Today, being a good recruiter is not sufficient to running a good recruitment business.
In the good old days, before the financial crisis of 2008 and 2009, having a good recruitment background and combining that with high energy levels seemed to be sufficient for success. The economy was strong and the recruitment model was relatively simple.
Fast forward to today’s recruitment environment and everything is more complex. The economy continues to have an uncertain future. Clients have many more options about how to satisfy their talent requirements and those options most often leave them in control of how they are going to recruit and who they are going to partner with for recruitment.
There are plenty of examples of recruitment agencies that are a shell of their former business, having not adjusted to the realities of today’s market.
In many instances the “magic” of recruitment has not changed dramatically. All of the activities related to shortlisting and presenting candidates, selling candidates, and managing client and candidate changes and objections do still require skills and experience that are unique to the recruitment industry and are not necessarily influenced by technology and other advancements.
But everything else has changed. Earning the right to work with that client, at a fee level and risk level that allows you to run a successful business, is a lot more complex. Many recruitment agencies are now working with clients that have completely different characteristics than those they worked with just a few short years ago.
Agencies need to respond. Providing the same services as in the past will not be sufficient. Drifting around, without strategic intent, and responding to ad hoc opportunities as they arise will also not be sufficient.
Most agencies cannot provide solutions in all sectors or across all services that are operating in the marketplace today. They must choose where they want to fight and decide how they can deliver a quality solution.
The past few years have shown that making a strong strategic decision and then putting wholehearted resources and energy into executing that strategy can lead to above average success. As a broad statement you’d have to admit strategic intent is not the strong suite across the recruitment industry. Energy, yes. Sales capability, yes. Recruitment capability, yes. Strategy, not so much.
There is so much for the recruitment industry to learn from other industries, especially services-based industries that have gone through regulatory change, industry consolidation, and commoditisation of products – some of the pressures the recruitment industry faces today.
A quick summary of changes in the financial planning, insurance, retail banking and maybe even accounting industries will show the massive change that those industries have encountered in the past decade. Organisations in those industries have adapted or perished.
In the UK and the USA, the huge influence of the publically listed sector and the Private Equity sector on the recruitment industry is clear for all to see.
Any organisation that either accepts investment money or has to stand up in public regularly, or both, is forced to develop a strong strategy, have great governance, and make sure they have the best board and executive team possible.
Partially as a result of this the UK and USA markets now have a large number of companies that are growing faster than the industry. They are outperforming the market. They are being innovative in the way their business approaches the challenges every agency faces. They are finding solutions to internal recruitment, productivity, globalisation, fee pressure, new recruitment models, and technology.
Some Asian countries also provides a view of business models different to ours. Japan, India and other countries seem to encourage multi-sector “conglomerates”. These companies often have operations across related industry segments, and recruitment might be just one of many operating businesses. As you would expect, the board and executive management of these organisations approach recruitment from a very different perspective to those who only manage recruitment activity.
In Australia the influence from non-industry management is minimal. Australian recruitment companies are conservative.
They are slow to respond to industry trends from around the world, such as high volume recruitment, managed services, offshoring, and the move away from 360 degree recruitment consultants. This is reflected in the almost total dominance of the RPO and Master Vendor opportunities by international companies.
Maybe there needs to be a change or locally owned companies, with notable exceptions,will be left behind.
Article written by Rod Hore and originally published in Global Recruiter December 2014