You will lose your larger corporate clients. It's a matter of when, not if.
Many recruitment agency owners are proud of their client list that includes “name accounts” – large household-name corporates that add legitimacy to an agency’s credentials.
But things have changed since 2009. Deep within those large corporate organisations, someone has been tasked with getting rid of you. They may be in HR; they may be in Procurement. The choices available for a large organisation to undertake its staffing requirements and its professional recruitment requirements are continuously expanding. In-house? RPO? VMS/MSP? Restricted Panel? Statement of Work? National? Global? There are a lot of models available.
If you are a small to medium agency it is tough to compete when these processes are being discussed in a large company. If a decision is made to engage the recruitment industry (and there is no certainty of that), the criteria for success are usually weighted against the smaller agencies because of margins, geographic coverage, service levels, or contractual conditions.
Related: You Can’t Avoid Change
Not a problem you say, I have a great personal relationship with the line managers, and they’ll let me know about job requirements. But the large corporates have got control of the procurement process and if you can’t get a purchase order raised through the proper channels then you can’t get paid.
Risk Analysis and Business Planning
There are some telling, but sad, case studies in the local market of good, profitable recruitment agencies that have faded away as they lost their stable of large corporate clients. Not because of poor performance or poor customer relationships, but because of changes in client procurement models.
How does this fit into your business planning?
Do you have a large corporate as a major client? Great! Push it as hard as you can. Maximise the opportunity. Extend it as long as is possible. Leverage the “brand” into other business. But be aware that in the short to medium term you may lose them as a client and your business needs to be sustainable without them.
You may not be able to accurately predict the timing of your client’s change of strategy or even predict the direction of that strategy but you need to try. You need some visibility of your major client’s activities and their impact on your business.
The most important strategy for smaller agencies is to ensure a sustainable mix of clients. In general smaller organisations will work with smaller agencies, and larger organisations will work with larger agencies.
Your business development needs to be focussed on those organisations that will deliver you sustainable business relationships into the future – for many smaller agencies this means working investing in organisations in the 50-500 person size that have requirements to match your area of expertise.
Many agencies are also finding that it is not sufficient to provide a one-size-fits-all 360 degree recruitment solution even with these smaller targets, and more flexible and innovative services need to be offered.
To review your position consider HHMC’s External Review to identify strengths and weaknesses in your business development, operational and financial performance.