Although Merger & Acquisition (M&A) activity in the recruitment industry has slowed down noticeably in the last couple of years, consolidation, growth by acquisition and realisation of asset value strategies are still often foremost in the mind of the business owner. According to the June 2003 Harvard Business Review, however, three out of four such transactions fail to achieve their objectives and more often than not dilute shareholder value and therefore place the utmost imperative on thorough due diligence.

One of the more common issues affecting owner-operators of boutique recruitment firms is the lack of a sounding board for new ideas, strategic planning, performance concerns and management hassles. It can be very lonely at the top for the small business owner whose monthly board meetings are solo affairs.

Performance measurement is a fundamental process to the majority of recruitment firms. This process allows a senior manager to analyse the current and projected performance of the company, team or individual by measuring billings, activities and forecasts. It is absolutely critical to the sustainability and growth of a recruitment business.

First, the good news: merger and acquisition activity in the recruitment community continues to accelerate as larger firms consolidate, expand and seek to increase shareholder value. Many owners of smaller specialist firms have a trade sale exit in mind and can start thinking seriously about taking the next step now that economic conditions and earnings are on the upward swing.

In an era characterised by increasingly sophisticated customers, margin pressure and candidate shortages, small recruitment businesses in particular struggle to position themselves effectively. In the fight for survival, many adopt the pricing schedules of larger competitors, but do so to the detriment of their competitive positioning.

One of the biggest challenges for executives is effectively communicating the organisation's strategy. Corporate mission and vision statements, company roadshows and team presentations are the typical tools used, but few if any of these provide little more than momentary inspiration for the people that are expected to make it happen. Little direction is provided to answer the employee's primary question: what do I need to do to make this happen?