Last month I looked at how you can optimise your Account Development. Please read it in conjunction with this article.
It’s been clear for some time that the traditional recruitment market (“payment on results” especially for permanent recruitment) doesn’t work very well any more, for any of the stakeholders.
Clients need more certainty, not more CVs. They want to find a recruitment partner they can trust to deliver a thorough, well-managed project in a reasonable timeframe. They’re tired of getting irrelevant, not-the-whole-story CVs from recruiters who have only a superficial understanding of the role and no real influence over candidates either. It’s widely believed that recruiters either scrape CVs off the internet and hit “forward” or they just make candidates up.
Candidates are hacked off. The main complaint is still they “never heard back”. They jump through hoops (entire obstacle courses, in some cases) only to discover that the recruiter hasn’t heard from the end hirer, the job changed, or there is no meaningful feedback. Now candidates are fighting back with AI-generated applications and ghosting – and who can blame them?
But recruiters are feeling this in their bank accounts. They routinely put in loads of work on jobs that come to nothing. Maybe the end-hirer claims “prior knowledge” (and I’ve written before about covering yourself in your terms for this, see link). Or the client collects CVs and takes no action. In the present market, efficiency in delivery is everything if you want to make a profit. And for business owners, they need visibility of future income to make any sort of investment. Plus, any future valuation will be based on EBIT.
But there is something you can do about it. It’s a fundamental repositioning that few recruiters can pull off. And that is because they are so conditioned by an environment of
- quantity-led KPIs,
- superficial client understanding, and
- limited understanding of how they can genuinely add value to clients.
Below, I have outlined four stages to repositioning your relationship with end-hirers. They won’t work if you only supply RPOs, submit via portals or work with clients who see staff churn as an occupational hazard. They are more prevalent in certain sectors. And these barriers are designed exactly to stop you from having the critical conversations.
Step 1:
First, you have to ensure that your recruiters understand the genuine value they bring to hiring organisations. Clients rarely hire to fill a job.
They hire to fulfil a company objective.
If the brief is for a sales executive, it’s to bring in revenue and new customers.
If the brief is for an R&D expert, it’s to prove the concept and secure their next round of funding.
So, recruiters need to step back from filling a job to understand the aim of filling a job. Because there might be another way to do it.
Step 2:
Your team of recruiters have to have a genuine understanding of their sector. That does NOT mean a large number of LI connections. It means understanding the sector’s business model, normal financial ratios, constraints, and new developments. And what makes this client company different.
To be quite candid, I don’t think I’d ever have achieved this without site visits, trade press and aiming to have discussions at the highest level possible in my client organisations. Certainly not from reading their websites.
Step 3:
If you can achieve these strategic conversations, the next stage is to start to think imaginatively about how you could contribute to corporate objectives. Obviously, you work for a different company, so you have to be able to do this profitably.
Just like the big consulting firms that consistently achieve significantly better gross and net profit.
Most recruiters with a predominantly perm-based model are lucky to achieve 40% GP. But the increased costs of staff and overheads mean that Net Profit is less than 10%. It’s much less for a temp-based model, but they have visibility of income.
The big four consulting firms make 55-70% gross profit. Why?
Because they are much, much better at presenting themselves as business transformation specialists. Solutions providers, aligned to corporate objectives. And, to be fair, much better at translating those into actions than just “filling a job”.
I didn’t learn to do this by filling jobs. I learnt through a lot of research and credible conversations with leaders in my client businesses.
Step 4:
I did not wait for those end-hirers to come to me with a requirement (whether for a job, a tender or a suggestion). I went to them with a proposal that showed the right level of understanding and related my proposal directly to corporate objectives.
Now, proposal writing (and presentation) is a skillset of its own. Understanding what might kibosh implementation is another (some of this I learnt the hard way). BUT I have actually done it – successfully- in sectors from financial services to retail to health and social care. And it’s been transformational for my business. My biggest contract was worth £120 million in gross profit.
AND I’ve done it with small firms that I support, to whom a guaranteed £100k in revenues was a game-changer.
Finally, I’m not the only person talking to recruitment business owners about this. But I am probably the only NED/Board advisor who has actually done it, multiple times, with solutions from subscription models to full Statement of Works.
And if you really want to transform your recruitment business, that’s why you need to talk to me, rather than someone who has only the theory.
