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September 1, 2015 / Mervyn Dinnen

What’s the Future for Recruitment Agencies?

At the recent RecFest conference, Roopesh from Workday opened a session exploring the relationship between agency and in-house recruiters by leading the attendees in a raucous sing-a-long of the Only Fools and Horses theme. It went down so well that they sang it a second time. Clearly for this group the image of recruitment consultants as fast talking market traders hit the spot. This was underlined by a slide showing some of the things that agency recruiters say during sales calls…

“I’m an expert in your market”
“I have a superb candidate from a previous search”
“Our standard Terms are 25% but I can agree to 12% just this once”
“Give me your most hard to fill vacancy”

So far so Delboy, but it wasn’t all pantomime villainy. There was agreement that in-house recruiters can learn things from their agency suppliers – sales and closing skills, focus and pushing back on hiring managers amongst them.

Earlier in the year I took part in a round table event where around 20 owners of small recruitment agencies were talking about their frustrations with in-house recruiters. They saw them mostly as failed recruitment consultants who weren’t commercial enough to realise the value of partnering with specialist agencies, and were scared of sales and targets and wanted an easy life. My role in this gathering was as one of two specialists with knowledge of both areas so I attempted to counter this view.

The real eye opener for me was that their major bugbear with in-house recruiters was over how they handled unsolicited emailed CV submissions. Yes, in 2015, all in the name of business development, agencies are still emailing companies with which they have no relationship, nor knowledge of their current recruitment requirements, attaching candidate CVs displaying full name and contact details. It seems that in-house recruiters ignore them, or worse still contact the candidate to let them know that their CVs have been sent in unsolicited.

I wasn’t happy with the stereotyping from either side. Whatever the rights and wrongs of each approach, there appears a clear undercurrent of disconnect between in-house and agency. Even amongst the successful supplier relationships there is still an element of mistrust.

These are interesting times for staffing agencies. There are skill shortages and talent is hard to find. Yet most are working harder for shrinking returns. Some sectors are thriving but the overall picture is one of tighter margins and harder to fill briefs. The number of permanent placements has fallen from almost 800,000 in 2006/07 to around 630,000 in 2013/14, despite the increase of people working in wider economy.

Trainees often join the recruitment industry in 2015 on basic salaries lower than those offered in 2005. Bonuses then were saved towards an investment in property or purchase of a car yet, anecdotally, now they help to pay the rent. Clients are changing the way they approach performance management, rewards and leadership development. Can the agency sales model similarly develop? Are we hiring the consultants that our clients would choose?

The days of being an intermediary between the client and the channels are gone. Agencies are now a channel again…and an expensive one.

Increasing automation and job polarisation could threaten the bread and butter business of clerical temp work. Clients are becoming competitors, whether through setting up their own internal function or offering their employees as a short term solution to others. There could soon be an app for outsourced managed workforces. Meanwhile the gig economy is connecting those who need a skill with those who are available and have that skill. Recruitment agencies are rarely facilitators of freelance gigs.

Everyone is connected. Clients are probably already connected to their next hire but may not yet understand where the connection is or how to leverage it. Permanent agencies need to look again at their own offerings and ask where they really add value. What if the introduction was free? What would they charge for then?

Much of the advice given to agency recruiters about the skills they need to develop – sourcing, analysis, content creation, storytelling, relationship building – usually pre-supposes that the business model remains unchanged, that vacancies need to be found and filled. But what if the business opportunities are not so obvious? Strategies need to evolve and respond to changing dynamics and preferences in employment models and talent acquisition.

Over the next few weeks I will be looking further into the current recruitment landscape and trying to understand the challenges that the industry faces, the impact they may have and how agencies might need to adapt.

Let me know what you think their challenges are?

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2 Comments

Leave a Comment
  1. Phil Hutchinson-May / Sep 2 2015 9:47 AM

    Mervyn, As ever a well written and thought provoking piece. What time are you and Steve Ward talking on Friday and where can I follow your discussion?

  2. Mehul @ Search Results Media / Jul 16 2016 9:53 AM

    Perfect and great piece of article Mervyn, As a part of Recruitment agency since last 4 years i truly believe every statement used in the article is perfectly relevant to the industry.

    There are certain things which we do as a unit to find the right talent for the right post is by using digital media. 85% of world population is registered on Facebook so why not find the right people for right job from there and satisfy the clients and be a part of the growth.

    Thanks for sharing the article.

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