Recruitment agency founders spend much of their time fighting the demons of business and only briefly celebrating the moments of achievement. It is a relentless presence that often leaves little time for business or personal reflection and contemplation.
And that applies to businesses of many different sizes and varying longevity.
The endless “doing” that is required in the staffing and recruitment industry is a key to operational success, but it is not enough to sustain and allow the business to achieve its potential or to achieve the objectives of the founders.
There is a common phrase “what got you here will not be good enough to take you there” and that applies in business. Another way of saying that is past success does not prepare founders for what comes next.
As a business grows this is especially true. Consider the role of a founder when the business is 5 people strong, as opposed to 20 people, as opposed to 50, and so on. The function of recruitment services offered to clients may be similar, but the role of the founder and just about everything internal to the organisation will have changed to enable those growth markers to be met.
The founder, especially, has a different role in each phase. For a recruitment agency of around 5 staff, the founder is at the centre of everything – probably the face of the business, the leading revenue generator, and responsible for every function – client strategy, recruitment processes, internal recruitment, performance management, invoicing, payroll, cashflow.
As the company grows, say to the 15-20 person agency, specialisation, grouping and delegation start to appear. Depending on the agency, there might be recruitment team leaders, a payroll and accounts team, and so on. The founder’s role is still critical to every function. They are the driving force for growth and maturity, and they are the decision maker.
When a company develops towards 50 staff, there have been dramatic changes. Functions that sat on the founder’s desk are specialist roles in their own right – marketing, HR, recruitment leadership etc. But most importantly, the founder is now responsible for guiding and inspiring a leadership team to undertake the functions of the business. They are not the single driver of the business; the leadership team has that responsibility.
While the heading of this article is that scale changes everything, some of this change will apply to organisations that don’t want to grow but want to stay at a size and capacity that matches the founder’s objectives and the market they serve.
In the early days, there is little to protect in terms of market presence, revenue streams, client relationships etc. Those are built over time.
And over time the promises made to staff, candidates and clients become clearer. The responsibility to clients, sophistication of services and obligations that are to be met (for the business and for personal requirements) increase. Accordingly, internal processes change. Quality of service, candidate care, account management, credit control and so on are important for the new obligations. Some of this is forced – technology, legislative changes, and public expectations all have an influence.
It is not just operational – the founder’s leadership style adapts to encourage consistency of service and quality, and of course decision making adjusts to ensure timely and considered outcomes for business sustainability.
What was appropriately corporate previously is not sufficient for today or tomorrow.
I often ponder on the huge percentage of smaller recruitment agencies in Australia and the similar characteristics in the US and UK markets. While we don’t have definitive data, it is commonly quoted that well over 80%, and possibly over 90%, of recruitment agencies in Australia are less than 20 staff.
Is this because most founders want to run a smaller business?
Or is this because most founders experience challenges as they attempt to grow through certain stages and into areas that are possibly beyond their personal experience, so their business, over time, hovers around the same level. They experience a stage of business failure and don’t breakthrough. Scale forces choices that founders often resist.
I don’t have any quantitative research on this. But I do want to help define and clarify what I see are distinct stages for a recruitment agency, the characteristics that each of these stages exhibit, and the changes that leadership need to make to be successful in each stage.
And the size of the recruitment agency is one of the key determinants.