Most staffing markets around the world have stabilised. Some have definitely started growing, while others are clearly showing signs of increased optimism.
For recruiting firms, it seems the dark days of 2009, where demand virtually collapsed, are behind us. Many business owners and managers are thinking about growth, reinvestment and hiring staff. However, these strategic and tactical decisions raise the big question of timing. When to spend money and when to invest in people and marketing.
These things depend on your local market and your position in that market, but they are absolutely critical. You, the business leader, will be best equipped to judge when your market is ready for investment, so any advice can only be generic. However one thing is for certain. You don’t want to go too early. It will be disastrous if you sink big cost into a business that is unable to generate returns. But equally dangerous is moving too late, as you can be sure that once your competitors get ahead of you they will be hard to dislodge. The prudent approach, I believe, is that you need to be working on aggressive growth plans NOW. That does not mean you have to press the “Green for Go” button yet. So for example, start working on a targeted marketing and sales plan now. Get the ideas in place. Get the timelines in place. Plan now. For example, if you are in accounting and you believe demand for temp accountants will take-off first, get a campaign ready now to launch when the time is right So you invest a little in planning and preparation, but the real investment in media and events and other marketing spend comes when you are sure the upswing is firmly in place.
A related key timing question is when to hire extra staff. We all know how hard it was to get good consultants when the boom was at its height. Yet we also know the devastating cost of mediocre people and highly paid staff who are not billing. Again it’s a matter for fine judgment, but even if you are not ready to hire, you should be planning now. Identify your gaps. Where will demand come and do you have resources to service it? Interview consultants now even if you are not ready to hire. Build a database of potential recruits. Keep in touch with them. In terms of actual hiring, don’t underestimate the lead time it takes for someone to become productive. Factor in training and induction time.
At Aquent we are starting to hire now in selected markets, but I am very mindful of productivity per recruiter as a key ratio in managing my business. I consider “full productivity” for a perm recruiter to be fee production equal to 3.5 times base salary and temp to be 5 times base salary – as a broad rule of thumb. So I am taking the view that current recruiters need to be at eighty per cent plus productivity before we add additional people.
Gear up, but be very careful not to over-hire in your haste to cash in on the upswing. It will kill your profitability in the recovery – especially if that recovery is slower than we would all hope.
Image courtesy of Martin Palmer
Great article!
The other thing to ask yourself is – “Do you need a biller or just a body?”
People who disappeared during 2009 are now reappearing across all sales and service roles. Why did they leave the industry during the downturn? Was it due to companies downsizing or was it due to the fact that they just could not keep up with billing and sales targets during a challenging time? Ask the question and do not take the response at face value.
Once you have figured out the reasons for their disappearance and before you get caught up in the wave of optimism and increased activity ask yourself:
Do I need a biller and someone with the ability to generate business?
Do I need a relationship manager to run warm/hot accounts?
Get this wrong and you could be paying the price before the year is out!
Good post Greg.
From my experience Recruitment Companies have started to step up their recruitment efforts over the past month. I do however think that many of the problems with the perception of recruiters being poor at getting back to candidates and general customer service complaints is a direct result of poor hiring choices. I know of a number of consultants who are not cut out for recruitment but are still hired by recruitment companies who simply seem to want to increase their numbers without any real regard for quality.
I respect what you are saying Greg but from a rec to recs perspective, many businesses have already reacted too late for the early upswing. I started advising my clients to hire in October last year. For many of them it meant carrying consultants through the Christmas period, but now they have fully productive recruiters in their businesses. Those that elected to wait for stronger signs of recovery are now finding themselves in a war for experienced recruiters that far outweighs what we saw at the height of the boom. Many people left the industry and with virtually no investment in training and development over the past 18 months, there is a chronic shortage of qualified, energetic and driven recruiters. Additionally, the point of difference between agencies is minute so good people are making career decisions based on whether they like the people they will be working with. The industry has to invest in sourcing new people because there just aren’t enough bodies to go around.