Timing the recovery. When to invest in staff and marketing

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