Today’s guest blogger is Martin Snyder, Main Sequence Technology. Founded in 1998, Main Sequence Technology creates talent acquisition technology solutions wherever and however organizations are built. PCRecruiter is the solution of choice for thousands of third party recruitment, corporate, and outsourced staffing teams across economic models and around the world. PCRecruiter provides comprehensive CRM and ATS functionality converged into database, voice, and email interfaces to empower recruiters to do what they do best with accessible, cost effective technology. Main Sequence is proud to serve the NPA organization and our many individual NPA affiliated customers. To learn more, please visit www.pcrecruiter.net.

As a guest blogger, I wanted to bring one of my old saws along. I have posted versions of it elsewhere, so if you have seen it, at least you don’t have to hear me expound (at length) about it over a root beer.

It goes something like this: The World Needs More Independent Recruiters.

More recruiters doing more recruiting could bring some measure of unemployment relief, but importantly, more recruiting may actually increase real economic development. To convince the world of that proposition, the world needs a better understanding of who independent recruiters are, and how they create value.

Easier said than done. Recruiting is deceptively simple to explain, yet complex in the execution, with widely varying performance styles and backgrounds among highly successful recruiters. Even many otherwise savvy business professionals have little understanding of what recruiters actually do.

In January 2012, a blog entry was published on Recruiter.com that generated thousands of tweets and Likes. The post starts with the story of Twenty Heartbeats. In an ancient country, a rich man wants a painting of a beloved horse. He takes the horse to an artist, and pays much gold in advance. The artist looks the horse over, and then goes off to paint. After years go by, the horse is old, and the rich man is angry by the lack of production of the painting. He confronts the artist, who whereupon paints the horse in a few brush strokes (twenty heartbeats of work), and the painting is incredibly brilliant and lifelike in every way. Enraged by this display, the rich man turns his back on the artist, but as he is leaving the artist’s home, the man sees the thousands of studies, scraps, and nearly complete paintings of the horse that the artist made in preparation to be able to create the stellar work in just twenty heartbeats.

The metaphor, of course, directly applies to recruiting; while it looks easy enough to persuade a person to move from one job to another, in the real world, it actually takes years of study, market expertise, and an intangible knack to reliably make it happen. Owners of independent recruiting firms understand that if a person does not have the knack, hard work and training are best invested in others. Recruiters are salespeople. High stakes salespeople.

A house is a pile of sticks, a car a hunk of metal and plastic. A job is identity, security, ambition, and social position. HR people are constantly talking about “fit” and “culture” when they talk about recruiting and staffing. It seems that the act of moving between tribes is a process choreographed around deeper evolutionary and cultural roots to comfort both the newcomer and the tribe that there is a fit; a mutual desire that can be reasonably counted on.

People who wish to learn about and understand cultural phenomena reflecting the knowledge and meanings guiding the life of a cultural group are called ethnographers (from Greek ethnos = folk/people and grapho = to write).

Superior recruiters are often superior ethnographers, able to understand and manipulate the knowledge and meanings that create the culture of organizations – both sources of and targets for candidate talent. Superior recruiters are market makers of Social Capital. Social capital refers to connections within and between social networks, which helps explain why social media has had an explosive impact on the profession. As a sociological concept, the prevalent view is that the greater the stock of social capital, the higher the likelihood of positive economic outcomes for any given group.

To be sure, independent recruiters are capable of creating jobs where no job actually exists according to many models. According to The Establishment Level Behavior of Vacancies and Hiring (NBER Working Paper No. 16265), in most models of search, matching, and hiring in the labor market, employers post vacancies to attract job seekers. Many establishments with zero reported vacancies at month’s end do hire new employees the following month. Establishments reporting zero vacancies at month’s end account for 42% of all hires the following month. Only about half of that gap can be explained with current econometric models, implying that many hires are not mediated through vacancies.

Independent recruiters know exactly how many of these hires are made: an organization was presented with the opportunity to bring on a particular person with a given set of attributes, and a latent or new role was created, formalized, or activated as a response to that presentation.

That presentation is very often the work of a professional recruiter.

Coincident with the rise of social media in recruiting, the subspecialty of Sourcing has become recognized. Recently, the American National Standards Institute (ANSI), for the first time ever, recognized a standard for HR (Cost per Hire), which identified sourcing activities as a distinct component of staffing operations occurring prior to the job application.

Sourcing and Recruiting are often synonyms in practice.

By whatever name and in whatever environment, recruiting is a basic economic activity. Recruiting takes place everywhere that organizations are built. Effective recruiting means understanding cultures and effective management of social capital. Applying recruiting skills more formally in economic development efforts, taking a market-based approach to working with unemployed candidates, and identifying and developing the sales talent inherently required for superior recruiting results are ways to enhance economic results for individuals and organizations. In my opinion, it is undeniable that the world needs more recruiters and greater understanding of what recruiters really do.

For those anticipating purely technological solutions, it may come as a surprise, but in matters of high-impact social situations, computerized browsing does not evade encounters, it merely prepares them under the best auspices. The same implacable laws will be in force as soon as the persons involved are in contact.

In the arena of the implacable rules of moving between tribes, recruiters are looking like irreplaceable players. It’s my old saw that the world needs more of ‘em.

As the Associate Director of Membership for a global recruiters network, I see split placements being made every day. With each recruiter taking home 47.5% of the client fee, it adds up quickly – and for most of our members, it’s more like “icing on the cake” for the profitability of their business. So, it goes without saying that recruiting can be a very lucrative business, but what happens when you decide you want to retire? How do you ensure that your independent recruiting firm has a resale value that amounts to more than your unpredictable client list?

Add contract work – Active contracts are guaranteed revenue for your business and can be valued and purchased outright. Obviously, this is more tangible than working on a contingent basis.

Expand your client base – If 70% of your business comes from one client and that client decides to move to another recruiting firm, your business will be significantly devalued.

Specialize – Once your specific niche is defined, figure out how to grow it. You want to be the “go-to” firm for executive placements in your specialized niche. Your team should experts  and this knowledge will give them an edge with clients and prospects.

Create business procedures – Create standard business procedures and document them. It is valuable information, especially if they are efficient and help make your firm successful.

Use a unique business name – Avoid naming the firm after yourself, e.g. “Smith Global Services.” Chances are the party interested in purchasing doesn’t have the last name Smith.

Try (as much as possible) to avoid turn-over – If your top producer decides to stick with the firm through the sale, they are a big asset and valuable to the bottom line.

Purchase real estate – It goes without saying, but owning the building or space where your business is operated will significantly increase the sale price. Even if the building is not being purchased, it’s an asset that can be sold seperately.

Disclaimer: I’m not a black, blue, or even green level expert in this area. Most of what I’ve included might already in your exit strategy, but it never hurts to continually re-evaluate based on the current economic and industry conditions. The bottom line is – your business is worth what someone is willing to pay for it.

What are you doing in your global recruiting firm to ensure a high business valuation?