What Makes High Turnover a Recruitment Killer?

I was genuinely chuffed to present at a recent Career Development Association of Australia event, looking at the world of recruitment and how it interacts within the greater Career Development Consultant market. The research into the presentation included a look at staff turnover rates for most industry sectors. Most were pretty average and indicated and level of comfort and engagement within a number of these industries. The usual two industries often noted as having the highest – retail and hospitality at 29% and 31% respectively – maintained that standing…yet they were both superseded significantly by one other.

Recruitment.

At 43%

exit-44205_1280So, in essence, 43% of employees who start a role, leave within 12 months. That is almost half and indicates that an almost full office of recruiters is replaced every 24 months. Suggestions that a significant number of employees leave the industry for good add to an already problematic situation – and one that really threatens the industry as a whole

At more than 10 percentage points higher than the next highest, it is a figure that should sound alarm bells to the industry as a whole. Whether it actually is creating concern or not is a matter of opinion (mine says it’s not…), but whatever the resonance from this statistic is, the fact is it is a very unsustainable rate.

So why is it so grim for the industry?

Is it too salesy?

No. Outside of the myopic view by some that cold, unsolicited calling still has some part to play in modern-day recruitment (it doesn’t), sales is incredibly vital and it must be in the kit bag of any recruiter. On top of that, it has such a visible element of the role that no one new to it will be unaware of its requirement. Savvy agencies realise that sales is not cold phone-based, but involves deeper understanding of industries and business and being able to build business via branding and more modern marketing techniques.

Is it a rotten job to work in?

For all the comments I have made about its negatives, recruitment, when done right, is a fantastic job to work in. Imagine being able to directly help in getting a candidate to realise their career goals, or to be influential in making some pretty important decisions about their jobs? Or help a business find that elusive candidate they have been struggling for months to find? It can be a really fulfilling and exciting career.

Do certain agencies perpetuate this problem?

I know of agencies that give consultants minimum training (usually of the internal database and recruitment software), give them a list of clients and tell them to find roles. Worse still, some are actively giving consultants only a relatively short time to make ‘sales’ or they are booted. This is the oft-touted ‘churn and burn’ in recruitment, and it has no place at all in the modern industry. It is archaic, misinformed and a highly contentious policy to play – and agencies subscribing to this method are part of the problem, not the solution.

Does it attract the right people?

This is a key issue. Problems within the industry are not consultant-centric. They are management’s doing. The industry is not an attractive proposition to those who would give the industry a much-needed boost – those who are people-centric, personable and driven to meet the needs of candidates, clients and internal colleagues equally – and it is the failure of management or those responsible for hiring consultants to properly secure these people.

Is there enough ‘can’ or too much ‘should’?

How agencies allow consultants to play their own game, give it the ability to become engagement models. What a consultant can do offers flexibility in the way they find clients, negotiate terms, locate candidates and complete roles. Compare that with agencies who tell consultants what they should do (or even worse; must do) to see where the more favourable – and engaged policies – lie.

Does it lose the right people

Unfortunately it does. If the industry is lucky enough to hire these quality candidates, it doesn’t take long for the ugly side to come out and for these folks to be turned off and ultimately escape it.

Does it actually have an ugly side?

When recruitment goes wrong, it does so spectacularly. Forced KPIs that fail to acknowledge changes in markets and which are changed on whims, the ever-present spectre (real or not) of ‘cowboys’ and the self-centred, money hungry, crash or crash through approach to recruitment, antiquated sales techniques forced on consultants, usually to the detriment of more modern and effective techniques and an obsession with the ‘old ways’ all seem to set modern-day recruiters up for fail. When these are present, the role is an ugly one to be a part of.

Is the views of outsiders impacting?

Oh, definitely. The agency recruitment model has one of the worst reputations in the business world. Comments throughout social media, publications and general viewpoints offer clear examples where the industry is falling over. Whilst some would say that only negative comments make it to the public domain, they are ignored at their peril.

Is it a transient industry?

By this, I mean is it like hospitality or retail: used as a springboard into another industry / career option or as a tool to get one’s permanent residency? It certainly appears that way – in some cases, whilst in others it is held onto as a career in itself. Can it be solely attributed to high turnover? I’ll lean to a ‘no’, but it is something that needs careful looking at. Using the industry as a ticket to other outside areas is not sustainable. Recruitment is not hospitality nor retail, where transience is common. Serious thought needs to given to making it attractive to the point where importing consultants from overseas is not a necessity.

Are employees engaged properly?

A-ha! Bingo. Here lies a big gap in the industry. Engagement levels hover at a lower-than-average and are a hugely untapped area for the industry that could really change its standing. This goes way beyond Friday drinks and the Christmas party, and more into both structured and organic programs designed to make a consultant feel a part of the organisation, in tune with what they are doing and how it impacts and happy with where they are and where they can be. Whilst some agencies have semblances of engagement programs, it does not go deep enough for long lasting engagement, and its most common result: retention.

So…

Is the recruitment industry serious in addressing this unsustainable turnover figure? Do they want to set up their agencies for success within their own employee base, as well as their profit margin?

Let this be a wake up call.

Cold calling continues to divide recruitment industry opinions

Recent interview with Shortlist on Cold Calling, based on my previous article: “Why Cold Calling is Ruining the Recruitment Industry”:

 

Shortlist

 

 

Cold calling continues to divide recruitment industry opinions

29 October 2013 9:31am

Top recruiters are split on whether cold calling is an essential marketing tool, or a relic of transactional recruiting, and one agency owner has questioned whether the practice played a part in the downfall of Hamilton James & Bruce.

In a post on Shortlist’s sister site, Recruiter Daily, Scott Brown Recruitment principal Scott Brown says he believes cold calling contributed to the recent collapse of Hamilton James & Bruce.

He told Shortlist HJB was one of several companies that Melbourne HR managers would single out when complaining to him about excessive cold calls.

Brown argues that cold calling drives clients away and is linked to poor engagement, high turnover, and reputational damage.

“The pressure to deliver on sales is one of the reasons we see the remarkable levels of turnover we have in this industry. And there is serious damage to your brand and how the business community perceives you, if you’re turning over consultants every six to 12 months.”

But AWX general manager Thomas Reardon says cold calling, done well, is critical to growth for all

businesses, and benefits AWX every day by increasing brand exposure, developing market intelligence and uncovering opportunities.

“Unsuccessful salespeople see it as a hassle and a numbers game, yet successful people in our industry see it as a great challenge,” Reardon told Shortlist.

The cold calls AWX consultants make could more realistically be called lukewarm calls, Reardon says, as they are trained to start the call with a talking point based on their area of expertise, targeted to the prospective client.

“We work in multiple sectors and have done for the last 13 years, so that gives us a benefit because we have the know-how, and understand how [the client’s] industry works.”

Employees receive one-on-one coaching to help finetune their call skills, go through role plays, and have team leaders listen to their calls and give feedback, he says.

“We give them a framework, and then let them interpret the conversation and read the needs of the client. It’s about active listening and correct questioning to find out what their needs and wants are, and how we can add value to them.”

Cold calling has been the first step in establishing key, long-term relationships for AWX, Reardon says. It also provides intelligence on the company’s rivals.

“You might hear about a margin, or how many people that client has got through a [recruitment] organisation, or about the current environment in labour hire in their industry.”

AME Recruitment director Allison Ashby, on the other hand, says cold calling has no place in her business. It shows a lack of respect for the prospective client to make unsolicited calls when they are trying to run a business, she says.

“And the thing is, we’re not trying to sell widgets here – we’re dealing with real people and their lives, and [cold calling] treats them as though they are a commodity.”

Rather than cold calling, AME is heavily involved in attending, sponsoring and hosting networking events and seminars attended by prospective clients, she says.

The events have to have “a purpose, and something that will appeal to them – it’s not about us”. This could mean an interesting speaker or a discussion on an issue that affects those clients.

Consultants then have a chance to meet people face-to-face, get to know a little about their businesses, and then determine whether they might need the company’s services – without trying to sell them anything.

“What we find is they then call us, because we’ve given them something for nothing, and we don’t talk business. “A classic case is this week, when we were invited to meet with an HR person who came to one of a series of HR networking events that we run. We get an experienced HR practitioner to share information with a group of people, and that’s how they came to know us.”

Butler HR director Scott Butler says any recruiter who is “sales-phobic” is going to have a hard time.

However, he says, cold calling is used extremely sparingly at Butler HR. “I wouldn’t say it’s frowned upon, but we get most of our work through word-of-mouth and referrals. It’s certainly something we don’t do a lot.”

Butler says he is not convinced of the merits of cold calling, and questions whether it simply makes recruiters “feel like they’re doing something”. He cites networking and after-hours events as more “organic” methods of meeting and connecting with potential clients.

The company takes advertising very seriously, he adds, and is careful about how it promotes its brand. “We use LinkedIn and SEEK, but we also still advertise on page three of the newspaper – it’s a little bit old school but it’s about the way in which we present ourselves, and I’d like to think people will seek us out as a result.”

Butler HR is a Wollongong agency with a strong local reputation built over many years, he notes, which might give it an advantage over agencies operating in crowded markets like Sydney and Melbourne.

“A lot of people know me and my brand, so it helps.

“And also I generally deal with the leaders of businesses. I think it would be completely ineffective if I tried to talk to some of those businesses without going direct [to the leader], and that can be difficult if you start with a gatekeeper, so I don’t know that a cold call is an effective use of time.”

© Copyright 2013 Shortlist

Is Cold Calling Ruining the Recruitment Industry?

When I hear of recruiters who chase the sales rather than work with a client in a mutual relationship, a piece of me dies. Similarly, when I get told that the only people agencies look for are ‘hungry sales people’, I feel the annoyance factor reaching critical levels.

Then, compounding this is something I heard direct from a senior manager in one recruitment firm when he said “recruiters are farmers or hunters, there is no in-between”, gathering as I did in my non-metaphoric understanding way, that “farmers” are the relationship builders (generally account managers and similar), whilst the “hunter” is the phone jockey, the impression I got was the ‘hunter’ was far more preferred than the ‘farmer’.

Now that I am in the unique position of being able to view the industry from all sides, I find the true extent of where the recruitment industry has headed and is heading…and frankly it leaves me confused. Whilst all businesses in the current economy are changing and evolving into a more relationship / quality driven scope, I find the recruitment industry has largely not kept pace with the greater changes in business and are instead insisting on the old, antiquated methods of sourcing – and keeping – clients.

One, also, has only to look at the overall changes in sales practice, and the newer methods of doing so, to realise that the old ways are for the scrapheap, and the ones that fail to adjust accordingly will be left on the shelf.

Before continuing, I want to affirm that I am most certainly not anti-sales. Quite the contrary, sales are vital for any business (or agency) and it must be a central part to any strategy to improve client numbers and overall revenue. What I do arc up on is the methodology used, and more centrally, the insistence of only one method of selling. Phone selling, too, is useful, but only under certain circumstances, and as I see it, certainly not when it comes to establishing new business.

Cold calling is intrusive. It is a relic of both a past ideology when this was the norm, as well as an imported belief system that this is the only means to drive business. This is absolute baloney. If recruiters are still in 1985, there may be some validity. If they are sitting in an office in down-town London, then you would concur it is the best form of sales. But this is Australia, 2013. Business demand that intrusive calls, especially from recruiters are not acceptable. As with a lot of areas in business, they are demanding relationship-based selling. There is no room for a wham! Bam! sales approach where the in-out, never to hear from again process is as antiquated as the phone itself. The demand is that recruiters leave the phone alone and engage them on a more face-to-face level. Whether it be networking, presentations or similar, the phone is used merely as the follow up device, not the initiator.

What really grates is that there is still recruiters (and rec-to-recs) who believe phone-based cold business development is one – nay, the ONLY – way to sell. These are the same that believe in the churn and burn mentality. Who believe that candidates are the commodity to close the sales with and relationships are best left to lovers and family. There is no room for growth with a client unless it means a greater profit in the end. And in the end, if they burn the client, well they just move on to the next one as if it is of no consequence whatsoever.

This behaviour is the EXACT reason why the industry has a rotten reputation in the market, why employee turnover fluctuates between 45 and 49% (one of the highest in the commercial world) and why businesses are internalising their recruitment function. The business world is actively avoiding the recruitment industry simply because sections of the industry refuse to join the new, real world and subsequently burn other recruiters trying to buck that trend. It is evidential in the number of internal recruitment positions advertised and the falling numbers of in-the-market candidates for agency roles. In addition, read any business forum that subjects recruiters to scrutiny, and it is overwhelming negative in almost all cases. A quick Google search will confirm that.

Evidently, those recruiters that actively encourage (demand?) compliance on cold-calling are also the ones that can be labelled as cowboys. They drive animosity towards the industry from the cold-call to the physical interaction with clients and candidates. They usually find no reasoning to treat candidates in a clearly defined and careful approach and choose to burn anyone who stands in the way of them and dollars. Conversely (and surprisingly common), they hold over their employees KPI’s that can be classed as restrictive at best and punitive at worst. The churn and burn mentality applies as much to the way they run their businesses as it does their outside approach. When their negative reputation increases, the claim they can’t find any “decent” employees reaches a shrill. Their regressive approach is merely looked upon as comeuppance by the greater business community.

This stupidity means that the wider industry’s reliance on the cold-calling model, so outdated in a modern business context is placing it on a dangerous path. This unequivocal insistence is more likely to create obsolescence of the agency model and a collapse of the industry.

But, hey, if it creates the wonderful profits and massive salaries…

 

ADDENDUM: With the recent collapse of Hamilton James Bruce, one agency who has indulged in the above, I wonder if this article is prophetic in it’s conclusion?

Rec-to-Recs…an account from the other side.

Since deciding to close my business, and transitioning from business owner to potential employee, I have found myself in the rather unique position of being unemployed. Whilst I am enjoying the little bit of ‘time off’ to recharge and reconnect with my family who I hadn’t really seen as a result of working 16hr days(!), it still hasn’t sedated my desire to get busy again. It is in this state that I call upon any help possible to gain new employment and get me back in the swing of things. I have done the usual – contacted people through my network, search social media and on-line job boards, and generally put it out there that I am in the market.

I have also registered with several Recruitment-to-Recruitment firms, or those who find recruiters for agencies. Interestingly, being on the other side of a recruitment interview desk has opened my eyes further to the many issues that I am fully aware exist in recruitment circles, as well as some that I was somewhat previously oblivious to.

To be perfectly honest, I was reluctant to register with these guys. I mean, I’m a recruiter right? I get other people jobs, so why not me? Yes, it would seem a likely view to take…but I acknowledge that I don’t know everything about what is happening across the industry, and a bit of inside knowledge and advocacy may be useful in returning to the agency world. What I was NOT prepared for was the diversity of opinions – the industry is going one way, then the other. Agencies are after high billers only, but no, they are after relationship builders. Though the most galling was this: your skills are in demand…no they’re not. Please! Here lies the first issue: Can we get one solid opinion, perhaps?!

Then there are the types of rec-to-recs, and I am sure this is replicated throughout the entire recruitment industry. Labeling them is easy because they seem to be clear in their intent.

Initially, and thankfully, there are the good ones, the ones that return calls / emails, seem genuinely interested in your skills and experience, and go for fit over any old role. They communicate, they involve, they instruct and they give feedback. I like these, and it is good to see this happening, because it plays for a better consultant in the agency world. Some may need a little prod, but overall they work hard, and as a ‘candidate’ it is comforting to receive this level of service.

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Recruiters: You are in the People Business – Remember That.

An interesting and lively discussion on LinkedIn has prompted a look at what seems to be a fundamental misalignment of recruitment industry policy. Yet, strangely enough, this misalignment covers probably the most vital element of the whole recruitment process, and if stories related during the discussion are any indication to the wider opinion – there is a lot to consider why this vital element is so continually mismanaged.

I, of course, refer to candidates and it is these people who are the most vital element to the recruitment process. It is also the most ready to vent frustration and exasperation about any element of the recruitment process to any who would listen – and with the increased uptake of social media, a quick search for ‘Recruitment Industry complaints’ on Google would return many examples of where the industry has let them down. I will list some of the grievances leveled at recruiters, however I think there is an overall commonality to the numerous complaints  – communication, and specifically the lack thereof.

Whether it be acknowledgment of applications received, keeping them ‘in the loop’ on application progress, or the simple act of returning calls, it seems there is a problem in the way recruiters meet the basic obligations when interacting with candidates.

Before continuing, let’s step back a bit and look at what a candidate is to a recruiter or a recruitment agency – for surely they need to be defined and assessed to measure importance. I was given some salient and vital advice at an early juncture of my recruitment career. Simply put, I was told ‘Today’s candidate is tomorrow’s client’. Now I know I didn’t come up with that axiom, nor was I the first to hear it, so it has been handed around the recruitment industry, seemingly through hundreds or indeed thousands of consultants, yet it still has remained ignored at best and brushed aside at worst. It is by no fluke that phrase has gone around the traps, for it is a vital piece of advice that any recruitment consultant worth their salt will take to heart and make it part of the way they work from day one.

Candidates are one of three crucial elements to a recruitment process, yet they are the most overlooked. At a conference a couple of weeks ago, I was speaking to an agency recruiter – holding a position of some influence – and the conversation turned to candidates and the role they play in the overall recruitment process. ‘Oh, they are really just the bum on the seat we need to get the fee’ was the reaction I got. Gobsmacked, I looked at him with a silent ‘What the?’, before composing myself and replying with ‘That is not a good attitude to candidates’. Response? ‘Well, if they don’t fit, they can be replaced and we can get a double fee. Haw! Haw! Haw!’ Walking away shaking my head, it hit me that this isn’t an isolated view and there are far more than this one person who believes in the ‘bum-on-seat’ mentality that leads to candidate dissatisfaction.

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