It also introduces the full "Deloitte Growth 25". These are the themes of future prosperity - sectors that will see significant growth and opportunity. In addition to Mining and the "Fantastic Five" (Agribusiness, Gas, Tourism, International Education and Wealth Management), it gives an overview of an additional 19 "pockets of growth" across the economy.
The most interesting part of the report, for me at least, was the section Creating opportunities for growth in which Deloitte identified the five major areas that Australian businesses need to take action on to ensure they are able to take advantage of the potential growth opportunities that come their way. Deloitte calls these the ‘prosperity levers'.
These five ‘prosperity levers' are:
1. Portfolio mix
2. Resource allocation
3. Opportunity radar
4. Competency advantage
5. Structural advantage
Each area has a brief explanatory paragraph. Here's what the report said in explaining ‘competency advantage':
Gain significant operating advantages through superior talent and/or business practices:
· Better recruitment, motivation and retention of high-quality talent (my bold)
· Incremental innovation within business
· Institutionalisation of superior practices
· Ability to tap into third parties
In the pages that follow, the report provides more detailed comments about each of the identified prosperity drivers. Under ‘competency advantage':
Companies can build on their structural advantages by expanding their competencies. A rapid way of increasing a company's competitive advantage is to develop superior talent. The focus here is on enhancing recruitment, motivation, day-to-day management and training practices to find, retain and develop the best people.
To ensure this advantage is sustained, those practices must be embedded and institutionalised within the organisation. They should also be complemented by innovative and incremental improvements to business processes that support greater productivity.
Looking outside, companies can partner with third parties to expand their areas of competency and create unique capabilities. This might include forming alliances with technical specialists, and outsourcing commoditised work that doesn't deliver an opportunity to differentiate.
It's very significant that a respected global firm from outside of the recruitment industry has made these, very considered, observations and recommendations. I firmly agree with what Deloitte has said. These comments are very pertinent to the long term and profitable future of the recruitment industry.
The Deloitte report is pointing to the critical change that the recruitment industry needs to make if we are to continue as a valuable and profitable sector in the long term; we have to become genuine recruitment consultants.
Our industry has labeled its practitioners as consultants for many years but the reality is that very little genuine consulting has been delivered as evidenced by the fact that only a tiny minority of recruitment agencies have been charging for their time or technical expertise. Invoices for ‘services rendered' have been issued on a success-only basis ie if you deliver the successful candidate for the vacancy you can send an invoice for a fee, regardless of how much ‘technical expertise' you delivered, how much genuine ‘consulting' you provided or how much time you invested.
The threat to the existing recruitment industry business model, and the concurrent idea of developing genuine recruitment consulting services, are not new topics for me, or other prominent recruitment bloggers. I have written about this topic in 2013, 2012, 2011 and as far back as 2009.
Greg Savage returned to this same topic earlier this month which generated a long stream of comments.
I don't think I can articulate the opportunity for recruitment agencies any better than I did almost exactly two years ago (04/04/12) when I published RPOs: agency threat or opportunity?
in InSight 225 after having attended the Recruiters' Hub conference in Sydney.
As I articulate in that article's summary, it boils down to honestly answering a critical question: ‘Do I want to be a transactional recruitment partner or a strategic recruitment partner to my clients?'
The answer will be important in determining your future profit because you will have to be very clear about, and take the necessary action around:
1. Your service offerings and pricing
2. Your internal recruitment and development of talent
3. Your internal remuneration and reward structures
This may mean that some tough decisions need to be made - now.
Are you truly prepared to take advantage of the recruitment industry's profitable future?
Thank you Deloitte, for independently pointing the way.