Twice annually, we conduct a business barometer survey of our members. The purpose of the survey is to benchmark past results as well as to help form a short-term recruitment outlook. Survey participants are the owners of the nearly 500 recruitment firms that make up our membership. In our newest survey, fully two-thirds of respondents reported a positive outlook for the next 180 days. Seventy percent indicated that business over the past 180 days was the same or better when compared to a year ago.

Survey participants are also asked to provide where their business is physically located compared to where most of their actual recruitment activities take place. Approximately 60 percent of respondents are located in the USA and also conduct most of their business in the USA. Nearly 23 percent are located in Australia / New Zealand and conduct their business in that region as well. The remaining respondents were located in Asia, EMEA, and South America.

More than 80 percent of survey participants said that recruitment fees are in line with or ahead of last year; this is to be expected as the severe talent shortage continues. Simple supply and demand laws dictate that prices are higher when supply shrinks. Fees are, in many cases, rising either due to price increases or because salaries are rising in order to remain competitive.

The strongest vertical markets reported by NPAworldwide members are:

• Accounting / Financial Services
• IT / Hardware / Software / Electronics
• Manufacturing / Mining / Construction / Supply Chain

A number of respondents anecdotally suggested that consumer goods (particularly FMCG) and retail also have strong recruitment activity.

There were not significant weaknesses reported in any verticals apart from some pockets in manufacturing. Again anecdotally, members who are working in petroleum-related sectors have reported some slowness due to continued low oil prices.

Overall, members are growing and feel positive about continuing that growth into the year.

Do you all remember when fuel prices were skyrocketing? It really was not that long ago. Everyone raised their prices. Airlines started applying added fees to your ticket. Delivery charges went from $25 for local furniture companies to $50. Everyone was tuned into the hardships created by the rising costs. We choked down the increases and went on with our lives.

So has anyone heard of a company or service that has reversed those increases driven by high fuel costs? I don’t know about you, but I can now fill my car with fuel for the week for less than half of what it cost just two years ago. Are airlines offering those who booked tickets six months ago a $50 check when they board the flight? Is a company that does landscaping saying costs are down for one of the major components of variable costs and now you, the customer, will see a 10% decrease?

What the heck does any of this have to do with recruiting? Here is my point…we live in a world of supply and demand. It is difficult to raise prices, but easy to keep the increase for a longer than a deserved period of time once you make the effort to implement an increase. Check your invoices this month for surcharges driven by old news regarding fuel if you do not believe me.

Have you been filling jobs with ease in record numbers, or are you getting more difficult assignments for a very limited collection of candidates? Thinking that tough jobs with limited candidates to fill from describes a typical job now. Am I right? Guess what that means? Good recruiters are in demand…supply is low!

Now is the time. Charge what you are worth. Once you battle through the pain to  increase recruitment fees, you will reap the rewards for many months, perhaps even years after.

A word of caution…do not be that company that fails to pay attention and keeps surcharges well beyond the period they are appropriate. Adjust recruitment fees to market conditions…your services are in demand right now, so act accordingly.

Perhaps a surcharge is a way to make this more palatable to a client. “Wow, that is a tough job in a limited candidate pool. We charge a 5% premium for those types of positions. Or, this type of search requires an engagement fee of 25% of the fee up front.” Figure out a plan and a message that will work for you. No gouging or being unfair. Be realistic and strike a balance with regard to recruitment fees.

Not too long ago it was Valentine’s Day here in North America…maybe the customs are different around the world but a dozen red roses is considered a nice way to mark the occasion for your loved one. Guess what happens to prices for roses at this time of year? Yes, they double or triple in price. And red roses, a sign of love (in greatest demand), rise in price the most.

Convertible cars cost more to buy in the spring than at the end of the summer. Concert tickets cost more for popular groups or performers than those that are out of style (demand). Hotel rooms cost more on Friday and Saturday nights. A beachfront vacation rental home costs more in the summer than in the dead of winter. I could go on….

Supply and demand…think about how your recruitment fees are connected to the bigger economy and act accordingly.

Our guest blogger is Rod Hore from HHMC. Rod is a 35-year veteran of Australian and international IT and corporate advisory organisations. His executive-level credentials traverse many segments of the staffing and recruitment industry and include corporate advisory assignments, mergers and acquisitions mandates, and C-level advisory to multinational and other public and private organizations. Located in Sydney, Rod founded HHMC to provide local industry acumen and global knowledge to Asia Pacific recruitment agencies. HHMC’s innovative business strategies and well-grounded guidance result in clients realising their personal and corporate goals.

Acquisition can be a powerful tool for accelerating your recruitment company’s growth. 2016 may be the year to build on your capabilities, add new services or products, gain new customers or enter new markets.

However, it’s important not to get swept away in the excitement of a deal and to remain strategic. A carefully planned, strategic approach greatly increases your chances of successful M&A and long-term business growth. As you consider growing your business in 2016, HHMC has a few tips to ensure you remain strategic.

Begin with strategy.

Your overall growth strategy should be the primary driver and guide for your acquisition. While this is a simple principle, it can sometimes be forgotten in the excitement of the deal.

Do not acquire a company simply for the sake of acquiring a company.

Buying the wrong company can be an expensive mistake that devours management time and cash reserves.

Use a demand-driven approach.

We strongly recommend clients research markets before pursuing individual companies. The reason is that selecting the right market is critical to successful growth.

The chosen markets should have healthy, stable demand for your services and be aligned with your overall growth strategy. HHMC strongly recommends selecting a market prior to identifying acquisition targets or potential partners.

Without understanding market dynamics, you may be tempted to pursue what looks like a promising opportunity, only to find that the market is not economically appropriate for the long term or not appropriate for your particular business.

In addition, market research will help you enormously when it comes to evaluating and identifying potential companies to acquire.

Develop measurable criteria.

The criteria should be aligned with your overall strategy. It may include growth rate, size, geography, customers, or key players.

Begin your research at a high level and then progressively zero in on individual market segments you find attractive as you gather more information. Further research is required to understand if the market is compatible with the type of services your business offers.

During the research, make sure to use your selection criteria to remain objective.

It is important to note that in some markets the available targets for your criteria may be scarce, so you may need to be realistic in your particular search.

Expand beyond the “usual suspects.”

It’s important not to fall back on the “usual suspects” or businesses that are already known to you.

They should not be your only source of candidates. Turning to these companies alone may mean you are ignoring a whole host of companies that could be strategically valuable acquisitions.

Remember the human factor.

Acquisitions involve much more than just financial figures. It’s extremely important to develop a relationship with owners, especially in privately-held, not-for-sale acquisitions.

Owners tend to be emotionally attached to their company and convincing them to sell to you involves much more than just a market-value cheque. Consider the owner’s drivers and motivations: what does he or she really care about? Developing a strong relationship with an owner early on in the M&A process will greatly benefit you and increase your chances of developing a winning acquisition proposal.

HHMC believes 2016 will continue to be a strong year for M&A activity and recruitment agency owners will have to put their best foot forward in pursuing strategic acquisitions. HHMC wish you every success in with your growth plans for 2016.