The recovery after a recession is a time of huge opportunity for recruiters. History tells us that great companies in our space have blossomed during this phase, brands have been built and fortunes have been made.

In particular people talk a great deal about the recession being an opportunity to gain market share for those companies who survive it. And that’s true. But it’s only an opportunity, not a certainty.

Informed decisions have to be made about where the growth will come. Resources need to be allocated to take advantage of the predicted increase in demand. You need to be very aware of where your competitors have fallen away, which key clients are now vulnerable and open to your approaches. It needs to be strategic and targeted, and not just across the board. Where is the growth going to come, has to be your question? What tactics are needed by you to capture it?

The answer may even require you to refocus your niche specialisation. What was good for you in the last boom may be a shrinking sector in the reviving market. If necessary you need to shift your focus substantially. Brave decisions for challenging times but remember, not every one will ride on the tide equally. Clear thinkers and smart implementers will thrive.

I am rather proud to be a Life Member of the RCSA in Australia, an accolade awarded to very few industry veterans who are judged to have made some contribution to the staffing industry in Australia and New Zealand.

I often wonder how I sneaked in to this august group, and so I am delighted that the RCSA have asked me to speak at a series of breakfast seminars in all major Australian and New Zealand cities over the coming months.

The topic is a challenging one. Below, an extract from the event marketing blurb

“Riding the Recovery”

Greg Savage Seminar on how to thrive in 2010

Having survived four recessions and benefited from the recovery on each occasion, Greg Savage will present his thoughts on how to prepare for the recovery, and what steps you need to take to benefit from the opportunities that will emerge as hiring demand starts to surge.

This session will be a fascinating blend of facts, forecast, tips and tricks, designed to give you real strategies to survive a depressed economy and to thrive as the market recovers.

Greg will share what steps you should be taking right now to position yourself for success, and he will also explore the many pitfalls and errors typically made by recruiters and business owners as the good times begin to roll again.

It’s hard to focus on ‘the recovery’, when many recruiters are battling just to survive, but it is something we should all be thinking about, because when the upswing comes, we will presented with a range of fabulous opportunities. Opportunities to increase market share, grow margins, acquire new clients, sell new services and scale to new heights in terms of billings and profits.

But not everyone will have the resources, the know-how or the energy to take advantage of a rebounding market, so a session on how the recovery might play out, and how we can prepare, might be very welcome.

But I am asking for your help!

What I am looking for is your input as to the content of the seminar. What’s scaring you about the business environment right now? What’s changed that you are not sure how to deal with? What specific question do you have regarding how to equip yourself for the upswing?

If you live in Australia or New Zealand, you will hear your issues addressed at the seminar in your city. However everyone is welcome to send in questions because I will post my thoughts on the most compelling issues on this very blog.

Simply post a comment at the end of this blog post – or if you prefer – drop me an email at gsavage@aquent.com

In the meantime mark your diaries and contact the RCSA to book your attendance.

http://www.rcsa.com.au/event/month/2009?title=Riding+the+recovery&event_start=&event_end=&tid_1=All

· Wednesday 19th August – Perth

· Thursday August 20th – Adelaide (luncheon)

· Wednesday 11th November – Melbourne

· Friday 13th November – Sydney

· Friday 20th November – Brisbane

· Week commencing 22nd February, 2010 – New Zealand (To be confirmed)

Perhaps the most common question I get asked these days is whether the dramatic decline in the staffing market has leveled off. My own staff, clients, candidates, even journalists want to know whether there really are any ‘green shoots’ in terms of employers venturing back into the labour market.

As anyone in recruitment knows, the answer to that question is a moving target, hard to pin down at best, totally elusive at worst.

And of course it depends what sector we are talking about, what level of employee, and what country or even city. What I can say is that in the Aquent space – Marketing and Design recruitment – it’s been a series of frustrating ‘false dawns’. We see a flurry of hiring activity for a week or two, suggesting we are on the cusp of bigger and better things. Then just as quickly, it dies out, leaving us with slow order-flow and patchy pipelines.

But the question keeps getting asked, so I am going to try and answer it as best I can. To make my assessment, I have looked at our business results in the countries we operate, but I have also gone right to the coalface to get opinion from people who are immersed in hiring and placing Design, Marketing and Communications professionals. I asked our senior management across the world the simple question …

“Has the staffing and recruitment market ‘bottomed’ yet”

In other words, has client demand, as measured by job orders, job offers, placements, Gross Profit generated, temps out working etc, continued to decline over the last month. Or has it plateaued in recent months? Or, is it actually on the incline – in other words improving.

The chart below reflects our observations for both temp and perm recruitment.

So this is what we reckon is happening. Remember, no science here. Just well informed opinion and a little but of “gut feel”.

Europe has not even really reached the bottom we believe. The economies there are in dire straights, and confidence has not returned to employers in any meaningful way. Lay-offs continue, and in England we feel the perm market is getting slightly worse if anything, while temp has bottomed and stabilised, albeit at far lower levels than this time last year. France, Netherlands and Germany are seriously depressed. Both temp and perm continue to decline, and my personal view is that we will bottom some time in the second half of 2009, looking for recovery in 2010.

Australia is still doing it very tough. The government tells us Australia is not in recession, but if you are in the staffing business, it feels very much like one. Both temp and perm have declined significantly for that last 9 months, and probably much longer. Recently, we sensed the bottom has been reached and we surmise we will bounce along at this pace for several more months, before any up-tick can be expected. The only bright spot from this part of the world is a small improvement in temp demand in New Zealand, but that may well be at the expense of perm hiring.

Asia is a mixed bag. Singapore has reached the bottom we think, but no serious signs of growth are in sight. Malaysia did not dip as much as its neighbours, and has recovered a little quicker. Our office there is recording similar numbers to last year, which can’t be said for many of the others! In Japan the temp market has stabilised in our view, but perm hiring is slowing and given the state of the Japanese economy, I expect that to continue to deteriorate.

India and China were the boom-time darlings prior to the meltdown, and they have been seriously affected in terms of employer hiring activity. However, both are bouncing back, particularly China. Apart from the strong results I see from our Shanghai and Beijing offices, I know this from personal experience having visited five clients in China myself only a few weeks ago. All were major companies, all were CEO level people I met, and all were currently hiring or planning to soon. I enjoyed my trip to China as you can imagine!

North America is the biggest revenue-earner in the Aquent network. We have 30 plus offices there, and dominate our space. Perm continues to decline in the US and Canada where the recession is vicious and where laying-off staff is inexpensive and accepted more readily by employers than, say, in Europe or Japan. My colleagues in the States do report however, that temp and contract in Design and Marketing is on the up, with digital and interactive specialists in particular demand.

So there we have a view from the trenches so to speak.

Are we there yet? No, I don’t quite think so. But if this recession were a marathon, I would think we are over the half way mark and the finish line is perhaps just edging into view.

Greg Savage

21st June 2009

Market slowdowns can be really scary. Suddenly the boot is on the other foot. Candidate supply frees up and clients have choice. And how they love to leverage that power! And of course the first place we feel the pressure is on fees and margins. And it’s true too that many of todays recruiters, brought up in the boom years, have never really had to deal with industry-wide price cutting, where every job order turns into a fee negotiation.

There is no “magic bullet” when it comes to fee negotiations. It is true that when the market softens the power shifts more to the buyer. But recession or not, you need to do everything you can to push back against margin degradation. And the way to tackle that head on, is talk about your value… not about your price.

The secret is to sell your differentiator. What have you got, and what do you do that gives your client special value. At Aquent we emphasise our niche focus, our unmatched access to creative, marketing and advertising talent, our multiple branches, our specialist knowledge and understanding of clients needs, our proprietary testing software, and then we should wrap all this up in 110% money-back guarantee. Explaining differentiators gets the focus off price, and gives you something meaningful to respond with when the client quotes competitors crazy fee levels

But you need to do more. When a client forces the issue on fee, go through your entire recruitment process explaining all the things you do to secure the right person. And I mean everything. The searching, the adverting, the screening, the collaborating with colleagues, the interviewing, the reference checking, the testing, the “selling” of the clients company to the best talent, and on and on. The biggest reason clients want to push down fees, is that they don’t perceive the value in what we do. And they don’t perceive the value because they don’t actually know what we do to earn our fee. And they don’t know what we do, because we, stupidly, don’t tell them!

It’s like looking at an iceberg. 10% of an iceberg is visible above the waterline. The rest, 90%, is out of sight. So it is with what the clients see of our work. 90% is out of sight, so the client does not factor it into his perception of “value”. So tell the client everything you are going to do to solve his staffing problem, chapter and verse! Then, ask the client why he feels a reduced fee is appropriate. This is important. Get the ball firmly into the clients’ court. The client is asking for a discount. He should be squirming — not you. When it comes to fee discounts you don’t have to justify “why not” — he has to justify “why”! Often the client will stumble a bit at this, but usually they say something like “your competitors charge less”

This often scares recruiters. But there is no need for fear. Ask, “ Can you tell me about a situation where you were charged less than the fee I am suggesting today, where you got the level of service and the calibre of talent you want — on a regular basis”

This is a gamble, sure, but the fact that you are there means that it is most unlikely the client is happy with their current supplier.

Sometimes the client pushes hard for a reduced fee. It’s going to happen in this market all the time. Don’t feel pressurised. It’s a purely commercial decision — and it’s your decision to make. Is this client and this order so attractive it is worth taking a lower fee for?

Remember this before you discount next time. Don’t think of the fee only as dollars gained or lost —think of the fee as what your service is worth. A discounted fee, means a discounted “you” — never forget that.

But sometimes you will feel it is worth a compromise to secure a particular opportunity. In these cases remember one golden rule.

Never reduce your originally quoted fee without extracting a concession from the client.

In other words if you say “my fee is 25%”. The client asks for a discount. You say “OK, 20%. You have just signaled to the client that you never believed in your value proposition and your service in the first place. You will struggle with getting her respect ever again — and you will never get your fees back up.

So if you reduce your fee, always ask for something in return – a retainer perhaps, exclusivity maybe, client paid advertising maybe, client gives you multiple orders maybe, or maybe you waive the guarantee.

Make sure the negotiation involves both sides giving. This way the equal partnership is in tact. So is your self-esteem by the way. Important considerations in a tough market.

Greg Savage
14 June 2009

Coming soon to “The Savage Truth” : “NegotiatingTemp Rates”

Until about 6 months ago, I had the best recruitment job in the world !

Seriously. CEO of a global, yet niche recruiter, with 450 staff spread across 30 offices in 15 countries. We dominate our space in most markets, we are highly profitable, and we do cool things all the time (see Aquent.com)

But that was then. For the last six months I have had one of the hardest, least rewarding jobs in recruitment (well that’s a hotly contested title I know, but it seems that way to me)!. Like everyone else in staffing, we have seen revenues decline, clients go bust and demand evaporate. From planning growth, opening offices and celebrating record quarters, I have moved on to restructuring, re-thinking, retrenching and re-strategising. And while that’s been healthy and we have done it well, its been very, very painful too

Its been tough. For all of us. But, I have been down this particular road before. Several times. So let me tell you a true story

It starts in August 1987. With 9 intrepid colleagues, I had just started a new recruiting business, which was to be called Recruitment Solutions. We were ambitious. We opened with 10 people on day one. We had two offices and big dreams.

Eight weeks after we opened our doors, the worlds’ stock markets went into free fall. “Black Monday,” the 19th October 1987, made the recent economic turmoil look like a mere blip. The Dow Jones on Wall Street dropped 23% in eight hours, and the next day the Australia All Ordinaries fell an astonishing 46%. That’s right — half the value of listed companies in Australia vanished in one day.

I was terrified. Mortgaged to the hilt, I had borrowed every single dollar to start the business. I had encouraged 10 colleagues to leave great jobs, follow me, and start Recruitment Solutions. And now, I was sure, the economy would tank and our business would fail, ruining us all.

But it did not. Stock markets recovered. The real economy thrived. Our business boomed, and by 1990, only three years later, Recruitment Solutions had 75 staff, five offices and revenues of $13 million. All good.

But it was NOT all good. By mid 1991, the Australian economy had fallen into deep recession. Let me tell you how it felt being a recruiter at that time. In mid 1990, before the recession hit, our business was handling, on average, at any one time, about 250 active perm job orders. By mid 1991, that number had dropped to 18 active jobs.

Our Sydney temp desk, which had averaged 30 job orders a week, plumbed new depths. In one memorable week we took one order. And it came in at 4 p.m. on the Friday – and it was for a one-day assignment!

Our staff numbers dropped from 75 to about 30. We closed two of our five offices. Every person in the company had to take a 10% salary drop. Admin staff were eradicated altogether, with consultants shouldering the load. We stopped advertising totally because great candidates were literally queuing up in the foyer. Rented pot-plans were wheeled out the door.

Our revenues, which peaked at $13 million in 1990, fell to $9 million in 1991.

Oh it was a full-on horror story, believe me. But it had a happy ending.

When the market recovered, we found that many of our competitors had disappeared! We found our clients valued that we had persisted, and felt bound to us as “fellow — survivors”. We found the consultants who remained had been burnished by the fire of true battle and were tougher, more loyal and far more skilled.

We found candidates valued our counsel during tough times, and allied themselves to us both as job-seekers and as clients as they secured senior roles. We saw that our processes and systems had been refined and improved and waste had been totally eliminated. We found that the economy raced back, and skills shortages emerged quickly, catching everyone by surprise. And we were perfectly positioned to grow faster and with more substance than ever before

Subsequently, Recruitment Solutions boomed. In two years our revenues were up to $18 Million. By 1997 sales were over $40 million, we had 8 offices across Australia, and the business was so profitable we could list our company on the Australian Stock Exchange, at a value of over $60 million dollars

Individual recruiters, who had survived the downturn, were streets ahead of new comers, in terms of skills, resilience and relationships. Many of those people with us during the early 90s went on to be huge billers, and I can name a dozen or more who now own their own businesses.

So yes, right now, its tough. But hold firm. Recessions end!

And then…let the good times roll!