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13 Trends for International Headhunting in 2013

by Dave Nerz

I see these trends impacting international headhunting in 2013:

  1. The demand for recruiting will continue to shift toward employers’ more highly specialized and challenging roles.
  2. The recruiter with international headhunting or global search skills will be in demand in 2013.
  3. Clients will fill easy positions with in-house recruiters or HR, by referral, or with social media tools.
  4. LinkedIn will continue to grow its influence on the search landscape with an ever increasing global footprint.
  5. Traditional job boards will suffer as aggregators like Indeed and Simplyhired gain ever wider use and acceptance.
  6. Other job boards will continue a progression toward even greater specialization both geographically and by industry or sector.
  7. Clients will continue to look for market share and growth on a global basis and will initiate international headhunting assignments to support this direction.
  8. Clients will view many openings as project-dependent and will be less willing to hire permanent employees and more likely to hire contract staff.
  9. The use of mobile and smart phone apps to connect with talent will escalate to even higher levels.
  10. The first contact with recruiters will be increasingly via summarized or speed application processes often identified as “apply with apps.” So the resume/CV will be a follow up step.
  11. The Asian and Australian economies will be slowing so more talent will be available from those markets. This is the opposite of recent years where those markets were net importers of talent.
  12. International headhunters seeking candidates with post graduate degrees will be operating in what is a nearly full employment environment.
  13. Global recruiting will continue a stratification process where research, recruiting, background checking, and onboarding will be sold separately and by different providers rather than in the bundled form to which we are accustomed. Specialist and price leaders will emerge in each layer.

In summary, while many things will be changing, I see 2013 as a relatively flat year with overall business levels similar to 2011 and 2012.

Split Placements Add Value to Recruitment Businesses

by Dave Nerz

hand making a flow chartIndependent recruiters are risk takers. Recruiters typically strike out and leave the comforts of the corporate life behind. Many of these entrepreneurial ventures grow and prosper. One of the things I am seeing more frequently is the desire to create an “exit strategy” from the recruiting franchise that produces value in return for the risks taken and the successes achieved. In some cases the founding entrepreneur has been better at creating and growing the business than they have been at making the business saleable. Those buying a business want to see what value has been added to the business. They are not buying the entrepreneur; they want to buy what is left after the founder is gone.

So what can be done to add value to a recruiting business?

Add Process: The buyer wants to know that the success of the business is not dependent on any one individual. There needs to be a process for recruiting, doing the books, hiring and retaining, marketing the recruiting franchise, and even keeping the place clean and stocked with pens and toilet paper. A rule of thumb: if it is not written down, it is not yet a process.

Add Quality People: What people stay behind when the entrepreneur leaves? They don’t all need to be employees but they should be part of the process and the relationships might be better if captured in writing. This one is a little trickier as some buyers may want to use their own bookkeepers and cleaning services, so don’t get locked into irreversible contracts.

Add Connections: Develop and document the relationships that separate your business from others in the same niche or market. Trading partners that work cooperatively with your business can be the difference between a good year and a great year. They can add the revenue that represents the total profit for any year. These connections add value, but need to be documented in order to produce value at the time of sale.

Add Sources of Revenue: The number one value added source of revenue for any recruiting business is contract placement. These contracts smooth the peaks and valleys associated with contingent recruiting. The ongoing revenue adds to the basic value of the business and increases the likelihood of a sale for a recruiting business.

A second way to smooth the ups and downs is the inclusion of split placements. Split placement revenue is not guaranteed, nor is there a guarantee of continuation on the departure of the founding entrepreneur. But if properly documented as part of the recruiting process, split placements can be demonstrated to add value and reduce the risk of long dry spells for incoming revenue. The ability to work others’ jobs when you have none—or to seek the help of others (without adding staff) when the business is overwhelmed—is a great value that needs to be documented and sold as part of the business.

Add a Formal Split Fee Network: Showing a potential buyer that you have formalized the process to the point of being an active member of a split fee network is a bonus for any potential buyer.

Make your years of risk-taking pay off. Plan ahead and add value that a future owner would potentially pay for.

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Image courtesy of Sujin Jetkasettakorn / FreeDigitalPhotos.net

New Ideas for Independent Recruiters

by Dave Nerz

Effective independent recruiters need to stay current on the trends, tools and ideas being used by the competition.  With the growth of competition locally and from international recruiters looking to expand their coverage areas, it’s wise to be on top of all the ideas that might be used to maximize success.  Everyone uses the traditional tools of recruiting like referrals, LinkedIn, Twitter and all the other more traditional sourcing methods.  Here are a few off the wall ideas for the open-minded and aggressive independent recruiter to find and close new candidates:

  • The Buddy System.  When you find a good candidate, find out who their best friend in the workplace is and make an offer to both.  You will hopefully get a strong and effective team of new hires and instead of just one your client will get two.  Your fee?  That’s up to you but maybe this offers an opportunity to show the client a savings?
  • Push News and Openings.  If you are not sharing with the best candidates the placements you have made and the best opening you have, you need to start doing this.  A simple email list and newsletter can get it done quickly and effectively.
  • Create Skill Challenges and Contests.  If you hire accountants, create a contest that will challenge their knowledge and experience.  Offer a $500 to the best response to a question or problem.  You will engage many that are employed and top thinkers.
  • Create a Talent Space.  If you can create a space on social media like LinkedIn for people with the skill you seek to gather and connect, you will get a stranglehold on those in your targeted profession or skill area.
  • Experiment with Traditional Media.  No one is doing so any more so you will stand out.  Include direct mail in your efforts, now a days it is a unique way to capture those you seek.
  • Offer Interview Options.  Make the interview easy to do.  Offer interview outside of work hours, do it in casual setting on a Saturday morning, do it by Skype, do it at a location your candidate selects…you will learn something about them from each of these options.
  • Side-by-side Comparison Worksheets.  Create a sheet that describes what the new employer is offering…upside, benefits, market share, working conditions, hours, etc.  Let the candidate complete how the existing employer stacks up right in front of you.  It lets you know where the issue are in an instant.
  • Know Why They Said Yes.  As an independent recruiter are you doing ‘post-mortems’ on successful placements to see what were the 3 to 5 most influential things said or done to get a yes out of the candidate.  If you know what works for one the process may be more repeatable for many.
  • The Diminishing Offer.  I personally love this one.  Because you know candidates will string you out to get as many active offers in before deciding do this…make the offer tiered.  If they accept within 24 hours of the offer it comes with a signing bonus of X.  If they take from 24 to 72 hours it is X – 25%.  And if it is more than 72 hours it is X – 50%.  If it is more than a week it is X – 75%.  You will quickly know how serious the candidate is and they will be explaining the issues holding them back with greater urgency.  It is a gimmick but it is hard to create urgency particularly when the candidate is employed in a border-line acceptable existing situation.

Independent recruiters need to try new things. The competition from other recruiters including international recruiters is certainly not going to get much easier.

 

Recruiting Franchise Opportunities will Benefit from the War for Talent

by Dave Nerz

open signMany say it is a great time to start to start a business and in light of the long-term demographics a recruiting franchise or staffing franchise is a good bet for success. Recruiting and staffing franchises help employers find workers either as full-time company hired employees, as temporary contractors, or as full-time contact employees.

Because of the uncertainty in the economy, many employers are looking for less permanent types of arrangements with employees. They want to pay someone to implement a project, lead a launch or manage a program but want to “rent” employees rather than “owning” them for the long haul. Demographics point to a long-term shortage of talent due to the aging baby-boomer generation leaving the work place and insufficient talent in the pipeline behind them. This is more real in technology, engineering, healthcare and science than it is for service-type jobs. But regardless, if the economy gets moving again, the demand for talent (aka skilled and talented employees) will be overwhelming. It is projected by many to be a “War for Talent” that will play out both locally and across borders and continents. And according to a report by The Bureau of Labor Statistics, the employment services industry is expected to be the United States’ 9th-largest in terms of job-creating industry over the next 10 years.

When I look a the money MRI, Spherion and others are charging for a recruiting franchise, I wonder why more are not going it on their own with the help of a peer group for support. While the turnkey option offered by the big boys is appealing, it also has its own unique risk. Because owners go into to it with a large debt to service, the success must come faster and the profits must be shared with the franchising operator. The success these major operators have is tough to argue with if you are relatively new to the recruiting business.  f you value independence, the recruiting franchise option will be somewhat frustrating as you are really a part of a bigger operation and must do certain things to honor the relationship bought into with the franchisor.

A seasoned recruiter, who knows the tools of recruiting, has a recruitment process, and just wants to strike out independently may value a peer group and some partners to help along the way. Vendors to the industry act as a great support mechanism and can provide ideas and support if a relationship is nurtured with your ATS provider, your accountant, job board partner, etc. Online networks, organized recruiting networks, trade associations and trainers to the industry are all excellent options that, while not fully replacing a recruiting franchise, certainly offer an option to those who want to be more independent.

What kinds of numbers have you heard that a recruiting franchise from a major brand costs in today’s market?

Would you pay the price or start the business independently?

Any resources that are a must for a new independent recruiter?

Recruiting franchise opportunities and the opportunities for starting a staffing business are good. Franchising, while not for everyone, is an option that will prosper in the war for talent.

NPA Is a Global Recruiting Cooperative

by Dave Nerz

I am frequently in a position where I need to describe what NPA, The Worldwide Recruiting Network is all about and how it works. One of the greatest challenges is describing the structure of NPA as a recruiting cooperative, and explaining member-ownership. So I started to doing some research on cooperatives, including a chain of independent recruiters and other  recruiting cooperatives and here is some of what I learned…

  • 2012 is the International Year of the Cooperative. No that does not mean you will find it right after the Year of the Rat or the Year of the Boar on a menu at a restaurant. It does mean that the United Nations believes that “Cooperative Enterprises Build a Better World.” That is the slogan for this year long campaign.
  • There are tens of thousands of co-ops around the world, no others focused on split fee recruiting.
  • Co-ops are owned and democratically controlled by their members. NPA is a member-owned recruiting cooperative.
  • Service to members is prioritized over profit.
  • Shared services co-ops provide services to meet the needs of their members. This sometimes includes joint advertising and marketing, offering training and educational activities, and negotiating prices with vendors.
  • Some examples of cooperatives include:
    • Ace, True Value and Do it Best hardware chains. These chains are owned by more than 13,000 independent hardware stores.
    • Best Western is the world’s largest hotel chain with more than 4,000 independently operators in 80 countries.
    • NPA, The Worldwide Recruiting Network…which is really a global recruiting cooperative.

A Split Fee Network Organizes the Playing Field

by Dave Nerz

I’ve been reading some interesting blogs lately on how recruiting compares to sports. Barb Bruno had an interesting one just a few days ago comparing recruiting to golf.

It got me thinking about where a split fee network might fit into the comparison of recruiting and sport. My conclusion is that networks function much like sporting leagues. They group like-minded recruiters together and organize the playing field for participants with various levels of tools and rules. Read the rest of this entry »

Contingent Recruiters or Retained Headhunters…Which is Best?

by Dave Nerz

I just read a blog post on ere.net by Fraser Hill.  The premise is about RPO, but the stereotyping of recruiters is what was most fascinating to me.  It seems that Mr. Hill believes the “Headhunter” (retained) recruiter to be more capable than the “RPO” or “Contingent” recruiter.

In my opinion, it’s all about how the client wants to pay, not the result they are looking to achieve.  Each model provides ample opportunity for the client to specify what they want and expect.  If the client is willing to pay a reasonable fee to gain the result, I think any of the many recruitment models and recruiters available can do the work to find top talent.

It is particularly interesting to see that “contingent recruiters” are evolving to more complex payment models as they engage multiple times with the same client.  I see “containers” (a mixed contingent and retained fee), small retainers, recruiter engagement fees, pay for hours worked, pay per candidate, and increased total fee payouts all be effective to motivate and incentivize a contingent recruiter to work a complex and longer-term search.  Again, it is just a payment issue not a capability issue that drives recruitment models.  It is interesting to see that not everyone views it that way.

Do you feel one recruitment model is more capable or effective than the other?

Have You Earned Your Recruiter Certification Yet? Why Not?

by Dave Nerz

Let ‘s start one step back from recruiter certification. I view recruiter certification as the culmination of a commitment to your profession as a recruiter. So maybe we should start at the beginning.

Where does the commitment to the profession begin? To me, it is connecting with and getting connected to others that are working in the same profession as you, a recruiting industry trade association or group. To me, there are many professions that are legitimized by a governing body or an association that ensures professionalism and standards. I want my lawyer to pass the bar exam, I want my doctor to be a member of the appropriate medical association and I want my pilot to be a member of the trade association or governing body that pilots belong to. I expect professionals to be connected to other professionals so that I don’t get bad medical advice or a pilot who doesn’t understand the dangers of wind shear.

So for me…

  • STEP 1. Join a recruiting industry trade association or recruiter association like the National Association of Personnel Services (NAPS) in the US. There are other groups in Canada like ACCESS or in Australia like RCSA. As a point of reference only, our organization so believes in this that we have corporately joined NAPS and make NAPS membership available to our members for just $100 annually. We are committed and walking the talk.
  • STEP 2. Study the manuals necessary to become an expert on issues and legal requirements of performing to the highest and most ethical standards of your profession. Look for a certification class and take it. Finally once you are confident, take the recruiting association’s exam to become a certified recruiter.

If you expect to be treated like a professional and want your clients to view you as committed to the profession, do these two things. Join your industry’s trade association and get your professional certification. It doesn’t cost much or require much time, and it will set you apart from the crowd.

Mergers and Acquisitions in the Global Recruiting Industry

by Dave Nerz

for sale signAs with most things in business, the global financial crisis impacted the number of global recruiting mergers and acquisitions done in the past few years, as well as the value of those deals. Staffing Industry Analysts reports results of global recruiting business acquisitions on a quarterly basis. These facts can be found on their website, staffingindustry.com. According to Staffing Industry Analysts, the number of global deals done in the 3rd quarter of 2009 was at a record low, and even quarters into 2011 showed great weakness in the number of global recruiting acquisitions completed.

More recruiting company purchases are focused on firms doing contract employment and temporary staffing. These types of firms have higher multiples on the sale of a recruiting business because contract employment is considered much more of an annuity than a direct hire placement. Contracts renew and can last for years while direct hire placements can be a “once and done” event. While experts disagree on the multiples, most quote a range of 2 to 4 times EBIDTA. There are many factors that can change this multiple up or down, including the location of the business, the mix of contract to direct hire, and the sector or segment of focus.

The most popular recruiting business sale segments right now are IT, healthcare and industrial. Not a surprise. Again there is  a larger multiple on the sale of a recruiting business from these segments and hence, more frequently a deal completed.

A new trend is the global recruiting business acquisition. The reason for the growth in global acquisitions is obvious to me, but maybe I’m too close to the topic of global recruiting to understand why it would not be obvious to all. I see it like the stock market….diversification is good. The same with growing global recruitment companies. They need coverage and diversification into more market areas and more economies. This should help them tap growth markets while diversifying their business portfolio. Global recruiting is expected by more clients as they grow their search for talent. So firms in the US need an Asian presence, and global recruiters based in the UK or Australia may need a North American location.

Has anyone sold a recruiting business recently or done the work to estimate multiples? I am interested to know your experiences.

Removing Barriers to Recruiting Internationally

by Dave Nerz

Businesses are growing internationally and global recruiters interested in growth will need to find ways to support this shift.

A study, sponsored by MAXIS GBN of more than 350 multinational business executives, reports that 40% percent of those surveyed intend to expand operations outside their home markets. The expansions will be in both developed and emerging markets.

With growth and expansion come challenges for businesses—and the global recruiters supporting them—to find talent in local markets. The war for talent is on and it is being waged on a global stage! Consider these findings:

  • Close to 20% of the largest multinationals surveyed expect to double their total workforce outside their home country within the next five years.
  • Twenty-five percent of companies will enter new markets in five years.
  • Global markets are outpacing home markets for revenue growth. Thirty percent of respondents expect 70% of their revenue from outside of their home country within five years.
  • Brazil, China, India and the U.S. are target markets for companies looking to sell products.
  • Vietnam, South Africa and sub-Saharan Africa are considered the best opportunity for those seeking to source materials, products or components.

The Barriers to Global Recruiting

Engaging in international recruiting will be an important survival strategy for recruiters in the years ahead. Yet there are many barriers to recruiting internationally that will delay or even stop recruiters from addressing this opportunity. Here are some of the challenges indentified by successful global recruiting organizations:

  1. Desire and Awareness – Some recruiters have become insensitive or immune to their clients’ growing need for talent outside of their local geographies or home counties. Relationships with clients built long ago and grown locally have remained locally focused. Some smaller recruiters have not investigated their clients’ international recruiting requirements. In some cases, lack of awareness is compounded with a lack of desire to change from a comfortable recruiting process.
  2. Knowledge – A lack of knowledge about foreign markets for talent keeps many recruiters from asking about international recruiting requirements.
  3. Networks – The absence of a network of international recruiting partners has prevented smaller firms from competing for international recruiting assignments.
  4. Success – As with most things, we tend to fear those things we have never tried or been successful with in the past.

Remove the Barriers

Take these actions to begin exploring the opportunities that recruiting internationally can offer your firm:

  1. Ask Clients About International Needs – You might be surprised how many small and mid-sized companies are seeking talent in areas outside the markets you have served. By asking, you will identify the opportunity that international recruiting represents within your client pool. Remember that recruiting is competitive and that developing a skill may help you land the next new client…so it is not just about the clients you have today.
  2. Become Knowledgeable – Read, ask questions, attend webinars, and add to your knowledge about what is going on in international recruiting markets.
  3. Grow Your Network – Increase your networking skills and efforts. LinkedIn and the many LinkedIn Groups are a great way to start. Become connected to more international recruiters. Based on client feedback, you may identify target countries to focus on initially.
  4. Demonstrate and Promote Your Efforts and Success – Talk about what you are doing when given an opportunity. The more you can display your knowledge, interest and any successes the more others will think of you as capable of international recruiting.

The growth of international recruiting is an opportunity for recruiters. Find a way to add global recruiting to your capabilities. Doing so will enhance your firm’s likelihood of survival, growth, and profitability in the years ahead.

Image: FreeDigitalPhotos.net

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