The markets have been on a roller coaster of late. Mostly down. Maybe even a little scary.
It has some thinking that a bear market, or worse, a recession, is near. For staffing and recruiting agencies coming off a very good year and looking forward to another, it may be a big concern. Especially as the staffing industry tracks the ups and downs of the economy closely.
But whatever is happening in the market, it’s your attitude, preparation and action that determine your ability to succeed in staffing and recruiting. A positive personal attitude and culture within your agency arguably plays the most important role in your success. Even so, here are three areas to focus on that can help you and your agency weather the ups and downs of business.
ONE: Review Often and Build Efficiency into Your Staffing and Recruiting Operations
When orders are plentiful and your profits are solid, it’s often easy to tolerate business practices and workflows that deliver only marginal profitability. But when incoming orders slow to a trickle, poor business practices can hurt profits.
You’ve probably worked hard to build efficiency into your organization. But a regular re-appraisal of your operations and how you might be able to tighten up your practices can help wring more profit out of every transaction.
Begin by making it an action item to get your team together on a recurring basis to review the steps of successful sales and order fulfillment transactions.
Your sales process is probably the first place to look for inefficiencies. Dave Stein, CEO and Founder, The Stein Advantage, Inc., a sales training firm, says, “When we ask sales leaders, general managers and CEOs whether they have a sales methodology and if sales people are compliant in its use, the answer is often disappointing. Many respond saying they have no methodology; but that’s really not the case. Their situation is, in fact, far worse. What they have is possibly the same number of methodologies in place as the number of sales people.” If your staffing and recruiting firm has similar inefficiencies, you can almost certainly figure out how to cut a step or two out of the sales process or execute faster or with better service to the customer.
Perhaps most importantly, become a believer in running your business “by the numbers.” Your key performance indicators (KPI’s) on all your agency operations and your staff should be measurable and actionable. Get a deep understanding of what your agency costs are for everything from sourcing candidates to billing customers. Develop a culture that focuses on quantifiable levels of staffing and recruiting service quality and your customers will look to you to fill their orders.
TWO: Build Long-Term Value into Your Staffing Agency
Building a staffing or recruiting agency is somewhat like building a well-performing stock portfolio for your retirement. Strategically speaking, you don’t focus on next month or next quarter, you focus on highly consistent performance over five years, ten years, or more. If you make your portfolio choices based on that consideration, odds are that you can rest easy in its long-term performance.
Likewise, your staffing and recruiting “portfolio” should focus on delivering similar long-term performance and value. Jim Childs, of Childs Advisory Partners, a veteran of the staffing industry as a CEO and investment banker, notes five strategies for value building:
- Develop niche leadership. “Niche companies are always more valuable than generalist companies,” Childs says.
- Focus on specialties and higher gross margins. Childs points out that, “The specialty players can have gross margins well over 30 percent due to their specialty focus and their mix of permanent placement revenue.”
- Avoid customer concentration. Childs notes that having a big account can be “a high-class problem to have. The trick is to create urgency in the organization to build around this anchor account.”
- Build a deep management team. Childs says, “It’s vital to build a deep management team that can drive the business so that it is not overly dependent on one or two people, including the owner.”
- Keep building real client relationships. Childs states, “Over time, your model needs to have deep, long-term client relationships to really get a premium in the marketplace.”
THREE: Stick to Your Business and Focus
What, exactly, is your business? How, exactly, do you differentiate yourself from every other recruiting and staffing firm out there? Does every member of your staff understand and believe in the answers to these two questions? You must clearly define the very specific core competencies that are at the heart of why you’re in business.
If you haven’t done so already, write down your business purpose your mission. Frankly, you should be able to put this on the proverbial napkin. Analyze what it means and what it takes to support your mission successfully.
Let’s say that your mission statement is: “We find and place skilled information technology professionals into contract assignments with Fortune 1000-level businesses.” If this were your mission, you would list everything you must do to support the success of the mission. Things like recruiting IT talent through college and university programs and related business and social networks. Then you’d make a second list that includes everything else you have to do that doesn’t really support the mission; like cleaning the office or having staff to maintain an on-premise IT system or handling all of your own payroll and billing.
You must focus on your core competencies. That means that everything that is not central to the success of your business are things that you should consider eliminating, streamlining, or outsourcing. Remember also that focus means NOT chasing every order that might come along. I know, the desire to fill any order from a valued customer is strong. But if it dilutes your ability to deliver on your mission, it also dilutes your ability to maintain quality service and higher profit margins.
Continuous Improvement Equals Continuous Profitability
W. Edwards Deming, the statistician credited for helping Japanese businesses become powerhouses of quality, performance and profitability, said that “Long-term commitment to new learning and new philosophy is required of any management that seeks transformation.” Savvy staffing and recruiting agency owners and managers will take those words to heart and reap the rewards. Equally importantly, you may just learn to enjoy the coaster ride.