There are two things currently vexing the mind of this blogger – Firstly, how does Davina McCall continue to get a job on the telly when she’s a bit rubbish and secondly, when is someone going to sit down with the agency recruitment world and tell them that big bad corporate world has been actively planning their demise for the last decade ?
Now, as Davina has just rescued the nation from peril by ‘pushing herself beyond breaking point’ (copyright lazy journalists up and down the country) I guess for now I’ve got to tackle that other conundrum, make myself unpopular in the process with the agency recruitment sector and tackle the 800lb gorilla in the room. Hey ho. That’s just how I roll.
You see, before the clicking of agency recruiters exiting takes place from inside that particular cabal, this is not a lazy, ‘they are all a bit rubbish and untrustworthy’ sort of thing you see nowadays. Nope, I know where that goes and it isn’t clever or grown up. Bloody big generalisations never win an argument and the whole debate has become unnecessarily polarised anyway. Nope, there are good and bad in everyone (as Stevie Wonder would say on his keyboard) and up and down the internet are some great folk like Mervyn Dineen and Greg Savage trying their utmost to reinvent, re-educate and reframe the agency model but having been inside the corporate tent for 22 years I’m still scratching my big Irish head as to the question – why bother ? When conditions are perfect* the big switcheroo will be complete and the proverbial ass will fall out of that market they say. When it goes the way of the typing pool or the Filofax will it be mourned or celebrated ?
Statisticians suggest that in the UK alone there are some 10,000 agencies hitting pre-recession levels of £27 billion in revenue. 100,000 people, most are in owner-led start-ups (the backbone of this country’s stuttering economic recovery). The technology agencies are typically owned by a bald guy called Mark established in a soulless commuter town, whilst the sales ones are owned typically by a guy called Dean, who dresses like Del Boy Trotter and drives a hairdresser’s car. They all have one thing in common – they’ve fallen into recruitment in the hope of making a buck as it’s a typical low-barrier to entry type of affair. One day their dream will come true as a larger dominant player will purchase them as the market consolidates and they make their fortune. In the meantime, the fact of the matter is that they are lined up against the following might of the corporate world with the sole intent of eradicating the agency world at every turn:
- The Internal recruitment teams are initially built and justified because of the high margin paid to agency recruiters and the ability to drive down this cost by doing it internally.
- When scale hits, then an RPO relationship is added to the mix. Their commercial contracts are historically simplistic and transactional-based and predicated on offsetting against the use of agency recruitment spend. The phraseology is moving ‘bad’ money (agency revenue) to ‘good’ money (investment or bottom line). This tends to be in the area of bulk or volume recruitment and the maths make the case compelling – as long as the agency model is diluted. The big altar of Direct Sourcing is built and like a distressed beacon only turns to the agency world when the tools of the trade fail to turn up the right candidate at the right time.
- When the model matures the case for beginning to cannibalise the senior search market becomes compelling by buying the skillset (search and research), establishing a configurable CRM and committing to own as part of a wider talent strategy. Moving down the value chain into the agency dominated mid-market becomes only a timing issue.
- Generationally the baby boomers grew up with the concept of the search and agency model as a staple part of the corporate diet, as much as the PA and the private toilet. They could keep abreast of the market, their opportunity within it as much as undertaking a hiring process for themselves. Today and tomorrow’s leaders will be more accustomed to bringing the social and virtual network to work with them, tapping into that and refraining from the traditional agency model. Once again that’s what the corporate world hopes.
- Social media and Technology has disrupted the world of recruitment. Those seeing it as a further opportunity to erode agency spend view LinkedIn as a ready-made candidate database. View video interviewing as an easier route to volume first stage hiring and referrals companies provide bolt-on technology to assist attracting a highly successful segment of the passive market at a fraction of the agency cost. Recently social engagement capabilities have emerged to help organisations build brand and stickiness and of course analytics helps dilute the age old conversation about the market, the candidate that the agency used to value as a subsidiary service.
- Procurement and its ugly stepsisters finance and legal have at their core a dastardly purpose statement built on the premise that the agency can’t be trusted a and focus on driving down the cost of supplier relationships and the risk of contamination to the business.
- Finally organisational unconscious bias is strong within the enterprise and it’s usually negative and fearful. I did it earlier in the article for comedy effect (but I wonder how many of you recognised the stereotype). I have never once come across a welcoming overture out of an agency’s earshot inside a business. No feeling of rapprochement and no business case that didn’t use the model as a makeweight for advancement in a clear zero sum game.
*When conditions are perfect – when talent acquisition meets talent development in perfect harmony, embracing technology as an enabler for sourcing and enlightened organisations seize the importance of candidate experience, all underpinned by perfect strategic workforce planning, then the game is up for the popular agency model. A huge factor in the success of the model today is the ineffectiveness of HR organisations to get their act in order but when that’s the only barrier then …..kaboom. Surely ?
Perhaps there is a future for the old agency as talent agents, similar to sports stars, and their revenue model is moved to the candidate as a sort of signing on fee. I read recently that this practice is beginning to take root in the highly competitive environs of silicon valley amongst technologists but perhaps there’s a wrap around service embracing candidate brand building through to package negotiation. The niche argument persists but surely if the market is consolidating then that provides less specialisation and more conformity. And if the business model for the owner-led agencies is ultimately to be bought for a price then is there really a long term plan or a greater intrinsic purpose centred on the candidate market or just a get rich while corporate dysfunction allows you to milk at affordable margins.
As I pointed out earlier this wasn’t about agency bashing – I’ve met some very capable folk there happy with the conditions they operate within and who have no wish to transition elsewhere in the value chain. This is about the phoney war that exists between client and vendor and cutting to the importance of the debate required for the sake of the talent agenda we need to embrace to fuel our ongoing economic growth and prosperity. Believing there are long lasting relationships between both parties (for different reasons) is just peddling a myth.
Finally, I guess if the perfect conditions do kick in soon, the recruitment agency sector can always look to Davina McCall to save the day !
And on that note and until next time – Please do not swear.