How To Recession-Proof Your Recruitment & Talent Business

Over the past couple of months, I’ve had several calls with recruitment agency and talent firm owners and senior managers. What has come out of some of the calls, especially with owner/managers of smaller recruiting firms, is horizon scanning the economic landscape and the uncertainty ahead.

The obvious question to be answered is - what you will do when new vacancies become harder to come by, and simultaneously, jobseekers decide to stay put because of the perceived risk of moving to a new employer. But the questions an agency owner or senior management should be asking go beyond the day-to-day transactional concerns.

I’ve been thinking about how to recession proof a small or medium size recruitment business. Particularly those that don’t have many exclusive or very close, long-term national and international supplier relationships with their clients. PSLs don't really count, I'm afraid.

From the early 1990s economic downturn, I’ve successfully guided my teams, divisions or firm through recessionary markets whilst continuing to deliver value and profit. Here are my thoughts on how I would approach things today.

It isn’t a catch-all list. I’m sure others cleverer than me will have other approaches and strategies.

1.?????Review and control of Opex and spending decisions. What do you spend money on that doesn’t measurably support your brand, fee earners, placements and profit?

2.?????Review your Capex commitments. Do you, for example, absolutely need to build a new website, or portal or implement a new global CRM / ATS right now?

3.?????Review your supplier list. Nailing a supplier to the floor on price is never a good idea (we in recruitment know this too well). Does each supplier relationship save you money, help you make money or fundamentally support and enhance your brand? If not, it may need to be cut.

4.?????Your people. Who is performing and who isn’t? Who consistently hits target, with their desk is in profit? How do they do it? Can you template it? And who is regularly costing the business money or always seems to be behind the curve and playing financial catch-up?

This must include managers (billing and non-billing) and team leaders and their delivery against sales or P&L forecast and budget. A budget is not a P&L forecast, and vice versa.

Oh, but s/he’s lovely. Let's give them another month or quarter to turn it around.

Sound familiar?

In most cases, a new tomorrow never comes.

5.?????In the 1990s, I worked for a recruiting firm that followed the Goldman Sachs model. The bottom 10% of fee earners get moved on, someway, somehow. Brutal and effective.

You do need some caution around this. I would caveat it with some ‘what ifs’. You need an eye on your employer reputation as well as your P&L.

6.?????Build out your high-value, hard-to-find, business critical, highly skilled contractor base (or temps). Can you cover your monthly costs with contractor profit? Don’t have contractors or temps? I would make it a priority to address that now, not when the economy dips.

7.?????Client relationships. Aha. Hmm. Yeah. Here we go…

i) Are your people working on elderly and/or near impossible-to-fill vacancies? If they are, they are almost certainly contingency roles and part of a PSL or agency panel or shared with other recruiters. Got jobs that are more than 3 or 4 months old and are still 'sourcing' or 'interviewing'? Go to the client with a better solution and value-proposition (there is a way of delivering on tough vacancies) or gracefully withdraw and spend your time on better quality business.

ii) Do your clients’ EVPs stack-up in the current, talent short market? If the economy turns, the best people may stay put because of the perceived risk of moving. A poor EVP won’t encourage the highly skilled to take the plunge in bumpy economic times any more than it will in better times.

iii) Are your clients’ hiring processes frictionless? This includes their ATS and turn around times, as well as the number of interviews to hire and the behaviours of the interviewers themselves.

Do the above give all parties a good hiring experience? If not, understand why, with hard facts. Advise your client(s) with case studies, data and proof of concept that there is a better way. Otherwise, make a call on the relationship. It is probably costing you candidates, placements, time and money.

Walking away from ‘business’. Scary, eh? Not to be done lightly. But making tough calls and being brave are vital if your people are going to be most productive and profitable.

If you can't deliver it, if you can't fill it; you're kidding yourself. 'Busy fools', as an old manager of mine used to say. Job spec got cobwebs on it? Can't change the terms of engagement or improve the spec or process? Bin it.

8.?????Move your firm’s book of business up the value chain. Win higher value vacancies from more engaged and progressive thinking clients. Equip your people with the tools and skills to win more valuable mandates. Teach them how to engage properly with higher value candidates to build buy-in, rapport and trust.

9.?????Through a phased transition, begin to replace contingency relationships with exclusive and retained mandates. There are several ways you can do this, and package it and sell it as a value-added, expert-advisor offering. It doesn’t have to be the old third/third/third head-hunter fee model.

Ask yourself; are you advisors or merely CV providers? You choose.

10.??Train your people and keep training them. Yes, they may leave and take that training with them. That’s life and that's business. If they stay (good leaders keep good people), you’ll enjoy the benefits of a highly skilled cohort who act and sound differently to their competitors. They will be confident, better informed about their niche (you do have niches, don't you?), they will be agile and able to pivot as markets change.

So if the expected economic downturn happens, you'll be in a better place than many of your competitors. If a dip doesn't happen, taking the steps above will mean you'll still be in better shape than your competitors: a lean, mean, agile billing machine, with happy staff, candidates and clients. Much of the above is common-sense. It's a list of ingredients. The secret is how you cook it!

This isn’t meant to be a contentious or controversial list. For the first time in a long time, I don’t currently have ‘skin in the game’, from a staffing or recruitment perspective. Hence, I feel a little more comfortable suggesting you may need to let go of client relationships, or people or projects etc.

To drive change at a recruiting firm, I do charge for my time. However, have the above for free. If it helps one recruitment firm and its people survive and thrive in this crazy world, I’ll be delighted.

If you'd like to quickly pick my brains on something, drop me an InMail. If you're interested in engaging me to help you transform and strengthen your staffing or recruitment firm, InMail me or 07743978179 or [email protected]

www.northstarconsult.org

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