A new spin on recruitment

One of the biggest problems facing recruiters today is the high level of staff churn in the industry and when they do leave, more often than not, they set up in competition.

It is always the good guys (or certainly the most capable) who go and businesses tend to be left with the mediocre majority. So I ask why let them go? Why not work harder to understand what they want, how you can satisfy them and what’s in it for you? I believe I have a solution – call it Staff Spin-out.

When I first took over at the REC in 2003 I wanted to understand the mindset of a recruiter. As a salesman I recognised that I had to empathise with my customer and REC’s customers are (or should be) it’s Members. So I trawled the information sources to find out what makes recruiters tick. The best piece of research I could find had studied about 450 recruiters who had been identified as ‘high performers’; big billers I assumed. These people, a fairy well balanced sample as it turned out, had been nominated for appraisal by over 50 businesses, both large and small, and the evaluations seemed extremely detailed. The outcomes were fascinating and help me postulate a number of theories.

I quickly concluded that the psychological profile of a high performing recruitment consultant very closely matched that of a successful small business entrepreneur. My thoughts were later supplemented by one of the first pieces of work produced by the REC Industry Research Unit, under Roger Tweedy, which suggested that recruiters most wanted ‘Flexibility; in terms of working structures, and Ownership; in terms of shares and status’ from an employer. This led me to conclude that the best recruiters tend to be naturally entrepreneurial and ambitious by nature. Over the next three years I looked at the people who left good companies and set up on their own and the damage their departure did, or appeared to do, to the agency they left behind. I also spoke to many recruiters who have left, stolen the database, and believe the eventual legal settlement they were forced to pay their former employer was a worthwhile investment in their new business. All of which I find crazy!

Historically, I came from the world of manufacturing (some may remember it) and more recently I was involved in technological innovation; I was a Dragon long before James Caan saw the potential. Perhaps the most sophisticated thing businesses commonly do in the producing sectors is ‘spin-out’ new products or ideas into new, stand-alone companies and, where opportunity exists, compete with themselves. It is quite common place to create a new business around a new technology and hive off some of the best people, often those who are ‘up and coming stars’ and give them their chance to shine.

Now in recruitment, if I am correct, there is an inevitability that the most successful billers (usually two or three of them working together) will quickly conclude that they can have a better future if they set up for themselves. My model offers you, as their employer, an alternative. It suggests that you identify your high flyers and even put them on your high flyers programme, offering them management training (making sure you lock them into repaying your investment if they leave in the next x years). Groom them for success and make sure you understand their aspirations. Tell them that, at anytime in the future, should they wish to start their own business that you will fund them and support them to success. We all know it is fairly cheap to set up an agency so for a modest investment, say £25K, you could fund the creation of a friendly rival, or better still a non-competing parallel business and, with a seat on the Board, keep a limited control over its development. You would of course take a small shareholding (say 25%) for access to your funds, database and mentoring skills and charge a small admin fee for back office support until they can fully stand alone. In three years time you can offer them the opportunity to buy you out, at a fair market price, or you can buy them out – helping them realise their wish for personal wealth – and the opportunity to bring the business back into the fold.

Some try this is the form of a franchise but, and contrary to popular belief, operating a franchise requires an extremely disciplined operating culture and an adherence to process that would defeat most sales-minded people. QED it probably won’t work in recruitment.

Now clearly ‘spin-out’ does happen in our sector. You have to look now further than the genius that is SThree, where Bill Bottriell and colleagues recognised that it is better to keep good people within their sphere of influence than let them get away, and Tim Watts at Pertemps, who just has a great nose for a business opportunity, to realise what is possible but I say that every business should recognise that good people must not be allowed to get away and should implement procedures – managed and operated personally by the business owner – to protect their most precious and costly asset, their staff.

Gareth