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Whats really stalling the growth of agencies?

By Ken Brotherston, Chairman of The Job Post

Hiring activity is on the up, companies are increasingly freeing up budgets and people are more willing to make career moves. Clearly now should be a great time to be a recruiter. Why then are so many agencies reportedly struggling to win new business and engage with passive candidates?

Im sure we could all name a few answers to this, but in order to dig deeper into the issue and find out what is really holding agencies back, TheJobPost brought together leading industry experts at its Recruitment Leaders Connect event to explore the challenges. 

The rise of the niche recruiter 

What became evidently clear is that the change in recent years has led to a continued rise of the specialist agency. At a time when many in-house resourcing teams are claiming to be able to do the same role of a recruiter, but in a much cheaper way, generalist agencies are understandably struggling.

As Johnny Walker, Director of CMC Resourcing, explained, while using consultancies for volume hiring is becoming a thing of the past, specialist agencies will always be in demand. In essence, niche recruiters are able to provide in-house resourcers and RPOs access to a pool of talent that the latter are unlikely to be able to tap into. As this audience increasingly recognises that they cant use 

LinkedIn or job boards to attract the best specialist talent, they will be more willing to pay what is necessary to an expert agency. Ultimately, the consultancies that survive in the future will be those that choose the highly focused approach.

Growth of marketing experts

Interestingly, what this rise of the niche recruiter has also led to is a growing need for agencies to create a brand that has a wide online presence. Indeed, Johnny outlined that at CMC they have recognised the need to move away from the sales approach and towards digital marketing. In an era where RPOs and internal recruitment teams want to reduce agency spend, attempting to sell to those who dont want to be sold to is simply a waste of time. Instead, agencies need to invest resources in creating a good online presence that enables potential clients to find them. In fact, at CMC the management team is looking to shift the corporate structure so that the majority of resourcers are digital marketing experts rather than sales consultants.

Are business development skills being lost in recruitment?

Given the on-going competition in the recruitment arena, its perhaps unsurprising that so many recruitment consultants will chase any possible business lead. However, as Chris Kendrick, Director of Crimson highlighted, this approach isnt sustainable. Too much time is being wasted pursuing opportunities that havent been qualified and ultimately result in nothing.

The reason behind this is simple: as the economic crisis hit, survival became the focus. But we are no longer in the midst of a financial downturn and recruiters need to stop being afraid to turn down an opportunity. Agencies need to start thinking smarter about business development to really improve sales activity.

In order to drive the point home, Chris referenced statistics from Gleanster Research which suggest that just 25% of leads are legitimate and should advance to sales. If we turn this point on its head, thats 75% of a consultants time wasted. If this is to be addressed, agencies need to go back to effectively qualifying leads to ensure time is being spent in the right way.

The world of recruitment has evolved drastically since the collapse of 2008 and it continues to adapt even now. While this does throw up a number of challenges, those savvy recruiters able to adapt to change will thrive. What the future holds is anyones guess, but for now at least we can expect to see the rise of the niche agency which is able to redesign the business development process.


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