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.
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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.