Alex Arnot is the founder of MyNonExec (www.mynonexec.com) providing non-executive advice to more than 30 recruitment company boards.
Having advised the boards of over a hundred recruitment companies, there are four factors that the most successful consultancies have in common.
- Follow a three-year plan;
- Understand that KPIs scale;
- Dedicate time to business development (no matter what); and
- Nurture talent.
The Three-Year Plan
Your three-year plan is critical to efficient growth. By envisaging what your company will look like in three years time (number of staff in each area of the company) you can then plan backwards developing realistic two-year and one-year plans before creating quarterly and monthly plans for year one. These will enable you to create the hiring plans and financial forecasts that will allow you to deliver your three-year vision.
However, creating plans is not enough. You need to measure progress against them and in particular against your monthly financial forecasts. These plans ensure that you remain focused on your ultimate objective, can measure progress and don’t get sidetracked resulting in wasted resources.
The best indicator of future performance is past performance. What do I mean? If 50 interviews led to 10 roles filled last year, you would likely need to secure 100 interviews this year to make 20 placements. The number of new jobs and candidate interviews are among my favourite ratios to look at, but the ratio rule can be applied more broadly – for example, business development calls to new clients. Use the data on your CRM from the last 12 months to calculate your ratios – e.g. total revenue divided by the number of jobs briefed on and then filled and then jobs filled divided by the number of interviews. It is important to realise that you will have different levels of experienced recruiters in your company so ideally these ratios would be individual rather than a one size fits all approach.
The Importance of Business Development
What percentage of candidates who register aren’t a match for what your clients are looking for? How often have you had a great candidate but the client moved too slowly or wouldn’t pay full rates? The more clients you have, the easier it is to select those that will generate full fees – particularly important in a market where it is hard to attract candidates. This means that your recruiters should be dedicating time every week to building their client lists.
It isn’t easy finding good recruiters. Not only does that make it harder to grow your team it also means other companies will be looking to entice your staff away. The companies who are most successful at retaining staff are also the most successful at attracting new ones. Here’s what they do:
- They hire to an agreed plan – what do I mean? They know what new positions they will be hiring for and when for the next three years. They share that plan with their team and prospective employees as it shows the opportunities for career development.
- They develop meritocratic career plans – they work with each team member to identify what that individual needs to do to reach their next step on the ladder. And if the individual achieves the targets, they promote them immediately.
- They invest in training – employees who stagnate become less efficient and are more likely to leave. Continual training (internal and external) is critical to keeping recruiters motivated. Good training need not cost the earth or be time-consuming – for example, check out my 100% free, online, live and on-demand recruitment training programme: https://www.mynonexec.com/recruiter-club/
- They hire the best people not the first people – I used to interview 17 people for every recruiter I hired. Why? Because in the long run it would save me time and generate greater revenues.
Follow these four rules, and you will be on the way to running a very successful recruitment company.