From Shortlist, July 2021
There are two routes that recruitment companies can take to expand their existing portfolios, and one of these almost always ends badly, says recruitment and RPO veteran Sue Howse.
The first approach is to expand the business’s current services into new markets, the Black Diamond CEO told a recent Captain’s Table forum hosted by Navigator Consulting.
“You can look at retaining your current services scope and look at how you can leverage that into different industry sectors. Many of us have done that within current customers, where you look at how to get access to more of their spend, and more of their hiring needs.
“You leverage that for growth within a particular customer base and if you have the opportunity to do that, that allows you to move out of technical and digital into finance or HR and marketing recruiting as well, or it might give you the opportunity to leverage your experience in providing tech and IT professional contractors and going to permanent hiring, so going up the chain as well.
“If it’s similar services and different sector, think about, ‘how do I build out different sectors with the current services or current clients I’m working with now?’.”
The alternative is to provide different services in the current sector, and Howse notes that these two approaches can occur simultaneously.
“You can also stick to your sectors, what you’re really strong at and where your domain expertise is, but start to look at different services. So [for example] you’ve been doing permanent hiring for digital and IT for the last five years, you’ve got deep domain expertise and you understand that sector really well, and you’re exploring with some clients the opportunity to potentially put a recruiter on site or on-demand from your business.”
This approach gives the recruitment company “an edge and a way into a solution delivery”, Howse says. “It also gets you closer to the client because you’ve got people on site.”
However, it carries a risk that the on-site recruiter will go “rogue” and become more a part of the client than their employer’s business.
“But in saying that, by having someone closer to the client, the chances are you’ll get a lot more work out of them, particularly if they’re using multiple suppliers.”
This can, however, require compromise, for example by reducing margins slightly to get a bigger portion of the organisation’s spend.
Moving into different services requires more “complex” decisions and considerations compared to moving into different sectors, but Howse says the path that more often leads to failure is moving into different sectors and different services.
“Be very selective about the sectors that you move into. Don’t move into sectors with major talent shortages. Why would you stitch yourself up trying to fill roles you know are not fillable?”
And when considering expanding into different services, Howse says partnering with other organisations “is often the most effective way”.
“The challenge is how do you cut the deal together… I’ve seen successful agreements where there’s been a primary contractor and subcontractor under that, which I think is very effective.
“It allows you to bolster up your team and capability in ways that are different to trying to do it solo. It also expands your opportunity for service offering diversification and also client diversification as well.”
Expanding into talent solutions
Meanwhile as more staffing providers shift towards total talent management solutions, it’s important to note that these should comprise four specific elements to meet client needs, says Howse, who held senior roles at ManpowerGroup and Harrier Talent Solutions prior to launching her own advisory.
A successful talent solution will reduce costs and increase value, she says, noting that “cost is essentially what hits the P&L… whereas value is the value created or value earned, depending upon the decisions that are made”.
The second element is compliance and risk mitigation, which is increasingly a key consideration for clients.
“I think we need to play this one up significantly at this point in time. There are so many people that are freelancing and are looking at how they can be on-demand workers, but they don’t necessarily have all the compliance checks and balances in place, the insurances and the liabilities in particular,” says Howse.
The third is efficiency, visibility and analytics, followed by quality and enhanced experience, because “we’ve gone past I think candidate experience to employee experience to human experience, so the overall experience of working with you as a provider and the experience that candidates are receiving is absolutely critical in the eyes of many clients”.