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Buyers of recruitment services are increasingly sophisticated

Buyers-of-recruitment-services

Reviewing the ANZ Recruitment Industry –Unsophisticated buyers of service

Oh for the good old days. When the industry experienced continuous growth and there were very few barriers to commencing and growing a recruitment agency.

Importantly for hungry recruiters, access to line managers and program managers that had a need and a budget was, on reflection, easy.

However, when an organisation notices a big increase in any category of spending then changes are likely to follow. That change gathers momentum when regulation changes force board level attention on the hiring of both the permanent and non-permanent workforce.  Combine the attention of the board, finance and procurement with a global financial crisis and changes are certain.

It is therefore of little surprise that the recruitment industry has been the subject of procurement and HR scrutiny and put under pricing pressure. Not all recruitment agencies have been positioned or willing to take advantage of that situation.

Related: Buy now – Win in The Future

But the changes are not just about pricing. There are a range of outcomes client organisations seek in today’s environment that were not present earlier.

Large organisations have applied supply chain principles to human capital, especially where large skilled (e.g. IT and health) or semi-skilled (e.g. manufacturing) resources are involved.

Control, risk and governance is a major issue for larger organisations. They want a holistic picture of their permanent and non-permanent workforce and the manner in which they are recruited, on-boarded, renumerated and managed.  All this leads to the rise of RPO providers and VMS/MSP environments.

From a recruitment agency perspective this leads an environment that can seem bureaucratic, overly controlled and of low financial value.

While this sophistication in purchasing arrangements from larger organisations can be seen as a US or UK phenomena, these practices do eventually transcend national boundaries and from the largest organisations to medium sized organisations.

The result is an environment that requires a more sophisticated response from recruitment agencies. Approaching organisations that have adopted procurement processes by having a junior consultant ring to ask “do you have any job orders?’’ is unlikely to receive a very positive response (in fact it is not the best approach to any organisation).The marketing and sales approach required for large targets is different to medium targets and is different again to small targets.  Indeed, the services provided and the fee structure for each category of client can also be remarkably different.

Recruitment firms need to spend time understanding the client organisations’ procurement approach and develop the appropriate value-adding and solution based approach.

One would hope that the days of cold calling a telephone book are well and truly gone.

How global M&A actvity affects your business. Find Out More

HHMC Global provides advisory services to the recruitment and staffing industry and is best known for its work on M&A transactions.  HHMC is based in Australia and works with clients globally.  To discuss your business future contact Rod Hore or Richard Hayward.

Categories: M&A

Tags: Strategy, Recruitment, Staffing, M&A Valuation Series, Recruitment Business, Business Valuation, anz recruitment

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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