New Year, New Job

According to research from US 'Retention Firm', Finnegan McKenzie, this is the traditional time of year when firms ramp up their recruitment.

It's a bit of a 'No sh*t, Sherlock' moment as lots of firms have year ends in December and so new budgets are agreed for the new year starting in January - on both sides of the Atlantic. However, 2010 is not just any year. For the UK this will be the first quarter, hopefully, of growth since we lurched into recession and so firms are still very tentative about investment plans and unemployment tends to lag the recessionary quarters. So it may not be the bonanza of new opportunities for career change that traditionally happens this time of year.

From the candidate's viewpoint, it is also a time when many people will be looking for a new job. According to Finnegan McKenzie's research this is very prevalent in senior management. They claim up to 51% of senior executives in the US will have actively put out their CV with the intent of changing job or perhaps to test the water by 1 January. This may be as a result of new year resolutions, a desire to increase year on year money, or just a stark evaluation of the previous year and a realisation that the job was not fulfilling or they did not like their boss. Whatever, I think many people in the UK would identify with this 'New Year, New Job' enthusiasm.

In a good year, this would be 'fish in a barrel' for recruiters. Fresh new CVs from highly paid and experienced senior executives to match to a plethora of new opportunities would be the time for a feeding frenzy of fees. I think that will not be the case this year - recruiters are still down on their luck and many are still suffering as the volume of openings are not rising very fast. Still, it has to be a period of hope.

I would argue though, that this is the point where many companies investing in growth make big mistakes. Because the recruiters match the fresh CVs to openings, corners are cut. Only that 51% of senior executives are moving and they are actively after a job - easy prey for recruiters and, I would argue, not the cream of the crop. In fact, I would wager that if Finnegan McKenzie drilled down on their research, then of the 51% of senior executives that put out their CVs at the beginning of a new year, there would be many of the same names as last year. I even wonder how many are people who actually moved jobs last year and want change again?

I always strongly argue, it is those who are not looking for jobs, who are delivering year after year in roles, who are the ones worth chasing. There is a band of senior executives and senior salespeople who are perennial job-hoppers who have great looking CVs but have delivered little sustainable difference to the companies they have been employed by. You can bet that their names will be known in the industry as that is their real skill, networking. I have been involved in the computer industry for many years and time and again the same names crop up. The daft thing is that many companies will mobilise themselves at the mere mention that one of those names are 'available' and they will be snapped up via clever recruiters masked as 'headhunters' who claim they have 'enticed' that name to move. Easy money.

It's a time to be wary. The growth that will be gained this year will come at a heavy price and will not be for the fainthearted. For many of us who have lived through recessions, there will be a period when firms may 'shoot their bolt' and try to get growth too early. This is a period of cagey moves and it also a time for reassessment of old markets and discovery of new as many firms will have learnt in the last two years that much of their business was tied up in too few companies at too low a price and exposed how little differentiation they have. Recruiters themselves have found that particularly revealing over the last 12 months in particular.

The good news is that many computer distributors are bragging of a very strong close to the year and this is a good barometer as technology will almost certainly lead the way in private sector growth. The consumer end was reasonably strong, accounting for good growth and part of that will be spurred by the VAT change, it is thought. But there was also brisk business in the banking sector.

This month sees the end of the first quarter for computer giant HP, December marked the year end of many large firms, notably Cisco. The first signs are there that technology sales are on the road to recovery and that will mean a general return to growth will follow. However, watch out for the 'Usual Suspect' CVs. There will be a mass exodus from firms at senior level - though be very wary that this year it will be for different reasons and the usual bragging rights associated with senior executives will not be there after a recession. Most will be leaving because they have been found out rather than before they have been found out. Recessions tend to do that.

Again, good luck in 2010 - growth may just be round the corner. I hope you find your fair share.

The Recruitment Industry Is Broken

Recently, on announcing sharply decreased profits, the CEO of high end recruiter, Heidrick & Struggles (H&S), L. Kevin Kelly, dourly warned that the recruitment industry's 55 year old business model was broken.

Citing the growth in DIY recruiting tools now available to firms and the waves of online search facilities at companies like LinkedIn, there is no doubt that there is a huge squeeze at the mid-market and low end. Finding candidates is no longer hard and the best value recruiters can be is an external sifting resource on generally available candidate information rather than having CV repositories as in the past. It certainly means that the age-old James Caan mantra of 30% of the first year remuneration as a fee per hired candidate is no longer a viable structure in this market and, as the recession bites, companies have not only reined back on recruiting activities but are now shopping around a great deal more.

It was inevitable really - recruiting in its regular form has had a good run for the money and the money has been exceptionally good. Even at the high end where H&S headhunt highly remunerated Board positions the market is also experiencing an erosion of fees as web based matchmaking services come onto the market to compete at much lower prices. H&S is a super, debt free and cash rich company and can survive but it now sees its future in a radically changed market model. In the past, search has yielded around 90% of its fees - in the future it will shrink to only 50% while 40% will be taken up by executive retention and coaching services, another 10% on tools to support this. For this to change, H&S is actively seeking acquisitions with its $183m cash war chest.

That sounds fine for companies like H&S but for smaller players, heavily exposed to the contingency recruiting market, this is impractical. Few have the cash resources to acquire such services and skills while many are still clinging desperately to an increasingly valueless model. There is no way companies will pay 15-30% of first year remuneration for a few clicks of a mouse and a first interview at best. Few recruiters have 'skin in the game' like performance linked fees and few come from the industry they are recruiting into, let alone have done the roles of the people they are identifying as talent.

Value is the key to the future for recruiters or volume, and the latter means more streamlined, web based service. Clients in the industry haven't helped the process with many driving the value out of recruiting by hammering on fees to the extent of running web based reverse auctions for volume placements. The whole recruiting industry is being squeezed from both ends in a market in recession. With the credit crunch to boot, it has been the 'Perfect Storm' and many recruiters who have suffered badly may never regain the lost ground as the market must change to deliver greater value to clients.

Companies like H&S are moving in the right direction when it comes to their high end market. But for mid to low end salary ranged specialists, life will get ever tougher as they are at most risk by the low cost, high volume models from the web. Even James Caan's golden touch has tarnished as his latest investment has struggled badly and only the agents in the City have done well recently.

There is a desperate need for a daring change in the business proposition and model in the recruitment industry that needs to resonate with clients and deliver real value. The days of large contingency fees for a few hours work are long over. Who will deliver the new model? Will clients respond?

The next year is crucial to the recruitment industry.