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The Business Basics Must Be Right For Survival, Let Alone Growth.

recruitment industry rates

Rod: The editor has asked some big questions this month. Maximising cashflow, ensuring processes are efficient, implementing beneficial new technology and positioning yourself for growth are topics that go right to the heart of a business owner’s issues.

Nigel: That’s so true and recruitment is no different to other industries when talking about the importance of getting the business basics right. Given the current economic environment every business needs to take a strong stance in managing its cash and cashflow, cash is king and always will be!

Of course other factors are important too, system and process improvement, staff productivity and retention all need to be continuously evolving and the ability to build customer loyalty and generate new business are just a fact of life if you want to be around for a long time. We both have these conversations within the industry on a regular basis and I’m not expecting it to change any time soon.

Rod: How do you think the recruitment industry rates in these areas?

Nigel: Most people within the industry talk the talk but aren’t so good at walking the walk. Yes they have great ideas and plans but often it’s poor implementation that prevents things from happening or they get busy or hit a bump and then can’t find the time or enthusiasm to deliver to the plan.

Rod: The numbers sometimes look good for an agency but we both get the opportunity to look under the covers and I have to agree, there is often a lack of enthusiasm for continuous systems improvement. Thankfully the RCSA and ITCRA are pushing certification and quality systems, and agencies are benefiting every time Dianne Gibert and her team at Certex International undertake an assessment.

You have seen the benefit of simple process improvement in your time.

Nigel: I’m no different to anyone else and accept that change can sometimes be stressful, hard work and at times disruptive but that shouldn’t hold you back or prevent improvement. All of these reasons are just an excuse to stay in your comfort zone and staying in your comfort zone for too long will eventually lead to tears.

I think most people enjoy the excitement of ringing the bell and making money. Delivering process improvements isn’t always fun, requires long term attention and discipline and these aren’t generally the strengths of many recruiters. Getting involved in a certification process can help you stay on track and do what needs to be done within a reasonable timeframe.

Related: Organic Growth v Acquisition - What is your strategy?

Rod: There appears to be little rigour around the specification and implementation of new technology for agencies. Technology for Agencies is rapidly changing which makes it a confusing time to see clearly what is relevant and what is “noise”. Owners and managers need to be very precise about their requirements so they can decide if they would benefit from new technology – sometimes the existing manual process is the best solution. After technology is chosen comes the daunting task of running an implementation project within time and cost constraints.

2013 will be a big year for technology change within agencies – not just the front-office Applicant Tracking systems, but timesheets, payroll and accounting systems. It is very important to get it right.

New Business Development

Nigel: What about new business development? There are some horror stories from 2012.

Rod: It is very sad that some companies have ceased to exist recently. My assessment is that some of those companies have put too much faith in the status quo. They were expecting the industry to stand still and expecting their clients to be stable. Both are false assumptions.

I certainly believe that, from a marketing and sales perspective, you have to assume you are going to lose every client you currently deal with in the short to medium timeframe. They will change their procurement methods, or employ an RPO, or reduce the size of the panel they deal with, or be offered a significantly cheaper solution from the industry, or take recruitment in-house. There are so many options available.

Someone, somewhere in the client organisation is looking at the cost or the effectiveness of their recruitment processes and agitating for change. Even if they are currently your client, if it is not you who is agitating for the change, you are in danger of being sidelined. It will not matter that you provide a highly regarded service to the organisation - the way the organisation undertakes recruitment will change.

The result is an increasing dependency on new business development. An agency’s client list must be continuously refreshed and growing.

Nigel: You’re right and I have seen some great companies disappear too, they sat on their laurels and thought they were safe; and that’s a huge mistake. The lifecycle of a client will vary as will their needs over a period of time, some of this is predictable but much isn’t so it’s wise not to be too dependent on any set of clients. If you accept this then you must accept the fact that client development and acquisition are the lifeblood of the future.

That’s the reason why I always encouraged everyone to get involved in developing new business; it helps safeguard their future and career. It is tough for one person to generate enough business to keep a team busy!

Rod: But it’s always been the case that if you are not a salesperson you don’t understand why the salesperson gets the all the kudos, status and financial rewards.

Nigel: You’re right but the owner understands the importance of new business and is prepared to pay to get it.

We are starting 2013 with high hopes for those agencies that concentrate on running all aspects of their business, but equally there are dramatically tough times ahead for those that ignore the basics.

Originally Published in Recruitment Extra February 2013

Categories: Marketplace

Tags: Recruitment, Staffing, Leadership, RIB Report, Shareholder, Recruitment industry

Picture of Rod Hore

Rod Hore

Rod is a 35-year veteran of Australian and international IT and corporate advisory organisations. His executive-level credentials traverse many segments of the staffing and recruitment industry and include corporate advisory assignments, mergers and acquisitions mandates, and C-level advisory to multinational and other public and private organizations. Located in Perth, Rod founded HHMC to provide local industry acumen and global knowledge to Asia Pacific recruitment agencies. HHMC’s innovative business strategies and well-grounded guidance result in clients realising their personal and corporate goals.

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