Recruitment Turnover

Here's a conundrum for you, an industry that markets its services based on its ability to match the right person for the right position has the highest level of staff turnover of any industry. Guess which one? Any thoughts why?

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Permalink Reply by Andy Headworth on March 6, 2008 at 1:00pm

Michael,
For me this is easy one to answer in one word - money! Way too many recruitment organisations focus purely on £ or $ and so consequently they are very happy to churn and burn those people that are not generating any revenue (or not enough revenue). They start people with little or no training (yes it still happens this way!), and wonder why they fail to generate any revenue, then they decide to sack them and start all over again with the same cycle.

They need to practise what they preach and start to develop thorough recruitment processes for their own companies, have good induction and onboarding procedures and the give these new employees good initial and ongoing training. They will then start to develop better 'longer term' consultants and reap the rewards of their investment!

It is an interesting debate though because you are right, and there will still be the recruitment company bosses out there who will wear their ten gallon hats and have 500% staff turnover!! The worrying thing is - they will still make money doing it, so they have no inclination to stop!!

Finished now, I can get off my soapbox!!!

Andy

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Permalink Reply by Jim Durbin on March 7, 2008 at 11:45am

It's simple economics. The learning curve to get profitable in recruiting is very fast. Generally, a year or two suffices to make someone sufficient competent as a recruiter.

Most large firms pay a small percentage of the total revenue generated (5-6%) in search, and even gross profit margin you're only making 10%. As recruiters get better at what they do, they start asking themselves why they are working hard for 5-6% when then could work just as hard for 100% on their own.

The large firms focus on the very profitable middle - contract work to companies who have outsourced employment.

If you're good - you break off and start your own firm. If you're mediocre, staffing firms desperate to bring on experienced recruiters of any stripe will hire you, but you don't last long.

Add to that the fact that recruiting traditionally doesn't take as much brains as it does willpower, and you get smart people who are good at what they do, but want to do something else.

The owners are focused on money, as Andy said, but that's because you go out of business if you try to be nice to the recruiters. The good ones leave to start their own firms.

Internally - recruiters are often not allowed to recruit. They're either overburdened with reqs or overburdened with paperwork, and to make it internally, you need to play politics.

No mystery.