Steve Berridge, finance technology specialist at The Access Group, gives advice for recruitment agencies looking to move to the next level.
Unlocking Recruitment Rewards.
Like many recruitment agencies, you may well have gone into the new year all guns blazing – determined to win more clients, move into new sectors and up your billings. There are plenty of opportunities, of course. Competition for talent remains as tough as ever and companies, especially in some regions and sectors, are struggling to fill their ranks.
In London alone, the number of job vacancies is 30 per cent higher than the national average, followed by the North-West (26 per cent) and West Midlands (11 per cent). With skills shortages expected to cost small businesses an average of £145,000 each this year, many will be looking to recruiters to help them get the right people for the job, so they don’t miss out on growth opportunities.
While demand for skills is clearly good news for agencies, remember that competition is fierce. There are almost 1,700 agencies currently operating out of London and no doubt many more will emerge and expand this year.
Recruitment comes with high rewards – but it brings huge risks too. Everyone knows that candidates regularly renege on the offer or fail their probation, so you only receive partial payment if you’re lucky. Then there are clients who do not pay on time and cause serious cash flow headaches, particularly when you need to pay temp workers and contractors every week.
So, even if you are riding high on a wave of business, it is important to take a step back, review your strategy and make sure it is informed by the right data, in order to deliver a strong ROI.
Where to start?
Digital technology and availability of quality, real-time data has transformed businesses, and recruitment is no exception. Essential but time-consuming tasks, like candidate screening and compliance checks, can now be automated, reducing the risk of human error and the cost-per-hire.
Just as important is a good CRM, so you are no longer sending out blanket emails hoping that someone will respond. You can instead build a rich talent pool that enables you to accurately match candidates’ skills with clients’ requirements, while ensuring compliance with workers’ rights legislation.
By speeding up the recruitment process, and limiting the chances of a bad hire, agencies that successfully place more candidates should see their hard work rewarded with full payment and repeat business. As well as being valuable at a day-to-day level, this data forms the basis of every strategic decision, such as whether to take on more staff, move into a new sector and/or open offices in a nearby city.
Looking beyond recruitment data
As powerful as this data is, it will only get you so far on its own. Many recruitment teams have systems in place to reduce the heavy lifting and gain actionable insights – yet they may not stop to consider what else they could be missing. One obvious but sometimes overlooked data source comes from your finance team, who play a crucial role in helping the business cut costs, bill more and drive up profits.
Your finance and payroll colleagues are custodians of vital data, so their role extends beyond simply paying wages, invoicing clients and safeguarding cash flow (although these remain as vital as ever). Rather than working in isolation, a collaborative approach is the next step in banishing guesswork, improving decision-making and streamlining the journey from sourcing candidates to billing clients.
Joining up the dots
By breaking down departmental silos, and ensuring every team is working together via a shared or integrated platform, you start to see the bigger picture. The visibility and granularity of shared data provides one version of the truth, so there are no contradictions in reporting and less chance of poor decision-making.
Something as straightforward as aligning timesheets and billings can tell you if experienced recruiters are spending too long on accounts that could be handled by a junior, or whether your highest-billing client is also your most profitable.
When it is easy for staff to input data – for instance, enabling them to submit timesheets and expenses on-the-go using their mobile rather than waiting until the end of the week – you generally improve its accuracy too. Engaging them with the process means they are more likely to provide the information senior managers need to spot problems and respond to change.
We have seen how automation makes the recruitment process faster and more effective, but imagine what could be achieved if you apply it across the business? When your CRM and finance systems are linked, you can automatically pay staff and contractors using timesheets, bill clients to ensure prompt payment and set appropriate credit limits. Get it right and even agencies that pay weekly can maintain positive cash flow, without over-relying on debt factoring.
Looking forwards not backwards
No matter what your growth ambitions this year, every agency needs to equip its finance team with the tools to identify opportunities and problems in good time.
Taking recruitment and finance data together, senior managers are able to turn unprofitable contracts around and respond quickly to demand even if it fluctuates. When you remove the time-lag in reporting, and continue to look ahead, you can make your next move, whether it be taking on new staff, increasing your fees or opening new offices, with confidence. In the fast-moving world of recruitment, gaining a competitive advantage depends on the integrity of your data.