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Market insight Recruitment Training

How agency recruiters can survive and thrive in 2023

Benjamin Franklin, upon the signing of the US constitution, is reputed to have said ‘in this world, nothing can be said to be certain except death and taxes’. I suspect we could safely add recessions to the other two certainties. As we emerge from the post-Covid bounce back, we are likely to face a broader global slowdown to what we experienced in 2022.

Recessions are cyclical and often tough to predict. A country is usually considered to be in recession when GDP falls in two successive quarters. Though economists cite a host of different causes it seems that the impact of lockdowns, Covid supply chain problems, the Ukraine & Russia crisis coupled with the resultant increase in energy prices have led to a challenging economic outlook after the initial boom.

I think it is safe to assume that some countries will experience a recession or a slowdown of some description. Recruiters sadly are not immune to the impact of such events. We recruiters tend to feel the impact immediately but the good news is we experience an upturn as soon as the economy does pick up.

In the 25 years I have been running recruitment businesses I have experienced too many recessions including SARS, the GFC and Covid-19. Regardless of the cause, I think the following is the advice I would give to recruiters to weather the storm. 

Stay very close to your key clients

It sounds obvious right? We should be doing this anyway but it is far more important when the market slows. Vacancies don’t dry up completely but they reduce in number significantly. Which vacancies then are the most important to your client? Typically there is a lag between the time the decision to prioritise certain positions and the communication of this to the recruiter.

Clients generally have multiple suppliers so in an economic slowdown a client would surely want to work more closely with their favoured recruiters. We have seen (thankfully) a return to face to face meetings following Covid, so take full advantage of this and get your client out for a coffee, lunch or a glass of wine and really understand the challenges they will face.

In the recent slowdown of the Singapore software engineering market my observation was that clients took a great deal of time to adjust the number of proposed or articulated vacancies. Plenty of vacancies seemed still to be open, but by some fairly simple questioning it was clear that prioritisation was already taking place automatically. You need to adjust to this rapidly.

A combination of understanding which are the key vacancies coupled with a real understanding of client challenges will allow you to identify roles that will have a higher fill rate. 

Try to predict market trends

As soon as you begin to suspect a slowdown (today, for sure) then it is wise to take a very in-depth look at your market sector and the geographies you serve. 

If you serve the energy sector today, for example, you may conclude that this particular recession does not apply to you as much as it may to other sectors. 

However if you serve the crypto sector then you have probably already made a significant adjustment to how you approach your desk. Crypto was red hot 9 months ago. Today, it is not. Most crypto recruiters will have pivoted into the more traditional firms to find roles they can fill. 

Take a close look at your sector and try to determine where your sector focus should be. In Covid, hospitality and aviation recruiters, for example, would have probably opted to leave their sectors completely. Thankfully markets usually come back and those recruiters will likely return to their usual areas of expertise. 

An interesting observation in the current market is to look at the multitude of energy firms and recruiters who, in 2016-18, pivoted into (mostly) tech, and are now doing the reverse and re-entering the energy sector as tech requirements begin to slow.

Look ahead. Try to evaluate your market based on as much information you can glean from clients and industry publications. Given the sales cycle of a typical permanent placement then it stands to reason that you would want to prepare to re-enter a market 3 months or so until the anticipated recovery. That is the tough bit, making the call.

Try to predict geographical trends

The ability to change geographical focus is a great tool to have if it is possible. As a rule of thumb a small boutique agency will have a lot more leeway to be flexible when opting to target different locations. This of course is not the case for the global players who can find themselves restrained if they have a significant brand network across a region. 

Geography has implications for the targeting of both clients and candidates. You may find that a neighbouring country is doing far better economically than your home country, it is relatively easy to leverage off home clients and ask them to introduce you to clients in other jurisdictions and this is another reason to stay very close to key clients. 

Though we welcome a gradual return to face to face meetings, it cannot be disputed that we all got more practice and experience in conducting video calls with both clients and candidates, across the Covid period. A positive Covid legacy is a willingness to communicate in this fashion. Resultantly, barriers have been lowered when attempting to build new relationships in different geographies. Use this to develop new clients. I recently spoke to a recruiter based in Hong Kong who was achieving success by opening up new clients in Singapore taking advantage of an increasing flow of candidates moving from Hong Kong to Singapore and beyond. 

There are lots of challenges when developing overseas markets such as time differences, language barriers and a lack of market knowledge. Most of the challenges however can be overcome by investing in significant research in resources readily available on the internet. As you launch your initiative you can very quickly fill any knowledge gaps by speaking to lots and lots of candidates. Hardly groundbreaking as we all know that it is our candidate base who possess all the intel  we need to run a successful desk. 

Prioritise placeable candidates

We are entering a phase of increased candidate supply. On one level this is a very good thing but on another level this can create some significant challenges. Most recruiters will have experienced a far higher response rate recently. This is due mostly to the fact that some candidates are actively looking out, but equally some are responsive simply because they want to hedge their bets, just in case their roles come under threat. 

Given an increased response rate it makes logical sense that you will find your diary filling up very quickly with candidates who have been let go. It is vital that you make sure the candidates you are going to work with are ones that your clients are looking for. Only by interrogating your client can you be 100% certain of exactly the skills and experience that is in demand. 

I recently got approached by someone I consider to be quite outstanding, someone I know pretty well. However well qualified I felt that he was my advice was for him to stay put at this point, and alert me only if he was laid off. The market in this particular sector is very unlikely to hire at the current time, so the best advice I could give would be to keep his head down and stay put at the current time.

Focus on candidates who have the skills that your clients are looking for rather than ones who have more generic skills. If you contrast the Singapore & Hong Kong software markets today versus Q1 of this year, it’s clear to see how a candidate who was recently in great demand is currently not particularly of interest today.

Pay very close attention to your 1st interview to placement ratio. If the market has shifted considerably then I would always suggest you re-start the ratio calculation. What applied to a desk historically may not always reflect the desk dynamics today. Keep yourself honest by starting afresh and ensuring your quality hit rate stays where it should  be. 

Work harder and smarter

It’s not really a case of ‘work smarter, not harder’ as I think it is a case of both. Your interview to placement ratio is likely to get worse hence you may need an increase of 20 or 30% in terms of candidates in order to achieve the same revenue outcomes. By definition then you are going to have to work harder and put in more hours. That may be unpalatable but it is correct. 

The working smarter part is really the 5 points in this article.

As discussed, recessions are cyclical so hunker down and see the event through to the end. It is common for recruiters to throw in the towel, but that can be a pretty short sighted approach. You don’t have to look far to see many recruiters who have been in the market for a significant amount of time, hence they have survived a number of recessions over time. All types of industries suffer from recession, not just recruitment. And remember, the grass is not always greener.

If you enjoyed the article, please consider subscribing or following us on LinkedIn to have new articles for recruiters like this delivered directly to your inbox.

One of our desk specialisms is Rec2Rec in Asia, so please feel free to reach out to me or my colleague Cameron for a chat about opportunities in the market.

Categories
Entrepreneurship Finance Recruitment

How much profit does a single recruitment consultant make for a recruitment agency?

Recruitment is an industry where an individual consultant can generate a very high margin for a company, but how much of that goes into an agency’s back pocket?

In this article, we’ll give you an insight into the P&L of a single consultant, what you generate for the company yourself at different billing levels and in different models.

Let’s take a senior recruitment consultant in a boutique with a good commission scheme who is relatively settled 3 quarters into their new role, earning a base of SGD $5,000 per month, performing at the higher end billing 5x their base salary.

This is someone who is most likely above their sales target, as a sales target can typically be set anywhere between 3.5 – 5x base salary.

The commission scheme in the example is based on a threshold of 2.5x quarterly base salary at 30%. The calculation: threshold = 2.5x 15k (base salary) = threshold of 37.5k. Billings of 75k – threshold of 37.5k = 37.5k which is commissionable. 37.5k * 30% = 11.25k.

Quarter 3

P&LQ3
JulyAugustSeptember
Revenue$25,000$25,000$25,000
Costs
Salary$5,000$5,000$5,000
Commission$11,250
Ordinary CPF$850$850$850
Additional Wage CPF$0$0$1,913
Google / Microsoft$17$17$17
ATS$180$180$180
LinkedIn$500$500$500
Zoom$15$15$15
Equipment$100$100$100
Office$500$500$500
Entertainment$300$300$300
Medical insurance$500$500$500
Visa fees$500$500$500
Accountancy$200$200$200
Misc costs$1,000$1,000$1,000
Total costs$9,662$9,662$22,825
Monthly gross profit$15,338$15,338$2,176
Quarterly gross profit$32,852

Very profitable, almost too good to be true hey? That’s because it is! Let’s drill down into this.

The P&L above gives you the numbers for a senior consultant performing well, most likely on the verge of promotion. However, you must consider how long it took for the consultant to become profitable.

Let’s go back 2 quarters to the consultant’s first quarter and look at a run up of 2 months to get their first deal signed.

Quarter 1

P&LQ1
JanuaryFebruaryMarch
Revenue$0$0$0
Costs
Salary$5,000$5,000$5,000
Commission
Ordinary CPF$850$850$850
Additional Wage CPF$0$0$0
Google / Microsoft$17$17$17
ATS$180$180$180
LinkedIn$500$500$500
Zoom$15$15$15
Equipment$1,500$100$100
Office$500$500$500
Entertainment$300$300$300
Medical insurance$500$500$500
Visa fees$500$500$500
Accountancy$200$200$200
Misc costs$1,000$1,000$1,000
Total costs$11,062$9,662$9,662
Monthly gross profit-$11,062-$9,662-$9,662
Quarterly gross profit-$30,386

Where is the revenue? It’s not on the P&L because the candidate only signed the deal in month 2, has a 1 month notice and requires an EP, so the invoice can’t be raised until month 4.

That means the same consultant has run at a loss of -$30,386 for the first quarter of their employment.

Let’s look at the second quarter for the consultant.

Quarter 2

P&LQ2
AprilMayJune
Revenue$25,000$25,000$0
Costs
Salary$5,000$5,000$5,000
Commission
Ordinary CPF$850$850$850
Additional Wage CPF$0$0$0
Google / Microsoft$17$17$17
ATS$180$180$180
LinkedIn$500$500$500
Zoom$15$15$15
Equipment$100$100$100
Office$500$500$500
Entertainment$300$300$300
Medical insurance$500$500$500
Visa fees$500$500$500
Accountancy$200$200$200
Misc costs$1,000$1,000$1,000
Total costs$9,662$9,662$9,662
Monthly gross profit$15,338$15,338-$9,662
Quarterly gross profit$21,014

The consultant has generated 50k in their first 6 months, which is a common minimum target amongst most agencies. Looking at the gross profit of the consultant over their first 6 months (-$30,386 for Q1, and $21,014 for Q2), they’re running at a loss of SGD $9,372.

As you can see from the P&L over each quarter, the profit really only starts to kick in for Q3 and that’s only if the consultant is on target.

Over the three quarters, the consultant has generated SGD $23,480.

Breaking down each line on the P&L

RevenueFee income of consultant
Costs
SalaryBasic salary
CommissionCommissionable income
Ordinary CPFCPF paid by the agency on ordinary wages (base salary)
Additional Wage CPFCPF paid by the agency on additional wages (commissionable income)
Google / MicrosoftFor emails and storage
ATSRecruitment software (e.g. Vincere, Bullhorn etc.)
LinkedInLinkedIn costs (Recruiter Lite, Job ads etc.)
ZoomVideo calls
EquipmentLaptops, mouse, business cards etc.
OfficeCoworking or private office
EntertainmentCandidate, client meetings or team events
Medical insuranceHealth insurance, dental etc.
Visa feesOngoing visa application fees, EP renewals etc.
AccountancyOutsourced accounting services to consolidate financial statements, payroll costs etc.
Misc costsOther misc costs

Net profit and tax

As a disclaimer, this example is focussed on gross profit and not net profit. It does not include corporate tax. If the agency is operating in profit, you can deduct another ~17% (this is the standard flat corporate tax rate in Singapore, but the figure will change depending on your jurisdiction).

Where is all that profit going?

It’s true, high performing recruiters are very profitable for an agency. As you’ve seen, there is a ramp up period before becoming profitable, but why do they not earn more commission if the profit in a good quarter is so high?

Preparing for a bad quarter

This is one quarter of profit, but the recruiter is still relatively new to the business in quarter 3 and may not have a profitable quarter 4. It can take a year or two to get to a level where billings which are consistently strong every quarter. That profit is there to support the consultant during a bad quarter.

Non-billing functions

The P&L above is based on a boutique. They do have non-billing costs such as equipment, visa fees, accountancy etc. If you’re working for a global agency, they will have much higher costs to support consultants that reduce the profit per consultant. Some examples of these costs are non-billing support, such as office managers, marketing managers, learning & development, non-billing managers, senior leadership and so on.

The more investment in non-billing functions, the higher the cost per consultant. Larger firms with a strong platform can enable you to bill more, and they can counteract their higher costs for non-billing functions by reducing earnings on commission schemes.

Underperformers

The P&L is based on one single consultant who is performing well. In reality, there will be other recruiters in the business not performing as well, running at a loss. The company needs the profit to invest in supporting others in the business.

The typical split between strong performers, average performers and underperformers is a third each. The boutiques will have a higher percentage of consultants performing well because they tend to hire more experienced recruiters, whereas the global players will have a lower percentage performing well because they need to train consultants.

Building cash reserves

During times of uncertainty in the market, major events can disrupt business as usual and take a hit on profit.

The best example of this was Covid-19. For a period of roughly 3 – 6 months, hiring nearly came to a standstill and agencies had to eat into their cash reserves to grind through.

Another example could be the economic outlook in 2023, the shift in market will affect the billing of consultants and a company must be prepared with cash reserves to deal with that.

Growth

Last but not least, growth! Unless it’s a lifestyle business, the agency can use the profit to invest back into the business to hire new consultants, launch new desks or even offices.

Disclaimer

The P&L above is purely illustrative and does not include every cost a recruitment agency incurs on one consultant. The jurisdiction in which an agency is registered to will also have an effect on costs when it comes to net profit, such as tax, pension funds and so on

I am by no means an accountant and my knowledge only goes as far as running management accounts for a small business!

Do you want to learn more about recruitment entrepreneurship?

As the Co-Founder of Vocay, I have overseen the P&L of a small business and I love blogging about entrepreneurship, especially in the field of recruitment. My business partner, Roger Smart, built Charterhouse Partnership from zero to 180 recruiters across 5 offices and he also writes articles about his entrepreneurial experiences.

If you’re interested to learn more about recruitment entrepreneurship, and if you found value in this article, please consider subscribing or following us on LinkedIn to have new articles for recruiters like this delivered directly to your inbox.

I also specialise in recruiting recruiters for agencies in Singapore, so please feel free to connect with me on LinkedIn for a chat.

Categories
Market insight Recruitment

How recruitment agencies are structuring their work from home & remote schemes in 2023

The world of work has changed drastically over the past 3 years and recruitment is no exception to that. Prior to the pandemic, most agencies required their employees to work in the office but the landscape today is completely different.

Big tech companies have offered a work from anywhere policy which dominated the headlines on the topic in 2022. Due to the sales-based nature of a recruitment role and the need for face-to-face meetings from time-to-time, it has been one of the more complex industries to navigate when it comes to creating a structure that works for everyone.

The working environment of agencies today can be categorised into 3 environments – fully remote, hybrid and office – but which category do recruiters like the most? There is no simple answer to this one, every person is different and this has created what can be considered a divide in opinions.

Here is an overview of how recruitment agencies are approaching their work from home strategies in 2023.

1. Work from home or work from anywhere

Some agencies offer a fully remote or work from anywhere structure. This is more common in smaller boutiques who operate flat structures and hire experienced billers, with established networks, who are able to work independently.

At this level, the recruiter will have a network that requires less face-to-face interaction, due to their existing track record with clients.

If the recruiter is a manager, they may find it challenging to manage a sales team remotely if the team are relatively junior or new to the job. If the team is more experienced, management can be more straightforward.

Some recruitment leaders, especially in the larger agencies, aren’t for this structure as they feel they start to lose some of that high energy sales floor culture, which is why they would prefer employees to have a hybrid structure.

Other recruitment leaders use this structure as a key attraction to join an agency, especially the boutiques, as some of the larger agencies aren’t able to offer it. It’s also popular on the employee side for recruiters who want full flexibility, but not for everyone which we will explain later in the article.

2. Hybrid structure

This is the most common structure in agencies today.

What we see most often is that employees have about 2 days at home and 3 days in the office. They generally tend to keep the days the same for everyone, so there is team interaction on the days employees are in the office.

Some managers would also offer the work from home or anywhere option up and above the hybrid structure, if the consultant is hitting billing targets.

Some agencies also manage how many days a consultant has at home by seniority. For example, a Principal Consultant may have more days at home than a Consultant. Managers may also be required to be in the office more often for training and fostering a team culture.

3. On the sales floor

A handful of agencies have returned full-time to the sales floor. This is more common in mid to large agencies who have high growth plans or agencies who hire employees with no recruitment industry experience. This is typically because the agency can manage closer and deliver training more effectively.

Some recruiters may favour this environment, especially those who worked in the industry prior to the pandemic as they’re used to the buzz of a busy sales floor and that’s what they love.

We still speak to recruiters who ask specifically for an office environment for the reason above, although most recruiters prefer a hybrid option.

Based on performance

In most agencies, recruitment managers base flexibility on performance. For example, if there is a performance issue, or if a consultant requires more training, face-to-face tends to be the preferred method for managers so they will call their employees into the office.

One size fits all or at the manager’s discretion

Some agencies have a ‘one size fits all’ structure for everyone, whilst other agencies delegate the decision of how they structure it to the leader of the team and what that particular manager wants to do.

Juniors require more training and face time

Although agencies have always hired recruiters without prior experience, this is becoming a go-to model in 2023 due to the scarcity of recruiters, compared to the availability of graduates.

Agencies who hire juniors are much more likely to require a consultant to be in the office full-time during onboarding to soak up the key fundamentals of recruitment.

Structures may change

The landscape is changing constantly and in some countries there are still lockdowns that may disrupt a model that has been put in place recently.

Not only Covid-19 affects a structure, but any shifts in the market, such as economic conditions in 2023. A shift in market conditions will require some level of training to adapt successfully.

Most working environments may change from time-to-time depending on this, but also the situation and needs of the business.

Which is the best and what agency offers one of these structures?

There is no simple answer to this one, every recruiter has their own preference and working style as to what works best for them. My advice would be to discuss how the agency structures their scheme during an interview process and assess how you feel about it.

Make sure you’re not closed off to change. A structural change in your environment will happen at some point in the future and it’s best to keep an open mind. You can talk to your manager to discuss your feedback on the change and how that affects you personally. Worst comes to worst, you can move agencies.

If you’re interested to know what agency has your preferred structure, feel free to connect with me on LinkedIn and we can have a chat.

If you found value in this article and would be interested to be kept in the loop on trends in the recruitment industry, please consider subscribing or following us on LinkedIn to have new articles for recruiters like this delivered directly to your inbox.

Categories
Moving jobs Recruitment

5 reasons to join a recruitment agency startup

Joining a startup is perceived to be risky for a number of reasons. The challenges that come with it are immense, such as starting a desk with no candidate or client base or working for a brand with no reputation.

The risk of failure, both as an individual recruiter and collectively as a business, can be far higher compared to joining an established consultancy. So why should you, as a recruiter, take such a leap?

Offsetting the risk is the reward that could come with joining a successful startup and there are, in fact, some convincing reasons why you should join one.

Jump forward 5 years in your career

By joining a newly formed agency, a recruiter can jump ahead by a number of years in their career. In the early years of Charterhouse, I hired an Associate Director into a Managing Director role and over a small number of months, he ended up running a team of 80 people.

Being part of a startup can mean becoming a bigger fish in a smaller pond. You will have a substantial influence on strategy and decisions from the outset. Early joiners will also have a significant impact on the culture and the eventual success of a startup. They write the story of the brand from day one.

As a founder that has seen meteoric growth, I can confidently say that the sharpest memories, and indeed the best resultant war stories, reflect the early days of the startup phase. After all, every business was once a startup. It’s simply a phase in the history of a business.

Take the opportunity to join a startup and jump ahead in your career, influence strategy and nurture a culture.

Make substantial money

Most founders understand the importance of overcoming concerns that potential joiners will have, and often this benefits a recruiter’s income when joining a new firm. There are two ways to ensure your income will grow:

  1. Obviously, you are in a position to negotiate a very competitive base salary. I can only speak for myself, but I can confidently say that I was always prepared to offer a competitive increase on base salary. After all, I wanted to attract top recruiters from my competitors whilst mitigating the perceived risk of moving to our startup. It’s not a long-term strategy, but it is one employed by a number of well-funded recruitment startups.
  2. A startup is also likely to have a very competitive recruitment commission scheme, and certainly one that is designed to both attract and retain recruiters. This is a long-term strategy.

The combination of a competitive salary increase coupled with a very exciting commission scheme goes a long way to alleviating concern of risk.

Build your own desk with limited restrictions

A startup could offer an increase in candidate and client exposure. If you contrast a global firm’s structure with a newly formed business, you may have some restrictions in place such as a salary band or candidates you can’t approach, account managers with ownership over clients or even restricted to working roles based in certain locations of Singapore.

In a startup, very few constraints exist when it comes to the above. There could be flexibility to work a desk you’re really passionate about that no-one is recruiting in, or filling a role in Hong Kong but based in the Singapore office.

On the flip side, you will have to develop clients and relationships from scratch. It’s about as tough as it can get, but it could be worth it in the long-term and you would have picked up some great experience along the way.

Become a future entrepreneur

I think this may be a surprising one to recruiters or founders reading this article. Recruitment is an industry with low barriers to entry and some entrepreneurial consultants desire to form their own startup. What better way can there be to prepare by joining one yourself?

For me, I have always been realistic about the fact that some recruiters will leave you to form their own businesses. I think only an insecure owner is worried about this, simply for the fact it’s going to happen anyway, whether you like it or not.

I can promise you one thing from my experience. Startups are not always what you expect. Running a desk, recruiting, is just one part of it. A vital one for sure, but there are so many challenges to running a new business. It’s a long list of things not many people think about. It includes everything from software selection, accounting, cash flow management, HR, internal recruitment, admin etc. It’s a very long list!

Focus on building your desk but observe all the other factors that will be going on around you. Most of these functions will be fully visible in a small startup.

Flexible environment

This is relevant in the aftermath of COVID-19. So much has changed in the past 15 months and I doubt anyone could have predicted just what was coming and how it has changed the way we work.

Recruiters have had a taste of working from home, relaxed dress codes, greater freedoms, family lifestyle flexibility and an increased reliance on remote technology.

Startups more often than not can offer some of these flexible benefits that may be attractive to recruiters.

What this all means

Taking into account that the startup founder is someone who has demonstrable experience, whilst acknowledging there is a level of risk, there can be very tangible benefits to joining a startup for the right people.

There are of course many challenges to joining a startup, which I will cover in another article.

Whether it’s right for you or not depends on you personally: what motivates you, your approach to recruitment and what you’re aspiring to achieve in the future of your career.

Please do not hesitate to connect with me on LinkedIn for some advice and career opportunities within the recruitment industry.

If you enjoyed this article, please subscribe for next week’s or follow us on LinkedIn to keep in the loop.

Categories
Recruitment

Can recruiters be successful with zero KPIs?

As agency recruiters, we all encounter KPIs in some shape or form throughout our daily professional lives. Agency culture is often driven, and sometimes even defined, by the extent to which it’s considered to be a ‘KPI focused’ environment.

KPIs are Key Performance Indicators. A quantifiable measurement of actions undertaken by a recruiter on a daily, weekly or monthly basis. They are designed to measure and evaluate a recruiter’s activity, performance and success.

Deploying a KPI-driven strategy works well with some recruiters. It helps them stay structured throughout the day, making sure they’re completing the right level of activity that will lead to success in that specific model. Other recruiters associate the acronym with negative connotations. Some recruiters don’t work well following one specific set of targets and would prefer to conduct the activities autonomously that they feel will lead to more revenue.

In recent years, the small to mid-sized agencies – especially startups – have moved towards a culture that is more focused on revenue generation over other intricate measures such as phone hours, but can a recruiter really be successful with zero KPIs?

Common KPI measurements

KPI measurements can vary depending on what the firm wants to measure, but these are the common ones. Our focus here is on permanent contingent recruitment.

  • Phone calls – the total number of outbound calls a recruiter makes
  • Candidate interviews – how many candidates a recruiter meets
  • CVs sent – a measurement of the number of CVs sent out to clients
  • First interviews – the number of first interviews conducted between a candidate and a client
  • Subsequent interviews – second and subsequent interviews between a candidate and a client
  • Placements – the number of physical placements made over a period of time

There are others, such as time spent on the phone, but from my experience these are the ones employed by the majority of contingent recruitment firms. This is the case for Hong Kong & Singapore, but equally applicable to New York or Sydney. 

What circumstances are likely to lead to a greater emphasis on management by KPIs?

The question is: can recruiters achieve success without having KPIs?

I thought it would be a useful exercise to explore which environments see the highest focus on KPIs.

The recruitment model

The most common one. Some firms are simply KPI-orientated. Robertson Smart was overtly KPI focused. I am sure there are those out there that remember PCX and CPE?

In my recent article about what distinguishes a top biller from the herd, I reflected on the fact that we used to hire recruiters directly from industry, hence they had no prior recruitment experience.

We employed KPIs vigorously as it was a way of keeping the inductees on track. The methodology was totally alien to, say, a trader or a lawyer, hence we used KPIs to maintain adherence and control.

Training

If a global recruitment firm had a strategy of hiring entry-level graduates to train up or if a firm has a vigorous training program then you would expect a similar approach.

The more experienced a team is, the less the reliance on KPIs. There are of course exceptions to this. The actions measured by KPIs also do not go away but the adherence to activity and quality levels simply becomes second nature.

Management

Managers come in all shapes and sizes. There are managers who adopt KPIs as the core method by which they manage a team.

I began my career that way. My early mentors drilled KPIs into me to the point it ran in my veins. Over time, however, I learned that this is often a very unpopular management style and can often be very demotivational.

Managers must always use KPIs subtly and as a way to guide, mentor and train and never as a blunt instrument to bash a recruiter over the head.

I am talking figuratively, but management by KPI tends to lead to the negative connotation we talked of earlier.

How can KPIs be used positively?

Revenue is king

We adopt KPIs with a view to ensuring that recruiters conduct a level of activity that leads to end results in the form of revenue. 

If a recruiter is 100% on target for a period then surely that is the most important thing? Some firms look at targets beyond revenue, even if the target has been hit.

There is an argument to say that you could have achieved greater revenue if you had achieved other non-revenue related targets, but there is also a counter argument to say if you did that, you may have affected the quality of your conversion rates and lost revenue.

My rule in this scenario became simply that revenue was the most important thing.

Carrot or stick

When a manager uses KPI data to help and guide a recruiter, it is far more positive than using bad KPI data as a stick.

The most important thing for me as a manager is to focus on the ratios, not just the numbers. If a manager tells the team that each recruiter must get 20 CVs, they will send 20 CVs out. Quality will suffer as quantity has taken over. Far more positive is to learn what percentage of CVs sent leads to a successful first interview being set up.

Trend analysis

This is the sophisticated and far more interesting aspect of KPI measurement. However successful or experienced we become as recruiters, we will stay occasionally stray, lose focus and take our eye off the ball.

Trend analysis over time is a very useful tool for spotting this. It may be that the market is changing and you were not aware.

What if, for example, your interview to placement ratio was declining, or indeed improving. Wouldn’t you want to know?

For me, personally and managerially, my absolute most important measurement is the first interview to placement ratio. It is the ultimate measure of the quality of consultative work you produce.

So, can recruiters be successful with zero KPIs?

Yes and no.

Trainee recruiters with subtle, positive and professional KPI management are far more likely to fully understand their art, and to be ultimately successful.

This is true also of experienced recruiters changing agency models. Over time, as the business becomes more like second nature, then an experienced recruiter will adopt the right level of activity quantity and quality.

For the most part that is true. That said, we have all managed many recruiters who do need fairly consistent motivation and discipline. I think these individuals are quite open to this.

I was talking to a great recruiter the other day, and he told me he would always opt for a tough but motivational manager. He openly said that if his manager was ‘soft’, he would not perform as well. 

In my last article, one of the five top billers used to keep his own personal and meticulous KPI records, and these were independent of the ones we kept for him. I recall he even went further and measured his subsequent (second and third etc) interview to placement ratio. We discussed this and I felt that measurement had little validity. I felt that the decision to interview based on the CV coupled with the first interview to placement were the key metrics but he wanted to take it further. Though he was a top biller, he was a very detailed and numeric guy and saw the value in it.

Subtle, professional and motivational KPI management keeps us honest. This applies to the graduate recruiter on day one of their career, and equally to one of the very biggest billing recruiters I have ever worked with.

Embrace the science of recruitment KPIs would be my recommendation.

Consider an agency that adopts a different KPI model

If this article has helped you decipher that your KPI management doesn’t work for you, please do not hesitate to connect with me on LinkedIn for some advice and career opportunities.

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Categories
Recruitment

What salary increment should you ask for when moving to a new recruitment agency?

When it comes to moving to a new agency, although salary isn’t commonly a primary driving factor, it still plays a critical role in enticing a recruiter to make the final decision and accept an offer. Let’s face it: no one wants to move for the same or less money whatever the opportunity.

How much of an increment you get when you move to a new agency depends on countless factors and every situation is different, but these are often the three most important factors: your billing track record, desk experience and current salary.

Unless you are majorly over or underpaid (find out in our salary guide for Singapore and Hong Kong), the average salary increment when moving to a new agency is between 10 to 16% but what exactly should you ask for in your situation?

In this guide, I will share some of the ways you can determine whether you should be looking for more or less than the typical 10 – 16% increment.

*Junior recruiters will receive higher percentage increments even if their salary increment is the same as more senior recruiters. See the end of this article for a disclaimer on the percentage increase calculation.

Your billing track record

Your billing track record is the first thing an agency will look at when it comes to figuring out whether they’re going to offer you your desired salary and it’s one of the best ways you can determine whether your offer is fair or not.

The golden rule to running a profitable recruitment business is ensuring your recruiters are billing over 3x their base salary, also known as the third rule. A third of your revenue is used to pay you (we recently calculated the exact figure was 32% on average including commission), a third is allocated to operating cost and the final third goes into a pre-tax profit.

As a recruiter, that means if you’re billing above 3x your base salary, which is typically when commission starts to become payable, hypothetically you’re earning a profit for the company.

If you’re billing above 4x your base salary, you’re a strong performer and it’s very likely you should be aiming for an increment in the 10 – 16% range.

If you’re billing over 5x your base, you’re an exceptional performer and you may be able to leverage a salary increment above 16%.

If you’re billing less than 3x your salary, whether it’s because you’re new to your agency, the environment just isn’t for you or you feel you don’t have a strong enough platform, it will be challenging to secure an increment based on the third / third / third rule. This is quite common.

There are many recruiters working for agencies where they are unable to release their potential for one reason or another. Your next agency will hire you if they believe in your drive and ambition but you will need to prove yourself before you secure a decent pay rise.

There will be exceptions to the above. Some agencies explicitly offer an option to take a below market rate base salary but with an improved commission scheme and in this scenario the above would not be applicable.

The practice you’re joining

If you’re moving to specialise within the same practice you already have experience or a network in, in theory, you will be able to make a placement faster than someone who doesn’t have that, leaving you in a stronger position to secure a higher salary increment.

Additionally, if you’re recruiting in a practice where recruiters are scarce, you will also be in a stronger position to leverage an even higher increment. Examples of these practices are specialised Data Science Technology recruiters, Finance Insurance recruiters, Private Practice Legal recruiters, SAP Contracting recruiters and so on.

If you’re in a fortunate position to have earned the experience as well as specialising in a niche practice, combined with a strong billing track record, then you have more bargaining power and there’s a good chance you can negotiate an above average increment (above 16%).

If you’re changing practice to a market you’re passionate about, your new agency might be happy to make an investment in you, but naturally you will need more time to become profitable. In this case, if your billings are between 3 to 4x your base salary, there’s a chance the agency may not want to offer an increment above 10% or at all. If your billings are 4 to 5x your base salary, you should still be able to secure an increment.

Your position in the new agency

If your new role in the agency plays a crucial part in the long-term vision of the business, you’ll be in a stronger position to secure an increment above 16%. Most of the time, this position will be in management where you are leading a team of recruiters or if you have some level of P&L responsibility.

It’s harder to find specialised managers than it is individual contributors (IC) because of the number of candidates available in the market, so if you are an IC, you may find it more difficult to secure an increment above 16%.

With that being said, going back to the earlier point about having experience in a scarce practice – as an IC – although you’re not managing, your network is such a rarity that agencies would go head to head to compete. Secondly, as more agencies become more lean, ICs are in higher demand. Some agencies even overpay to secure the best in the war for recruitment talent.

Your current salary

This is a controversial topic. Some people believe that employers should not look at a candidate’s current salary when drawing up an offer. Instead, it should be determined by their track record and experience.

In reality, the above is not practiced by many companies and the agency will 9 times out of 10 ask what the current salary is of a candidate so they can get a better understanding of what they will put forward as an offer.

In a situation where you are underpaid in your current role, by say 30%, most agencies will recognise this and they will offer you a salary that is more in line with your experience.

Additional situations where an increment is typically not offered

There are some additional situations where an increment is not offered or perhaps a reduction in base salary is offered.

International relocations, for example. It’s similar to when you change practice – you’ll need more time to build a network to generate revenue to justify your salary. Unless your track record is very strong, matching your base salary when moving internationally is common.

Short tenure in your current role (<6 months) is another example. An employer will not want to offer an increment if you’ve been in your current role for less than 6 months and you haven’t had a chance yet to showcase your potential.

Lastly, adverse market conditions is another common situation. Your new agency wants to make the hire but they can only get budget approval for a matching or lower base.

Combine two or more of the above, such as an international relocation during a recession, and there’s a good chance you’ll have to take a salary cut for the time being.

Make sure your demands are ‘morally’ appropriate

Whilst it is a good thing to aim for slightly above what you’re worth for negotiation purposes, there is nothing worse for an employer when receiving a highly unrealistic salary expectation demand from a candidate.

Of course, there will be some rare situations where a 30% increment is highly justified. For example, if you were billing 6 – 7x your base salary or if you are massively underpaid. If you’re billing less than 3x your salary and you’re looking for a 30% increment – sure, it’s very likely you have the potential, but the employer will need to invest time and money into developing you as a recruiter. Your expectation may come across as uncommercial.

On the contrary, the same goes for agencies when they lowball a recruiter. An unretractable sour taste is left in the recruiter’s mouth and more often than not the process is unrecoverable.

All in all though, you should be transparent and realistic about the figure that you share. The best way to approach this, whatever the situation, is to pick a figure that you’d be quietly surprised about getting if you were offered it, but realistically you’d expect that figure to get knocked back once. Be slightly ambitious but not outrageous.

This way, the figure you end up with is going to be fair to both parties and either way, you’ll be happy with the outcome.

Knowing what is right in your situation

There are so many factors to take into consideration when it comes to determining what you’re worth. Every situation is different and must be analysed separately but by looking at your billing track record as the number one factor, your experience as the second and current salary as the third in that order of importance, you should be able to come up with a figure that is fair on both parties.

It’s a tricky one to get right. My parting advice would be to be slightly ambitious but not outrageous. Never sell yourself too low!

Are you unhappy with your current salary? Please do not hesitate to connect with me on LinkedIn for some advice and career opportunities.

Next, it’s time to figure out if your commission scheme is competitive enough!

Disclaimer

It’s important to note that the more junior you are, the higher the percentage increment may be, even if you receive the same increment as someone who is a Manager.

For example, an increment from Consultant to Senior Consultant in Hong Kong could be from HKD $25 to 30k per month which equals a 20% increment, whilst a Manager going into Senior Manager could be from 50 to 55k per month which equals 10%. The amount has increased by 5k in both situations, but the percentages are quite different.

For the sake of this article, we calculated the average increment for all seniority levels, from Associate Consultant to Managing Director.

The percentage increases discussed are also relative to normal market conditions.

Categories
Recruitment

What distinguishes a 1 million dollar biller from the herd?

Hitting the SGD $1 million / HKD $6 million mark in recruitment is a monumental achievement that belongs to a handful of legendary recruiters.

I was asked recently how many million dollar recruiters I had managed in my career.

Some billers did very well in a particular year, but not the following year. For the sake of this article, I began to think about recruiters who, on more than one occasion, billed over a million dollars in a year.

The biggest billers we had were in the Robertson Smart days. Interestingly, that led me to some insightful conclusions when thinking about what exactly contributed to someone becoming a million dollar biller. 

Five 1 million dollar billers is the answer to the question. Three were based in the Singapore office and two in Hong Kong. Of the five, four are still active in the industry and sadly one is no longer with us. They are a mixture of nationalities and currently residing in three different countries.

It got me thinking about what it was about these 5 individuals that enabled them to bill so much and so consistently. What exactly did they have that separated them from the herd?

This was a tough one, but when I got thinking, I found some similarities in each individual.

Direct from industry and specialisation

This was perhaps a surprise. Of the five, only one was working in the recruitment industry before they joined Robertson Smart. Three were bankers and one was a lawyer. I think this needs some explanation.

The Robertson Smart strategy, from inception, was to hire industry experts and not to hire recruiters. This had two driving forces. Firstly, there was virtually no ready supply of recruiters in Hong Kong and Singapore at the time. This scarcity still exists to an extent in today’s market. Secondly, the strategy was designed to penetrate very senior levels of search business but by employing a broadly contingent model. It wasn’t uncommon for our contingent recruiters to sell retainers.

Was this a factor in those four individuals billing such high levels of revenue? Yes, one hundred percent. Crudely put, we used to say it was easier to teach a banker to recruit than teach banking to a recruiter. The same for a lawyer. They came into recruitment having often been successful in equally competitive businesses. These individuals had instant access, credibility and expertise. That was overlaid with a very solid induction and training programme which helped to attract top talent to a newer brand.

The combination of these elements meant that very credible recruiters were approaching a candidate base that had common senior experience. Resultant fees were big. From memory, the biggest single fee deploying this approach was north of USD $630k. Difficult to believe, but true nonetheless.

Direct from industry is a model that is still very commonly employed in today’s market as more firms appreciate the benefit of being a specialist. It’s easy to see why.

Others who didn’t come from industry, such as the one biller of the five who came from recruitment, who spent time learning their market inside and out, were very successful too.

Methodology and access to senior executives

I touched on methodology above but it’s worth digging a bit deeper. As mentioned, the broad strategy involved identifying lawyers and bankers, for the most part, but we were open to any industry professionals. Traders covered trading, private bankers covered private banking. We had an ex-hotelier covering hospitality and a qualified accountant covering the accountancy and finance function.

The point is, however, that this was a contributing factor in creating above average fees. Recruiters would join the business with zero experience, be encouraged to widely network and meet candidates who were, first and foremost, industry and professional peers. In tandem with the candidate networking, the recruiters were encouraged to meet clients.

The inductees more often than not had zero recruitment experience. If that was the case, how could we have let them loose on their own so early in their recruitment career? This was never a problem. Imagine a qualified lawyer, turned recruiter, networking with a number of lawyers who were both clients and candidates. They were armed with the right set of questions and were clear on the objectives of each visit.

They were taught to try and spot opportunities of a logical connection whilst not being coached simply to look for and fill specific assignments. This worked exceptionally well with what I came to call a ‘bolt-on’. A bolt-on sector is one where a firm is open to hiring additional heads regardless of whether there is a vacancy or not. Two perfect examples are private banking and fee-earning lawyers. Clients could and would simply push the desks aside to create space for another one, figuratively speaking.

In this scenario, it is quite easy to see how rookie recruiters could, sometimes instantly, be transported into high fee opportunities very early on in their careers. Of course, the starting point was at such an elevated level that it often would only go upwards, culminating in a million dollar biller.

The above is not the full story though. Not every recruiter who made this move was successful; recruiters needed character, too.

Character and motivation

Was there a similarity in character of these individuals? Was there something else on top of their career backgrounds and access to senior networks? Absolutely.

When I visualise the five, most were – to some extent – a lone wolf character. Highly engaging, intelligent, fun and challenging individuals but each had a very internal focus. They were all highly money and goal orientated.

They came to work, to work. They would get their heads down and get on with it. I would never have to talk to them about activity. No need to even bring up KPIs, except perhaps as a way to demonstrate what high levels of activity could mean to your personal billings and income.

I recall that the four of them who came from industry (and not recruitment) were utterly invested in the training and induction program. They did not see it as an irritating training ritual, but rather something to learn from and use to their advantage.

They were all with us for over half a decade

Two of the million dollar billers stayed with us for a decade and the remainder over half a decade. They were colourful characters and there was never a dull moment. They carried themselves very well and enjoyed, I am sure, the prestige of being the superstars of the time.

Long tenure is a sign of stability. These were amongst the most headhunted recruiters in Singapore and Hong Kong. So many firms tried to attract these recruiters away from us, but a number of boxes had to be ticked in order to achieve this. For these individuals, it did not seem to happen.

A very lucrative commission scheme contributed to this success, one that I like to believe was not beaten anywhere in the market at the time. It was not the sole contributing factor, though. I will cover that off in another article in the coming weeks.

Combination of factors

The factors of specialisation and methodology, combined with a certain character, led to the successful development of million dollar billers.

I am very certain of this and it is well worth mentioning that this approach developed many scores of top billers in the half million mark over the years as well. All were equally welcome – I can assure you!

Join an agency where you can become a top biller

If you’re a recruiter in today’s market, we’re working with over 20 agencies who have successfully developed top billers through learning & development programs.

Please do not hesitate to connect with me on LinkedIn for some advice and career opportunities.

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Categories
Recruitment Training

How a contingent recruiter can successfully deliver a retained assignment

Last week, we discussed how and when a contingent recruiter could seize the opportunity to sell a retained search in a number of different scenarios.

If you have managed to close one recently, congratulations! Now it’s time to successfully deliver to earn the remainder of the fee.

You have pitched for, and won, the retainer on the back of the work you have done to date, coupled with a valued relationship you have built up with your client over time.

Delivery is vital. Now is not the time to mess it all up. The good news is that you don’t need to. The beauty of retained work, for me at least, is the combination of methodical planning, managing expectations and collaboration.

In this article, I will outline five key steps you can take – drawing upon personal experience – to ensure you perform to the highest industry standards.

Set very clear expectations and deadline dates

Let’s jump back a step. Prior to winning the retainer, you would have conducted some initial research.

I won a retainer to identify a CEO. I won’t mention the sector, but the role was based in Karachi, Pakistan. This was an example of a request from a usually contingent client. They wanted me to research the market, identify a longlist, approach them and then jump on a plane to interview face to face.

Each search has very specific challenges. Research fully and understand what the specific challenges will be. In this one, the challenges were that I would need to connect with individuals who would be very tough to contact and then I would have to jump on a plane to meet them.

In the proposal to the client, be extremely concise but realistic about timelines for delivery, interviews, offers and placement. Are there any major holidays that will delay things? Is your client very tough to tie down to an interview time? Factor all of this in and before you win the retainer. Walk the client through the process step by step so both of you are very clear on deadline dates and expectations for the search. The scene is set.

Prepare the long list before approaching

Assuming there is no real urgency, I always suggest to hold off on reaching out to any candidates until you have completed the long list. I always include in the search brief the need to identify candidates that are possibly slightly too junior for the role as well as candidates who are possibly slightly too senior for the role. Leave no stone unturned.

The slightly junior profiles can surprise you and are often ready to step-up. The more senior ones are usually very happy to refer candidates for the search. I would always approach the senior profiles very honestly and tell them that I am looking for referrals. It works a majority of the time.

When I am working on a retained assignment I am always very transparent with clients, and usually I would request a meeting, face to face if possible, so we can discuss the parameters of the search. Do you both feel, at this very early stage, that the list of search profile targets is on point? It is especially important to call out any surprises based on what the expectations were when the search started.

How long is a longlist then? That is a ‘how long is a piece of string’ question. The rule of thumb is that the list generally ends up being longer than you first envisaged. In the Pakistan CEO example above, I guessed it would have been just ten, but it was in fact around twenty five. Typically, however, my longlists have been approximately fifty to sixty names long. In the Tobacco Country Manager example in the last article, the longlists were massive as the client asked me to target pretty much any FMCG business, and not to focus purely on Tobacco.

Prioritise by identifying those candidates who meet the specifications most closely and then work backwards. This can be a common mistake, and I made it – I did not prioritise Tobacco first. Instead, I took a blanket approach which meant I wasted a lot of time mapping profiles we would never need to contact.

Take a very systematic approach

Take a breath…this is not contingent search! You may reach out via your research team or you may do it yourself. I generally take a three step approach. I put a couple of paragraphs together, outline the job and ask if there is any interest. If there is, I would often send a job description for them to study. If they declined to proceed (and for reasons that I also agreed with) then I would often ask for referrals. If I did not agree with their reasoning or if they were keen, I would progress things to a phone call and eventually face to face if circumstances (hello, COVID!) would allow.

At this point, you have built a significant relationship longlist, you have reached out to the individuals on the list and you are beginning to meet candidates. This soon becomes what I call the long shortlist. The long shortlist is the narrowing down of the most qualified and relevant candidates for the search. In a search I conducted in March of this year, my long shortlist contained around twenty individuals. One third of them I felt were spot on, one third were very close and the final third we were on the fence about. Usually you can safely prioritise the candidates in the order of relevance.

It’s time for the client to meet candidates. If possible, get the client to block off some fixed times in the diary. Ideally, block off a couple of days and set up the interviews. By approaching it this way, you can do a far better job of managing the process, the client is in a similar frame of mind across the interviews and the flow of the assignment will continue. This is far more preferable than having interviews strung out over a number of weeks.

Maintain high energy levels and keep up the momentum

Some retained searches are very straightforward. In my experience, more are than not. Some however can go array. Things can go wrong for a number of reasons, for the most part though, this usually happens if the client’s expectations are out of kilter with the candidate base. This should be identified in the initial research but not always. 

The job is not completed until it is completed and the successful candidate has taken the role and has started with the client. Occasionally, a client will suspend the search before it has been finalised. There are a number of reasons for this. I have known of cases where an internal candidate asked to be considered for the role and another where a candidate who had previously declined the role changed his mind. Sometimes the client simply has a change of mind or strategy. 

Always keep up the enthusiasm levels and momentum however hard it gets. That is how you win the second retainer from the same client!

Arrange a regular feedback session with the client

A great trick is to arrange a regular call with your client. It helps to keep both parties honest. Ideally this would be a weekly call where you discuss the progress of the search, the problems you are facing and the candidates you are proposing. 

There’s a lot to do when it comes to delivering a successful retained assignment, but the more retainers you sell, the more practice you’ll get and the better your reputation will be with your client – to the point where you might want to transition into retained search permanently!

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Lastly, if you’re exploring recruitment opportunities in Asia, please do not hesitate to connect with me on LinkedIn for some advice and career opportunities.

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Categories
Moving jobs Recruitment

How to find the right recruitment agency for you

If you’ve been recruiting for a few years and you’ve started to experience early signs that indicate it’s time to explore the next step in your career, you might be wondering how you can shortlist agencies that would be the right fit for you.

As a recruitment to recruitment consultant at Tiger Partners and now Co-Founder at Vocay, I have spent 4 years of my career speaking to recruiters every day to understand their motivations behind a move to a new agency. From these conversations, I would suggest a list of agencies which I felt were a good fit for the recruiter.

What should you think about when choosing your next recruitment agency and where will you find these agencies? In this guide, I will share my advice about how you can determine what agencies are a good fit for you and where you can get started with your search.

Choosing a practice

As a recruiter, you will have developed a network within your practice whether you are a generalist or specialist. The first consideration to think about is whether you want to continue specialising in your practice or whether you want to move into a new one.

If you’re a specialist, the advantages of staying in your niche are obvious. You have spent months or even years building a network and trust with clients. By staying in your specialist area, you’ll be able to build upon your existing network in your new agency and hit the ground running.

If you’re a specialist but you just don’t find your market interesting, it might be time to consider changing your practice. Being successful in recruitment is all about being fully motivated. If you’re not enjoying recruiting in your practice then your motivation and performance will suffer as a result of it. If you change practice, there is no doubt it will present a steep learning curve but if you’re motivated and you have a long-term outlook, it might be time to take the plunge.

If you’re a generalist, you’ll have to decide if you want to continue being a generalist or if you want to become a specialist. Most agencies in the recruitment industry are specialists or are becoming specialists as it allows consultants to become experts in their field and well-networked.

Start by choosing a function

Getting into the nitty gritty, you should think about your functional specialism. Are you a Tech recruiter specialising in Software Engineering or are you a Tech recruiter specialising in Sales? Both functions involve working with very different candidate profiles although they’re both in Tech.

Be self aware about your personality when choosing a function. For example, one question you could ask yourself is: do you work better with reserved, more introverted candidates or would you prefer to work with extroverted personality types?

Choose an industry

In addition to thinking about your functional specialism, you should think about the client base you would like to work with. Some recruitment desks may specialise in the same function, but two consultants could be covering a totally different client base. Do you want to place Marketing professionals into Banks & FS institutions or would you prefer to place Marketing professionals into E-Commerce businesses?

Choose a perm or contracting desk

Perm and contracting recruitment is so different but which one should you consider?

Perm recruitment involves a lengthy or slow-paced process, between 1 – 3 months of developing a relationship with a candidate with a chunky fee at the end of the process. The fee is a one off and you’re on to the next one after that.

Naturally, permanent recruitment can involve developing more in-depth relationships with candidates over a long period of time as positions take longer to fill and finding the right candidate can be very complex.

On the contrary, contracting recruitment involves a very short and rapid process, quick turnarounds between 1 – 14 days and high volume. The fee is a margin on the candidate’s monthly salary and is often paid in monthly instalments. It’s a smaller amount of revenue at first compared to perm, but there is huge potential to build up a book of recurring revenue.

Contracting is a fast growing business in Asia. During COVID-19, the solution has become handy for many organisations taking a cautious approach to expansion. Professionals are also becoming more familiar and open to the concept of moving from a permanent role to a contract position.

Contracting recruiters are adaptable, nimble and quick on their toes.

Choosing an agency model

Understanding your own personal approach to recruitment will be vital when exploring new agencies to ensure that you align with their models.

Are you a consultative recruiter that enjoys developing long-term relationships or are you a recruiter that likes to move quick and focus on hitting ambitious KPIs?

Most agencies will incorporate a combination of both, but some will emphasise one more than the other.

Self-driven or structured environments

Small to mid size agencies (headcount of 1 – 250) commonly operate flat hierarchies with self-driven or independent recruiters. This environment is good for recruiters who prefer to have an influence on the way they recruit, tailored KPI’s or targets for their desk and a level of autonomy.

Mid to large size agencies commonly operate models that are very structured with recruiters who are able to hit ambitious pre-set KPIs or targets. This environment is good for recruiters who prefer to work with proven structures where there is no ambiguity in the recruitment process.

Seniority level

Another consideration you should think about is the seniority level of the candidates you want to place and whether the agency covers or has access to those levels.

Junior to mid level models, which involve small fees and high volume are becoming more common as agencies have found a niche where there are less competitors (most agencies compete in the mid – senior level space). Firms like Michael Page and Robert Walters have built specialised brands such as Page Personnel and Walters People to focus on these areas.

Mid to senior level models, which involve larger fees and lower volume, is a space where most recruitment agencies are competing and one that can be lucrative for the recruiter.

When choosing between the two, think about how comfortable you are working with junior or senior candidates and how keen you are to do high or low volume recruitment.

Senior or C-level placements are only covered by a handful of agencies and if you want to explore the C-suite space, you might want to consider transitioning into retained executive search.

Your future manager

Your manager is the person you will develop the closest relationship with during your tenure at your next agency, and the most influential person when it comes to being successful.

Finding a manager that you can both work and click well with is a must. Sometimes you might be interviewing with two very similar agencies and it is the manager that sets them apart.

Common characteristics that recruiters look for in a manager include mentors, people developers, transparency and high emotional intelligence levels.

You can even go a step further and reference-check your manager by speaking to recruiters who have worked with them in the past to make sure there are no red flags.

The only time, however, that you can really determine whether you’ll click with a manager is when you actually meet them.

Career path

Are you thinking about becoming a manager? Do you want to be a manager from day 1 or would you prefer to be an individual contributor (IC)?

Some agencies operate a very flat structure where nearly all recruiters are IC’s. If you’re looking to become a manager, this type of agency is probably not going to be the right fit for you unless they have a particular role to manage a large team or plans to become more hierarchical.

Other agencies are very hierarchical where there are layers upon layers of management, and managerial roles often come up now and again as a result.

Most agencies, regardless of the size or hierarchy, offer access to an IC path if someone would just prefer to bill.

Your career path may be dependent on the role itself rather than the agency.

Long-term vision of the company

In addition to your personal career path, another important factor to consider is the agency’s long-term vision.

To ensure a successful and long tenure, it’s crucial that you buy in to the long-term vision of that agency. After all, you’re not just coming in to a be a recruiter, you’re coming in to help and play an important part in the success of the business.

Company culture

Recruitment is a hard job that requires a lot of time and effort to become successful. Working alongside like-minded people makes the journey enjoyable and is crucial to maintaining motivation levels.

Company culture can sometimes be related to the size of the agency.

Large agencies might have an entire floor dedicated to the sales room with high energy where you can bounce ideas off each other, listen to consultants around you to observe recruitments styles and meet people from many different backgrounds and cultures. Find out more about the culture and benefits of joining a larger agency here.

Small to mid size agencies will have a sales floor where everyone knows each other’s name, where there is a sense of unity and collaboration. Find out more about the culture and benefits of joining a boutique agency here.

Think about where you’re at in your career, what you’re looking to get out of the business and what you enjoy outside of work. Are you a junior recruiter looking to experience the buzz of a global brand or are you an experienced recruiter looking for a self-driven environment? Do you enjoy after work drinks? Do you prefer taking days off to support local charities?

Earning potential

Most recruiters are driven by money and if it’s not number one priority, it will probably be number two or number three.

Earning potential is a hard one to decipher before meeting an agency in person. Commission schemes are often kept confidential until meeting face to face or speaking to a rec2rec agency.

When it comes down to it, a majority of commission schemes in the market, although varied in structure, end up returning a similar percentage return on your billings.

The percentage return of your billings, including base salary and commission, is considered to be competitive around 32%.

If you’re earning less than 32%, it doesn’t necessarily mean you have a bad commission scheme. You may be working with a large global player who offers access to established relationships with clients, allowing you to maintain a strong pipeline without the pressure of business development. Although your percentage return is lower, you could be earning more money than a recruiter who’s yielding 35%, but taking home less. If that’s not the case, you might not be billing enough to hit higher percentage tiers.

If you’re earning more than 32%, you’re earning a competitive amount in the market.

In the early stages of your career, finding a platform with established relationships that has a good percentage return is the sweet spot. When you become more experienced and you’re ready to step into a new environment where the risk of starting or building a desk is higher, you’ll have the opportunity to reap the rewards with higher percentages.

If you’d like to know more about how commission schemes work or if you’re not making enough money with your scheme, read our ultimate guide to commission here.

Start your search

If this guide has helped to determine what type of opportunity or agency would be the right fit for you, get started by connecting with me on LinkedIn or email at cameron@vocay.io.

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Recruitment Training

When a contingent recruiter should sell a retainer

Our industry adopts a number of varied solutions in order to solve a client’s recruitment needs, the most common being contingent and retained search, amongst others.

A popular comment in recruitment is ‘well, it’s not rocket science’. It’s true, it’s not, but some hard-to-fill searches are complex and recruiters have to consider all options when proposing a solution to a client to ensure successful delivery.

Simply explained, contingent search is a model whereby the fee is only payable upon the successful execution of a mandate. If they’re not engaged on an exclusive basis, the risk sits squarely with the recruiter as they may be up against internal teams or other agencies.

Retained search is a model whereby a client pays a portion of the fee prior to the completion of the search process. The most common structure would be a third of the fee payable upon the instruction to proceed, the second third upon the successful presentation of a shortlist of candidates and the final tranche is paid on the start date of a candidate.

Is one model better than the other? Absolutely not. They are simply different recruitment solutions. It’s all about proposing the most appropriate approach for the search you’re about to undertake.

I have not forgotten a question an early recruitment mentor of mine, Tony Seager, asked me. He said, “why don’t most recruiters win retainers?” I pondered but I had no idea at that early stage. The answer was pretty simple in the end: “because they don’t ask”.

So, when should you propose a retainer over contingent? In this article, we will focus on the situations where you should propose a retainer to a client, as opposed to the usual contingent option. There has to be very solid reasons and you must be able to demonstrate to the client the clear benefits they will receive from this approach.

On the back of a failed contingent search

Can that be true? Would a client trust and retain you if you had not delivered? Yes, is the answer.

Using my existing relationship with a UAE based international tobacco company back in the day, I leveraged the work I had done with them in the Gulf in order to continue the relationship in South East Asia.

To kick things off, they asked me to identify the country managers for, if I recall correctly, Indonesia, Vietnam & Cambodia. This sounded pretty exciting. I identified so many good candidates but I couldn’t get this one to come together. We have all been there too many times. It sometimes happens, however good you may be. You put your all into closing the assignment, but things just don’t go smoothly and you’re not sure whether you should risk more time and effort with something that is looking less likely to pay off.

I had to pull out of the search so I called the client and told him. He was far from happy, but he understood and asked me what I suggested. I felt the roles could be filled, but due to the complexity of the markets, it would be extremely difficult and risky for me to dedicate much more time without some form of guaranteed payment. This converted to my first ever retained assignment.

The absolute key to winning retainers on the back of a failed search is relationship and trust. If you demonstrate that you have done everything you possibly can, the client sees less risk in paying for a retained search. This is especially true if you have a tremendous amount of goodwill and trust with the client and they want you to go out of your normal specialisation or geographic area. 

If you’re happy to do the search and you know you can deliver, but the assignment attracts a significant investment in time, just ask.

Market and research mapping

A contingent recruiter is nimble and moves very fast. One of the huge advantages to practice and geographic specialisation is economy of scale. If you are an expert in your field then your response could be immediate. Speed undoubtedly is an advantage in the contingent world, and more often than not, it can be the difference between a fee or no fee.

If a client comes to you and requests that you, not only to find suitable candidates, but also requests that you do a full market map and perhaps some competitor research in the process, then you are perfectly positioned to go down the retainer route.

A Robertson Smart market strategy was to win retained business utilising market mapping. We identified a very specific industry, Equity Research in Hong Kong. for instance and simply produced organograms of all the banks in the country. Armed with this information printed, we could quickly refer to it when sitting in front of a client. 

We would then use this information internally to very quickly identify the relevant candidate in a contingent situation, but if the client wanted more access to our research, then we would ask for a retainer. In the example above, we converted a contingent search discussion into a retained search assignment to identify a Head of Equity Research for a well known Dutch investment bank.

I do feel that many recruiters have little idea of just how knowledgeable they are about their specialisation and the key players that work in them. All too often, we get so absorbed in our day to day work that we don’t stop to think about how knowledgeable we actually are and how we can leverage retained fees from clients.

Confidentiality and control 

Some years back, I remember a client asking us to do a 100% confidential search. We were to identify a replacement where the current incumbent had no knowledge that a search had been ordered. Not pleasant, but it happens.

In this instance, the candidate source network was very tightly knit. This meant that if we were to reach out to the candidate base and reveal the client’s name, then the current incumbent would have found out very quickly. 

We discussed it internally. The potential fee was lucrative, the candidate base easily identifiable, and frankly we already knew them all. The client could not make any form of direct approach as then it would have revealed their identity very quickly.

It actually was a very easy retainer to win. We explained to the client that there has to come a point where you reveal, in complete confidence hopefully, just who you are recruiting for. Sometimes that is even in an initial screening call, or perhaps you hold it back until you have managed to set up a face to face meeting with the candidate. 

Our rationale for selling the retainer was that this was a complicated assignment and the approach would significantly slow things down. We argued, successfully, that it would be better to take a step by step approach, and not dissimilar to the three stage payment model as outlined above. 

The additional benefit we sold the client was control. This is a significant shift in the nature of the relationship between a client and a recruiter. A contingent recruiter carries most of the risk. Not so in a retained scenario as the client shares the risk with you. This gives the client a lot more say, a lot more control over the process and the recruiter. In this example, the client seemed to feel more comfortable gaining more control by taking some of the risk.

The most important factor

In my experience, these were the three most common ways to convert a contingent assignment into a retained one.

I do say, however, the most important factor up and above all of these situations are the trust and relationship you have built up with the client.

As you build that trust, why not simply approach the subject with the client in an appropriate manner when the situation calls for it, and just ask for it?

Won your retainer? Now it’s time to deliver to secure the remainder of the fee.

Lastly, if you’re exploring recruitment opportunities in Asia, please do not hesitate to connect with me on LinkedIn for some advice and career opportunities.