For most recruiters, 2015 has been a good year. The number of interviews is up, decisions are being made and competition among employers is creating a wonderful environment for the recruiting business. With this backdrop, many firms have their strategic plans for 2016 to be focused on growth.
While the euphoria of making placements gives us the confidence to hire, we need to keep our feet on the ground planted on a stable foundation. This foundation feeds on itself and will be created from the following items:
- Cash on hand
- Accounts receivable
- Interview board
- Qualified recruit assignments
- Hiring, training and retention activities
- Motivated candidate flow
- Accountability to high levels of phone activity
- A stable sendout to placement ratio / metrics
- Technology to capture and manage the database
Three Months of Cash
Cash on hand is critical to give a growing business the calories it needs to properly function. Growth is expensive and cash on hand allows you to make proper choices versus panic driven emotional decisions. A good rule of thumb is to have a minimum of three months of regular monthly expenses put away in a savings account. As an owner, remember to include not only your business expense but your personal as well. As the growth of the office fuels profits, grow the stash to six months of expenses.
Accounts receivables are absolutely wonderful, but somewhat unpredictable. And the Golden Rule in recruiting is that falloffs happen when you need the money the most. In order to track your receivables, keep a log of your collection activity. Be disciplined to work the receivables at least weekly and have a standardized process. This process will make you aware when there is a problem; many times this could be a client worried about a recent hire not working out as planned and early discovery could lead to your ability to save the deal.
Deals in process, i.e. active interviews, must be visible for all to see. Peer pressure will push search consultants to keep deals on the board. And once visible this will allow the manger or owner to track the interviews through the closing process. Maintaining at least five active interviews is a true sign of a healthy desk, but it is also very difficult and takes extreme discipline and work ethic.
Our business is driven by having confidence. Confidence in our business will always come from having solid well qualified recruit assignments. These are those gems so clean and bright they are worthy of our time and effort. I like to see every search consultant to maintain at least five at all times with no more than two from any one client. As managers, review these weekly with the search consultant’s and hold them accountable to “real” assignments. Force them to “dig” even on repeat clients. At the end of the day, if you validate their plan you can set them up for success.
Obviously without candidate flow, those recruit assignments go unfilled and your cash on hand turns into “what just happened?” In today’s candidate driven market, candidate flow is defined by “are the motivators strong enough to require a job change?” Reviewing profiles for defined motivators as well as listening to closing calls will help you as the manager ensure search consultants are working with motivated candidates.
As you have more and more rookies, it is imperative to have systems in place to hold them accountable to the recruiting methodology, as well as call volumes. For rookies, these are like the shield and blade of a Roman fighter. The system will protect those who hold it dear, but will become worthless without the impact of the sharp blade known as call activity. Holding them accountable in the early days will reduce the risk to you as well as them.
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Sendout to Placement Ratio
Of all the metrics I follow, I’m convinced the sendout to placement ratio is the “key.” I suggest calculating the ratio using a 12 month rolling average (total sendouts for the last 12 months / total placements for the last 12 months). I keep this is an Excel program and then build a graph so then I have a visual picture. If done properly, this will guide you to what is going on with a particular search consultant, a team of search consultants or your entire office. The sendout to placement ratio is amazingly consistent and efficient at monitoring qualifying, matching, closing and the overall “intensity” which is required to do the business.
Data Is Your Heartbeat
The daily operating “systems” as well as technology within the organization must be in place to capture all the data into a central database. This database becomes a living organism and it doesn’t matter who feeds it. Rookies can generate good candidate flow just like a tenured person, but without capturing all the data, it is worthless. The database is the heart beat of the business. Turn your draw losses into money makers by capturing all the rookie data!
Remember too that search consultants will become confident when billing big. As some “easy” deals hit, forgotten are the times you carried them through the slaughter of the recession. Hone your skills at retaining these producers. Show appreciation, but remember to keep a watchful eye for strange behavior and metrics. Build teams as it becomes more difficult to leave when the team environment is feeding them splits (not to mention the thought that a client may stay with the team).
2016 should prove to be more momentous than 2015. We continue to see strength in hiring, but changes can come quick so you must have the foundation in place to protect the overall health of the company should something go bad. Build your foundation strong, and when something does go wrong you will be able to take advantage of those market conditions while others are panicking.