Why Most New Recruitment Agencies Will Not Last More than 12-18 Months.
With the onslaught of many new agencies setting up everywhere and the market opening itself to more dimensions, the loyalty of a recruitment consultant staying in a company for many years is a distant memory. You see, the business of recruitment agencies can be easily duplicated, and apparently, when one of the top recruitment consultants in a company reaches the top sales for a few months, greed and EGO take over.
Many people who work in a recruitment agency handle the clients and candidates directly, and when they make over $10,000 – $20,000 per month in sales, they have a tendency to believe that they can earn more IF they were to start on their own.
What happens is that they will talk to many potential investors, and eventually, one of them who is not in the industry will be willing to pump in the money. Of course, that recruitment consultant will automatically become the Managing Director of the new company.
When the new agency is set up, the Managing Director will stop doing sales, and when there are new job orders, they will be pushed to the new consultants. Being trained by the previous manager who kept everything to himself, the skills the new MD has learned will also be limited, and most likely, he has not really had the experience of running a business before. They only know how to talk to clients and candidates!
In actual business, it is more than clients and candidates; real business involves the following:
– Sourcing for the best place to work (the office). Most people were slaughtered by this because they have no idea what is the best deal in the market. Nine out of ten of them will be misled by the commercial agents, as they are not IN the market.
– Creating a brand that has a deep impact. Many people think this is redundant because they are not into marketing and branding, and of course they do not know it is EXTREMELY important. The fact is that the brand says a lot about you, and if you cannot create the difference, you will be like any of them out there.
– Recruiting the right staff. Most of them who are recruitment consultants fail in their selection of the candidates because many of them are not even trained how to do so. They just go through many hundreds and thousands of resumes, and they believe they are good interviewers.
– Leadership and retention – This will kill many. Seriously speaking, these things usually do not exist in the new MD because they are not trained how to do so. However, many still believe they are good in these areas!
– Understanding the industry – Most new agencies do not even know about the Market Tumours, and when I explained them to the MT, most just stared blankly at me and were at a loss for words because I had decoded the entire recruitment agency industry and torn it apart to bits and pieces to a point they had not seen before.
– Managing the cost of operating – most of the new MDs do not have these skills because they are not trained at all.
– Generating sales – based on the 80/20 rule, eight of your consultants will not be producing and only two will produce. With that, the salary will be more than the sales, and any logical investor will pull the plug eventually. If the investor is the MD himself, he will feel even more pain in this issue.
– The MD will need to incorporate new ways to generate new consultants, new clients, and new candidates because they will find that the previous method they used will not yield good returns.
– Training – Your staff needs training in almost all areas. Most of them do not believe they need to train staff. Well, if the skill set of the company staff is not up to standard, eventually the sales and clients will go elsewhere!
Anyhow, managing a recruitment agency is not as easy as it seems. It takes more than hard work and sales to make it happen. You will need to focus, innovate, position, brand, change, and adapt to be able to make it big. Good luck!