A major challenge faced by recruitment agencies looking to scale is how to ensure that revenue generation builds evenly across the business.
Most companies begin with one or more high-billing founders, then add headcount as they reinvest the cash surplus they build in the early months.
Sometimes founder energies can generate enough jobs and clients to keep the initial team billing strongly, but as the business grows the scale of the challenge increases.
Once an agency is in full growth mode – hiring new recruiters who are expected to be self-sustaining and generate per-head profit independently – multiple factors need to align to mitigate cashflow risk and ensure the agency’s top and bottom lines continue to grow stably.
What steps can a growing recruitment business take to reduce billing inconsistencies across an expanding recruiter base?
Map Markets
A risk for ambitious, cash-rich agencies is to add headcount without first evaluating the scope of opportunity for each planned desk. Often general business momentum will create the confidence that there is ‘lots of business out there’, without critical data to shore it up.
The outcome of this approach can lead to (potentially talented) recruiters getting off to a slow start as they feel their way around in a new market – perhaps eventually to learn that there wasn’t as much potential on offer as first thought.
Market mapping for new hires doesn’t need to be exhaustive, but some basic validation that each new hire will have enough opportunity to comfortably hit their assigned sales goal is advisable.
Indicators can include:
- Target customer lists – total number of companies, headcount size, revenue, number of locations etc.
- Volume and frequency of job postings – across core platforms, based on keyword queries.
- Total target candidate numbers – derived from LinkedIn searches, plus job board CV libraries.
- Competitor activity – size, distribution, focus and job postings of competitor agencies.
Especially if new hires are being directed towards new markets or tangential sectors, it can also be useful for an experienced team member to ‘pilot’ their desk, winning a handful of clients and job orders, and even delivering a few successful placements before proceeding with the decision to add personnel.
Monitor Activity Data
Where dizzying frameworks of KPIs once dominated the recruitment sector, there’s a tendency for newer agencies to be less forceful in imposing daunting amounts of goals on their teams. Fewer recruiters are targeted on base activity such as outbound calls dialed, and many are managed with a lighter set of guiding metric.
But having access to data and using it to set targets are two different things, and it’s vital for an agency trying to stabilise revenues to know exactly how recruiters are spending their time.
This doesn’t mean stifling staff with overwhelming mini-goals, but does mean having the ability to:
- Diagnose where recruiters may have a problem, if they are struggling to consistently reach target
- Benchmark against top performers, to see activity patterns that are working
If your agency only tracks a handful of basic KPIs (e.g. CVs sent, interviews booked) but has no way to dive deeper into how recruiters are spending their days (phone usage, email, LinkedIn messaging etc.), then it can be very hard to provide the help and support needed to correct their work and help them get back on track.
Ensure Training Is Thorough And Ongoing
There’s a huge range of quality in the world of recruitment training, with much of it just focusing on making sure recruiters have the basic skills to execute the core steps in the recruitment cycle.
Training programs can miss key areas that are fundamental to recruiter success, such as effective correspondence, relationship-building skills, developing true market knowledge, or the nuances of negotiation.
A further issue is caused by ‘onboarding-only’ training structures, where recruiters are loaded with information in their first few days of joining an agency, then never offered more. Six months later when they’re struggling to hit target, there can be a lot of important information in that early training entirely forgotten.
When evaluating your training, keep in mind:
- does it teach all the skills needed to excel in the job, or just the basics?
- is it ongoing, or just a data-dump during onboarding?
- does it offer clear best practices for recruiters to follow at all steps of the process?
- do recruiters have access to ‘refresher’ materials to help them master key topics?
Monitor Activity Data
Plenty of agencies come unstuck when trying to build reliable billing cycles because they don’t have enough insight into recruiter pipelines.
By the time a recruiter looks as though they might miss their goal, it’s already too late to take action to fix the situation.
Key to this is tracking what each recruiter has in the pipeline at all times, using realistic qualifying measures to ensure things don’t just ‘look good’, but actually have a strong chance of converting to revenue. This also gives managers enough time to adjust recruiter activity early enough to avoid billing dry spells, by concentrating on sales, sourcing or specific job openings as needed.
Developing a weighted pipeline system is an effective approach, grading each opportunity a recruiter is working on by vital signs such as how advanced it is in the process, the level of client hiring urgency, number of competing candidates etc.
Foster Accountability
Most importantly, the desire to overcome stop-start revenue generation has to come from recruiters themselves.
Developing a weighted pipeline system is an effective approach, grading each opportunity a recruiter is working on by vital signs such as how advanced it is in the process, the level of client hiring urgency, number of competing candidates etc.
