20 August 2015

Monkey Business: Choose YES or NO

Say NO to Monkey BusinessYes, I'm still on about monkeys.

Last week's article 'Sending resumes to match emailed job specs is a job for a monkey' drew a very spirited response from readers with a string of public comments on LinkedIn in addition to a steady stream of emails from owners. The common theme was that agency owners and managers intensely dislike the way many of their clients engage with them. Procurement, HR and internal recruitment are obvious culprits in this undesirable state of affairs.

I have clearly scratched an open wound and the sounds of pain have been loud.

So what choices exist for recruitment agency owners and managers?

And I do mean choices; everybody has a choice about the type of business that they pursue and the specific organisation that they engage with.

The major problem, as I see it, is that too many owners and managers have not consciously and deliberately made a considered and decisive choice in this matter.

One of the important planks of any company's strategy is deciding what their ‘offer' is and who is the best customer to target with this offer.

In the early days of my recruitment career, there needed to be little thought put into strategy as recruitment agencies didn't really have any serious competition due to medium to large companies rarely having any sort of dedicated internal recruitment role or function. The life cycle of each vacancy was much shorter (dealing directly with the hiring manager meant that both interviews and hiring decisions occurred over a much shorter time period) and there were many jobs to fill, with less competition, and as a result, there was no significant cost in working on a vacancy that you did not fill.

Back in those good old days, the strategy of almost every recruitment agency was simple:

Make calls, find jobs, fill jobs. Repeat.

The biggest strategic decision most agencies made was whether to have specialised consultants for temp and perm or whether to go into a new market (eg open in a new location or expand into, say, business support, if you were an accounting specialist).

Fast forward a few years or ten and we find ourselves in a world with well-equipped internal recruitment functions, suppliers (eg Seek, LinkedIn etc) pitching directly to end-users, a far greater level of competition for the vacancies referred to agencies and a much longer vacancy life cycle.

These changes to the competitive landscape have, mostly, seen very little change in the way agency owners and managers approach strategy (ie they don't have a clearly defined and well articulated strategy that they consistently execute).

Recruitment agencies say they are in the recruitment consulting business but the reality is quite different. If you look at the quality of vacancies many agencies are working on and how the client is engaging with them, they are actually in the monkey business; the business of emailing resumes to match job specs and waiting (and hoping) for a placement to occur.

This approach is both demoralising and unsustainable in the long term if you have an overhead cost base and remuneration & commission structure that is appropriate to a ‘recruitment consulting' engagement model.

Here's my explanation of the differences:

Business model
Client commitment
Distinguished by
Key indicators
Monkey Business
Minimal - they typically farm out vacancies to multiple agencies
Emailing resumes in response to emailed job specs
Low job-filled ratio

Frequent or consistent fee discounting

Long wait for feedback on resumes and interviews
Transactional Recruitment
Moderate - they might use one other recruiter per vacancy or recruit in parallel themselves
Meeting with the recruiter for a job briefing
Moderate job-filled ratio

Infrequent fee discounts

Reasonably predictable client recruitment process
Recruitment Consulting
Full - the client divests complete accountability to the recruiter

Taking the recruiter's advice re key selection criteria, salary & benefits, interviews, recruitment process etc
High job-filled ratio

Retainers/cancellation fees agreed

An agreed client recruitment process that stays on track

Strong flow of repeat clients and referrals

You can make good (and consistent) profits in each of these three markets but (and it's a big but) you have to understand the reality (ie how the client wants to engage with you) of the market you are choosing to be in and ensure that both your overhead cost structure and consultant remuneration and commission structure reflect this reality.

Where agencies come undone is that they think (and act like) they are in the Recruitment Consulting business but a quick review of their day-to-day operations exposes the reality that they are, in fact, in the Monkey Business (I suggest you read my blog Another one bites the dust: The rise and fall of HJB for a recent example).

The moral is ... if you don't like the business you are in, then either:

a.       Persuade your client(s) to change the way they engage in doing business with you
b.      Sack the client/s and then find new clients who will engage with you in the way you want to do business
c.       Change your overhead costs and remuneration & commission structure

No-one needs to be in the monkey business. Just choose to say NO and get on with it.

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