In Australia we are just about to complete one financial year and start a new one.
It’s a very good time to review some critical statistics from the past 12 months and make some firm commitments to the way in which you will operate as a recruitment consultant (or as recruitment agency, if you are a business owner).
Here’s the first, and most important, statistical review to undertake: The number of months you worked for free.
Yes, this may be a painful exercise for some of you but it’s a very important one.
In the past 12 months many, many recruiters have worked way too hard on way too many jobs and receiving absolutely nothing in return; no thanks, no acknowledgement and, worst of all, no fee income. And, given all the feedback I am hearing from the market, I suspect this situation is unlikely to improve anytime soon.
Of course the contingent recruitment model (no placement = no fee) has been the bedrock of our industry since it began. Only a small minority of recruiters and recruitment agencies have exclusively worked, and continue to work on, the retained (pay-as-you-go) model.
The contingent model has been the most popular model for the basic reason that, overall, it has worked well for both sides. The clients have been able to procure a valuable service without making a commitment to pay any fee unless their vacancy is filled and the recruiter has been incentivised to deliver a service based primarily on a result, rather than a process, and received a fee that generally made this gamble a worthwhile one.
For most contingent recruiters not filling a majority of jobs they worked on was rarely a problem because the financial return from the minority of jobs they did fill still made for a profitable desk and a profitable business.
That mutually beneficial state of affairs has now reached a tipping point where it is no longer working for many recruiters and their employers. Recruiters are allowing themselves to be taken advantage of by corporate recruiters who will, in most cases, either fill their vacancies through their own direct sourcing or through internal promotions. Giving a vacancy to an agency recruiter is, increasingly, becoming a ‘covering all bases’ move rather than an indication of any real likelihood of that job being filled by said agency recruiter or recruiters.
As all successful recruiters are optimists at heart, when given a job to work on, they are overtaken with the powerful, default emotion of ‘I can fill this job!’. A far more useful response to being given a vacancy to work on is for the recruiter to ask themselves the more insightful, and profitable question; ‘what is the likelihood of me filling this job and approximately how many hours will that take me?’
How many contingent recruiters, each time they take a job, realistically assess their chance of filling said job and then invest the number of hours consistent with that assessment? A very tiny minority, I suspect.
This optimistic, emotional and unscientific approach to building a successful business as an agency recruiter is never been less likely to succeed than now.
It’s like the alcoholic attempting to stop drinking; rationally they know what they need to do and that they should do it but their emotionally generated behaviour is so ingrained it’s very, very hard to change easily or quickly.
Here are the first steps for any member of Contingent Recruiters Anonymous (motto: I’ll recruit any job, anytime, anywhere)
Step #1 Add up the Total Potential Fee Income of all the jobs you (or your team) worked on in the past 12 months. (eg $850,000)
Step #2 Subtract your Actual Fee Income (from the past 12 months) from your Total Potential Fee Income. The figure you have left is the total value of the work you did for ZERO fee return (eg $850,000 – $285,000 = $565,000)
Step #3* Divide the figure from Step #2 into the figure from Step #1. This is the percentage of your time you worked for free* (eg 565,000 / 850,000) x 100 = 66.5%
*making the (reasonable) assumption that over the course of a year the average amount of time you invested in each job you filled compared to each job you didn’t fill, was approximately the same
Step #4 Convert the figure in Step #3 into months of a year (eg 66.5% of 12 months = 8 months)
So there you have it; the reality is that this recruiter worked, the equivalent of the beginning of July until the end of February for zero, zilch, nada, nothing, no financial return whatsoever.
Is that fact scary enough to have this recruiter stick with the program prescribed by Contingent Recruiters Anonymous?
Here’s my advice: Alongside setting targets and budgets for the new financial year, how about setting a clear target around reducing the amount of free work you do?
This means raising the bar in terms of what a vacancy requires to be classified as a ‘qualified job order’, in other words, a job worth your while working on.
Here are some of my past blog posts to help you decide where the bar for ‘qualified job’ is for you in 2013/14: