The People in Recruitment

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.