If I started a new recruitment company tomorrow, I would...

If I started a new recruitment company tomorrow, I would…

I have started several recruitment businesses, and I invest in new start-ups right now too.

But if I were to rush back into the main game, and start a business tomorrow that I intended to run, there are certain things I would do, and others I would not.

I certainly would build a business that was niche, specialised and deep in an area where talent was hard to find. Yes, hard to find. Because clients will only pay us for hard to find skills, so the idea is to become a world champion at finding talent in a niche, and go deep.

For sure I would build a strategy that delivered at least 60% of my GP from temp and contract activity. In fact 70% would be better. When my ex-Recruitment Solutions colleagues started people2people, and I invested and helped on their Board, I know I irritated them by insisting the business focus on temps, even though at the time, permanent recruitment was easy and juicy and seductive. We did Perm well, still do, but the fruits of that ‘build temp‘ strategy were fully revealed in the post-GFC downturn, when 400 plus high-margin temps generated a cushion of income that withstood a 50% drop in perm revenue.

I am not a high-volume, low-margin guy. I have spurned 100 times more PSAs (PSLs) than I have pitched for, and I believe the commoditisation of recruitment is a slippery slope to recruiting hell for many. So my opinions below are based on my view of the recruiting world. But I am often right, so have a read anyway :)
Screen Shot 2015-07-18 at 1.59.52 pm
Multi–listed, contingent permanent recruitment is a mugs game. Taking a Perm brief where you are competing not only with other recruiters, but also the clients’ own internal sourcing mechanism is lunacy. And it’s degrading too. If the candidates are easy to find, it’s almost certainly work not worth doing, because the margins will be low and your fill-rate even lower. Avoid PSAs where you think volume will make up for shit margins. It hardly ever pans out.

Do recruit for clients in areas of intense skills shortages. You will have their attention when they are in talent-short pain. Trust me on that. Work with clients who treat you as a partner, and fire the game-players, users, and those who routinely disrespect what you have to offer. It’s not that hard, I promise. Liberating actually!

Maybe the very biggest of corporates are not your hunting grounds, but rather seek out SMEs without massive internal resources, tedious bureaucracy, and a smug attitude to boot.

Screen Shot 2015-07-18 at 3.32.35 pm

In actual fact the temporary industry is at greater threat from technology disruptors such as Freelancer.com and Upwork, and their ilk, than most people realise. But mostly at the low-skill level, and for discrete project work. So don’t focus your agency on that work, where mass recruitment leads to low margins and sometimes high litigation risk. I know some big recruitment players make money there, but they have the scale, technology and process to make it work. Mostly, you don’t.

Focus on the professional contract market, where the career contractor exists. The person you can actually build a relationship with. Where the contractor sees you as her employer, and values your service. Work in areas where assignments are long, skills are rare, and tasks are complex. This kind of temp recruitment requires recruiters with talent relationships, deep networks, great skills in the ‘craft’ of recruitment, and longevity in the market place.

Technology can’t replace that.

The Agency recruitment industry has massive opportunities. But unlike the past where you could make money just about anywhere, doing just about anything, now we have to be strategic and razor sharp in both focus and implementation.

*****************************************************************************************************

The  Savage Truth Speaking Tour rolls on. Coming up; Brisbane, Adelaide, Perth, Sydney, Melbourne, Auckland, Dublin, London, Glasgow…. Details here

****************************************************************************************************

 

About Greg Savage

Over a career spanning thirty years, Greg Savage has established himself as a global recruitment leader. Greg is a regular keynote speaker at staffing and recruitment conferences around the world.

Connect & Subscribe

Subscribe to this blog and join me on social media. I have a lot to say. Some of it even quite good.

Subscribe (Why wouldn't you?)
Facebook (A great recruiter hangout)
Twitter (40,000+ other people do)
LinkedIn (Find out who I actually am!)
YouTube (A great face for radio)
Instagram (Pics of my recruiting travels)
Pinterest (Pin me down)
Google+ (.. because.. it's... Google?)

, , , ,

16 Responses to If I started a new recruitment company tomorrow, I would…

  1. Brent September 8, 2015 at 11:08 am #

    Nice one Greg. We have certainly found genuine partnerships with some fantastic SME’s who truly value our service offering. We have also taken some joy from firing a couple clients of late which allowed us to focus our time and effort on our ‘real’ clients.

  2. Wally Barr September 8, 2015 at 11:20 am #

    Greg,
    Right on the mark again! Amazing.The fact is that this applies to several industries and job slots. Think of sales. What does a salesman do now. The buyer finds out everything by searching.My startup is an education based service that teaches you how to become an industry specific consultant based on 1099 sales rep relationships. Most companies in the next 5 years will only have commission only reps as stats say that sales only spends 22% of the time in front of clients. Marketing materials are only used 8% of the time.The new workforce will be a series of consultant based organizations.
    Wally

  3. Neil Bolton September 8, 2015 at 12:17 pm #

    I’d add another to the list, Greg.

    Unless you know them well, don’t hire recruiters. They come with bad habits. I’ve hired gym instructors, teachers, secretaries, (remember them? :)) and if I was starting an agency now I’d look closely at young, not-yet-jaded journalists.

    But not recruiters with fifteen years’ experience.

    • Anthony Hesse - Property Personnel September 8, 2015 at 5:10 pm #

      100% agree with you Neil. None of my current team had worked in recruitment before joining me. The few times I have gone down this route it has not worked out.

  4. Andrew Aston September 8, 2015 at 1:25 pm #

    Couldn’t agree with you more Greg. The opportunities that remain in our industry are enormous for both start-ups and existing players… with the right business model.

  5. Anthony Hesse - Property Personnel September 8, 2015 at 5:26 pm #

    Great blog as always Greg. The part of it that I particularly agree with is “Taking a Perm brief where you are competing not only with other recruiters, but also the clients’ own internal sourcing mechanism is lunacy”. This is an undesirable situation that we seem to find ourselves in with more and more existing clients, and you are right, it is invariably troublesome.

  6. Matthew Broadbent September 8, 2015 at 8:35 pm #

    Greg. I’ve been a follower for some time, but this article is pretty inspirational. So much so that I wrote a blog about it letting people know you’re coming to the UK next month so they can hear you in person deliver the message. Thanks for writing this. I think I’m on the right track. See you next month (when I can get a ticket out of REC)

    • Greg Savage September 8, 2015 at 8:39 pm #

      Thanks Matthew..glad you enjoyed it. Look forward to meeting you at my sessions in the UK, where I will be talking more about this.. and much else. Persevere with REC..please :)

  7. Frank September 9, 2015 at 12:38 pm #

    Thanks Greg – I feel as though I just sat through a private consulting session with you picking up some very valuable thoughts and considerations. Many thanks.

  8. Feroze jalal September 9, 2015 at 6:57 pm #

    Nice one

  9. Renato September 11, 2015 at 3:20 am #

    Great blog – What niche would you recommend as the best to start a new recruitment company?

    • Greg Savage September 11, 2015 at 7:51 am #

      A niche where you had a deep knowledge, a broad network and where there was likely to be ongoing demand for talent, and skills shortages

      • Renato Krienbühl September 11, 2015 at 7:18 pm #

        Ok and many thanks! Rgds, from Zurich, Renato

  10. Danny Craigie September 23, 2015 at 12:52 am #

    Great points Greg and I agree on the whole but I would say that starting the company as an initial 100% perm company for 12 – 18 months will give you a healthier cashflow before the inherent debt that comes with running professional high margin contractors.
    Having to go down the invoice discount route to fund a contract payroll adds a huge amount of cost and any profit / cash in the bank gets hammered.

  11. Finance manager recruitment October 6, 2015 at 8:49 pm #

    You can prepare these new personalities to your organization’s reasoning and incorporate them consistently into making another authoritative society. While this may be a favored strategy, it is not the slightest bit vital if the thinking behind enrolling more youthful hopefuls is on account of they are not able to request higher wages because of their absence of work experience. Similarly, exploiting a negative economy where occupations are few and far in the middle of by contracting experienced, capable hopefuls at the lower end of the pay scale additionally can be seen as an out of line practice.

  12. Artur Sekula April 12, 2016 at 8:48 am #

    Thank you for sharing your thoughts Greg.
    I have been working on my business for 2.5 years and yes it is hard to say no to work but working on your own you do have to choose the good the bad and the profitable projects.
    Thank you again and all the best!
    Art @ Essence Crew

Leave a Reply