NO MORE NICHE?
Tim Dunn, partner and head of recruitment at accountancy firm, Menzies LLP asks Is the era of sector-specific recruitment over?
The coronavirus pandemic has hit every sector imaginable, catching companies off-guard and leaving them to deal with the fallout. Among other things, the crisis has highlighted the need for businesses to adapt, innovate, and diversify in order to de-risk; and for recruitment firms, that includes varying their portfolios.
Before the pandemic, recruitment companies were often advised to secure a niche in their target sector in order to establish themselves as industry experts, reach the best candidates, and deliver more successful hires. In turn, allowing the charging of premium prices for their service.
The impact of Covid-19, however, has re-written the rule book and those that have been able to diversify have proved most resilient. Whereas work in retail, hospitality, and leisure has largely dried up as a result of the coronavirus restrictions, sectors such as IT, energy, and logistics are actively seeking fresh talent. So, with UK unemployment at its highest level in three years, how should recruitment companies be preparing to survive and thrive?
Up until quite recently, a targeted approach was considered the most successful method of recruitment. However, even before the pandemic, a growing number of firms were realising that this approach made them more vulnerable to risk in the event of sudden market changes. The coronavirus crisis has accelerated things; rather than proactively planning to diversify, many companies have been forced to take a reactive approach to market conditions and are now looking to explore alternative income streams.
While catering to the mass-market has proven a lifeline for some, it should be treated with caution to avoid expertise from becoming diluted. A natural next step for those considering diversification is to morph into a sector that has some parallels with one that’s already proven to be successful. In order for this to work, a measured and managed approach is key; choosing two or three sectors will ensure the firm’s KPIs remain consistent and resources aren’t being spread too thinly.
For recruitment companies seeking to diversify, it is important to practice what they preach. The way they recruit and develop staff internally is key to building a high-level of transferability. For example, individuals will need a depth of industry knowledge, in addition to the usual superb client handling, organisational, and research skills. Where recruitment professionals display these core competencies, they can then be redeployed into sectors that are booming. Furthermore, with a sound commercial outlook and strategic vision, there is potential to nurture relationships with like-minded individuals outside of the organisation, allowing partnerships in new markets to be built and contracts to be formed.
Now more than ever, taking a long-term approach is essential to ensuring short-term survival. Regardless of specialism, all recruitment firms should be reviewing their business plans and adapting for the way ahead. For example, using cashflow forecasting can help with planning how much is expected to be made in sales and spent in costs. Taking steps such as reducing their cost base, collecting in any unpaid debts, and protecting revenues where it is possible to do so, can help to keep businesses solvent until work streams begin to return to pre-Covid levels.
Recruitment, as with many other businesses, is all about relationships. The success of a recruiter depends very much on the strength of the relationships developed over time, with both candidates and clients. For this reason, sector-specific recruitment has proven itself to be extremely successful, particularly in the case of senior hires. Experienced and highly-qualified candidates can carry a large price tag – in the world of head-hunters and search firms, a £100,000 recruitment fee isn’t uncommon – so, it is essential that recruiters understand the job spec, know the market, and have a good feel for the customer’s culture.
Where strong client relationships exist, it is more likely that the firm will be the first port of call when any new vacancies arise. This makes it even more important for firms to invest in talented people and reward them accordingly. Finding creative ways to keep workers motivated and making sure their needs are addressed whilst working remotely is vital.
Prior to the pandemic, it was definitely a candidate’s market, but things have changed significantly and now the balance of power sits with the employer. With hundreds of applicants now applying for every new position that becomes available, and with large time implications involved in sifting through such applications, business owners in many industry sectors are likely to be seeking additional support. While emerging technology, such as AI, can go some way to help companies, experience is a key factor in identifying the best candidates.
Providing an all-important buffer between employers and the marketplace, good recruiters aim to add value to their clients’ businesses over time. From offering advice on positive employment policies, to supporting business owners in areas such as promoting diversity and inclusion, recruiters should be taking the opportunity to immerse themselves in more than just the talent pool.
If 2020 has taught the recruitment sector anything, it’s that even the most watertight of business models can experience significant disruption and staying agile to market and economic changes is vital. By taking a long-term view, establishing a more varied portfolio, and ringfencing revenues where it is possible to do so, firms can spread their risk and start working their way back to a successful and profitable future.