12 October 2009

The Hidden Profit Available Inside Your Recruitment Company

I wasn't at the RCSA Conference last month on Hamilton Island, but from all accounts it was an excellent conference (well done Julie, Claudia etc, at the RCSA). As usual, Jo Knox from Recruiter Daily was pumping out newsworthy articles from the various presentations and one in particular caught my eye.


It was Top consultants bill five times more: Study.

The article reported on the BSRP Asia research that concluded that the financial difference between the elite recruiter and the average was huge.


Specifically the research found that ...

‘For permanent recruiters the elite performers average $590K NDR (gross profit) each year, while "average" consultants generate just $257K NDR. Elite temp recruiters average $900K NDR while average temp recruiters generate $357K.'


This research does not surprise me in the least and supports the data generated, from a much smaller sample size in the SME recruitment sector, by Nigel Harse's RIB Report.

The conclusions from the BSRP research about the attributes of an elite performer were also, unsurprising. eg demonstrate strong tactical focus, use their time more effectively but can also always make time to spend with clients and know their clients' businesses better than their own, to name three.

More instructive were the major traits of the ‘average' performers (note: not ‘bad performers'). These traits were observed to be:


1. good at strategic planning, but don't take a consistent approach


2. less focused on money


3. over- or under-worked


4. prone to over-servicing clients


5. quick to blame others


6. less skilled at relationship building


Why these observations are especially revealing is that because these average performers are, financially at least, more than justifying their existence, there is an enormous upside in the productivity and profitability of these employees.

These ‘average' performers require zero extra organisational money be spent on hiring, office infrastructure (eg desks, computers, phones etc), base salary, overheads etc, to generate more income and profit. Where does the money need to be spent? Of course, you guessed it - training and coaching!


Naturally I have a vested interest in saying that but when I look at the six ‘deficit' areas listed above, I know that apart from #2 (intrinsic motivation issue) and #3 (leadership issue) that the remaining four areas can be quickly addressed by an effective coaching and training program. How much would that cost?


Of course it depends upon the current skills and attitude of the respective ‘average' consultants but I could confidently say that a $20,000 investment in 6 recruiters across a 6 month period would (very conservatively) yield a 5 fold return on investment.

And the best bit? After the program costs and extra commission or bonus payments for the recruiters, about 50% would go straight to the bottom line!

This is no bandwagon I am jumping on. Last September ShortList quoted me, saying almost exactly the same thing on this topic at last year's RCSA Conference in Christchurch.

A simple example would be if each of those 6 perm recruiters (from my example, above) converted just one multi-listed contingent job, per month, into an exclusive job, and as a result filled, rather than lost, the job, an extra $204,000 in gross profit would be generated across a 6 month period (using the RIB report's average perm fee of $6,700).


Forget PSAs, hiring new recruiters, upgrading your database and rebranding - how much ‘easy' profit is hidden, and readily available, in each ‘average' performing recruiter in your team or business?

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