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having the highest – retail and hospitality at 29% and 31% respectively – maintained that standing…yet they were both superseded significantly by one other.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.

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The British Are Coming! The British Are Coming!

Paul RevereOn the night of April 18, 1775, Paul Revere and two others, made aware of imminent movement of the British Army on military supplies held by American Revolutionists in Lexington and Concord, Massachusetts, rode to these towns to warn them of the incoming British forces. This became known as “Paul Revere’s Ride”, romanticised within Longfellow’s poem as having him yell in warning ‘The British Are Coming, The British Are Coming’.

Whether Revere did shout those words is for the historians to argue, but overall, England via their armies were keen to ensure (and enforce) their approach to colonisation was done their way, no matter how much it conflicted with the new American nation’s differing approaches and desire to do things their way.

 

These days, recruitment has been witnessing a revolution of its own. Here in Australia, there is the unmistakable acknowledgement that those brought up in England and on English approaches are moving and have moved to Australia over the last 10-15 years and taking up a significant share of the recruitment market. This has seen improvements, profitability and some new practices to invigorate part of the industry, yet like their ancestors in the American revolutionary war, are they here to radically change the industry, or just happy to integrate their skills in recruitment within the best country on Earth (this humble blogger’s opinion, only!)?

The Facts

To put some perspective on the issues with this revolution, a few quick comparisons must be made.

These numbers identify there may be a large disparity between the world of recruitment in London versus the world here in Melbourne or Sydney. However, what the numbers don’t indicate thoroughly is the clear and distinct difference between the recruitment industry in Australia and the UK. The English recruitment industry is highlighted by a highly sales driven environment, where dogmatic sales and the more ‘in-your-face’ approach is commonplace. Where the high-pressure, KPI-centric and churn and burn model is generally the accepted norm. The relationship model is not really concentrated on (though it is there in pockets), and is largely discounted for the quick sale, quick turnaround and quick fee service. Competition is fierce and is reflected in methodologies and approaches. Here, if clients and candidates are burnt there is not really much care held when this happens simply because the market is large enough to have a few casualties along the way. Interestingly, they have more in common with recruiters in the United States than here in Australia as far as approach is concerned, yet have more of the flair and savvyness seen in Australia than their American counterparts

The Approaches

To make it in this market, you need to be aggressive. With the incredibly large numbers of recruitment consultants in Greater London, there is a fight to get the biggest and best names on their books. Transactional recruitment is king and relationships are only a minor tool used in the overall arsenal that is skewed significantly to the aggressive side. Small clients are often ignored or given an even poorer level of service whilst the sport is in chasing those big names. It is an approach that has proved to be effective for the market and conditions there, and I am by no means examining how they conduct business nor am I opining on it. It is placing context into what then happens here.

The Australian approach with is more relationship driven, where reputations are built on the work they put in and by the response of clients and candidates alike. It is here where all clients, no matter of size are treated as if they are incredibly important to that individual consultant. So then, when consultants within the English market make their way out here either permanently or on holiday, friction is caused as two approaches, both different, seek to integrate together.  The Australian model contrasts sharply to the London model and this friction is one of the contributing factors to the decline of the recruitment industry’s reputation.

Fortunately, though, this has been seen as a definite issue in some sections and a portion of these imported consultants fit well into the Australian business approach, and have worked successfully at forging and building solid relationships. In fact, this portion go out of their way to dismiss the tactics of their old environment because they understand they will get nowhere adhering to these methods out here.

The Conundrum

However, the practice of importing overseas recruiters (primarily from the UK) begs the questions:

  1. What is it doing to the Australian industry and perceptions of it; and
  2. Why is this so actively endorsed?

Quite a number of complaints bandied around by candidates and businesses about the industry all seem to be around lack of communication and the ‘cowboy’ attitude some recruiters have. In relatively the same breath, most complainers lament that the industry is now ‘overrun with English recruiters’ (based on observation within one online forum, that focused on IT recruiters). Whether this attached comment is mere circumstance, coincidence or a genuine belief that the two are concurrent is perhaps up to individual contributors, the facts are that a lot see concurrence in the importing of recruitment talent and the poor level of service. This is an observed perception in the market, and whilst semblance to truth may be a little stretched, can there be a real issue of a clash of work practice that has left many in the Australian market put out by the imported practices and the friction that it causes? Indeed there is. However, there is no apportioning of blame here, nor does it feel like that in the market, simply because the clash of workplace cultures is the underlying issue.

However, the point here is not that the English are horrid recruiters, turning the local market into a mire of sales cowboys and poorly treated candidates. No, it is that they will come and keep coming, and it is their lot – and ours – to ensure the integration of an entrenched approached can be exchanged for another.

Today, we are seeing the recruitment industry undergoing a significant upheaval. Brought on from the effects of the GFC, there is a view that the current industry model is outdated and unworkable to cater to changes mentioned. In fact, some elements are already announcing the death of the industry as sourcing candidates internally becomes easier for the average business.

This has seen a lot of recruitment agents leave the market permanently (when you consider that staff turnover for the industry fluctuates between 45% and 48%, there is a problem – even the current figures of 39% are still almost three times acceptable turnover rates). Tenures for consultants seem to average around 2-3 years (sometimes less depending on agency or industry serviced) and there is significant backfill required at any given time. This is the number one reason why importing consultants is seen as the best-fix measure. Recruitment-t0-Recruitment agencies often advertise overseas (some solely look for candidates from the UK) and recruitment firms make sponsorship an attractive proposition for these.

Seemingly, the recruitment agent conundrum is answered, in part, by the imported brand of agent. However, is it geared to success, or merely to fill a panic-inducing hole within an agency? We have an almost boundless supply of eager agents (who wouldn’t want to come out here?!) and their methods are, apparently and according to those attracting them over, are apparently compatible with Australia’s.

In answer, it would seem reasonable to suggest that recruiters from the UK are just better at doing the job, provided they are across exactly what businesses here demand.

Thing is, the old methods of recruitment are not working. The sales approach is flawed and the disproportionately bad comments leveled at the industry increasing. Change is needed, and it needs to be conducted by those with a sway. By this, it is the imported English recruiters that will have a major say as to where the industry is heading. No use saying they are the detriment; it’s too late to question the importation policies of firms and rec-to-recs. The fact is they are here and will continue to arrive. The industry’s survival in Australia will be down to these and how quickly they can adapt to the different environment, culture and business standards expected here. Can these international recruiters sufficiently attend to a market clearly different to that which they come from and in turn bring the industry out of its difficulties and the antipathy it brings and into a return to its vitality and acceptance?

It is a question without an answer…yet.

Thankyou For Your Carefully Considered Cardboard Cut-out of Competency

Over the past couple of months, I have embarked on a journey. A journey of discovery, of enlightenment, of questions and answers and a journey of resolution. No, it wasn’t one of those tedious self-help guru workshop nor a blissful return to nature or some other such folly. It was a lot closer to home and far, far more eye opening.

The truth is, I have been looking for a part-time or temp or contract role to supplement my focus on the consulting, writing and speaking that my business has evolved into. Heck, I would even consider something more substantial and full-time IF the right role came across my desk.

This has led me to fire off resumes to different employers, recruiters and others  in the hope of gaining a look in to what roles may be relevant at that time. It is this activity that has given me in equal parts a very perplexing and interesting insight into not only how candidates are treated, but where the modern-day recruitment practices are situated.

Both give me little hope for the future.

Anyone who has read previous posts of mine know how critical I am of the recruitment industry and of recruitment practice. It is not until one is subjected to these practices, though, that the full extent of the various issues within it become frighteningly clear. The key issue above all else is centered around candidates and the way they are treated within a given hiring process. Some time ago I wrote a piece looking at the rec-to-rec industry. This time, however, I will give them a rest and concentrate on others.

Now, for this post, I want to return to a pet hate and look at, more importantly, where it leads to and why it is a crock.  That pet hate is, of course, keyword matching. The views I have on this practice are contained within this blog and have been a constant throughout my posting. For perspective, the first contact a recruiter / HR / anyone else has with a candidate is with their resume. If the sum-total of the (as recruiter / HR / other) consideration of that candidate is to line up the resume with the Position Description and tick off similarities (or, worse still, use an ATS – mentioned below – or other automated tools), then that is LAZY! Don’t know how much more clear I can make it. It is oft-repeated by myself and others, yet the predilection for using it is increasing – not decreasing! Which means it is becoming a preferred sourcing tool AND that decisions are being made on this basis only.

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Top 10 Hiring Mistakes – #1 – Not A Plan In Sight

Going for a bushwalk into an area you have not been before without a map and proper preparations is akin to trying to blow up jelly with dynamite: it’s pointless and potentially dangerous. The most skilled bushwalkers have a map, compass, provisions and equipment to prepare them for any eventuality that confronts them when hiking through unknown regions.

The same can definitely be said when hiring, where the most unprepared and unplanned often come unstuck. Yet, significantly, most businesses do not have that plan in place when it comes to hiring and tend to go into hiring woefully unprepared.

Alongside the preceding 9 mistakes, the lack of a plan creates some real issues for a business and its susceptibility to making bad hiring decisions. These include:

  • Financial cost or rehiring, re-orientation, re-training, re-advertising and potential legal costs
  • Poor staff morale
  • Loss of potential and current customers and new business opportunities
  • Damage to brand
  • Strain on HR or the HR function
  • Workplace toxicity
  • Further time and labour costs in rehiring and covering the bad hire

Which will lead to significant out-of-pocket costs that no business of any size can afford.

If you want to see why getting the hiring right, and planned thoroughly is important, just think if you want to have all these costs and loss hitting your business. If you are heading into a hiring process, and there is one or more steps that are missed or brushed over, it will mean the difference between a quality hire and a costly fail. Additionally, if that plan is not incorporated into overall business strategy, the possibilities of a bad hire impacting business growth via the above hits are staggeringly high.

Thing is, poor hires are those done off the cuff. Usually after some emergency has hit the business (see #9 – Panic Hiring), employers want or need to cover the gap as quickly as possible. This is catalyst for bad hiring decisions, and the lack of a proper plan – heading into the hiring bushwalk without the map, compass and provisions – is probably the most dangerous (and let’s be honest, dumb) action a business can conduct.

Why does this happen? For one, it is the preconceived idea that planning and working through that plan is time consuming, and not worth the hassle. I mean, really, going into a lot of detail to make a hiring decision hardly seems worth it right? Well, let me put it this way, if the only cost in the hiring process is time, you have come out in front. Because as sure as water is wet will a poorly planned and executed hire surely come back and bite you where it hurts.

Another reason is pure ignorance. A fair majority of people who do hiring are not aware of the issues getting it wrong can do to a business and blissfully dive into a hiring activity with nary an idea what to keep an eye out for that could be potentially problematic for them. It’s not until something happens that they realise they have well and truly stuffed up.

Above all, and a common thread throughout the Top 10 Hiring Mistakes; it is complacency that drives poor hiring habits. The second hiring is seen as a bother, or apparently easy to do, or not worth investing time to get it right, is the moment it falls apart.

Hiring needs time, it needs a plan and it needs care. Planning gives a structure that even the most inexperienced employer can follow. When the greater majority of businesses are small or medium and may not have a dedicated recruitment arm much less an HR one, it is important that a structure be in place to allow those charged with hiring the best can do so effectively. Mainly, though, it avoids missing crucial elements that will impact overall decision making and lead to those bad hires…and navigating that dense forest becomes an easy and achievable task.

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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