It doesn’t seem that long ago that the industry experienced continuous growth and there were very few barriers to commencing and growing a recruitment agency.
Importantly for hungry recruitment consultants, access to line managers and program managers who had a need and a budget was, on reflection, easy.
However, when an organisation notices a big increase in any category of spending, changes are likely to follow. Especially for large organisations. That change gathers momentum when regulation changes force board level attention on the hiring of both the permanent and non-permanent workforce. When you combine the attention of the board, finance, and procurement with an uncertain economic environment, change is certain.
It is therefore of little surprise that the recruitment industry has become a focal point for scrutiny from both procurement and HR departments, resulting in a notable push for pricing adjustments. This intensified attention comes as organisations strive to optimise their workforce management processes and streamline expenses in the ever-evolving business landscape. Not all recruitment agencies have found themselves well-placed or inclined to seize the opportunities presented by this situation.
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. This approach optimises talent allocation, mirroring supply chain efficiency, and aligning expertise with operational needs.
Compliance, risk, and governance are major issues 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, remunerated and managed. “Who is on my site today and what is their employment status”. All this leads to the rise of RPO providers and VMS/MSP environments and a myriad of recruitment solutions.
From a recruitment agency perspective, this generates an environment that can seem bureaucratic, overly controlled, and of low financial value.
While the implementation of advanced procurement strategies might initially appear concentrated within the context of larger organisations in countries like the US or UK, these practices inevitably extend beyond national confines. The movement of these practices from major corporations to medium-sized enterprises exemplifies their adaptable and transformative nature.
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.
Staffing Industry Anlaysts have encapsulated some of this complexity in their free document the “Workforce Solutions Ecosystem”.
The marketing and sales strategies needed for significant targets differ from those used for medium-sized targets. Smaller targets necessitate yet another distinct approach. Notably, the services offered and the pricing model for each client category can vary significantly, as can the systems and cost frameworks necessary to cater to these diverse client segments.
Preparing your recruitment agency to deal with these different environments, or not, will require clear and agile thinking. The implications of how to service one client in a structured procurement-led manner, as opposed to a relationship job opportunity manner are immense. Account management, recruitment processes, margins, recruitment culture and even commission structures may vary for these different clients. As always, there is much to consider for today’s recruitment agency manager and owner.
HHMC Global operates within the staffing and recruitment industry on equity transactions, market valuations and business growth advisory. Contact us to discuss further.
