The Golden Age of Recruitment

Hurrah for the new ‘Golden Era’ of Agency recruitment !

by Greg Savage on March 11, 2015

Hardly a week goes by without some ‘expert’ trumpeting the death of agency recruitment, or a technology start-up predicting the ‘disruption’ of our industry, and how recruiters are an endangered species.

Really? Who exactly? And, when exactly? Didn’t LinkedIn promise that, what, a decade ago? We are still here. Growing in fact.

Agency recruitment is not a dying industry.

In fact, despite what you read, our prospects have never been better! We must re-invent and evolve, for sure, but where we are going, if we get it right, is a far richer, more intellectually stimulating future than anything we have seen before.

To be clear,

I believe the recruitment industry is on the cusp of a new golden era.(short video)

The opportunity for companies to grow and make profits has never been better. The opportunity for individual recruiters to make money and forge fulfilling careers is back on the table.

But, not for everyone.

In fact most will not ride this new wave of prosperity and fun.

It’s an opportunity, not a right. The smart, and the quick to adapt will thrive. The rest, not so much.

But, why do I believe Agency recruiters have the world at their feet, if they make the right strategic and tactical decisions?

This,

1: The frailties of in-house recruiters.

For years now we have been running scared because of the rise of in-house recruiters. And hardly a week goes by without some head of internal recruitment trumpeting how they have reduced agency spend. And that reduction is no doubt true, and felt by many of us.

But, increasingly the evidence is that all is not so rosy in the in-house world. Reducing agency spend is one thing. But what about key metrics like ‘quality of hire’. Line managers are reporting a drop in quality of candidate, and that is holding business back.

And what about ‘time to hire‘? The internal team saves an agency fee, but it took them six months to fill the job? What was the cost to the business, of that delay?

And then, what about your employer brand if your processes provide a horrific candidate experience, which many corporates do. What does that cost? In money, in future candidates, and in customers?

There is no doubt that we are seeing a shift back to clients realising that the time and infrastructure required to recruit high quality people, at short notice, does in fact need agency expertise.

So the effectiveness of in-house is being tested. And will come under the microscope even more as talent shortages start to effect corporate results.

So, I believe that one of the biggest barriers to Agency growth — in-house teams — will become less of a threat. But only if we are able to provide our clients something they cannot get themselves.

We have to do, what in-house cannot do. And that is mostly to do with accessing specialist talent.

2: Technology recruitment solutions are not so scary.

Technology recruitment solutions have been popping up almost weekly it seems, all claiming to be able to wipe out agency recruiters.

Many have come and gone already. Others, like LinkedIn, pose a much more credible threat.

But none of them, LinkedIn included, has come close to wiping out third-party recruiters. And bear in mind LinkedIn has been around 12 years. Longer than most of you reading this have been in recruitment! LinkedIn is not a start-up, deserving of time, to ‘get it right’. In fact, frankly, LinkedIn have as many issues to address about their business model as recruitment agencies do. More maybe.

And our industry has not suffered since LinkedIn came along. In fact our industry just grows and grows, (The global staffing industry is worth USD $440 Billion and growing at more than 5% a year. The US temp staffing numbers have just hit an all-time high, with 2.9 million temporary workers placed through agencies, every day. The Australian recruitment industry is worth USD 21 Billion.)

And many of the digital, technology driven recruitment disrupters, who started with a hiss and a roar, while no doubt carving a niche in some cases, are clearly no significant threat to our model.

Don’t get me wrong. I am not dismissing the impact of technology on our industry, and on Agency recruiters. I call these companies ‘Hi Tech/No Touch’ recruitment matching models, and they will take some business, mostly low level, but in my view they will do our broader industry zero real harm.

And there is one key reason

Talent is not an online commodity

Identifying candidates is not the same as recruiting them. It’s the ability to bring talent to the hiring table, and manage the process that clients will pay us for.

And that leads me to the core reason why our industry is approaching it’s best ever era.

3) Massive, global, skills shortages

Sustained, epidemic shortages of skills and talent required to do the jobs, many newly created, that society needs.

Skills shortages are already upon us, and they will get far, far worse. And skills shortages are nirvana for us. If we become world champions at finding talent!

There are endless stats on this topic, but suffice to say more than 50 percent of global employers are currently reporting talent shortages. And crucially, they say the shortages significantly impact their ability to meet their client needs.

Each industry and sector already has a list of niche skills that are in short supply, and this will intensify over the years ahead.

And the impact is being felt right now.

Just last month SEEK in Australia reported a 10% rise in job ads year on year, in the very same week that unemployment in Australia hit 6.4%, a 13 year high!

Meanwhile ITCRA reports that the time it takes to fill IT contractor roles doubled in the last three months of 2014, as the search for quality contractors intensifies.

And this costs companies money. And this is only beginning.

Talent becomes the epicenter of competitive advantage

In fact talent is now the new currency of wealth creation. It is what makes companies win or lose in the market, and it’s what will make entrepreneurs rich. Or not.

It’s a differentiator. It’s non-negotiable. You must hire the skills. And that ladies and gentlemen… means Agency recruiters are back!

Skills shortages and the currency of talent alone means huge opportunities for third party recruiters.

4: Changing candidate job search behaviour.

On top of this, technology has changed the way candidates look for jobs. They have literally dozens of channels including job boards, company career sites, social media, and increasingly, search engine job searches.

So the best talent will know their worth. And they will also know how complex the job search has become, how time consuming. What an invasion of privacy it can be. And if Agencies are good enough to provide this option, they will come to us because we can act as their Agent

5: Old candidate tactics no longer working.

It’s now crystal clear that many of the standard talent sourcing channels, that most corporates use, are becoming increasingly ineffective.

Job Boards are still a major source of hire. Don’t get me wrong on that. But they only tap into a very active group of job seekers, and more importantly job seekers are getting sick of them, favouring new ways to connect with new jobs.

LinkedIn is waning in effectiveness in my view. In many ways LinkedIn has actually weakened the efficiency of the recruitment function. It’s now more difficult to connect with qualified talent, because LinkedIn has made data so available, the best candidates get swamped, and they get approached in such an untargeted way.

Technology can help you identify talent. But human beings recruit!

The recent decision by LinkedIn to limit Inmails is clearly in response to many of it’s members being inundated with recruiter spam. Many of the most qualified individuals are actually going out of their way to make themselves harder to find! There is now perceived to be an advantage in privacy.

And in my view 2015 marks the beginning of an era where we return to ‘the relationship’. ‘All-digital recruitment’ does not work.

6: Power is shifting to the candidate

The fact is power is shifting to the candidate, and if it hasn’t in your sector yet, it no doubt will do. And in a candidate driven market place, waiting for them to respond, simply does not work. It changes everything. Relationship building and candidate experience become key.

We think all of this is a problem for us Agencies. But it’s a massive problem for companies who want to hire direct. Their old strategies are not working too. So what are they going to do now? Well, they will look for outside help. And we need to be ready. Match fit. Primed to respond.

And that means one thing.

Recruitment companies have to become world champions at finding unique talent. We have to create candidates. We have to be skills hunters and talent magnets.

And that is going to take a change in mind set for many of us. We have to be innovative and sophisticated in developing a wide variety of tactics to drive candidates into our talent funnel.

And to do that, recruiters have to behave like marketers.