As companies grow, a natural evolution is expansion in different geographies and/or business lines. For recruitment companies, this can also be governed with changes in the way people work and how companies engage people. In the 50s, we see a build up of temporary work, in the 80s, outsourcing became a new cost reduction trend and that also included recruitment services. While a company like Nestle can differentiate their products by packaging. Differentiation in a service industry is subtle and lack of it has more detrimental impacts on conflicts of interest.
Consider a common example and a true story. A company is confronted with 2 separate businesses of the same company, one in providing recruitment services, another in providing recruitment process outsourcing (RPO) services. The first team offered recruitment services at X% of salary with potential volume discounts. The second, not knowing their colleagues had pitched recruitment, now offers on-site recruitment services charged with a margin and salary of recruiters on board.
As the company considers both offers, they are left with wondering: if 2 on-site recruiters can handle the recruitment, why bother using recruitment services from team 1? And why is the same company offering me completely different services? At some point, the company will also wonder: if I need 2 on-site recruiters over a period of time, why not just hire them?
The example is simplified but the reality is not far. This happens when there are no clear rules of engagement and differentiation. While the dynamics of a services work best at being flexible, differentiation will be important to give room for each business line to grow without them choking each other’s growth. Sending a clear message also allows the sales team to better communicate the services.
Create differences by considering the following for each business lines. Ideally, when there is no cross over, it will be able to stand on its own and even create hybrid partnerships for their client.
Defining rules of engagement
The business rules should be clear for each business. This will allow them to pursue business within the areas where they should engage and avoid potential conflict with another team. The following can be considered when defining the rules:
Defining rewards and penalties system
Once the rules are defined, it needs to be followed. And each team will need to know the rewards and penalties for following or working outside the rules. They should be aware of:
Building a business sharing environment
While rules are established to avoid misbehavior, a positive growth environment is important to create a counter balance to the restrictive nature of rules. This can also be a platform to create hybrids and partnerships. Business sharing is about communication. And communication can be encouraged but without a structured approach, daily activities will choke agendas and communication will be left till the last moment and often too late for any collaborative work.
Celebrate success and publish case studies
Celebrate cases where teamwork from various teams contributed to success. Creating case studies of hybrid models that worked for clients will also be a form example for future cases. Some times, studying losses are just as important to understand what worked and what does not. This may also provide information for changes in rules where it has not worked.
The above are process changes. In almost all situations, the people aspect is key and needs to be the first to be addressed. An analysis of the different business and existing situation and creating open communication with management to create the desire for change will build strong foundations for future changes.
It is incredible how quickly a company can fall. Currently, I am reading “Too big to fail” by Andrew Ross Sorkin. As I flip through the pages that document the incredible downfall of big financial institutions, the stories of such downfall is not limited to the financial industry.
For a recruitment company, the rise and fall can be just as quick and sometimes many times more brutal. A recruitment company is a house of cards built by all the different individuals. It does not have products that can be produced by machines or inventory of assets. In a service industry, lean manufacturing has no sense, 6 sigma is not practiced. In effect, sometimes efficiency through people can be seen as inefficiency in a products company. This is why running a recruitment company or a service company is a unique management study in itself.
Where people run the show, it is a common paradox that the people industry has the worst human resources practices if they even exist in the organization. It is not common that a recruitment firm has more than a payroll executive and even rarer to find a human resources department that looks at training and development of staff. The quality of human resources department (if in existence) is questionable.
Recruiters belong to a very unique camp of people driven by passion in the business and money. As long as their interests are served, the machine stays powered. And when motivation is low, yesterday’s profits will be wiped out by today’s inactivity.
Here’s a story of an incredible downfall.
- Bad top level management that drove away good managers due to disrespect, harassment, pressure.
- Good managers left with their clients to a new company or set up their own.
- The team without a good manager now struggles to find new clients and assignments.
- Good team members are attracted to join their managers in another company or set up and leave with their clients.
- Without new assignments or clients, there is less income and thus profits.
- The company starts cutting back staff to stay afloat.
- The staff in the company starts to shake in confidence of the stability of the company and impacts their performance.
- The company had to continue to cut back staff due to lack in productivity to stay afloat.
- Bad top level management is removed with payout without new replacements.
- The company continues to cut back staff to pay for payouts of departed managers.
- Staff confidence drops to new low and began looking for jobs. Thus further impacting productivity.
- And layoffs continues as a vicious cycle.
This is a common story in service industry where people matters. Let this be a cautionary tale.
Suggested Remedies (before it is too late)
Regain Confidence
Confidence is a very volatile element. In a service industry, confidence within the company will affect every day performance and motivation. If cutbacks continue to try to protect profits, losses are imminent.
Explore the option where layoffs are systematically stopped except for bad behavior or performance. When there is a greater sense in job security, there is also less need to spend time looking outside and thus more time in focusing on business development and delivery.
Admit the misbehavior of past management without conceding defeat. Be honest in the situation and then persuade the staff to look forward to work together.
Creating confidence internally can also help to regain confidence in investors and draw cash to sustain short term liquidity. A more confident workforce will also be apparent to clients to win sales and build top line.
Participate not support
Under normal circumstances, management has the responsibility to manage teams and “clear the path” for success. However, in dire times, leadership is often seen as rolling up the sleeves and work along side the people.
The time of an executive is expensive and thus, their participation or action has to matter in the best way possible. Here, the best impact is to meet with key clients or potential clients, using their position as leverage in creating opportunities for sales meetings and winning deals.
Being active in professional networks and associations are also important contributions to drive leads and raise visibility of the company. Every executive should participate including the CFO, CCO, COO etc. C-level executives have their own professional network where they can bring a difference.
For executives, they should remember that it is not enough to state what you want, it is just as important to show what you mean.
Start Measuring and Announcing Success
Executives are used to measuring and reporting on results. This often means profits and bottom-line, return to share holder value etc. Under tough conditions reporting on continuous negative profits can only serve to shaken confidence and raise doubts on job security. Whiles these should be measured, reporting on wins, success are more important.
Measuring increase in sales is also important in measuring success of teams. Here, a team manager cannot hide bad performance by cutting cost or use other ways to hide cost to show an inflated profit. This may also mean % increase in sales and measuring absolute profits and not in %.
Such measurements will direct focus on sales and increase in top line. When top line is secured, bottom line will be managed.
Mark The Turnaround
Extreme measures are used in extreme situations. Finally, building a strong DNA of a company will be important in attracting good people and keep sustainable growth. And this needs to be communicated and the targets once set and achieved, should be celebrated.
The people in recruitment is all a company has. Management will be well served to remember this.
I’ve been asked several times, “how can we specialize when we are (5, 10, 15) people in the company?” It’s a catch 22 situation.
In recent days, specialization is no longer an accessory in marketing communication of recruitment firms. It has become a harsh reality. Let’s face it, if a company is willing to pay anything from 10k – 30k to recruit a talent, what would make them choose a generalist recruiter over a specialist recruiter? The answer is probably only price and even that price advantage is eroding as the market readjusts in the crisis.
On the other hand, the risks of sustainability is a real concern for small to medium size recruitment firms. If the company has 10 people, that just about covers all the different sectors and/or functions to specialize in. A sudden change in demand or loss of a key recruiter could mean its death.
That is not to mean that big companies have profit with their size too. Many are unable to make a psychological leap of “one-stop shop” to “multi-specialization under 1 roof”. Large companies are hampered by internal politics, fear of change and commitment to change, while small companies are paralyzed by fear. Having said that, there are successful cases and proof that it can be done, to the profit of those who dared.
Some considerations I had shared:
It doesn’t have to be a case of either or
Many companies think that to specialize means they have to name and cover all the different areas from a-z. Unless the company employs 500 employees, it can hardly cover all the different sectors and functions in recruitment. It doesn’t have to be this or a generalist.
If we compare the financial times, the european listings of sectors / functions and any other listings, we can quickly observe that there is no 1 standard list. The lack of common standards in this case is a clear advantage. A company can draw on its strength and find large groupings beneficial to them.
Eg, IT&T is largely accepted as a common grouping for information technology and telecommunications. Healthcare & Pharmaceutics is another broad group that can include hospital care, medical devices, biotechnology, medical drugs development and sales.
Keep it broad, keep it separated
The reality of small businesses is that they cannot afford to turn down good business just because they have committed to specialization and they don’t have too.
Choosing to specialize has 2 obvious benefits: marketing on strengths and building internal strength. For a small to medium size company, it is important to name the specializations so broad that it can just about cover everything. A paradox? No, a clever mask perhaps.
Eg: Technical and Non-technical skills. This works for small firms of 3-5 consultants. It doesn’t have to be publicized widely on the website or company collaterals but can be used for client presentations and during sales pitch. The 2 teams should be separated and built for further specialization as the company grows.
Evolve and multiply
Like cells, a growing team often need division to create further growth in their own right. In today’s market, more and more companies are focusing on short to mid-term planning as long term planning can quickly be obsolete. Equally for recruitment firms, specialization can evolve over time.
While the core marketing, communication and external materials can retain general information, companies can make use of easy to produce 1 page appendixes or add-ons for their specialization. This can be replace quickly when the teams evolve. For a small company, size and agility is a competitive edge.
Eg: In the above example, when the team reaches a size of 5 members per team, it can be split. In the “Technical” group, this can be split into broad base of “Engineering & Technical” and “IT & digital”. Core marketing materials can still say “Technical” with an additional paragraph for each.
Commercial positioning need not mean organizational structure
For many companies, there is a confusion of external and internal view. External communication and representation of the company is usually used to speak to clients and potential stakeholders. Internal structures relates to management and operational effectiveness. Potentially, it is beneficial to mirror each other but it is not a necessity.
Advocating a company’s strengths in specialization is a strategic sales decision. This does not have to be mirrored if it does not serve operational strengths. Where teams are small, it can continue to operate as a single team with the same manager.
Eg: A large size recruitment firm may have varying strengths in the different teams of specialization. They could group a small team of recruiters in digital marketing under a broad group of marketing, communications & public relations for ease of management and cross over business. Externally, they list the specializations separately to create an impression of strength.
Specialization does not have to be a catch 22 situation if it is managed thoughtfully. Internally, it is a core benefit for people development. When a recruiter starts to focus, their knowledge base for a particular area and their contact base is built up. Not only does it sell easier, it will also help in operational efficiency in delivery. I’d say, it is a “catch all” situation, no pun intended.
Google has recently changed its privacy policy. Instead of different policies for different products and in different countries, it has created a single policy. For a recruitment company that maintains a candidate database, privacy policy is also a key consideration.
Typically, a recruitment company has to have approval of a candidate before they can use their information and retain their information in the system. Every country has different privacy policy. In Europe, the policies are typically tighter especially in southern europe. In Asia, the policies are more relaxed or the laws are less evolved to protect rights. For recruitment companies that have offices internationally, this meant managing as many privacy policies.
There are limitations to maintaining local privacy policies. Most importantly, this meant that candidate information cannot be shared easily even if candidates want to be considered for positions abroad. Taking the lead from google, having a single privacy policy can be achieved. It will not only simplify the process but also allows for sharing of data. Potentially, the database can also be turned into an asset that provides valuable information on trends, candidate behavior etc.
How is creating a single privacy policy useful? As the main use of candidate database is in looking for suitable candidates for open jobs, the most important consideration is if it facilitates this. For a recruitment company that targets blue collar workers or administrative skills, this can be less useful since candidates are usually not mobile. It is more important for a recruitment company that targets middle to senior management level candidates or young graduates. Theses job applicants are usually mobile and willing to consider overseas position when the occasion arises. In some cases, the skills are concentrated in some countries. Allowing candidate sharing will help local offices tap into talents elsewhere.
There are some companies that already uses single privacy policy such as Monster.com. Even though it is an online job positing and application system and not a recruitment company, the same principles apply. Some potential considerations to creating a single privacy policy.
- Consider if a single privacy policy is possible. From the examples of some companies, I would say this is entirely possible. Look at google.
- Are there privacy considerations that are unique in some countries that cannot be excluded? If so, add them as part of the single privacy as a note for “x” country only.
- Using the change in policy as as a marketing initiative to invite candidates to update their records.
All things considered, the politics of the company and inter-country database sharing cannot be ignored. But once this is enabled, the rest is management.
