SME recruitment firms need support to adapt to today’s challenges

Steve Carter

The recently released Deloitte APSCo UK Recruitment Index has once again given the recruitment industry and interested others some great insights to both the ‘here and now’ but also the challenges that lie ahead for the UK recruitment sector.

The headlines are undeniable; however, the report fails to draw together a combination of factors that means the report is little more than interesting for the majority, as business as usual (or perhaps survival) takes precedence over dealing with mid-range strategic challenges

The major contextual point within the report is the overwhelming proportion of ‘micro entities’ in the sector. In fact, the report highlights that almost three-quarters of the entire UK recruitment industry fall into that category, having 0–9 staff. It just isn’t realistic that firms of this nature, often founded by ‘big billing’ entrepreneurs, will have any perception of the challenges created by technology, automation and the flexible workforce. They are still coping with candidate shortages, the impact of direct sourcing, and the erosion of traditional markets and margins. Simply, they are focused on this month, this week, maybe today and the idea that automation is a good thing may resonate, but it’s never going to make the agenda for 75% of companies.

With the market so fragmented for any number of reasons, there are more rudimentary questions for the SME majority, particularly where they have the ability to control things, like moving away from generic recruitment into ‘super specialised’ niche spaces, having a credible ‘at scale’ contracting business, understanding where they ‘add value’ rather than seeing themselves as ‘sourcing’ for a fee and becoming ‘trusted insiders’ in their respective chosen space.

It’s a cliché, but recruitment company owners/directors spend little time working ‘on their business’ and almost all of it working ‘in their business’, perpetuating the ancient (and ineffective) style (as taught to them) of micro manager, making their teams cold call and e-shot, while ignoring candidates and generally irritating any potential (and existing) customer.

For most SMEs, technology and automation means having a customer relationship management system (CRM), using job boards and blogging (when they remember); in fact, the development of recruitment CRMs is beyond the user capacity in most companies with a fraction of the system being utilised at all. Perhaps we need technology to ‘run the technology’ or – for the older ones among us who can remember – the faithful Roladex (Google can help here for Gen Y and Millennials) might make a comeback!

If the sector’s SME population gather their thoughts and develop a coherent and deliverable strategy, then they have every chance of increasing market share and margin without trying to take on the ‘big boys’ by automating or advancing technology.

The one point in the report that does cross the border between the majority and the emerging/established is the need to deal with the rapidly changing talent landscape in the sector. Flexible working is something that is a ‘norm’ in most modern businesses, but is simply the ‘thin edge’ of the talent wedge as the industry has failed to innovate in other areas such as reward and remuneration, leadership development and the embracing of more contemporary workplace engagement methods. Many agencies do have a strong corporate social responsibility culture and have successfully built great organisations, but sadly almost all agencies still only reward with a big night out and plenty of booze and ‘sell the dream’ of ‘big bucks and fast cars’, which in truth is little more than a dream nowadays. The whole industry is a long way behind the curve in being modern employers and that in isolation is a change that would futureproof many organisations and shareholder value.

If the report is really addressing the middle market and above – who may have the time, infrastructure and funds to move beyond a transactional focus – then is the suggestion that the majority have the ability to compete a futile exercise?

Market insights like the Deloitte APSCo report remind us that we are a large, formidable industry; however, we are definitely a ‘broad church’ and the needs of the majority are vastly different from those of the fortunate few.

Steve Carter is a 30-year industry veteran, having served on the board of both public and private companies as well as operating as Managing Director/CEO for global recruitment organisations in the UK, Asia and Australia. Steve now heads up Elite Squared, a consultancy made up of specialist industry leaders that are all committed to supporting recruitment SMEs with strategy and ‘hands on’ support in achieving performance improvement/turnaround, sustainable growth and shareholder value.

To read more about Elite Squared visit: http://www.eliteleaders.co.uk/services/elite-squared