Yes, the staffing market may be recovering, but every day we read of recruitment companies going into liquidation. And even in the best of times, I know plenty of recruitment business owners are frustrated by how hard they work for such modest returns.
And the tendency is to blame clients, or the market or the government.
But often the real culprit is much closer to home. Profitability of a recruitment business is totally dependent on recruiter productivity. And more to the point, poor returns are usually a result of long-term acceptance of mediocre performers.
And plenty of business owners are naïve when it comes to the real cost of their staff. They talk of accepting people billing a modest multiple of their salary as being sufficient. I have often heard such statements as “Well, I only paid her $60,000 a year and she billed $70,000, so she covered her cost”. Total nonsense, that was a loss making hire, make no mistake.
What is often forgotten is the opportunity cost of having a serial under performer in your company when you could have a high performer, covering overhead and contributing to profit.
This short video above explains a quick, rough and ready way to work out what recruiters cost you – even before you pay their salary!
- Posted by Greg Savage
- On August 24, 2010
- 4 Comments