Turning Toward Change or Going Round in Circle?

Here’s some food for thought this coming holiday; the recruitment industry is inefficient, it is fundamentally flawed and cannot cope with the complexities of the current labour market. And if that weren’t enough, our consummation with being ‘first’ in the war for talent has blinkers us from a potential available workforce of approximately one million plus Australians, who cannot currently find work.

Lesley Horsburgh talks to Toby Marshall about his roadmap to success and his hopes for the industry.

These are the views of Toby Marshall, founder and Director of Abacus Recruitment and author of the recently released book Get a Better Job / Get Great People. While his claims might sound a little harsh, mad even, Marshall is far from it. He is refreshingly candid, yet there’s genuine concern. He’s cool but extremely passionate about finding the right solution for employers and candidates, an issue he says that begins at home.

“It all starts with how you remunerate your consultants. Virtually all recruitment consultants are paid commission, even those people who appear to be on salaries; the reality is that the only thing they are judged on is revenue. “So if each quarter the only thing that determines whether you keep your job or not is how many placements you’ve made, well that’s commission.”

So how does Marshall’s theory lead him to believe there are such inadequacies in the industry? He compares recruitment today with the insurance industry of 15 years or so ago, and suggests that if we undergo a fundamental change to the way we incentivise our people, as did the insurance industry, we will enjoy better success for our clients, candidates and ultimately the reputation of the industry.

“The last thing the industry needs is for clients and candidates to have the perception that the more expensive candidate will get a bigger shove from the recruiter – and why wouldn’t they? If you have one candidate who wants $100K and another who wants $120K, and the fee you charge rises according to salary level then why wouldn’t you push the higher earner?”

It’s a fair point and one which many recruiters would probably have difficulty arguing against. With the pressure from management to reach targets each quarter – it seems the only incentive for consultants is to bring in as much revenue as possible and all within deadline – is it any wonder many organisations have such a poor opinion of the industry, when we’re actually forcing our people to treat the recruitment process with such a transactional approach. “We call it spray and pray,” says Marshall, “sending bodies out to clients in the hope that they’ll stick – somewhere. That’s not something I enjoy.”

But the problem doesn’t stop there, Marshall also believes that it’s absolutely imperative that recruiters insist on working with clients exclusively – but who should drive this – client or recruiter? “We have to educate clients. It’s quite straightforward really, why would you take a brief and do three or four serious days work on it if you didn’t have the role exclusively – you wouldn’t – you’d return to your desk look up your database and the activity would end there.

“It’s this industry race to the line that clients drive, which ultimately returns little more than a list of names. On top of that, it’s not very satisfying work, churning out short-lists against the click – that’s production line stuff, it’s neither professional nor interesting.”

At this point in this article I can almost picture a sea of readers nodding in agreement – but how many of you can put your hands up and say you honestly don’t accept this way of working with clients? Not many I bet. Marshall and his team at Abacus can – having spent numerous years ‘selling’ the boredom set in for Marshall who was convinced there had to be a better way – for everyone.

“It’s partly what drove the new model within Abacus; boredom with the sales, just boredom, absolutely crashing mind numbing boredom of selling bodies, money for bodies we’re calling it versus fee for service, and it is not very professional.”

Yet despite his beliefs Marshall is under no illusion that the industry will change overnight. “Recruitment firms will go on working like this because they are full of people that have been hired for their sales skills – that’s what they’re used to.”

And it’s here that we reach the deciding factor – do you view recruitment as a sales or service industry – for those who answered service – are your staff bonus structures reflective of this? And for those who believe recruitment is a sales industry – how likely is it that your consultants will take the time needed to truly service clients, win the confidence and loyalty of candidates and build a portfolio or business relationships that are unlikely to stray to the competition?

Marshall is clear, recruitment is a service industry. So strong is his belief that the Abacus model has changed to reflect a fee for service rather than based on results; billing clients upon engagement of service, again on appointment or a candidate and then on 3 months and 6 months post placement. Fees are capped too. It’s a model that is proving far more successful in the long-term and while it can initially strain cash-flow, Marshall it seems has found his vocation. “I’m having a lot more fun now and the book’s helping that I guess as proof to my clients that I have got a good approach, that I am trying to up-skill them.

“I am talking to a number of firms about how they recruit at the low levels as well as senior lever. I’ve particularly worked at more senior levels and now this is fascinating for me, looking at how to create better jobs at the lower levels, why in general do people want to work here, why do they want to come and stay? That sort of thing, which is a lot more interesting than “here’s a job now fill it. So we’re actually helping to try to create jobs and then gain employment, which is a much better strategy.”

While Abacus and a handful of like-minded others in the industry slowly turn clients around, the industry, in general, continues on, perhaps in circles. So where can a more widespread change begin? “Clients have to acknowledge that we’re up against two sets of skills here – client knowledge, understanding of company culture and the specific market and there are recruitment skills” says Marshall.

“A lot of business managers undervalue that. A lot of line managers think that they are paying recruiters for names. They think that recruitment skills aren’t hard, they aren’t but the key is time in the market – that’s what they’re paying for, an understanding of salary levels, emerging skills, market demand and where to find the best people. That’s where the future in out industry lies and if you’re not a niche recruiter – than you’re insane!”

While the Abacus model might be rare right now, Marshall is confident that the change will occur.

“It’ll change. Insurance changed and the only reason it changed before the recruitment industry is because it affected the consumer. But if we keep raising the issue and keep reminding clients of the choice that they have change will come – whether the recruitment industry likes it or not.”