What to jettison during the long slow road to recovery

Financial performance · Agency case studies · RCSA · Business planning
Greg Savage
Greg Savage

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Industry veterans Geoff Morgan and Greg Savage take aim at the business conventions best left behind as recruiters look down the road of economic recovery.

Job advertising and technology are two areas ripe for upending, the Morgan & Banks founder says.

"Ironically, we need both, but we've been doing the same thing for many, many years" – posting advertisements and "sitting around taking the response to those ads", Morgan told RCSA's ReForm Digital conference this morning.

"I don't like that I've been doing that for so long... And I'd like to make sure technology enables us to communicate better with our clients and our candidates in a real way rather than hide behind it as a process."

Any business decision made about technology should be improving the experience for the candidate, the client and the recruiter, Greg Savage told the event.

"Don't worry about efficiency and cost-saving being your primary driver. Your primary driver is better communications and interaction."

Further, "the other thing I'd like to see come out of this is to move away from multi-listed, contingent, in-competition job orders, which is a disastrous business model no other industry has", says Savage.

Non-exclusive work drives down the quality of services to candidates and clients, while causing stress and a lack of profitability for recruiters, he says.

"The irony is – and we can't do this because it would be a cartel – if every recruitment company in the world only took jobs exclusively, we could halve our fees and triple our profits."

But recruiters need to sell commitment to their clients, Savage adds.

Recalibration opportunities

The recovery will be bumpy, with no "snap-back" that some are hoping for, says Savage.

"There will be flurries of activity and then we'll fall back... Even our Prime Minister is now talking about three-to-five years for our economy to get back to where it was. So, let's calibrate our thinking better."

The biggest opportunity, he says, "is to configure our own futures".

Many people in recruitment will talk about change, "but when the market picks up, they'll be so delighted to see business, they'll go back and do the same thing they've always done before. That will be a tragedy".

"Now is the chance to slaughter sacred cows in your business... to dump what you didn't like, what worried you," Savage says.

Along with technology, those sacred cows include terms of business, delivery models, the types of people a business hires, commission structures, and branding, he says.

Surviving beyond JobKeeper

Morgan and Savage stress the need for businesses to reduce their cost base as the second half of 2020 throws up new uncertainties.

"More than that, you have to come up with a way as a leader in this business to deliver the outcomes clients and candidates want, but without allowing your cost base to rise again," says Savage.

Thankfully, "the Jobkeeper program has allowed us to [retain staff], but after November, we're going to have a whole set of issues to consider as business owners", Morgan says.

That situation will require leaders to be as close to their numbers and pipeline than ever before, Savage adds.

Gross profit calculations (from permanent placements and net contract margin) should be forecast for the next six months, he says.

"Look at your contractors, look at their start and finish dates, budgeting early finishes. Work out your contractor GP for six months, then do the same with your perms, but be very conservative with permanent, because I don't feel that's coming back anytime soon."

And with that GP calculation, says Savage, "you've just got to calibrate your costs to come in under that number".

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