The Recruiting Business Is Dead

Lately, we have seen article after article about the demise of the permanent placement/search as we know it. We remember seeing the same types of articles during the soft economy of the early 90’s only to see the recruiting business rebound and expand as never before.One would assume from the writings of the wrongheaded wits and judgment-challenged pundits that the hirers of the world will exist forever more on chair-warmers. Lose a slot-filler and all you have to do is go to the job boards to find another. This “human parts store” attitude may work very well for a large majority of openings.Let’s face it. Not every opening requires a superstar. There are a lot of jobs out there that require no more than a pulse to perform adequately. These people, of course, are a dime a dozen. No company in their right mind would pay a fee for them. One person will do the job pretty much like any other and the planet won’t spin off its axis if they don’t.Some jobs, however, require more than a replicatable set of skills that can be found in the human parts bin also known as the Internet. They require a person who has demonstrated the ability to create and implement a plan that will reach a predetermined result or to provide a workable solution to a firm’s problem. These people need vision, foresight and the leadership skills to devise and execute the right plan.Plug in the words “vision” and/or “leadership” in your job board search string and be prepared for responses in the thousands. But try to find the few people who really possess those traits along with a demonstrated track record for having already done so and you’ll likely hit a brick wall. Once you move out of the realm of the easily findable, you’ve moved out of the zone where an HR insider with a few web surfing skills will be able to achieve victory.No matter how well trained in the Internet and no matter how well they think they can tap the passive jobholder pool for a job that defies description, HR people just don’t normally have the time or the moxie to attract the right person, even if they are able to find them. The classic textbook for this business, Placement Management, addressed the in-house recruiter subject in “Why Companies Should Avoid In-House Recruiters.” We’ll be glad to Email a copy to those subscribers who make the request through TheFordyceLetter@aol.com.No matter how automated the applicant acquisition task becomes for the in-house recruiters, it will never replace a search professional for those truly unique openings. In fact, HR will probably not even know about these openings since the origins for these positions are in the minds of the top leadership of their firms or for a desperate senior executive with a critical requisition that has languished in the HR department for months.Do you sometimes wonder why corporations with large in-house legal staffs go to their outside law firm for the truly important stuff. When most have a bevy of in-house accountants, don’t you wonder why their important financial matters are handled by an outside accounting firm?You can buy and sell stocks via the Internet less expensively than using a knowledgeable stockbroker but the truly sophisticated investors aren’t the day-traders, many of whom went broke during their heyday. They have partnered with their investment firm advisors of choice.TurboTax and other tax software packages certainly haven’t put H & R Block out of business nor have the Googles or Yahoos made libraries obsolete.Looking in the rear view mirror at the boom time 90’s, it truly was a slot-filling period and our profession benefited by collecting full fees for filling those slots, not because the companies couldn’t have ultimately filled them themselves but because there were more slots than people, urgency was vital and many in our business were able to deliver results even though we were often just considered to be commodity-delivering necessary evils.The chroniclers of recruiter doom forget history and ignore demographics. And so do those companies with current openings to fill who have beat down the average fee percentages they’ll pay to a point where it’s not worth the trouble to do business with them. The pendulum will swing back in our favor sooner than you think. It’s already happening for many.We know how tough it is to say No when cash flow stinks. But there are still some reasonable companies out there and your main job these days is to find them.Several years ago, we wrote an article entitled 10 GOOD REASONS TO SAY NO. Not much has changed since then and you should weigh every assignment against them.

  1. Accepting the business would necessitate hiring more consultants. Adding employees (and overhead) for just one multiple candidate or long-term assignment is often prohibitive. What do you do after the deal is done?
  2. It’s only about price. If that great batch of business comes at a deeply discounted price, run the numbers. Don’t be like the tailor who only loses a few cents on each suit, but claims to make it up in volume.
  3. Too much blue sky. Get it in writing and get it signed. Verbal promises usually aren’t worth the paper they’re written on. Discounting your fees to 15-20% for 12 openings may be their way to get a favorable fee only to cancel the last 11 openings.
  4. Wrong specialty. If you’re asked to find people outside your normal specialty areas, you begin at ground zero . . . often an expensive starting point. Ask yourself why they aren’t utilizing firms already conversant in the specialty sought. Maybe they’ve already burned those bridges. Unless you belong to an active cooperative split network, you may be buying future problems.
  5. It’s only about money. Make sure the payment terms favor you, not them. And if getting the deal was a little too easy, check their credit rating or get a substantial retainer up front.
  6. It’s about access. If everything must be funneled through one corporate “traffic cop” be wary. You must have access to the hiring managers to be effective.
  7. The point-person’s an imbecile. No matter how attractive a deal sounds, dealing with a jerk isn’t worth it.
  8. It’s about maximizing resources. If taking a new chunk of business means you won’t be able to adequately service the clients you have . . . pass. Resources will only stretch so far.
  9. The company is substandard. Trying to recruit first-rate people for second-rate companies is a no-win situation.
  10. It’s about unreasonable wish lists. Asking for superstars for grunt jobs has sunk many a search pro. Don’t buy into this trap, no matter why the company says they need overqualified people.

We recently received several copies of a lengthy document from ConocoPhillips, inviting recruiting firms to participate in a Request for Information possibly leading to an eventual place on their Preferred Provider list. Their approach is the same as if they were inviting suppliers of oil field pumps, paper clips or chair pads. According to their letter:

“ConocoPhillips currently contracts with a significant number of suppliers, in a process that is generally decentralized, to support its external hiring needs. By converging on and certifying a limited number of suppliers, ConocoPhillips anticipates enhancing the quality and retention of candidates while minimizing overall recruiting services costs through process efficiencies and reduced fees due to our leveraged approach.”

ConocoPhillips is not the only company foisting this type of insidious nonsense on our industry in an effort to cut their recruiting costs by 20%. By the way, in case you’re feeling sorry for ConocoPhillips in their cost-cutting effort, they had first-quarter net income of $1.4 billion.Here’s a list of questions that must be answered in Phase One (the RFI):

  1. How do you intend to monitor your performance to ensure a consistent service level, continuous improvement and quality assurance? What metrics do you use internally to measure quality?
  2. What benefits are there in having a Preferred Supplier relationship with your firm?
  3. Is your firm a member of any professional associations? Please list.
  4. What are the corporate address, mailing address and phone number of your company’s main offices? What is the structure of your organization (number of offices, location, number of employees, etc.)?
  5. Provide details and a typical timeline regarding your sourcing, recruiting and interviewing process to locate suitable candidates for oil and gas industry global companies. How do you communicate (e.g. written, oral) the results of the process to your customer?
  6. How do you source diversity candidates?
  7. Are you a member of any cooperative placement networks? If so, which ones? What percentage of your placements over the past two years resulted from a candidate referral by a cooperative placement network?
  8. What is the size and profile of your current customer base?
  9. Do you have a candidate database? If so, what type of system do you use? Is it shared globally?
  10. Do you provide background or reference checks for candidates prior to referring them to clients? If so, which specific background checks do you perform?
  11. What are your standard and/or customized reporting capabilities?
  12. What is your policy regarding placement guarantees?
  13. Do you offer retained searches and contingency searches? What is the standard for fee each?
  14. What is your policy for recruiting or working with existing candidates placed at your current and past clients?
  15. What limitations or restrictions do you have on your ability to cast a wide net in your recruiting for ConocoPhillips?
  16. List 6 (six) customers (including contact names, titles and phone numbers) you serve that are similar in size, geographic presence and requirements to ConocoPhillips in the oil gas industry.
  17. Do you have any current searches ongoing with ConocoPhillips? If so, who is the ConocoPhillips contact that you are working with?

Provide responses to question 18 in the attached “RFI Questionnaire Response” spreadsheet on the sheet titled “All Placements.”18. Provide us with the number of searches versus the number of placements for oil and gas industry clients, by Specialty Area, for the past two (2) years (i.e. 2001 and 2002). Indicate the location (i.e. country) where the placements were. What percentage of these placements are still employed with the hiring company? What is the race/gender breakdowns of these placements (as defined by US designations)? What are the average salary, length and cost of the searches your firm conducts for each Specialty Area?In addition, they require a breakdown of Number of Searches, Number of Placements, Placement Countries, % still Employed, Average Search Cost, Average Search Length, Average Salary, Number of Minorities, Number of Non-Minorities, Number of Men & Number of Women under each of the following categories: Executive Management >$150,000, Engineering (Upstream & Downstream), Geoscience, Technical/Scientific, Marketing/Business Management, Commercial/Business Development, Information Technology, Legal, Accounting/Finance & Human Resourses.Once you wend your way through all of this, you enter Phase Two Assessment Phase. If you pass muster, you will be expected to travel to a site of their choosing (at your expense) to endure a 2-3 hour interrogation. If you pass this phase, you are asked to submit a formal bid for the business which, if accepted, makes you a bona-fide “Preferred Supplier.” They also want the names and contacts of all your other clients/placements.Whew! Sounds more like a colonoscopy to us. And guess what. Even if you’re invited to the prom, there’s no guarantee you’ll be asked to dance.We vividly remember a similar effort by a Fortune 50 company a few years ago. After spending several days and many dollars to complete their crazy quilt process, successful search firms were expected to perform their searches at 20% with 180-day full money back guarantees. They made no placements and to add insult to injury, all of the confidential information they submitted leaked to a competitor despite the non-disclosure agreement that they had with the company. It wasn’t pretty.Another very large multi-national bank sent similar forms to a large number of recruiters claiming they had over 120 openings they needed to fill within the next 12 months and they were setting up their Preferred Provider network. They also used a “take down your pants” type form to complete before the next several phases of the preferred providers selection process. It was not until they received the information from recruiters that it was revealed that the maximum fee was to be 20% for senior openings and 15% for mid-level spots. The number of openings had diminished to just 22 openings by the time the process took place. There would be no retainers, a 90-day full payback guarantee was required and all resumes had to be sent to an HR person in California who was not (nor had he ever been) a banker.Resumes had to have been pre-reference checked and each submission had to include complete and comprehensive reference checks attached something likely to turn potential candidates off.But the final clinker was the required $2 million dollar E&O policy with the bank as the loss payee.You may think that working with the big dogs in industry is your ticket to fame and fortune. Most feel otherwise.One misinformed commentator in the industry wrote that our industry’s permanent placement practitioners are doomed because (1) in-house recruiters are now everywhere so who needs the third-part type; (2) the Internet’s multi-million-resume databases make third party recruiters obsolete and; (3) sophisticated software matching algorithms automate the resume screening process.In an attempt to contradict those items pointed out in “Why Companies Should Avoid In-House Recruiters” statistics are plentiful from the HR community about in-house recruiter effectiveness, but the metrics put forth by those promoting the in-house recruiter effectiveness myth fail to tell you that many of the jobs filled by them are for bathroom cleaners, clerical help and the like rather than purely professional hires.How about the job boards? The biggest complaint from companies seems to be that quantity does not link to quality. Sifting through hundreds (and even thousands) of resumes brought up on a query, only to find that the resumes misrepresent backgrounds, don’t even remotely fit the job or are dismally out of date is a miserable and time-consuming job costing valuable time and money. The EEOC is investigating the probability that the whole process may be inherently biased on a number of levels. A perfect opportunity for the government to foist even more costly record keeping requirements upon companies making this method of recruitment even less efficient.From the jobseeker perspective, the job boards have been a fertile opportunity to become the victim of identity theft. Personal information has been compromised in other ways. Jobseeker information exists on the Internet long after they are off the job market. Many, whose superiors found their resumes on the Web after they went to work for them, have fired them, thinking they were still on the prowl for a new job when they really weren’t.Most ‘applicants’ don’t realize that their resumes end up in that black hole called Human Resources where the right experience doesn’t usually equate with the ability to get an interview with someone who really understands the requirements of the actual job. We’ve all heard about HR recruiters automatically turning down any ‘applicant’ using AOL, MSN or Yahoo as their ISP. Others robotically trash otherwise qualified resumes for a wide variety of specious reasons. Some firms that have spam sifters or filters for pornography have blocked submissions of preeminent scholars who have magna cum laude or summa cum laude on their resumes. We’ll let you figure out the offending word in these two educational accomplishments.Software matching systems that claim to electronically find those few needles in those vast haystacks are a joke at this stage. Those who have used them have told us that they just don’t work for professional openings. How could a computer program do what human beings have been failing to do with regularity for decades? The world really isn’t made up of attributes from the “human parts bin.” People rarely get hired because they are the best qualified or the most skillful. We all know of hirers who won’t hire other people who are too tall, too short, too fat, too thin, too reserved, too flamboyant, too something. They get hired because they’re great interviewers, will work cheap, know the boss, are somebody’s nephew, tell great stories, play good golf or you name it. Try putting these into a software program. Recruiting, search and placement is an art more than a science. Trying to use Artificial Intelligence techniques in a process such as candidate selection is just plain dumb for any but the most menial of tasks.So when misinformed people tell you that permanent placement is dead and gone, perhaps you should question some of their other pronouncements as well.We were recently informed that IBM is working on a hiring model that will revolutionize the employment process and third party recruiters aren’t even in the mix. Might work for IBM but what about Carl’s Computers?Back in 1992, IBM had another model for their employment process. In fact we chronicled it in a front-page cover story. They set up a subsidiary known as Employment Solutions, Inc., a separate profit center to handle all their hiring. They set up in IBM offices all over the country. They thought it was such a great idea, they were going into competition with the recruiting industry offering such services as employment process consulting, recruitment of professionals, testing, pre-screening, background/medical verification, college recruiting and image building.Quoting from their brochure, “Whether your staffing needs call for recruiting on college campuses or among established professionals; establishing co-op programs; or retaining contract employees, we do it all. And we do it right.” and “We’re proud of the ways we’re like IBM, and we’re just as proud of the ways we decided to be different.”After spending a couple of years and a ton of money, it folded. Guess even the big guys can screw up by misjudging the market.So why will recruiters grow in number and prosper when the economy recovers? Here are a few reasons:Confidentiality Every company occasionally needs key players in areas where insiders just won’t do, whether it’s a replacement for a current employee or someone to ramrod a brand new activity. Sending a requisition to an HR recruiter is like putting a confidential matter on the front page of the company newsletter. Who do you think screams the loudest when this happens? The current employee who wonders why they didn’t get the job.Internal failure How long do you think a desperate hiring manager must wait while internal recruiters fail to get the job filled? Aside from the usual reasons such as current staff working overtime to complete vital tasks and necessary duties being backburnered, the cost of an unfilled opening can be very expensive much more so than the one time, tax deductible fee charged by a professional recruiter. (See TFL, 2/01 cover story “Cost of an Unfilled Opening”).Legalities Although some think that it’s a free-for-all out there, there are always some companies that are just off-limits for internal recruiters to tap. Recruiters are often useful as that arms-length buffer to keep corporate lawyers from getting into a fistfight with each other over what they consider to be a corporate raid.The Yes factor Recruiters are paid to present candidates who have been prepped to say Yes to an offer. This is a frequently forgotten advantage that rarely exists with the internal assembly line recruiting efforts of insiders. Negotiating before and during the offer phase is much better accomplished by a third party recruiter, smoothing out those devastating little unrealistic expectations that can derail an acceptance and cause the company to go back to square one.Access A niche recruiter will always have a more fertile talent pool from which to choose than an insider who must start every search from scratch or who must resort to a frequently out-of-date internal database of has-beens, wishful thinkers or less than prime candidates. As TFL Publisher Paul Hawkinson said in his classic Why Recruiters are Worth What They Charge: “A professional fisherman will always have more to show than a weekend angler. Recruiters are in the marketplace day in and day out. They know the unfished coves, reefs and inlets that are unknown to others. The job-hunter bookshelves are filled with lore about the ‘hidden job market.’ The same holds true for professional recruiters who have a detailed roadmap to the hidden talent sources which will never be accessed by newspaper ads, alumni associations, applicant databases, job boards or any of the other more familiar sources of people.”Speed Most recruiters operate on a C.O.D. basis. No placement no fee. What better motivation could there be for moving the process along to a positive conclusion? The old saying goes, “Time is Money” and no one knows that better than a competent recruiter whose paycheck depends upon speedy and successful finales.We could go on and on about rosy futures for third part recruiters and why those who predict the end of the recruiting profession are dead wrong but here are some comments from industry opinion makers:Bill Radin, a top-producing recruiter, manager and trainer (www.billradin.com) whose best selling books include The Recruiter’s Almanac, How to Market & Sell Your Recruiting Services and Advanced Strategies for Recruiters penned this open letter to all the business analysts, pundits and prognosticators:

Regarding the ridiculous notion that our business is obsolete — the very notion barely dignifies a response!I’m sure the other industry leaders will do a good job in letting the facts speak for themselves; my goal with the attached piece was to add a little humor. It was tempting to use the “Rumors of my demise” quote from Mark Twain, but I would guess the more erudite among us have already worked it into their comments.If the recruiting industry is on its last legs, please tell me why a local recruiter just filled the City Manager position in my hometown, and why my alma mater hired a retained search firm to find a new university president.Possibly you’re the same “experts” who ten years ago predicted that 95 percent of all permanent jobs would be replaced by a “flexible” workforce. If so, your track record leaves a lot to be desired. But don’t worry. Your own job security looks pretty good. You could always work for AccuWeather, where predictions and accountability pass like two ships in the night.Or, if things really got bad, I hear there’s a job opening that would fit you to a “T”: Iraqi Information Minister.

MRI’s President Alan Salikof took a more statistical approach:

“A few years ago, on-line staffing emerged as a serious threat to the traditional search and recruitment model many Internet companies, inspired by the promise of e-commerce and technology, entered the staffing industry. The economy was in a dot com frenzy and the staffing industry was no exception.As the dot com bubble burst and economic activity began to slow down, the staffing industry was one of the first to be hit. The industry size today is around $7bn, down almost 18% from a high of $8.5bn in 2000. The U.S. economy has lost more than 2 million jobs, a drop of 1.5 percent, since the recent recession began in March 2001. Average unemployment for the managerial and professional segment has nearly doubled to 3% in 2002 from an average of 1.7% in 2000.Today on-line staffing or E-recruiting is no longer the threat it was thought to be. E-recruiting in the permanent placement space hasn’t really taken off:

  • partly due to depressed hiring in today’s economy, and
  • partly due to its inability to compete with the “high-touch” skills of recruiters

E-recruiting tools are now viewed as complements rather than substitutes for traditional recruitment at best, they can play an important role in reducing cycle time and cost per hire when used in conjunction with traditional recruiting.We have been hearing anecdotal confirmation of latent demand for hiring, although many businesses are still reluctant to make significant investments; everybody is waiting for clearer and more convincing signs of an economic uptick. But as the economy continues its recovery, this pent-up demand should give way to a hiring surge. Companies that are holding back will turn to their search and recruitment partners in significant numbers for their permanent placement needs. The candidate surplus that exists today will be quickly absorbed, and it won’t be long before we return to the candidate shortages we saw before the recession. Industries such as healthcare and finance will lead the way; according to MRI’s hiring survey, 62% of the companies surveyed in healthcare and finance indicated that they would be increasing hiring in 2003. Other industries following closely are non profit/Government/Education 48%, construction 46%, and manufacturing 42%.From a macro-economic perspective, once the current economy improves, there will be a significant short supply of labor. According to the Bureau of Labor Statistics, the number of available jobs is projected to increase by more than 22 million jobs over the next 5 to 10 years a 15.2% increase while the labor force is projected to increase by only by 17 million in the same time. There will be a shortage of about 5 million workers in the medium term. Most of this shortage will be in the areas of skilled and professional workers that make up the middle management recruitment space. The BLS has also identified staffing to be one of the fastest growing industries in the next few years.Consolidation will continue to be a factor in the staffing industry as larger firms acquire smaller and weaker firms; 2002 mergers and acquisitions in the staffing industry were up by 30% over 2001.Fewer assignments and increased selectivity by clients has made competition tougher and put pressure on margins. Smaller firms are finding it increasingly difficult to remain profitable and continue to exit the industry. These conditions mean that there is market share to be had by survivors in the permanent placement space.What I know after more than 20 years in this business is that it comes down to the skill of the best recruiters. These recruiters develop a good understanding of the industry they work in and are therefore great at assessing their clients’ requirements, screening talent and delivering the right candidates. These recruiters build a credible relationship with their clients by providing quality candidates cost effectively. These recruiters respect the search and recruitment process. It is these recruiters and the companies that employ them who will ensure that the permanent search business will not disappear into oblivion.”

Terry Petra (http://www.tpetra.com/), a regular columnist for The Fordyce Letter and one of our industry’s leading trainers and consultants predicts a renaissance for search and placement.

“The long-term prospects for the search and placement sectors of the staffing industry literally herald the coming of a ‘renaissance’ of opportunity and prosperity. In the short-term, many firms who are properly focused and leveraged with their clients are already showing the proof of this statement through double-digit growth projections for the remainder of 2003.In our April survey of a cross section of the hundreds of staffing firms that comprise our training and consulting clients, over 83% predict sales and profit increases for 2003 over the base line of the last two calendar years. Based on their first quarter performance, 26% project 2003 as a record year.Nevertheless, many firms in our industry continue to struggle and hope to survive until the long awaited economic recovery takes solid root. For some, it may be too late. Frankly speaking, if your firm depends on the strength of the economy in order to survive much less prosper, you are not prepared to participate in the developing ‘renaissance for search and placement.’ Remember: It is difficult to ride the crest of a wave when the wave doesn’t exist.Historically, somewhere between 30% to as high as 50% of our industry have been ‘crest riders.’ They have depended on external economic factors for their success rather than well developed and focused core competencies. For those firms, the wait for the next crest could be a long one.Without recapping the geopolitical-economic realities of the present day, suffice it to say that my ‘crystal ball view’ of the future is no more reliable than that of any other individual who has access to the same information.However, there are two certainties about the world of search and placement that will continue to define the challenges and opportunities embedded in this time of ‘renaissance.’First, and most importantly, top performers are always in short supply, regardless of the unemployment rate. Tie this to the demographic fact that 78 million “Baby Boomers” will be retiring in the next fifteen years to be replaced by a mere 33 million “Generation Xers”; the building shortfall of top performers becomes even more obvious. Nevertheless, those firms who make their living from harvesting the ‘low hanging fruit’ (average candidates and less than qualified job orders/searches), will find themselves replaced by clients who are becoming increasingly sophisticated in harvesting this ‘low hanging fruit’ for themselves. Clients will no longer do business with search and placement firms providing ‘that’ which they can provide themselves, unless those firms agree to heavily discount their fees.The second reality is the fact that the margin for error in business is rapidly decreasing. Strategic business decisions have to be made on a decentralized basis and within a timeframe that reflects the speed at which information is made available. This places an added burden on the human resource side of the organization equation creating an environment where clients must increase their ability to attract and retain top performers for their vital, mission critical positions. This is where the greatest opportunity exists for those search and placement firms who are adept at developing partnering relationships based on ‘client centeredness’ principles.In comparison to a historical perspective of how our industry has functioned, the future will not be a business as usual environment. ‘More, better, faster’ will be the mantra for business success. This will be true for our clients as well as for our own firms.For those search and placement firms who are truly prepared to impact in a positive fashion the performance capacity of their clients’ organizations, the benefits of this emerging ‘renaissance’ will be substantial. They realize that business requires more than slick marketing phrases and techniques. Although there will never be a substitute for consistent daily effort (picking up the phone), as never before, this effort needs to be increasingly focused on the long-term success of their clients’ organizations. By bringing to their clients an improved process for dramatically decreasing the margin for error during selection and hiring while increasing their ability to retain top performers, these firms will earn the right to fully participate in the emerging ‘renaissance for search and placement.'”

Scott Love, (www.recruitingmastery.com) founder of the Academy of Recruiting Mastery and the author of The Recruiter’s Adventure Book sees it this way:

“Computers and technology can replace some functions of our society, but wars are won on the ground through hand-to-hand combat. Fire-power from the air and sea may offer the greatest amount of leverage and headway, but the critical and final battles are always won by the troops on the ground. It’s the same way with the employment business. The classified ads and the Internet may be effective to a degree in a sweeping and generalized sense, but because so much hiring in our society is based on specialized expertise and focused competence, there will always be a role to play for search firms. We now live in the age of the specialist. Workers must be more than just good and loyal employees. They must become specialists within their own ‘brand’ of work. And because of this uniqueness of the American worker, an entire industry of identifying and moving these specialists and value-providers will continue to be fed and continue to remain alive.A product or service is only as valuable as its perception of value. And if there’s a buyer, there will be a seller. If companies are willing to pay for top talent, then there will always be search firms ready to provide this value. And the value of the specialist to a company is exceptionally high.Because of the high value of this specialist employee, companies are willing to pay for a service to place that unique employee in their company. The economics of this situation cannot be denied.Economically, this system creates a sort of perpetual motion machine of supply and demand.Consider what the Internet did for both the travel industry and the insurance industry. Travel is a commodity where price is the main driving force. Hence, the Internet was a key contributor in putting a major dent in the revenue of travel agencies. There is no risk or complexity in making flight reservations, and it’s a fairly simple task. Where do I want to go? Where am I leaving from?What time do I wish to leave and what time do I wish to arrive? That’s it. Task complete. But independent insurance agents are continuing to thrive because of the whole nature of insurance, especially life insurance, even though the Internet, in theory, could provide the same information online. Because life insurance is such a sensitive and intimate issue (planning for your death and the death of your spouse), it will always be handled by professionals who know how to approach these issues with the right degree of delicacy and solution-oriented programs.It’s the same way with executive search. In the first six minutes of a recruiting telephone call to a prospective candidate, a competent and professional search consultant gets information that this new contact only shares with his or her spouse: what he hates about his employer (desire to move), and how much he makes. It is this intimacy of information and the trust that goes along with it that cannot be replaced by Email, job boards, and ads. This is especially true for those competent working professionals who really understand the true level of value that they bring to their employers as an employee. But when one of these professionals is approached in the right way with the right amount of ethical influence by a competent search practitioner, then they can be moved effectively to a company willing to invest in this person’s level of talent. A job board is not effective in approaching someone like this.Executive search is a contact sport, and will always survive because of the delicate nature of the transaction and the value of the transaction. Perhaps futurists who make misinformed predictions of the demise of our industry may one day be replaced by technology. One can only hope.”

Elaine Romberg, president of IPA an I-CTS (www.ipaservices.com) wrote, “The permanent placement business is dead and they just don’t know it yet,” is like saying, “The sun will not rise in the morning.”

There is no doubt in my mind that business is beginning to increase. IPA (Inter-City Personnel Associates) and I-CTS (Inter-City Temporary Services) have both just recently held their annual national conventions. The very definite overtone of the meetings has been that business is finally beginning to pick up. Independent owners are feeling positive and are sharing their optimism with one another.IPA job orders have begun to increase. Owner/members are indicating clients are calling them – this had not been happening in the past couple of years. IPA placement activity is increasing; inquiries from independent owners is definitely picking up and this will result in new IPA owners who meet IPA qualifications.While it doesn’t appear interest rates are going to rise quickly, past recessions indicate interest rates will probably increase within the coming months.The real estate market has remained strong and this is no doubt due to low interest rates.However, the most effective and economy-boosting decision that should be made as soon as possible by our government is tax cuts. If taxes were cut, demand for product and services would increase; manufacturing needs would increase; more jobs would be created; the economy would flourish and more people working would result in more taxes collected for the government and less unemployment and thereby boost our economy. This is a basic economic principle that seems to have been overlooked by our government.I recently heard a speaker say he made a decision of his own a couple months ago that the recession was over . . . that he had gone along long enough blaming his poor production (along with others) on the recession and that now that he no longer considers his poor production a result of the economy, he is amazed at the business he has going for his company.So, sometimes it is a mindset and if we allow it, we can convince ourselves that times are tough; business is poor; and the list goes on and on. However, if we turn it around, we can convince ourselves that changes need to be made; business is out there and we need to go after it; and guess what, we are amazed at how it changes our perspective.As far as companies laying off and restructuring, many times companies have overstaffed to start with and when the layoffs occur, the company is basically getting rid of the “fat” and it doesn’t affect the production as much as it may appear. What this does do is create more unrest and fear in a down economy and only increases the pessimism when you read and hear from the media how bad the economy is. This is unfortunate, but true.I see the future being as bright as we allow it to be – we can all look at the glass as half full or half empty – and we know if we look at it positively, it will make a difference. Onward and upward is IPA’s motto!”

Steve Finkel (www.stevefinkel.com), veteran industry trainer, author and speaker wrote about Winter’s End.

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“Some things, while not significant in themselves, take on greater weight as predictors. In the Midwest, as an example, no one cares about robins … but the sight of that little worm-eater after a cold winter is an infallible sign of the coming Spring.In like manner, it is easy to dismiss those who whine about the ‘coming demise’ of search and placement as short-sighted and ill-informed, or as inexperienced hustlers seeking to promote their own interests at the expense of the Truth. While that is certainly accurate, it overlooks the real significance of this: historically, such foolish predictions always occur at the end of a Recession, and herald the onset of boom times for our industry!There have been ten post-WWII Recessions. After every Recession, our industry comes back stronger, better, and with greater market share, higher average fees, higher per-desk-billings. And so it will be once again. However, right before the beginning of the resurgent boom market, the worm-eaters always arise, claiming that this or that “sea change” or techno-trend have altered things forever. We have heard it all before.For information on why our industry will rebound strongly and soon, visit the author’s website (www.stevefinkel.com) and read the article, “Bound For Glory! 2003….and Beyond,” originally printed in the January 2003 issue, of The Fordyce Letter. But briefly, consider this: almost half of today’s workforce (72MM out of 165MM) are baby boomers, soon to begin exiting from full-time employment. From 2000 to 2010, workers 55 and over will increase by 77%, four times the rate of those from 25 to 54. Do you want a real talent shortage, not just the bubble of the ’90’s? Here it is!What is true is that those remaining recruiters who still rely on the Internet will do poorly. Those who trouble themselves to do genuine research rather than believing foolish hype will find a recent Merrill Lynch report clarifying this. For the two-year period of 1995-1996, Internet traffic grew at an astounding 1000% a year. Like the dot-com boom itself, however, it proved to be a bubble. By 1997, things slowed to a 70-100% annual growth, though no one noticed, due to the spurious Y2K scare, and continuing promotion of the ‘vast Internet boom.’ Now, studies over the past several years have shown significant negative (U.S.) annual growth in this area. Someone should tell the net hustlers.But as our Secretary of Defense, Donald Rumsfeld, has said, ‘If you don’t want to believe something, there is no body of evidence, no matter how overwhelming, that you cannot ignore.’ So true.Moreover, the Internet “trainers” long ago realized that your clients would pay more than you for their pointless information, and are now and will be hard at work teaching your clients’ HR people how to avoid paying your fees. Those few ill-trained, misled, or lazy people who continue to rely on the Internet to dredge up the same unhappy or unemployed candidates as their clients will indeed be in sad shape. The real recruiters will prosper, as they deliver what they always have quality candidates not available through any other source!Fear not. Great, great times are ahead! You are in the right place at the absolute right time. Spring is around the corner. As always, the worm-eaters are an infallible predictor.

Gary Stauble (http://www.myrecruitercoach.com/), a professional coach who specializes in assisting Firm Owners and Solo Recruiters said:

“The staffing industry as a whole has had its nose bloodied in the last few years and many recruiters did not have the training and tools that they needed to survive in a tougher market. I’ve heard estimates that as many as 30-40% of the firms that existed a few years ago have closed shop and thrown in the towel. Based on how bad some of the recruiters of the late nineties were at relationship building and candidate development, this exodus was a natural and beneficial process for our industry. So, if you’ve made it this far, pat yourself on the back as you have been nimble enough to get through a rough period and are in a great position to benefit from the coming upturn.The days of ‘easy recruiting’ may be gone for good but overall it seems that our industry is poised for growth and prosperity.The Internet is here to stay and has changed some aspects of our profession permanently. Those recruiters who became lazy and viewed this as their primary tool for locating talent are probably not here anymore as companies realized that they could find the same people off of a job board. The Internet is a powerful medium for recruiting and it has its best value in assessing the skill oriented jobs that can be easily assessed by filling out forms and answering questions. So for many junior level and medium level technical positions it may be the preferred method for employers to use.But it cannot replace the value that recruiters can provide in assessing ‘subtle skills’ such as leadership, boardroom presence, ability to motivate staff, and energy level. And, in most cases, it still is primarily used as a glorified electronic newspaper ad which can help companies locate the very best of the ad lookers – but not the happily employed high achievers. To attract these people still requires pro-active effort on the part of a skilled professional. Our value lies, as it always has, in being able to find the talent that a company cannot find on its own.When the economy comes booming back, those who have refined their skills and made adjustments to their search process will prosper. We need to make sure that we offer exceptional value to our clients on each search and don’t cut corners. I speak to many firm owners and recruiters in my work as a coach and a surprising number of them are focused on ‘closing deals’ much more than adding value for their clients. Clients are much more sophisticated than they once were and the recruiter who can build rapport, gain trust and show true concern for the client’s point of view will have a major advantage over his or her peers. Clients want a more sophisticated recruiter, someone who can act as a consultant and surprise the client by delivering more than what was expected.Relationship building skills will be a bigger ingredient in future success. We are in the ‘service age’ and clients want problem solvers who can help them save time, save money and increase productivity. Recruiters who can do these things will have an exciting future ahead of them.”

Bill Vick (www.XtremeRecruiting.org), founder of RON (Recruiters OnLine Network and current chief executive of XtremeRecruiting.org has long been a proponent of the Internet. His comments follow:

Sometimes I just don’t understand some of my Recruiting buddies. Every time one of them says, “Business is really tough” I think to myself, so when has it been easy? Sure, the economy is going through some bumps and grinds but that is the nature of the beast. I think the problem that many recruiters have who say the business is tough or the permanent placement is dead mantra are not living in today’s world but yesterday’s.We have just come out of an incredible boom time where traditional recruiting and placement practices went out the window and the new kid in town, the Internet, dominated the mind share of recruiters, candidates and clients. It was a time when an average recruiter could call themselves a big biller and a sloppy recruiter still made placements. Throw a warm body against a job order and wait for the check to roll in. Those days are gone, long gone. Today’s business is a business of basics, ethics, focus, smart high energy recruiting and relationship building. Too many good recruiters forgot what brought them to the party or never learned it. Now is the time to get back to the basics and practice good recruiting. Planning, call activity, follow up and follow through, qualified job orders, candidate control, all of the clich?s are now the rule, not the exception.I talk to recruiters, owners, managers and executives on a daily basis and without exception I am hearing that times are tough (read changed from a year ago) but placements are being made. In fact, some of them are having their best year ever. Granted some disciplines like medical are hot but if you continually pursue the hot discipline you’ll get burned with a lack of follow on business at some point in time. Build relationships with hiring mangers and prospective top talent and make marketing a daily part of your life and you will be surprised that instead of a dead business we live in a dynamic and solid marketplace.Every day you need to expand your sphere of influence to new prospective client companies. Everyday you need to set specific goals as to the number of action calls you will generate, the number of send outs you will orchestrate, the number of new job orders you will capture and the number of new candidates you will recruit. Its still a business of relationships, numbers and skill and don’t let anybody kid you that it is not.The Recruiting Industry is far from dead. Its alive and well and living in the heart of every good recruiter who realizes that you get exactly what you expect from life. No more and no less. Do I think that recruiting is an inner directed business you bet I do and my wish for anybody reading this is to get back on the phone, follow your plan and do business.

Doug Beabout, CPC, (db@DougBeabou.com), a well-known and highly successful search practitioner, trainer and author responded with “Where We Go From Here.”

“During several training road trips throughout the Midwest and Northeast recently a number of recruiters asked me, “When do you think the recruiting industry marketplace will improve?” At the risk of being perceived as sarcastic, I often replied, “How soon do you want it to recover?”The recent few years have brought trials and tribulations at the “desk.” Most recruiters believe this is a classic understatement. Still others feel it is overstatement. The majority of recruiters, in this business in 2001 will acknowledge this as the cause for their demise as recruiters. Some estimate as much as 60% of practitioners have “fallen off” the recruiting desk and are now otherwise employed.From my observation and exposure, I believe this to be a conservative estimate. The greatest tragedy in this reduction of recruiters is that many failed as a result of bad choices, lack of knowledge or stubbornness to change, not because they were a victim of world economic events.I am continually amazed at how some people react to what the media portrays as the crystal balls of our economy. CNN reports that an uprising of dissidents occurred in Baghdad and the Dow falls 50 points. Greenspan says we are doing okay (but not great) and the market rises 50 points. The real problem for many recruiters lies in the fact that we are affected by similar influences. We talk to one another and pass along continued bad news stories about calling a lot of companies and coming up dry. We perpetuate our own difficulties when we accept negativism. There is no doubt about the fact that today’s recruiting marketplace presents many challenges.In my three decades of experience I learned a very important lesson; my success depends largely on myself. I refuse to let the ‘spin doctors’ dictate my income. Nothing exists today that is just cause for failure. While attending a training conference in Chicago, I listened to a very well-known and respected economist state that pent-up demand in our US and global industries is so great it is best described as a massive coil spring compressed to its limits. He further stated that it is about to expand rapidly. Good news for all of us. Industrial growth without talented recruiting services is historically impossible. The CEOs and leaders of nearly all successful companies have consistently affirmed this.Our future in recruiting is based upon several factors; first is to realize that our nature as people is to cling to everything we perceive as the source of our past success. The practices of recruiting that were effective in the past period of affluence are very addictive. Clients became very forgiving in the standards they expected of us when faced with continued demand for candidates in a shallow talent pool. Many clients hired people who fell short of their standards. Many recruiters became sloppy in their practices or simply never needed to learn the fundamentals of the recruiting process.During the last year, the majority of recruiters in attendance at my seminars and boot camp training programs had six or more years of tenure as recruiters. It is very encouraging to see their quest for improvement brought about by the realization that they must change their practices. I am still more discouraged by the larger number of recruiters who believe that ‘if it ain’t broke don’t fix it!’ They blame a poor economy, 9-11-01 and scared clients for their bottomed-out billings. I fear that more recruiters may wither away if they continue to maintain that mindset. We are well past the days of rational excuses for failure.Change is not right or wrong. It is essential. Our marketplace today requires a return to the fundamental skills of relationship-building, surgical recruiting and an obsessive practice of applying the proven criteria of good search activity and client qualification.Another essential element of success today is aggressive marketing, everyday. The desire to create great activity, in a recovering economy, is dependent on identifying every possible client with high-grade search requirements. The luxury afforded us by the high demand marketplace of the 90’s was a minimal need to sell our process, services and ourselves. That was then and this is now. As we said many years ago in my early days at a desk, ‘You are either on the phone or on the bus (and the bus doesn’t stop at the bank!)Another change many must face is their specializations. Whether discipline or industry based, the future economy will bring a ripening of some markets and spoilage in others. Changing niches seems a daunting task to most recruiters. It simply requires research, exploration and a willingness to give up whipping a dead horse.The near term future holds tremendous wealth generation potential for well positioned recruiters who are respected and known by hiring companies. Clients are increasingly selective in choosing vendors. My own niche, Procurement, has exposed me to the insight that corporate America is seeking closer relationships with vendors and is willing to pay a premium for premium results and service. The companies who pay our fees are evolving to exploit the recovering economy. We must evolve and improve as well.The future of the recruiting market is great. The recovery of your recruiting practice is at hand. Those who return to (or learn) the fundamentals of marketing, recruiting and closing will have great success. In short, the future depends on you as much as it depends on economics. The reduction in recruiters is tragic blessing to those of us remaining. The bad practices and great market exploitations are past their life expectancies. The marketplace today is ripe with opportunity for immediate improvement in billings. Recruiters seeking self-improvement, aggressive in their efforts to market and resolute in maintaining high activity criteria will be waiting in line at the bank, not on a recruiting recovery.

Mike Kappel, founder and CEO of the Top Echelon Network (www.topechelon.com) answered the question, “Is perm recruiting dead?” with a short and simple answer.

Perm-placement recruiting is extremely viable for the long term, and here are two main reasons why:1. Demographics suggest that the number of people available to work (the “supply”) versus the number of people needed to work (the “demand”) is widening as baby-boomers begin to enter their retirement years. As this imbalance between supply and demand increases, it will become increasingly difficult for employers to find qualified people. This is the perfect scenario for recruiters.2. Generally speaking, the best companies usually want to hire the best candidates. And even though the best candidates may occasionally use the Internet for their job search, most of the time they are happily working and are not scouring the Internet for new jobs. This means that a human being will be required to find these happily-employed superstars, identify their “wounds” that would cause them to consider leaving their current employers, and facilitate those transitions. The Internet will never be able to convince a happily-employed, superstar candidate to quit his comfortable job in favor of going into an unknown situation with a different employer. It will always take a human being – a recruiter – to work hand-in-hand with the candidate to make the job switch happen. This bodes very well for recruiters.During all types of economic conditions companies will lose key employees due to attrition (e.g., death, divorce, job changes, etc, etc.,), and they will have to replace those key employees. Mediocre companies will hire any warm body who can fog a mirror, while top-notch companies will take the time and effort to recruit and hire top talent.Perm recruiting has been a good business for decades, and it will continue to be very viable for many decades to come. And although the Internet may have impacted recruiters’ easier placements, the difficult placements that can only be filled by a recruiter will always exist. I repeat… They will always exist. Any way you look at it, perm recruiting is a long-term profession with a very bright future!

Frank McCarthy (www.diverseworkplace.com, a long-tenured practitioner specializing in diversity search and placement wrote this ‘tongue-in-cheek’ commentary:

“I read about the obituary of the placement business with great interest and concern. No one mentioned when and where the wake and funeral services would take place. Before I lay out my mourning suit, buy my plane ticket to attend the final obsequies, order flowers, and pen sympathy cards, I thought that I would heed your plea for opinions on the occasion of the tentative demise of our industry.I respectfully disagree with the lamentations, groanings, wailings, and kvitchings of the bereaved and doleful mourners and groaners. The heavy-hearted, grim-visaged grievers who truly believe that the industry is about to breathe its last will probably move in the direction of their most predominant thought: death and burial. If their belief in the last days of the placement business is so strong, their death wish may come true for them. Requiescant in pace may the rest in peace. Amen.My belief is that the only ones who will pass away are those who continue to do business as usual. You know the ones. They do not believe in building strong and mutually beneficial relationships with clients. They scoff at coming up with new product lines like having a candidate research group or building coaching for newly placed executives into their product mix. They ridicule their competitors who are investigating creative pricing strategies and coming up with new ways of working with their clients. They are oblivious to all the studies that predict future and painful labor shortages. They sneer at the facts that the workplace, like the world, is changing. They want no part of becoming culturally competent so that they can deal with the realities of the new workforce. Instead of mastering the Internet and new technologies, they long for the days of resumes in, resumes out, invoices out, cash in. Their patron saint is the dinosaur – not Barney of television fame who is still around – but the ancient dinosaur who moaned and groaned itself out of existence. The beat of not recognizing and capitalizing on new and emerging opportunities goes on and on.In every funeral there is a panegyric, a encomium, a eulogy, a testimonial to the deceased. Not so in the case of those who have carved on their tombstone: business as usual. The positive players in the placement game are staying in play, developing new strategies, and proclaiming their mantra with the words of Wayne Gretsky: ‘I want to be where the puck is.'”

We thank our commentators for the time they spent to share their insights with us. Finally, we received a book from friend and veteran practitioner Richie Harris (www.salesrecruiters.net) entitled Impending Crisis Too Many Jobs, Too Few People. It’s a must read for anyone attempting to predict the future of the recruiting industry.

Paul Hawkinson is the editor of The Fordyce Letter, a publication for third-party recruiters that's part of ERE Media. He entered the personnel consulting industry in the late 1950's and began publishing for the industry in the 1970's. During his tenure as a practitioner, he personally billed over $5 million in both contingency and retainer assignments. He formed the Kimberly Organization and purchased The Fordyce Letter in 1980.

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