What recruitment owners are doing right now!

My diary for last week shows 32 meetings (mostly phone and video) with recruitment agency owners. It does not show the dozens of ad-hoc calls, and the hundred-plus email and LinkedIn messages.

Nor does it convey the panic and emotion in those meetings.

I also made time to put out this message about how recruiters must stand up now, and this one for recruitment owners and managers, with a framework to tackle the decisions we now have to make.

But what decisions did they make?

What came out of those dozens of decision-making meetings and calls?

I am going to list them. This is not a template for how you should act. Your situation is unique, and in any event, the circumstances are so fluid, that what seemed like a very smart move last week, may be hopelessly inadequate now. (Indeed the Australian Government announced measures on Sunday night that will change much of what was decided last week!)

But here the list is, to help you.

Staff Layoffs:

Sadly it became clear that many companies would need to reduce the cost base fast. I have seen some extraordinarily naïve calls on LinkedIn and elsewhere calling owners cruel and selfish for letting staff go. Let me tell you bluntly that I have had at least six experienced and mature owners in tears this week. Tears of regret and guilt. But answer me this. If your breakeven is $250,000 a month and your gross profit has fallen to $150,0000 a month, and likely to collapse further, what exactly is YOUR idea to save the business? These companies face potential losses of hundreds of thousands of dollars a month. They have in some cases a cash runway of fewer than 40 days. Without addressing costs, everyone will lose their jobs and the owners their houses as well. So long, painful and immensely sad conversations have been had. I never heard a callous or blunt sentence from any owner in this position. No one wants to let a single person go. But in the end, the sums had to be done (see my template here) and estimates of how the crisis would pan out were made. Key considerations in making staffing decisions were these;

• Let’s do it only once if we can. We do not want a ‘death by a thousand cuts’.
• Assess every person who is not productive now in terms of revenue, or who is not supporting someone who is productive.
• We ask the question of each person “If the market improves slightly in six months, would we rush to hire this person back’.
• We bear in mind we want to keep the fabric of the business strong, so don’t “over-prune”.

These questions didn’t make the decisions easy. But they added clarity. These are actual cases that happened last week. A 100-person company let twenty people go. A 40-person company let five people go. A 12-person company let seven people go.

All did it fairly, empathetically and all did it with real sadness. In many cases, doors were left open for a recall.

It was the shittest of weeks, and I wasn’t even on the front line.

Working hours reduction:

Every company that laid off staff looked at this first. Almost all of them did this, as well. A nine-day fortnight (work nine days out of 10. Get a 10% pay cut) in one case. A 4-day week in another. ( 20% pay cut. All staff including management). A three-day week in another. (40% pay cut). All saving payroll costs significantly. All designed to save jobs. However, all those decisions put financial pressure on staff who have commitments. Some management teams are taking extra salary cuts now as well. The overriding consideration has been that the cost base had to be reduced, or we all lose our jobs.

Discretionary expenses have been slashed:

Advertising, tech, beer in the fridge. Even significant expenses where possible are being reviewed. One client who fortunately has an office lease up for review, chose to exit, and everyone will work from home for the remainder of this year.

Massive focus on cash:

(Often initiated by me, ironically. You know my love affair with cash). Analysis of every outstanding invoice. Collections stepped up. Risky debtors evaluated and strategies put in place. Cash-flow projections done for varying scenarios. In some cases, recruiters are looking at a new offer to clients. Recruit now. Pay later. Which means the recruiter gets the fee upfront, but the client pays over instalments. This company, APay*, is leading the way in Australia and NZ. Bank managers are being approached regarding overdrafts and other terms.

Working From Home:

In Australia and New Zealand, (apart from the client mentioned above) only ONE of 15 clients spoken to have sent staff home to work. But that was last week. This week could easily see that changed.  ( In fact, five minutes ago the New Zealand government mandated compulsory working from home for the entire workforce, essential services excepted). Of course, anyone slightly ill was sent home, and those wanting to work from home have been allowed to.

Key Leaders:

Some owners identified vital people in leadership who if they got sick would leave a massive hole. Contingency plans were put in place.

Technology:

Most owners have allocated money and resources to upgrade and test technology to suit remote working. This is being fast-tracked.

Health:

All have introduced social distancing guidelines and sanitation resources for staff. One client has his office professionally disinfected by the cleaners every night.

F2F:

Even last week not all clients had stopped face to face client and candidate meetings. The situation has escalated rapidly, and I doubt any will from now on.

Travel:

All travel has been cancelled, of course.

Customer engagement:

Some have started to get on the front foot concerning candidate and client engagement, such as calling all contractors on assignment for updates, and contacting all clients for a debrief. Last week it’s fair to say that this stage of the framework had not been nailed. More to come

Staff morale:

All managers and owners are concerned with staff morale and safety. But most are a bit lost as to how to lead in this environment. Clarity, transparency and regular communication is key. So is designing new ‘working together remotely’ plans, and also setting new ways to measure ‘productivity’. More to come on this as it unfolds.

Mental health:

Reduction of anxiety was front and centre for everyone. Ideas that came from the conversations include the critical importance of ‘calm leadership’, even if leaders are scared too. Focusing on what we CAN control is a good mantra, and gives people clarity and certainty. Dousing sharing of dramatic news and doomsday scenarios is vital. The importance of keeping the big picture in mind, and the fact that ‘we will recover’ is powerful. Opportunities will emerge. ‘This too shall pass’ is a phrase we are often using.

As I mentioned, not many clients have got the developing a new ‘business as usual’ strategy right yet. In other words, how do we generate revenue? New services? Staff activity goals? I think that will evolve and if I have some good stuff, I will create another blog.

Meanwhile, I emphasise that we must stay calm. We must be supportive of each other. Be kind. Be generous.

And above all remember, this too shall pass.

Recruitment COVID-19 Management resources from me created in the last few days;

Recruiters this is our time to step up.
My COVID-19 Strategy discussion framework.
Podcast. How to react to the current situation, especially around costs.
I am doing a podcast with RCSA. Members watch out for that
Agency execs navigating COVID-19 need to act like true leaders (this from Chris Savage. It’s excellent)

*I have an association with APay, but I have that relationship because what they offer is an excellent solution for recruitment businesses, especially now.

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Average of 5 star reviews on Amazon. Delivery in a few days.

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Image by Arek Socha from Pixabay