevance.

What if you could do the same in a recruitment context and find Recruiters that already have the Candidates you’re looking for listed in order of relevance?

Uniquely only Agency Recruiters can offer this because unlike In-House Recruiters, who are tied to one Employer, Agency Recruiters can make their Candidates available to any Employers.

In the changing world of recruitment this unique selling point is worth debating particularly in the context of a possible shift away from a Client-led to a Candidate-led agency model (like Sports Agents).

Agencies need to modify their proposition retaining Consultancy where it has commercial value and embracing other propositions that offer a unique competitive Agency advantage.

Apathy…the curse of the recruitment consultant.

The innovative TruLondon un-conference attracted little interest as far as I could see. I tuned in to the LiveStream along with, at its maximum, 3 other people to watch interesting topics discussed by the most un-inspiring people I’ve seen for a long while-who were mostly there to sell their product/personal brand. Apologies to anyone who was truly awesome I must have missed you!

Katie McNab of Pepsico speculated thoughtfully as to why so few recruiters attended the event which is dominated by “thought-leaders” and suppliers. See her blog at http://recruitgal.posterous.com/

Was it that TruLondon and the issues discussed are disconnected from the real world of recruitment? Maybe but I suspect this is also spiced by a liberal dose of apathy which recruiters seem to have in abundance.

When it comes to new ideas, policy, strategy, saving the industry and debating the issues; recruiters just don’t care! They are the equivalent of Sun readers: bit of media gossip, page 3 and good sports section…couldn’t give a stuff about Syria.

Well newspaper owners can’t ignore Sun readers as much as recruitment “leaders” and suppliers cannot ignore apathetic recruitment consultants. What they need to do is give them what they want.

And that’s more cash each month!

If the IOR, IRG, APSCo, REC or anyone else could do that they’d have applicants queuing out the door, leverage to ensure compliance and the attention of a fully motivated membership.

Show them the money!

In-House v Agency and how Agencies can win back market share

 The argument about the demise of agency recruitment seems to make the false assumption that the agency recruitment model cannot adapt. In-House recruitment is a copy of the Agency model and it is true that market share has been lost. However there are things that Agencies can do that In-House teams cannot copy and this is where we can help.

The traditional recruitment process model, whether your using In-House or Agency recruiters, is always delivered by a relatively small number of consultants. So it takes time to source candidates, make calls, screen, interview and process.

There is a faster alternative, which only Agencies can offer.

On a daily basis every agency consultant is managing say 25 unique active/passive candidates. All these candidates who can be assessed and delivered for interview with 25 phone calls. A network of 1000 consultants would therefore have 25,000 candidates all deliverable with only 25 phone calls. In-House consultants may be able to find 25,000 candidates but it would take a lot more effort to drill down and build a relationship with all the relevant ones. This is an amazing competitive advantage for agencies!

Vacancy-Clearing is a Job Board.…..but not in the conventional sense.

It’s an Employer 2 Recruiter Job Board, which allows Employers to post Jobs and find matching candidates from Agencies using a crowd-sourcing approach. It’s not your core business but it is something you can help build and access for free whenever you want to. In-House cannot copy this because you cannot crowd-source on the In-House side.

You may be concerned about the realistic chances of you benefiting directly? Well image in the example above there are 1000 agency members. If we can attract 1000 jobs per month then statistically each member would make an extra placement and meet a new client each month. That’s something to consider!

Getting the message across is the problem and we need your help with 3 things:

1. Recruiters need to drive the message in the market by sharing it:
Buttons at http://vacancy-clearing.com

2. Recruiters need to sign up to build critical mass - it's free anyway.
Sign up at http://vacancy-clearing.com/agencies/registration.php

3. We need to find Regional Sales Managers to build the business.
Jobs posted at http://vacancy-clearing.com

Here’s a short Prezi to describe graphically where we’re going.
http://prezi.com/xxzvzsw5dfcp/a-brief-history-of-agency-recruitment/?auth_key=d07351c0b46e0ef735d533e8c64ac34a0b447bf2

By the way if you’d like your own Prezi designed by experts go to Mr Prezident they're really good.

A bit of extra-curricula is a must for all Recruitment Consultants.

This weeks EXPO was a great success and unlike previous years HR and Recruitment events, attendance or footfall as they call it was impressive. I enjoyed the opportunity to meet more people in 5 hours of coffee and post event beers than I would ordinarily meet in 3 months. Almost everyone will have come away as I did with upbeat feelings about the industry and the people in it.

So what made it a success and what imbued us with these positive feelings?

Simply put: people got involved. Where there’s participation there’s: atmosphere, a sense of purpose, sharing, passion and a feeling of identity.

Those that seek to unify and lead the industry were there: the IOR, TEAM, APSCo, ARC. Sean O’Donoghue of the IRG was spotted. There were some notable absentees including the REC and The Recruitment Society.

However it’s fair to say that even with the impressive effort the organisers put in to making the event a success, the numbers that attended would still have represented only a tiny proportion of all recruiters in London and the South-East. Why?

In all walks of life people are uplifted by belonging to a group that they identify with. The group supports them, offers tangible financial benefits and gives them a voice. This is more relevant in recruitment than in almost any other sector because the industry is dominated by small firms working in isolation.

If someone as cynical as I can go to an event and come away energised and positive, then you will too. But this can’t be just an annual adrenaline shot. We should participate in monthly events at least to keep up to date with news, developments, opportunities and innovation but most importantly to feel like we belong to something we’re proud of.

So join a group and get involved.

It’ll make a positive difference to you and your business.

Note:
Perhaps the groups mentioned above could add a link in the comments section to their membership pages?

Sorry if I missed anyone out!