Time to re invent the wheel?

Blimey, recruitment can be a tough business can't it! The last year or so has been a real challenge and having seen the use of recruitment agencies decline over the last 10 years (proportionately) - despite the overall growth in the market up to 2008 - its been on our minds that their must be a better way.

Given our business model hasn't changed since I popped out of the womb 40+ years ago I'm convinced it is time for change. For sure, continuing to try and compete in our existing form in the shark infested waters that make up the UK recruitment market (Its nowhere near as bad in mainland Europe) has limited potential and, if I'm honest, limited appeal.

So inspired by two great books - Good to Great by Jim Collins and Blue Ocean Strategy by W Chan Kim and Renee Mauborgne - we have embarked on our own journey of reinvention. And I'm not talking about tweaking our existing service. We are already working hard to drive more efficiency and effectiveness through the business. I'm talking about real Blue Ocean stuff, to be so different that we don't simply steal a march on the competition, but we actually make our competition irrelevant.

The process started just over a week ago with 10 colleagues from around the organisation gathering for a day off site to start the process. Now, normally when we do these things we try and re invent the wheel in one day with the result that we all come out feeling pumped, but nothing really changes. And on reflection, the proposals are not that different from what we are already doing. In summary, its usually about trying to offer more for less - which is only a one way street.

So this time we have established clearly that this is a journey. And on the first day of that journey we decided we would focus on one thing, and one thing only - our current situation. More specifically, the real, brutal facts of our current market and the factors on which we currently compete as an industry and business. It doesn't seem like much, but I can tell you we were totally absorbed for the whole day. And totally energized at the end of it. There is something strangely cathartic about performing an honest and detailed post mortem of the industry you are in!

And in case you are interested, at the end of that day we had reached rough agreement that the list of things on which our industry competes were, in no particular order:

Price
Brand
Reach - geography/sector/industry
Candidate - Acquisition, processing, experience
Client - Acquisition, service
Jobs - Acquisition, Advertising, fulfillment
Fill rate
Exclusivity
Speed
Technology

No surprises there I hear you say! And you would be right.

But, the really interesting debate started when we began to consider which of these we could eliminate.

On the day we never got beyond suggestions, followed by raised eyebrows, laughter and sharp intakes of breath, as we ran out of time. But that very question will be the centre of our next session in a few weeks time. I'm anticipating a very, VERY lively session!

How long will the journey take? 3 months, 6 months, a year? Who knows. My money is on at least 6-12 months, possibly longer. 6-12 months of research, debate, reflection, conversation, creation, destruction, planning, execution, failure, success. Whatever the outcome, It promises to be a damn good ride!

I'll keep you posted!

Comment by Chris Underwood on March 12, 2010 at 12:10pm: Gareth - interesting subject and one I wholly agree with. The existing business models of the majority of recruitment firms, I believe, are unsustainable for the simple fact - that you also recognise - they largely haven't changed and the world around them and importantly their clients have. As such in their current state they add questionable value to a client. I await the deluge of criticism from other readers for such a sweeping generalisation but the simple fact is that recruiters have to up their game and provide a service that a customer wants, values and can't do (better) themselves.

They "want" is a given - companies will always need to hire. The "value" and "can't do (better) themselves" is where I believe the focus should be. I wish you luck with your journey, I've been through mine and had created something special!!

For anyone still reading and wanting to correct my stance on adding value to clients - please don't tell me you do - get your clients to tell me (or even better prospective clients!)

Comment by Amos on March 12, 2010 at 1:06pm: Gareth -

One thing you forgot to mention was service lines - as noted above from Chris. I believe that the recruiting model will eventually change into " a full service agency model" its not enough anymore to have candidates/jobseekers in your database - what will set your brand and business apart in the future (besides having great opportunities and clients) will be the value added services that job seekers crave as they transition or get headhunted. Having a diversified portfolio was great from 2000-2009 - but that set of thinking will soon be a thing of the past. Service offerings and collaboration will be your competitive advantage.

With the economic shift came a huge technology shift and if you dont (at least) try to evolve your model you will perish - slowly.

Comment by Tim Collins on March 14, 2010 at 4:29am: Thank you Gareth for sharing your journey. A Blue Ocean Strategy is definitely what's needed. Maybe Chris Underwood has the key in his phrase "can't do better themselves". For example, as a consultants we are not immersed in the client's corporate culture. We don't have the same blind spots. We can see a requirement from the POV of the hiring manager, HR, the Boss and the current market reality.

I look forward to your future posts.

Comment by Bill Boorman on March 15, 2010 at 10:55am: Great post again Gareth. I've noticed lots of changes in how recruiters charge. Examples of this are the fixed fee, charging by time not result or volume, referal networks, charging for services rather than staff, offering consultancy over introduction among others. I think this could be central to consideration when looking at change. "What do we want to be?"
Reach is another key area. As you and Mervyn have seen, you can quickly build a global network in a specialist area. Recruiting need not be local, takes some new thinking.
My view is that the key K.P.I. for clients is going to be retention rather than placment. It's all worth thinking about!
Best of luck!
Bill

Comment by Gareth Jones on March 15, 2010 at 12:36pm: Thanks for the comments guys.

Chris, i suspect you might get a deluge of recruiters challenging you but i would have to agree with you- the value add is questionable.

Amos, i agree that expanded/different service lines are key but not simply bolted onto the current model. Adding extra services on top of the existing recruitment model is not the answer - it just spreads things thinner and the chances are that, for most recruitment firms, they wont have the competence to deliver these addtional services properly and will therefore fail at it.

Chris - it seems recruiters are actively discouraged from seeing client/HR blind spots in some of the recruitment companies i know! And then there is the group who dont care anyway!

Bill - retention is the key as you say. After all, better retention leads to fewer ongoing recruitment issues. Interesting to contemplate a recruitment industry without the placement!

Comment by Joshua Letourneau on March 17, 2010 at 12:29pm: Gareth, good post. In North America, business models are already changing . . . and changing big-time. Sure, there will always be a place for high-level Exec Search. The point is "High-level".

I'm not a huge fan of RPO cannibalizing Exec Search - I wrote about this at FistfulofTalent.com a few months ago ("To RPO or Not RPO - That is the Question!")

However, when we say one of the most World-Renowned and best-branded Exec Search firms (Korn Ferry) buying into the RPO and Contract Recruitment space (though FutureStep), we know there is a fundamental shift occurring.

Jerry Albright and I had an interesting discussion here at RBC about 2 years ago when I tried to signal that business models were changing here in the U.S. I could tell it was difficult medicine to digest - after all, none of us appreciate the notion of our business models threatened. But I saw it coming . . . it was happening all around me . . . as we moved deeper into the recession, the old-school model was dying . . .

From my own personal experience, here's what I can offer:

I had a shot at filling 15 positions nationwide. They were all the same profile, with the only variable being geography.

The company was willing to let me "throw my hat into the ring" and compete against 20 other Exec Search firms, all asking for between 15% and 30% per fill. Let's say I pulled 3 hires out of my efforts (working a 1-man desk, that's not shabby over 30 days at $20k per fill). This would be $60k in receivable revenue. But I just didn't like the sound of that - sure, $60k is nice (don't get me wrong!), but it didn't sit well with me that I was leaving so much revenue on the table. After all, I'd be recruiting nationwide anyway, so why limit my firm's incoming revenue because I was clinging to "guns and bibles" of Exec Search's past? Was I really so closed-minded that I was unwilling to innovate in my pricing and delivery?

So this is what I did: I told the Client I'd come on-site at their SE location, join their staff on a project basis that was purely pay-for-performance. I didn't charge an hourly fee - I wanted a % per fill. As I was literally on-site, I knew I could build relationships with the Hiring Managers on their dime - they were paying for lunch!

I filled all 15 positions in 45 days at an average fee of 8%. That's $8k x 15 jobs, and I was in their building telling them I didn't need the security blanket of an hourly fee. My ass was on the line to deliver - As a headhunter, this is what I believe in.

45 days later, I was $120k richer. I doubled the $60k I originally saw myself making. Oh, and by the way, I averaged about 24 - 28 hours a week at their site. Feedback was immediate - I walked right down to the Hiring Managers' offices to set up interviews and follow-ups.

Why did this work? Again, because I didn't cling to the guns and bibles of Exec Search's past. The lesson? Innovate, put your ass on the line to deliver, and then come through. I'm sure the Exec Search firms didn't like my value proposition to the Client, but what did I care? I put an extra $60k in my pocket, got an exclusive, and save the Client $80k (they paid me $120k, with the original expectation being to pay out ~$200k in fees). That's win-win. That's biz model innovation. :)

Comment by Joshua Letourneau on March 17, 2010 at 12:31pm: P.S. Even after putting an extra $60k in my pocket, people still wanted to argue with me that the model isnt' changing. The Exec Search Bible-Thumpers were beating the drums louder and louder. "Please, don't change! Please, I beg you, don't change!" :)

Yeah, right. Those of us willing to find the "Blue Waters" you mention will continue to win and win and win some more . . .

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