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It's time for recruitment agencies to get better not bigger

Posted by Nigel Harse FRCSA on 19 December 2019
It's time for recruitment agencies to get better not bigger
2019 is quickly coming to a close and we have a brand new decade looming. So, after Santa has snuck in and quietly done his job and the bubbles have popped on New Year's Eve, what can recruitment agencies expect in 2020?

Looking ahead to 2020 there are very strong indicators which you may choose to ignore and it will be at your peril!. We've enjoyed the best long-term run on record in Australia but it's coming to an end and has already ended for some. Sales volumes are falling quickly, partly due to the holiday and festive season slump, a definite fall in vacancy rates and falling demand for temps and contractors. While this is a predictable seasonal trend, the concerning underlying facts reveal that despite having enjoyed the best of times, recruitment agency profits have been heavily eroded throughout 2019. I think the bubble is not going to burst with a bang, not just yet, but it's already deflating, small leaks are here there and everywhere and it's concerning!

Business is being squeezed from all directions and with no easing in sight:
  • Fee and margin pressure remains to be a constant challenge and will continue, more for less
  • Candidate expectations continuing to soar, it's mobile, quick and friendly
  • Client expectations continuing to soar, deeper talent pools, greater knowledge and relationships
  • Consultant turnover and team productivity remains an issue for many
  • General operating costs for many are already through the roof and at unsustainable levels


In a recent blog, The Bottom Line: 1 in 5 recruitment Firms Increase Profit in FY19 we outlined the dangers of today's market where there is more work but less profit. With an even tighter and tougher 2020 ahead, the focus must be on improvement rather than scale.

2020 will be a whole new era

1. Pause, ponder, prepare

Firstly and very importantly, enjoy a well-deserved break over the festive season, for most of us it's been a year of hard work and we need time to rest, recharge and reset our self. In addition to some R&R, I know you will think about your business, so ensure you take the time to reflect on what 2019 has been, recognising the good and not quite so good and then parking it in the past. Ask and challenge yourself with some important questions to get you moving forward into 2020 with a renewed enthusiasm. A question we think that should always be asked is, "How can we operate more efficiently and improve all stakeholders' experience in the process?". What are the simple metrics that will demonstrate you're improving? You HAVE to return to work in 2020 with a mindset yearning for improvement and ready to embrace change. Regardless of my market predictions, this mindset is the best way forward to achieve success. 

2. Improve operating efficiency with automation and AI, believe me you need to get better at what you do

In the process of reflecting on where improvements can be made, there is likely to be a common theme that emerges. If the emphasis is on productivity in a challenging market, then the solution surely lies in achieving new efficiencies. But how? The implementation of automation and AI is a logical place to start. The proviso is that any technology implementation must be adopted and deployed effectively to eliminate tasks with double handling, eliminate wasted time, reduce errors and generally drives staff and customers mad. The true benefits and productivity gains are only realised when the team understand and buy in to the necessity for change. This is the 'we want to get better' frame of mind needed if you are to succeed while ensuring the improvement journey is also engaging, effective and collaborative. 

For some easy-to-implement tips on how to get better not bigger, check out Ross Clennett's blog. In the meantime, enjoy some Christmas cheer, let your hair down and come back to work in 2020 refreshed and ready to do things better than ever before. 

How does your recruitment agency compare?

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Nigel Harse FRCSAAuthor: Nigel Harse FRCSA
About: Highly regarded and widely sought after for his knowledge, unwavering passion and innovation, Nigel is a 40-year veteran of the recruitment industry.
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Tags: Business Profitability Recruitment Agency Profit Successful Recruitment Operational costs Market Growth Team Size Staffing and Recruitment

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