Don't waste this once-in-a-lifetime opportunity: Savage
This article first appeared in Shortlist. It is reproduced here with permission.
Recruitment leaders should now be building sustainable businesses that will survive the inevitable crash, as this might be coming sooner than they think, says industry advisor Greg Savage.
"I think this is probably the best opportunity that you're ever likely to get to make substantial gains in your company's size, profitability and sustainability," Savage told the Emerge 2022 conference in Sydney.
Reflecting on some 40 years in the industry, he says not every business will "rise to the top", and that leaders need to make smart decisions now to avoid repeating errors from the past.
"Our industry tends to have short memories," he warns.
And there will be a crash, Savage says. "I don't know when... but it will crash because it's done that 15 times since I've been in recruitment."
There are already some signs that this might happen sooner than most people think, he adds.
So to build a business for the future, leaders must not waste the opportunity from the current market, Savage says.
"Just because you're making significant profits, that does not mean you're building a company that is going to be resilient in what's to come," he explains.
A sustainable recruitment business, Savage says, has the following hallmarks:
- annuity revenue (temp, contract, locum, maybe RPO), and gross profit mix of around 70% temp and 30% perm;
- deep, embedded client relationships, with multiple orders and multiple touchpoints;
- multiple revenue earners;
- higher margins – "we provide incredible value in this market, we should charge accordingly";
- a replicable people development structure; and
- a second tier of management, to enable growth and to create a saleable offering.
He also warns leaders not to be seduced by their great results. "It's a great time to gain market share, [but] just because your profits are going up that is not a sign that you're gaining market share."
Hiring 'new world' recruiters
To make the most of the current conditions, agencies also need to hire a different style of recruiter, Savage says, and "make sure they evolve the skills that are needed".
Ironically, as processes have become more automated, recruiters have the most impact on the consulting, advising and influencing part of the process, he says. "But a lot of recruiters don't have those skills because they've become very good at the transacting and the speed parts."
Managers must also "lead in a candidate-poor market", which is Nirvana for recruitment, Savage adds.
"You will one day be looking back on this candidate-short time and these will be the good old days, trust me. Because the one thing you would not prefer is a job-short market, that's when your company goes bust and recruiters get fired," he says.
"We're looking to leaders to lead in innovation," Savage says, noting people should not be scared of that word.
"Innovation is about incremental change, and asking yourself every day 'why do we do it this way?'. And if the answer is 'well it's always worked', that's probably not good enough."
Winning leadership style
When it comes to leadership, Savage agrees the industry needs a "very different style" regarding empathy and understanding people's drivers, but he suggests the pendulum has swung too far.
"The real secret is getting the balance between empathy and outcomes right. You've still got to have a result – it's not about everyone going around asking everyone how they are while the business is going bust. We actually need a balance between empathy and outcomes."
To this point, he says some recruiters are advertising for talent while promoting a lack of KPIs, "like it's a good thing".
"Are you out of your mind? It's like advertising a ferry service and saying we don't have lifeboats."
Rather than dropping performance measures, Savage recommends "redefining" productivity, suggesting the concept of "quality activity driving success in recruitment is absolutely sacred".
"So you need to build a company where you understand how you can create a dashboard for your recruiters that they have buy-in to, and they understand the link between activity and outcomes, and that there are goals and that there's a strong accountability for it."