This article originally appeared in ShortList on 1 September at 4:55pm
Improving profitability pre-GFC was all about building revenue, but three savvy recruiters are using new approaches to lift their bottom line, according to industry trainer Ross Clennett.
"The pre-GFC productivity improvements were driven by revenue improvements. The post-GFC era is about cost management and looking at all aspects of the agency to ensure efficiencies... are maximised throughout the whole business," he said.
Wasting time working on jobs that clients eventually fill through other channels, for example, saps productivity, but recruiters can tackle this issue by changing the way they package their services, Clennett said.
One recruitment agency Clennett declined to name charges clients a fee that is 60% of its usual rate, provided the work is retained and the client pays the fee upon signing its terms of business.
For clients that chose to work with the agency contingently, fees sit at 15% for roles with salaries up to $50k, 18% for $50-100k, 20% for $100-150k, and 25% for above $150k.
One client, who was invoiced $12k the previous calendar year, has already been invoiced $100k so far this year, the agency told Clennett.
Procurement and supply chain specialist Jigsaw Search in 2012, which has not only increased productivity and profitability, but also spurred the development of its own job search application, said Clennett.
"The majority of [Jigsaw's] consultants' time was taken up in ad response, with six hours spent tackling the processes involved with that... costing the business $23.7k per consultant, per annum, in lost productivity," he said.
At the same time, "95% of placed candidates were from the existing database, or proactively sourced from LinkedIn or referral".
Since it stopped using SEEK, the company's gross profit per consultant has increased 12%, or around $40k per annum, while the business is also saving around $21k in job ad spend annually.
Building upon this success, Jigsaw developed its own job search app that releases job information to a pre-assessed selection of candidates within its database, Clennett said.
"The registered candidate instantly receives details of all roles that match their skills and all future roles once the ad is posted to the internal Jigsaw system. Once notified, with one tap they can apply or decline to apply for the role... the consultant will call the candidates to then provide further information, as well as seek permission to represent them to the client."
The application significantly reduces the time taken in recruitment processes – sometimes taking only two hours to get to the employer interview stage – which dramatically improves productivity, said Clennett.
"The whole company also executes absent colleagues' recruitment processes without fee splitting... The company-wide personal billings record for one month is $142k and was achieved by a consultant who only spent one day of that month at work, the rest of the month he was on his honeymoon. It was made possible by the quality of data on the Jigsaw database."
Agencies lose productivity to sub-par support staff; however offshoring these services is a time- and cost-efficient solution, said Clennett.
Business support specialist Rusher Rogers Recruiting turned to an offshore admin and support solution after escalating staff costs and turnover issues negatively affected the company's profitability, Clennett said.
"The company has mixed success with admin and support consultants, typically being okay [at] admin but generally weren't very good at sourcing candidates and only skilled at processing incoming applicants," he said.
The agency began using a 'Recruitment Virtual Support Agent' to address the issue, said Clennett.
"For a monthly cost of $3,000 plus GST, the admin and support role is undertaken by an RVSA saving [the company] around $2,000 a month in salary on costs, before the savings of associated office costs."
The RVSA agent, who started in March this year, undertakes tasks such as writing and posting job ads, and candidate searches, and her work has resulted in an estimated $40k gross profit improvement, with a time saving of six hours per filled job.
Further, the company recently posted its best gross and net profit results in two years, Clennett said.
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