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The recruitment processes that allowed “me too” agencies to survive, or even thrive, in past decades are struggling today. Those business-sustaining personal relationships fade over time and are not sufficient to ensure success.

Who would have imagined your suitability as a recruitment agency would be determined by quality processes, compliance, technology capability, data security, account management, or even public ratings from candidates?

Rod Hore, Traditional Recruitment Processes are Under Threat, 24 October 2023

Having a three decade-plus insight into recruitment agency owners from the viewpoint of, variously, an employee, a coach, and an industry observer, it’s not difficult to differentiate what separates those owners who build a sustainable recruitment business that reliably grows sales and profit over the long term, from those that cannot build such a business.

Those who succeed do so because they balance their right-brain emotional/creative strengths that invariably have been the original reason for their success as a recruiter, with the need to have left-brain logical/process strengths, which are necessary for building a successful large recruitment business.

It’s not essential for an owner to develop their own left-brain strengths; many successful owners have, or acquire, a business partner who brings those strengths to the business.

The importance of recognising and working with respective right-brain and left-brain strengths was the foundation of Australia’s most successful recruitment partnership – between Andrew Banks and Geoff Morgan.

Banks and Morgan recognised the importance of their complementary strengths to the extent that Chapter 2 of their 2004 book, Flourish & Prosper is called Working with the differences. The chapter’s description of their respective strengths leaves the reader in no doubt that Banks was predominantly the left-brain leader (“I’m more interested in operational things….”), and Morgan was predominantly the right-brain leader (“…… while Geoff is the best brand builder”), although clearly, they were both able to successfully flex when required.

If a management consultant’s report on recommended improvements to the traditional recruitment agency owner last century used the words “quality processes, compliance, technology capability, and data security” the owner would, most likely, have snorted and said words to the effect of “We’re not a big company or a complex business. We don’t need that sort of stuff”.

Although that may have been somewhat true then it certainly isn’t now.

As Rod Hore succinctly points out, “traditional recruitment paradigms are being challenged as businesses explore cost-effective alternatives that offer specialised expertise, streamlined processes, technology solutions, compliance, and global talent access.”

The buying behaviour of end-users is less predictable and subject to variables that can change quickly when the end-users’ market changes and technological disruption causes new competitors to rapidly enter the market.

An example of this unexpected, and costly, end-user change was on public display this week when ASX-listed Ashley Services announced that a subsidiary’s (Linc Personnel) major contract loss was of such significance the subsidiary’s entire contribution to the group’s profit would be wiped out as a result.

This is a company that purchased 75% of Linc only 15 months ago, and, after the contract loss was announced, declared the carrying value of customer relationships, valued at $2.57 million at the time of purchase, would be written down to zero in the current reporting period.

The directors of Ashely Services paid the $4.2 million purchase price for Linc on the basis that Linc’s history of delivering profits, in which the soon-to-depart major customer clearly played a substantial role, was all-but certain to continue.

What type of risk assessment was undertaken by Ashley Services on Linc?

What risks were identified in the now-lost major contract?

How accurately were those risks assessed, addressed, and mitigated?

How was the overall risk assessment factored into the offer price?

I don’t know the answers to these questions but I would certainly like to know if I was an Ashely Services shareholder (I’m not).

Traditionally recruitment agency owners won, or lost, large tenders and PSAs based on price.

Although price remains a key factor in client decision-making the reputational and financial risks that an agency may, by association, expose their client to in areas such as cybersecurity, privacy compliance, occupational health and safety, and employment law are increasingly relevant.

Our industry is still capable of producing a solo owner who substantially and rapidly grows their agency’s sales and profit (Collar Group’s Ephram Stephenson is a high-profile recent example).

However, for an excellent insight into the partnership mindset that is increasingly looking like the model of the future for our industry, I urge you to listen to Liz Kingston discuss with Blake Thompson and Declan Kluver in her episode of Confessions of a Recruiter podcast the way she and Gerard Kerr work together as equal partners in Kingston Human Capital.

In the past, the strength of client and candidate relationships would surmount almost every other hurdle on the path to long-term agency success.

It’s a very different game now, as Rod Hore succinctly puts it:

If your agency relies on cold calling, only offers contingent 360-degree recruitment services, cannot articulate its differentiation and real value to a client, or has not invested in an online and connected presence, you are playing in a shrinking pool.

The recruitment processes that allowed “me too” agencies to survive, or even thrive, in past decades are struggling today. Those business-sustaining personal relationships fade over time and are not sufficient to ensure success.

Andrew Banks and Geoff Morgan realised these harsh realities three and a half decades ago, paying off to the extent that they were regulars in the BRW Rich 200 list, and it’s taken almost everybody else in our industry a long time to catch up.

Related blogs

What Secret? Recruitment gold from Geoff Morgan and Andrew Banks

Compliance ignorance in recruitment: do you know what you’re really risking?

The hidden truth of how Andrew Banks became a million dollar biller

Deaths and big fines leave agency owners on notice about workplace risk

The 5 most influential people in the recruitment industry in the past 60 years

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