I know what your recruiting clients are thinking – do you?

Everyone says recruiting is changing. The evidence is overwhelming that we are on the cusp of a seismic shift in the way our industry needs to work. It is all changing. Client expectations, candidate behavior, social media, technology.

But how do we sort out the reality from the hype? And what should the ordinary recruiter do to prepare for the future?

Well, a great place to start is to make sure you understand what is different about the way our clients are thinking now. Have they changed their outlook from prior to the GFC? What are their pain points? And how is all this going to affect recruiting, and indeed our industry as a whole?

Over the past six months I have personally been on about 50 face-to-face client visits. In Australia, the UK, Singapore, Japan, Malaysia and France. Typically I have met with the CEO, the CMO, or the VP responsible for Talent and Recruiting.

And I have taken these wonderful opportunities to ask those senior executives exactly these key questions, and more. What are they thinking? What is their attitude to hiring? What is working in terms of recruitment? What is not? What do they plan to invest in? Are they going to use third-party recruiters more, or less?

And I learned a lot. Too much to share completely in this blog, so I chose one compelling theme. And it is this.

The critical thing you need to know, if you did not already, is this. In boardrooms across the world, CEOs, CFOs and HR Directors, have a fierce desire, backed up by real strategies, to drive as much cost from recruitment as possible.

Hiring, its cost, its effectiveness, is under an intense spotlight. Everywhere.

This is driven by good old-fashioned cost-control as you might expect. CEOs are under intense pressure to deliver growing profits as the economies recover. But also something new has emerged.

Increasingly, I now see a very deep cynicism of the value of third-party recruiters. Business leaders are now changing their whole recruitment strategy accordingly. Internal recruiting teams, RPO, talent technology, and a range of direct sourcing tactics.

And for many companies around the world, social media has come as a godsend, because they see it as a great channel to connect with talent directly and cut you (and me) out!

And that is what many intend to do.

Our challenge is going to be to woo those ex and prospective clients back. And to do that we are going to have to prove we can give them something they can’t get themselves, at a cost that they perceive to constitute value.

This is the massive issue for us all in recruiting that I learned from speaking to your clients.

Differentiation and proof of value

And it will send many recruiters who get it wrong out of business… soon

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  • Posted by Greg Savage
  • On August 17, 2011
  • 15 Comments

15 Comments

Piers Rowan
Years ago there was considerable pressure to buy up display advertising in newspapers. Companies would not baulk at paying $7,000 in advertising alone. (It is arguable that this investment was more in favour of the recruiter's brand than that of the client). Anyway apart from writing the same text and passing it on to a different outlet the job - finding great candidates - hasn't changed - and neither has the hard work you have to do to achieve it. So if you are billing $7,000 for a placement fee you can be assured that these clients have had up to a 50% reduction in the cost of recruitment ALREADY! Recruitment done wrong kills organisations. Done well it elevates them. If someone wants to cut your fees they are asking you to deliver the same quality for less. In simple terms you just took a pay cut. Until the need for interviews is removed (good) recruiters will have a safe place in the market. Another point if a company spends $500,000 on a HR team and social media strategy and it doesn't work they are stuck with the costs and still have to go to 3rd parties for help. If they "spend" it on contingent recruiters and they fail to deliver they can move to the next one without actually "spending".
Yuriy Schevchenko
CEOs are cynical of third party recruiters and want to use us as little as possible. What's new? I heard the same thing that I'm hearing now when job boards like SEEK, Monster and Jobnet came out - nearly a decade ago now i.e. "recruiters will be a thing of the past now that there are job boards" etc. etc. I wasn't convinced then and I'm not convinced now. As long as we, recruiters, are able to supply corporations with talent they themselves cannot find then we will be in business. As Piers says, unlike any other costs they incur in hiring, most recruiters only demand a bill once a candidate has started in a new role.
David Palmer
I don't think Recruiters being asked to cut fees means they are necessarily being asked to take a pay cut. Maybe like everyone else they're being asked to become more cost-efficient at what they do. Before Henry Fords assembly line innovation cars were made from start to finish on the spot. Recruitment is very much like this. So the Recruiter who identifies 5 Candidates for the Client and places 1, often finds it very difficult to place any of the other 4. Recruiters must develop new ways in which they connect with Employer demand and they could start by seeing their market in terms of passing "customers" as well as regular "clients".
Veronica Phillips
I believe that good third party recruiters will always do it better than internal recruitment processes inside of most medium and large organisations. The dollar cost will always put too much on the bottom line, and as their businesses evolve they will have to continue to create ever more efficient systems, employ and retain highly competent internal recruitment teams and constantly change strategy based on the communication of management as to what they need in challenging and competitive business environment. This is the nature of business. In the long run external recruitment costs less than their total internal department costs when they try to do it all. Recruitment is never your core business skill unless you are a recruitment company However I agree with David Palmer, we need to find efficiency in our own methodologies, to deliver cost savings to clients and I believe now we are in a prime place to do that with new technologies like social networking etc..
Robb Norris
It is all about value. If you can demonstrate that your service provides a value statement that a company cannot get themselves (i.e. Direct recruiting from their competitors) then you should be okay. Too many recruiting firms in our market have fallen into the trap of providing quantity instead of quality, re-cycling resumes from job boards, little or no qualification in their process and then get surprised when their "client" wants to bring the process in-house. Companies will pay for quality when it is perceived.
RM
It is really interesting how good some internal teams are getting. I recently started a new desk with slightly different focus within my niche. I have been shocked by how the internal teams in my larger prospects are delivering to the business. The internal teams have up to 13 Senior Consultants from agency background. Not only are they finding the best people in the market for their hiring managers but the line managers are definitely under tighter reigns to not talk to agency recruiters. It is not all doom and gloom, instead of the 5 key ASX clients I hoped to get, I have about 20 smaller, medium sized organisations that need my help and I am busy! You have to be dealing with clients that will use you, supplying them with core skills shortage staff that are essential to their business. There is no need to bang your head against a brick wall and be the world’s most persistent sales person trying to crack that big client that says their tactic is to not use agencies. Rather place candidates with clients that want to use you.
    Greg Savage
    Really interesting comment and insight RM. Thanks for that. I think you are spot on. Internal recruiters are getting much more effective and in many cases SME's are a better target for our services
Martin Burns
I'm in an interesting position right now, servicing two clients with very different views of recruitment. The first client is - on paper - a third party recruiting agency's dream client. They have a great b2c web brand, with a highly trafficed site. They hire brilliant software engineers, give them an environment that is light on process and focused on actually building products, have a Silicon Valley look and feel to their environment & culture. Pay great salaries - really great, actually. They're desperate to hire, will relocate, sponsor work visas, and have deep pockets. Great fee structure, etc etc. I can talk to the hiring manager about candidates. The other client is a bit tougher. Technical consulting, so they need brilliant, experienced engineers who can be client facing. This makes for a much more shallow pool. Use technologies that are valued by the business world, but sometimes get a "turn their nose up at" response from engineers. Don't sponsor visas, and pay market. Consultants work on-site at the client, for around 6 months at a time, so there's less chance to build and/ or sell "you'll love our cool office, free lunches, game room, etc etc". They're hiring, but much more deliberately than the first client I mentioned. Lower fees - in fact, it's a retainer, so I receive a fixed check per month, plus a fixed fee-per-hire that is about 20% of what I'd normally receive if I placed an engineer at the same salary level at the first client. I would pick the second client over the first, any day of the week. Why? It's simple: while the first client is attractive in theory, their internal recruiting team is a train wreck. They insert themselves into hires at random times, behave in a borderline unethical fashion, drag their feet on paying invoices (months overdue on one bill right at the moment), placed an HR manager into the role of Director of Recruiting, and have pissed off so many candidates (as well as agencies) in the region that no one wants to work with them. I took on the work as a favor to a friend, who's in desperate need to hire, but am ready to fire them. The second client _values_ recruitment, even if they're leery of paying huge fees. Most of the team is on this hybrid model, so we have some flexibility, we report into (and, the team speaks weekly with) the founding CEO, they value our ideas (social-media focused, more agile ATS? on the way. Redesigned career site? We're neck deep in it. Create an hourly sourcing team so the recruiters have steady pipeline coming in? Done). The fees may be less - because the client is watching their bottom line - but the overall payout to me is higher. It's just volume, coupled with a hell of a lot more pleasant working relationship. So, after all this ramble, the bottom line - to me - isn't so much how _much_ a client wants to pay, but how willing they are to work well with outside recruiters. If they get it, that it's important, and you get it, that they have a finite amount of money to spend, and you treat each other well in finding common ground, it can be a beautiful thing.
Amit Tandon
In India, a lot of large firms have set up their recruitment centers that are hiring for global operations. In addition, fairly large internal recruitment teams are set up to serve the needs of the organization. It is working very well for companies when they are hiring 'commodity skills' like software programmers, call center execs etc. However, when it comes to specialized skills, there is still a fair bit of dependence on the recruitment firms. So, recruitment firms that are into hiring large numbers of generic skills are facing cost pressures more than specialized ones.
    Nimish
    Hi Amit, What do you think about Specialized skills recruitment - do you think companies try and 'insource' this as well to internal teams ? If companies outsource specialized skill recruitment, how does a recruitment firm add value beyond what an internal recruiter could have done ?
Mark Johnson
There are still opportunities to work alongside internal teams. Some of our best success stories in 2011 came from working with ASX listed clients and partnering with their internal teams. If they can fill a role without an agency then that’s fantastic for them. However if you become known as a specialist for the “hard to fill roles” then you’ll become a trusted advisor who should be their first and only call. If a company can fill a role with an easy online advertisement then why would they pay a recruitment fee? Where is the value is that? We, as recruiters shouldn’t shy away from our fee. We just need to justify it. If it was as easy as putting an advert up and arranging an interview then you’re client won’t and shouldn’t use you. I genuinely fee we’re moving away from commoditised transactional recruitment agencies (as Amit said). It’s going to get harder I’m sure and less people will want to work as recruiters. However I’m personally looking forward to the way recruitment is going. It's a great opportunity to specialise and build these relationships for being the best in your field and worht your weight in gold.
Nimish
Hi Gerg, I think you are spot on - Differentiation and Proof of Value. But don't you think this is where most recruitment firms are failing - failing to communicate( or even create) value to clients. What do you think can be done to create value for clients , and how to communicate it best ?
    Greg Savage
    Nimish 1) yes 2) to develop techniques to access candidates that clients and competitors cannot find (via marketing seo, social and CRM) and prove that advantage to clients
      Nimish
      Greg, how does one do this in a fastest finger first environment ? Could you also elaborate on how to use marketing seo and CRM to access unique candidates.
        Greg Savage
        Please read my extensive blogs on all these topics at www.gregsavage.com.au.. also look at my many youtube clips explaining this, regards

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