The 3 essential elements to building a sustainable recruitment sector.

Regulation
Cooperation
Efficiency

The boom times of the last decade and the absence of client choice until now have enabled the agency sector to submerge problems which have only been exposed now the tide has gone out. These include standards of professional behaviour, placement inefficiency and uncompetitive pricing.

The problems all stem from a lack of barriers to entry to an industry that is also completely unregulated and massively fragmented. Anyone can set up as a recruiter tomorrow, pick up the phone to the HR Director of a company and talk a lot of drivel. This has led to multiple SME recruitment firms creating massive over-supply in a shrinking market, adopting desperate tactics in an effort to survive and good recruiters are justifiably fed up with it.

Some might argue that it’s a case of the survival of the fittest. However I believe the unfit need to be excluded now otherwise they will continue to spread negative PR and damage the prospects of good recruiters who have invested years in their businesses.

In order to control the number of suppliers and stem the flow of new entrants we need government sponsored Licensing and Regulation. This could be in the form of a professional entrance exam and Continuous Professional Development. Regulation is about monitoring the performance of agencies. This is currently being done in the Financial Services industry by the FSA. To set up an independent regulatory body costs money so a licensing fee will be necessary.

In order to improve efficiency, lower costs and make pricing more competitive on the supply side some form of inter-agency cooperation is desirable. This could take the form of sector specific networks which create a focus for say IT agency recruitment. e.g. TITAN – The IT Agency Network .com. This would provide a means by which jobs unfilled by an Employer’s IT agency PSL could be cascaded to other IT agencies to improve overall fill rates and allow agencies not on a PSL the opportunity to deliver matching candidates to clients as and when required.

Efficiency also demands that the quality of recruiters improves. This will start to happen once the Demand v Supply balance is restored, Agencies start to see their order books improve, revenues rise and the attraction of better quality trainee recruiters becomes possible in a market in which they can flourish.

If you believe government sponsored regulation might be the answer, please comment and share as we need to get a consensus going on this and start to press for change.

Comment by Barbara Goldman on September 21, 2011 at 9:25am: I'm not sure you ever want to 'control the number of suppliers' or 'stem the flow of new entrants'. Doesn't sound very free market to me.

I know that there are a lot of poor quality recruiters out there. They wash out quickly, all by themselves. The market takes care of them.

Every Monday, thousands of new recruiters start a new job. Training is not easy. Those new people are on the desk, calling clients immediately. They make mistakes. They wash out. FAST. One out of ten new hires might make it a year on the desk.

Another government agency? Can I puke? I am all for standards, but honestly, let's find another way.

Comment by David Palmer on September 21, 2011 at 9:35am: Problem is when things wash out they leave a very bad taste. The USA govt adopts the exactly same approach to protecting the citizens jobs and it's manufactures sales. Don't be led by the nose into thinking because it says "free market" that's always a good thing.

Comment by Derek Wirgau on September 21, 2011 at 10:39am: I don't see how government testing and regulation will help. All brokers of financial products are licensed and it'sstill a dog eat dog industry with the investors as the main meal. Within the recruitment industry, I have found that the largest turnover of recruiters is not at the small enterprise but at the large firms. The small agency can't afford to select poorly and tend to hire candidates with some experience. The large firms are notorious for hiring college graduates with no work experience and throwing them to the wolves.

Comment by Sandra McCartt on September 21, 2011 at 10:48am: No more government regulation. No to anybody telling me what I can or cannot charge for the service I provide. No to anything or anybody or any association deciding to spread the wealth or business around to try and make everything fair, right and equal.

Any and every business has the right to decide who they want to work with to provide goods and services to their company.

Many professions have license and regulation requirements and it certainly does not insure the capability of those who practice within that profession.

My suggestion is that if you were going to use a CPA, an attorney, a plumber or someone to repair your roof you would be furious if the gov or some association told you that you could not use the provider of your choice because the one you wanted to use had too much business.

It's my take that what you are suggesting here would have all of us working for the government at a set rate determined by someone else and would achieve nothing but lower the quality of service. Think about the last time you tried to get anything done with any gov. agency and the level of intelligence of the person you had to deal with. And a sure fire way to drive an entire industry offshore to get out from under excessive regulation.

I think the next election in the US is going to be a strong comment about regulation and what it does to business.

Comment by Chris Kidd on September 21, 2011 at 10:52am: More government = less freedom. Less freedom = less business.

Comment by David Palmer on September 21, 2011 at 11:34am: @Sandra That would be a "No" then.
My proposed regulator would prevent a plumber fixing your boiler if for example they had no plumbing qualifications. They'd block a brain surgeon operating who had a history of operating whilst drunk. It's not about over regulation it's about having some where there is currently none.

@Chris Ok so why does your govt impose import duty on foreign imports if less freedom = less business ?

Comment by Amy Ala Miller on September 21, 2011 at 11:48am: I worked for the government in employment services for nearly 2 years and it was a joke. Unions protecting the long-timers who had no business giving career advice to anyone, let alone the thousands of unemployed we saw every week. We were intended to function, to a certain extent, like a staffing company. If that's what government calls staffing and helping people get back to work we'd be in worse shape than we already are if someone let's them do MORE of it.

Comment by Chris Kidd on September 21, 2011 at 12:15pm: David: You are running into a cultural buzzsaw with the whole regulation thing. For the most part, Americans don't like to be told what to do. Having some government bureaucrat (who has likely never walked a mile in our shoes) telling us how to run our business is reprehensible to those of us who participate in the meritocratic segment of the US economy. So far, the only good thing to come out of the Obama administration is the reminder that we prefer freedom to regulation.

With respect to import duties, just because our government does something, doesn't make it right. To my point, import duties make it more difficult for consumers to afford goods manufactured out of the country. Again, more government (taxes) = less freedom (purchasing power).

Comment by David Palmer on September 21, 2011 at 12:34pm: @Amy Unfortunately as you know Recruitment firms are not there to get the unemployed back to work but I accept that's not your point here. Regulation only works if it has the power of the law. Regulation could get rid of the old (me), the bad (there are too many to mention) and the mad (I hope we keep Sandra). It's not about making things fair or removing competition it's about defending the professional status of an industry which is being eroded.

Comment by David Palmer on September 21, 2011 at 12:38pm: @Chris-think youre right mate! Import duties protect your manufacturers as appropriate regulation would protect the businesses of good recruiters. Not telling you how to run your businessess but putting in place certain standards surely that's a good thing. If it got rid of your lying cheating competitor who didn't remotely do the job properly you'd want that wouldn't you?

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