Things used to be much simpler.
From the early days of recruitment in the 1950s, service providers could be split into 3 distinct categories:
Executive Search Firms – Senior mandates, retained work
Professional recruitment companies – Contingent mid-to-senior recruitment
Staffing agencies – High volume, low value temporary placements
These traditional businesses had been in existence for more than half a century before innovation emerged in recruitment.
The rise of RPO (the outsourcing of part, or all, of the recruitment function), pioneered by people such as James Caan amongst others is now a major arm of the industry.
Today, recruitment is a huge and complex industry.
The largest service providers offer diverse add-on services to compliment the core recruitment offering. From talent and leadership consulting, employer branding and communications to assessment services and proprietary HR technology.
The recruitment industry is growing faster than ever. Largely thanks to technological innovations there are now entirely new types of recruitment company. These companies offer services that supplement or even displace the traditional search, recruitment and staffing service providers.
The lines between the traditional recruitment companies operating in each of three key segments has blurred. Contingent firms are competing with search firms and selling retained work; traditional staffing firms are developing professionals recruitment businesses and even executive search arms.
Executive search and professionals recruitment is no longer restricted to permanent placements. Interim and contract placements have formed a large and important part of the mid-senior and executive recruitment solution. Innovation has, on the most part, been driven by the larger companies in the recruitment world.
The recent acquisition of Monster by Randstad is clear diversification from the second largest recruitment company in the world, but it has sparked debate over whether there could be conflicts of interest for customers.
It seems the recruitment battle lines once drawn in the sand are now being scuffed out and re-drawn.
Big and small
Focusing on recruitment and not on the add-on recruitment services, there have historically been very limited ways in which a recruitment company can grow.
By increasing headcount or by increasing profitability per head.
The first method is the most common way a recruitment business grows.
The term boutique, typically means smaller. Usually, they’re more specialist (fewer sectors), with fewer offices (smaller geographical coverage) and more focussed on seniority (placement salary range).
When today’s largest corporate recruitment businesses were founded, they were “boutiques”. They’ve just done very well over time and now are a distance away from the description they first aligned to.
The recruitment landscape is evolving at an accelerating pace. There are more recruitment agencies than ever before – 3000 new recruitment agencies launched in the first half of 2016 just in the UK.
Third party recruiters face much more competition.
Not only from their peers in the ever growing number of agencies, but also from internal hiring teams, innovative technological platforms and a growing number of hybrid talent solutions, emerging from both the tech startup world and traditional recruitment agencies.
There are a now a huge number of different routes an agency can take in order to innovate and differentiate themselves to their client base, talent communities and their prospective hires. Some of the more recent trends include (but aren’t limited to):
Companies that brand themselves into micro-specialists typically do so to ensure they are seen as specialist experts in their niche sectors to their client and candidates bases- not a generalist agency. Yet they act as one entity and maintain the capabilities, infrastructure and clout of a much larger organisation.
An emerging innovation that offers a blended approach to hiring. This sort of solution is emerging with a tech-startup clientbase who typically engage in an innovative pricing model whereby there may not be a fee-per-hire, but set rates based on a project or hiring milestones – offering a cost-saving and guarantee for hiring companies.
Diverse platforms are emerging from traditional recruitment agencies to offer their customers’ points of differentiation – whether it is a mobile app to facilitate easier timesheets for contract workers, an active online talent community, a state-of-the art website, or a full-blown automated talent matching platform – there are growing numbers of agencies investing in technology to stand out from their competition.
With the barrier to setting up an agency lower than ever before, yet opportunity within the industry ever-growing, there are now an abundance of financing opportunities for would-be entrepreneurs.
Much like the micro-specialist model outlined above, the benefit of a shared services model offers good value for the investor as well as the entrepreneurs across their portfolio. The carrot of significant ownership plus the infrastructure and support of an industry veteran can attract top talent and allow each portfolio company to scale more quickly.
Traditionally limited to the domain of much larger companies; these are just a few of the innovations we are seeing more frequently across the agency world in addition to the more established managed services. They are being offered by smaller and smaller organisations and include services include market mapping, training-as-a-service, competitive intelligence, candidate sourcing and project services.
Agencies: There are more ways to challenge the norm than ever before. You can stick to the old fashioned methods and provide a high quality, tried and tested function to your candidates and clients, or you can go against the grain. Both have benefits and are effective if executed well.
Recruiters: Today, more than ever, if you don’t feel aligned personally to the business you work for, the choices for you to change and pivot your career are greater than ever. And they’re getting more diverse by the day.
Recruitment started out as a three tiered service industry, seen as a means to an end by the masses. Today it’s an evolved, complex and hugely varied sector that plays a massive part in the lives of people and companies.
Technology will continue to play a big part in the evolution of the recruiting industry- removing barriers, creating greater transparency and opening communication channels. It’s an exciting time to be a recruitment professional!
Recruitment Specialist Healthcare at Ethos BeathChapman
Snr Recruitment Consultant - Sydney CBD at West Recruitment
Recruitment Consultant - Accounting & Finance at Allura Partners
Start your own business with investment & support at Hilton Lord Associates