27 April 2016

Rec-to-recs: Where to from here?

Two weeks ago on LinkedIn (thanks Greg Webster from Cox Purtell Staffing Services), I was reminded of one of my blogs from the distant past; Rec-to-recs: What should they deliver?

When I read the blog again, I was surprised to find that it's now six years old. In consulting my blog stats, I discovered that it is ranked #7 on the list of my most-viewed blogs (out of 431 blogs published since 26 March 2008). The 38 comments that the blog generated remains the second highest number of comments that one of my blogs has attracted (Now Hiring 32 Professionals: All Agencies welcome to submit candidates* written in August 2009, about Atlassian's rules for working with recruitment agencies, just topped it with 40 comments).

Another Cox Purtell consultant, Imogen Ryan, suggested I write an update on the original blog; a good idea, I thought. So here we are.

Undeniably the rec-to-rec sector has gone through some challenging times since I wrote the original blog. Rosemary Scott's business, Scott Recruitment, is no longer a national business. The franchise model that Scott Recruitment previously operated under is no longer in operation. The Scott Recruitment website lists one location and two recruiters, including Rosemary herself, who is obviously back on the tools again.

Former Scott NSW Franchise owner, Deborah Ross, after a short period running her own rec-to-rec business, is now part of the team at yet another, kind-of franchise model that is seeking to attract experienced and successful recruiters into self-employment.

Former Scott Queensland Franchise owner, Belinda Beekman, after a short period running her own rec-to-rec is now in real estate sales.

Former Scott Victoria Franchise owner, Craig Watson, has been running his own rec-to-rec, Watson Collard, in partnership with former Scott Victoria employee, Luke Collard since March 2014.

Former Scott West Australia Franchise owner, Bunty Paramor has been running her own rec-to-rec in Perth for over three years now.

The tale of Scott Recruitment's dramatic downsizing is replicated in other rec-to-recs throughout Australia, albeit on a much smaller scale and without the unwelcome publicity that messy and protracted court action brings.

I can't find a rec-to-rec in this country that has even six employees, total!

It's clear, for the time being at least (and probably for the longer term), that rec-to-recs will be micro businesses that have owners working from home or a co-working space and have one or two employees, probably working part-time and/or from home, focusing on candidate sourcing. I mean, let's face it, is any rec-to-rec short of jobs to work on?

The questions I am interested in finding out the answers to are these:

  • What sort of business model creates a sustainable and profitable rec-to-rec?
  • Are any rec-to-recs doing anything dramatically different that's working?
  • Are any rec-to-recs charging their clients using anything other than the traditional formula of ‘percentage of starting remuneration' fee?
  • Are any rec-to-recs consistently able to deliver top candidates to their best clients?
  • What assessment technology are the best rec-to-recs using? How is it helping them place candidates with little or no recruitment experience)?
  • Which rec-to-recs are delivering value for their clients, beyond candidate referrals and placements?
  • What future is there for rec-to-recs?

Next week I plan to write a follow up blog to this one, aiming to answer all of the questions above, with lots of quotes and examples. But, I need your help.

Please send me your views on the rec-to-rec sector via the comments section below, or if you prefer to remain anonymous (publically, at least) then send an email to ross@rossclennett.com or call me on 03 5977 1577 or 0423 557701.

I look forward to hearing everybody's views.

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  1. Hi Ross. I am more than happy to share the most intimate of details of our business. We have clear points of difference, easily discernible value-adds, and are continually reviewing our structure and model to be more in-tune with the ever-changing recruitment industry. We are also 2 weeks away from launching our new website... shall we lock in a phone call?
    Cheers Craig Watson

    1. Great - thanks Craig. I look forward to talking to you and Luke about the action you are taking.

  2. Hi Ross, Strangely I too was recently reading the original post. Always know that you have a good topic when the comments are more amusing than the post - sorry ! Thought the R2R bashing was very ironic.

    The issue is largely nothing to do with R2R but rather the candidates that they represent and the market itself.

    Over the past number of years the number of consultants coming over from the UK, Ireland, the US and SA has largely dried up so the supply is clearly limited and getting exclusivity on those is largely impossible for the R2R.

    Couple that with the fact that despite their assurances about company culture, product area, training and career development etc, the candidates will almost always secure multiple offers and eventually choose the worst company that had to offer the most money to get them on board !

    They are then back on the market within 6 months saying that they were sold a pup but still wanting the same money. With such limited candidate supply, limited candidate control and a highly competitive market, R2R is a terribly difficult space in which to operate and equally very difficult for the business to achieve scale.

    From our perspective, we've had a great deal of success dealing with Russell Bebb and Tony Crane - two guys with an excellent understanding of our business and a really solid passive candidate network.

    1. Thanks for your comment, Niall. Your comments about being sold a pup, then the candidate wanting the same money does ring true. I am glad that Russell and Tony have done such a good job for you, it's great to hear.

  3. Hi Ross, thanks for getting this conversation started again. I've been doing rec-to-rec for 9 years now. The first couple of years for a larger brand as their NZ Manager, and then starting up my own brand in late 2009. The initial business I worked for had some good people, but when the GFC hit they disintegrated into their component individual parts. I have tried to grow the rec-to-rec side of my own business beyond just me, but it is incredibly challenging. Rec-to-rec just seems to be a business well-suited to flexible, agile, responsive solo operators who can work hard at building a personal brand that recruiters engage with, rather than passing on those skills and traits to other employees.

    The fact of the matter is the candidates of rec-to-recs (other recruiters) often need closer attention and tighter control than in other sectors, as they can be very fickle and easily swayed. Perhaps it's easier for a solo operating rec-to-rec to maintain that laser focus and "at any cost" constant attention required to get a placement over the line.

    I would have made more profits in recent years by doing this myself from a kitchen table. But I decided to take on a more challenging project and see if I could actually grow my business beyond the norm for our sector. Doing so in agency rec-to-rec has proved somewhat futile though, so we have achieved it by broadening our offering to in-house rec-to-rec, HR recruitment, and flexible on-demand recruitment contractors (virtualRPO).

    All of these offerings fit well together and have made it possible for us to grow to six people across Auckland, Wellington and Christchurch, with more to come I hope.

    We try to provide extra value to our industry through weekly blogs and quarterly networking events which are gaining in popularity. We have tried different pricing models, hosting training classes, developing new-to-recruitment candidates etc, but none of that has really taken off or resonated with the agencies of NZ who generally just want an experienced recruiter with local experience and sadly don't really care how they get them.

    The future for us lies more in flexible on-demand recruiters which will grow as the sharing / flexible / gig economy grows too. Some agencies see this as a threat, but the more forward-thinking ones use our model for sourcing specialists or to staff up for specific recruitment projects.

    I personally love agency rec-to-rec, for all its foibles, but have found I can offer more value and better outcomes by reducing my client base to a smaller number of firms who I have an intimate knowledge of, rather than trying to bring on more rec-to-recs to deliver to a wider client base. The future for us is bright, I believe, but only by making agency rec-to-rec one facet of the way we source and provide recruitment expertise to businesses.

  4. Thanks for your comment, Jon. I have been a long term admirer of your approach to rec-to-rec. Your growth in a much smaller NZ market equates, on a per-capita basis, to a business of about twenty people in Australia, far larger than any Australian rec-to-rec. Congratulations on what you have achieved and I will continue to watch Rice Consulting's progress with close interest.

  5. Vibeke Thomsen30/4/16 9:18 AM

    I started my first Rec2Rec firm in Wellington in 1995 and has been in the rec2rec business ever since. When I started Galaxy in 2005 there were 7 or 8 rec2rec firms in Brisbane and since then they have come and gone.

    The market has changed - A LOT - and we put a lot of effort and self education into adapting to the changes in order to remain current.

    Galaxy is now the longest standing rec2rec in Brisbane and we have operated out of the same offices in CBD Brisbane for 11 years now. Our service driven mentality, ethical standards and long standing relationships are the key factors behind our longevity.
    Rec2Recs need to deliver more than just candidates. We are the ears and eyes of the recruitment industry and with our umbrella view, our value adds are BOTH candidate relationships as well as industry advice to both candidates and clients. E.g - we spend a lot of time helping our clients putting together commission schemes and we don’t just talk jobs with our candidates, in fact the majority come to us for (recruitment) career counselling – which may or may not result in us putting them up for a job.

    As the market is job rich, Galaxy decided a long time ago, to choosing our clients very carefully, we don’t work with every agency. We need to believe our clients can provide our candidates with a compelling place to work and our clients need to trust and invest in us. It has to be an honest, trusting partnership to work. Same with the candidates. It is not about numbers, it is about success ratios.

    Simply put – Rec2rec consultants need to LISTEN to the candidates, be honest with them, offer advice, and send them (only with their permission) to carefully selected few potential new employers – not 10 or 15!!

  6. Hi Ross

    I, like Craig and Jonathan, am more than happy to share with you the journey we've had as a rec2rec, the different initiatives we've presented to the market (national offering, products, fee structures etc), what has worked and what has not and the positive impact being part of McCall has had on the business for the last 12 months.

    Running a rec2rec is still the hardest thing I've ever done so I'm watching this article with interest for what I think will be valuable feedback for me, from my peer group, and the client and candidate market.


    Lisa Norris