Recruitment Agency Opportunities and Threats

I recently partnered with Broadbean Technology for some detailed research on the SME recruitment agency market in the UK. The aim was to look at how they were doing and also at ways in which they were adapting to market changes. Overall we found the sector in fairly buoyant mood and posting record figures. It has become a crucial supplier of strategic skills to the UK’s business sector, yet we also identified potential headwinds that some were beginning to feel.

Changing preferences of a new generation of candidates and consultants, both in the way they look for work and what they want to get out of it, are beginning to impact the way agencies attract and engage with candidates and trainees. The speed of interaction that technology enables, and users expect, is one that recruitment businesses have to embrace, particularly in an evolving era of transparency and ratings.

Clients are building their own internal capability and in many cases are looking for a different type of relationship. Some recruiters find negotiating with procurement, and working through an RPO provider, to be particular pain points. For forward thinking agencies this does create opportunities to add value and be seen more as a partner than a supplier. Making this change happen will require a different mindset and approach, and one that the research showed is starting to appear in the SME sector.

Amongst the trends we found underlining this, was a prioritisation on the development of marketing initiatives and building awareness to replace a more traditional sales-led transactional approach. This is important as the research showed only 10% of agency vacancies coming from outbound sales calls and 11% from speculative inbound calls. Building reputation and investing in CRM technology is helping many move away from a transactional model.

To support the increase in vacancies from developed relationships rather than speculative approaches, consultants are supported in becoming true sector specialists, offering knowledge and insights to clients, and to build their networks to source candidates. Growing concerns over the hiring and retention of consultants is being addressed by increasing investment in their learning and rewards, and realising the potential of employer branding.

During the research I spoke with a number of SME agencies who were trying different approaches. Some were embracing more agile models, others were taking a much more creative marketing approach, whilst building advocacy and client loyalty.

We featured some of their stories in the report along with more insights into how the SME recruitment agency sector is developing to meet current opportunities and challenges.

To find out more of what they are doing, and see how you compare, download a copy of the report here. And let me know how you are currently finding the market…


(It should be noted that we completed this research, and the report, prior to the referendum on the UK’s membership of the European Union. Whilst that result will undoubtedly play a significant role in shaping the recruitment agency sector over the next few years, it is almost certainly too early to tell what direction that may take)

Researching the Recruitment Industry in 2016

2016 predictions for the recruitment industry are very upbeat. Record turnover figures, increased hiring projections, rising placements numbers and improving margins all point to a busy and profitable year. But are there headwinds?

Could the need for increasing investment in technology, development of niche sector specialisations, with evolving demands, behaviours and expectations from clients and candidates, and challenges in the engagement and rewarding of consultants, test even the most ambitious agency owners?

Rather than make predictions, I’m keen to get under the surface of the industry and find out what’s going on – how agencies are really feeling, what plans they have in place, and what trends they see emerging – and what the real picture is.

I’ve teamed up Broadbean Technology to work on a joint research project. We’re not out to guess or speculate but want to focus on the facts – and get some real data from the recruitment agency owners and directors who are sitting in the driving seat of the UK’s small to mid size recruitment agencies.

Tell us how things are for you right now & what your expectations are for the next 12 – 24 months by following this link…

…the questionnaire should take 10-15 minutes and is totally anonymous. The questions look at business make-up and your business development strategy. We ask how you generate business and also how you typically make placements, as well as how you are responding to new technologies and not-so-new trends.

We both think the answers you provide will give the industry insight into what the future really looks like for the SME Agency sector in the UK. The questionnaire will be open until 5 February, so please feel free to share the link. We will be publishing our report at the beginning of March.

Thanks in advance for completing the questionnaire…can’t wait to find out how you see the current market.

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?