Have you ignited the Compound Effect in your recruitment business?

The 8th wonder of the world

Did you know that the great Albert Einstein said that,

“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”

Whether you are familiar with this concept or not, you may well be wondering what the connection is to running a recruitment business. It will all become crystal clear soon.

For ease of setting the context, this diagram below illustrates the powerful effect that compound interest can have on a relatively small amount of seed money over time.

Einstein was referring to this mathematical phenomenon, widely known in the financial world, where money with compound interest experiences exponential growth.

If you have ever read Darren Hardy’s book The Compound Effect then you will recognise that this same maths phenomenon works in your life choices too.

I can’t think of many books that really can transcend every area of life when you apply the principles but this is one of them. And I want to specifically focus on how it can help in your recruitment business.

What is the Compound Effect?

Hardy describes this as,

“The principle of reaping huge rewards from a series of small, smart choices. What’s most interesting about this process to me is that, even though the results are massive, the steps, in the moment, don’t feel significant.”

This is the magic formula for success:

Small, Smart Choices + Consistency + Time = RADICAL DIFFERENCE

Early on in the book Hardy talks about choices, and he captures the message neatly with this,

The life we end up with can simply be an accumulation of all the choices we make...they can deliver us to our goals or send us orbiting to a galaxy far, far away.”

Can you see the obvious parallels in your recruitment business? Think of all the choices, and subsequent results, that you and your consultants make each day. Are they compounding over time to result in successful searches and growing fee revenue, or are they working against you making it difficult to grow and win new business?

Is the Compound Effect working for or against your business?

For the recruitment professional, every decision no matter how slight, alters the trajectory of their current search assignments, their pipeline, their month, year and so on. Whether or not to stick to the daily ritual of proactively sharing value with your network, to make a blind reference call before submitting a candidate, to follow up with a candidate you had given up on reaching, to make one more call or finish up for the day. Every choice has an impact on the ‘Compound Effect’ of your recruitment business success.

Author Hardy emphasises the point with this simple question, “Have you ever been bitten by an elephant? How about a mosquito? It’s the little things that will bite you.”

My guess is you know exactly what those ‘mosquitos’ are in your recruitment business; perhaps questions you failed to ask at the client briefing meeting, the un-briefed client failing to sell the candidate on the opportunity at interview, the counter-offer conversation you didn’t have, the relocation questions you didn’t ask. The list of seemingly small things that bite in the recruitment world goes on, and we’ve all had our fair share.

Lets go back to that definition of the Compound Effect - “…even though the results are massive, the steps, in the moment, don’t feel significant.”

Many people miss out on the Compound Effect because of it’s simplicity, and therefore haven’t experienced the payoff yet. For example, they quit the New Year gym routine on the 7th visit because they can’t see any new muscle definition yet. Or the recruiter starts to cut out a best practice because missing it hasn’t caught them out before. What they don’t realise is that these seemingly insignificant steps completed consistently over time will create a radical difference.

This is crucial for the ambitious recruitment firm to remember - that in amongst the busyness of each day, those little best practices are required with consistency in order to get that big payoff.


So here we are in March, the final stretch to closing out Q1. How are you doing so far? Is your recruitment business consistently making the small, smart choices that will help reap radical rewards in 2016? The choice is yours: you can overlook it for it’s perceived insignificance; or you can ignite the compound effect and put steps in place for the whole team to embrace and sustain it.

Here are some action steps inspired by the Compound Effect that you can take today, both as an owner or with individual consultants:

  1. Write down one of your recruitment goals.
  2. Now write out the handful of small, seemingly inconsequential actions you can take every day that will lead you to that goal.
  3. Additionally write down the small, seemingly inconsequential actions that can lead you away from that goal.
  4. Do the small positive steps. Don’t do the small negative steps.
  5. Repeat

What are some of the smart daily choices and actions that are consistently being made in your business?

About the Author:

Tsen Wharton is a former Executive Recruiter turned software entrepreneur who is passionate about helping recruiters serve their clients in a way that brings superior results for everyone. He is Founder of OpusPro - a software tool built by and for recruiters to optimise search assignment management and enhance collaboration with clients. If you are curious to find out how OpusPro can help your business ignite the Compound Effect, consider taking a tour to find out more.

Tsen writes about insights, ideas and best practices, both directly from and out-with the recruitment industry, that can help recruiters get more of the results they want.

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