17th
March
Cigarettes & Recruitment – What the Two Have in Common
I see another large search & selection recruitment business has posted fantastic growth in profits, I can’t name them as I have done once before in this blog, last time they got a bit heavy handed. The headline makes me roll my eyes and think “oh no, I can’t believe that UK companies are still buying the poor excuse for a service on offer”…then you read on, and what strikes you is that actually in the most sophisticated recruitment market in the world, the UK, actually their businesses aren’t growing that well and their profits are being heavily supported by growth in developing markets.
Now I am not suggesting for one minute that contingency recruitment is to be compared with the harm cigarette manufacturing causes, but I am suggesting there is a link in the ‘Go To Market’ strategies. Within the UK (and the rest of the developed world) we have seen a slow down in demand for cigarettes; this has pushed these organisations to exploit those less sophisticated/educated markets in the developing world. Herein lies the analogy, the bottom line is the large search & selection businesses have not learnt a damn thing from the slow down in the UK, no business model change, no innovation, no new service offering…all they’ve done is gone, “oh well, games up here boys, let’s milk what we have and go find some other suckers to sell the same old pony too”…downright lazy in my opinion, if at least in the short term, profitable.
Which brings me neatly on to my pet subject, I would love to hear from those recruitment companies or others who have genuinely innovated in their recruitment niche or market. What new service offering that radically changes the game for your customers and candidates have you introduced?
Good post Roger, and very pertinent – you see these profit announcements all over recruitment websites and magazines but as you say, very few larger agencies have demonstrated growth in the UK and in other EU countries.
Undoubtedly, some of the blame lies with recruitment firms who want to continue shovelling the same old s**t – but can you blame them? Most profit seeking companies with shareholders to satisfy opt for the easiest way to larger dividends for all… most of the change you allude to is being effected by smaller, niche agencies where pride is as important as profit. Without my reputation, I’d be sunk – so I need to provide the absolutely best service I can, every time. This means an awful lot more focus on linking recruitment to retention, development and performance. Rather than ‘you have a vacancy, let’s find someone to fill it’ I talk about ‘why do you have a vacancy, what people will best fill it now, three years from now, five years from now?’
Recent offerings?
1. psychometric profiling
2. behavioural interviewing
3. completely new pricing model (is it just me or do % fees make no sense at all?)
4. complete visibility during the process – my clients know how many people I target, how many calls I have made on their behalf that week, where candidates were sourced from, what contact I keep with candidates during the interview process, etc.
I think the way forward for the better recruiters/agencies out there is for them to sell ACTUAL recruitment consultancy. That could mean anything from taking more ownership of all or part of their client’s recruitment activity to teaching them how to do it themselves.
The trend is for more companies to bring recruitment inhouse and I think it offers the most obvious and immediate new sources of revenue to agencies.
I suspect that most recruitment businesses currently making their living via the contingency method will need to hire more heavyweight recruiters who know about delivery and understand that cold-calling isn’t selling, if they are going to be able to exploit this trend.
Dan…great points, demonstrating your value through hard tangibles in this market is most definitely innovation.
Completely agree that the innovation comes from those that have to innovate to get heard…does that mean that the smaller boutique guys should come together to take on the established players?
Should we create a home where passion, innovation and pride in the service you deliver is valued by shareholders?…the big guys are in retreat in the UK, their business models can’t shift…I love the idea of a cadre of small innovative players creating a scaled response to the dross being peddled today!
Mitch, hi
Again great point about people selling “consultancy”…however in the large recruitment companies, this is called “wasting your own time”. I know my experience of building relationships & consulting with the client on their broader resourcing issues was frowned upon, “yes that’s all very interesting but how many jobs have you got on?” was the familiar cry.
In order to create the “room to consult” the commercial model has to change and that at the moment is the cash cow…like so many businesses before them, the inability to kill your sacred cash cow will end up killing them…eventually…
Roger,
I think you’re right about the smaller players getting together to beat the big boys – that’s exactly what I’m doing with a couple of other agencies. There’s enough business out there for all of us so we play to our strengths and try not to tread on each others’ toes. We’ve found this approach increases our credibility, our ability to engage with clients who want quality, and ultimately our own profits. Profit growth for smaller agencies does not have to be linked to a ‘spray and pray’ approach.
I think Mitch is along the right lines with proper consultancy services, but the focus needs to be on quality (i.e. how do we measurably improve the business value-add of the recruitment function) rather than cost (i.e. RPO or direct hiring). Bringing a team in house undoubtedly lowers costs, but if you’re simply hiring people in who have worked for ten years with a large agency then all you’re doing is bringing the old school model into your business.
Roger, perhaps if recruitment agencies hired people who could actually sell, they’d generate more fees up front, have their revenues magically become more forecastable and waste less time generating jobs they’re not going to fill.
I appreciate this sounds suspiciously like retained search, but it could be adapted quite easily to the agency sector.
But like I said, they’d need to hire credible people to sell it.