In 2010, when I’d just graduated, and was looking for my first ‘proper’ job in marketing, I remember being baffled. Why, thought fresh-faced me, could I find so few “actual jobs”, yet so many “jobs in recruitment” – in other words ‘finding jobs for other people’. It felt like a total conundrum.
It felt like a total conundrum.
Many of my friends joined recruitment agencies straight out of university. I begun to solve the conundrum, learning from them that recruitment is often a ‘fend for yourself’ kind of role. As long as you can pay your way within a few months, you’re all set. Companies let you try your hand at it, fully expecting only a small percentage of their new starters to stay long term.
So, query solved – Why were there so many jobs in recruitment? Because recruitment agencies hire loads of people knowing that – by Darwinnian natural selection – only the best will remain.
But hang on – thought I more recently – that doesn’t quite explain why there are so many agencies in the first place. Once over the hurdle of finding an entry-level job, professionals can find themselves hounded by them. Why? Because there are absolutely LOADS, all competing for candidates’ attention!
20,000 Recruitment Agencies in the UK alone
There are estimated to be over 20,000 recruitment agencies in the UK. That’s a colossal amount! Put it in perspective: 20,000 recruitment agencies, when the country’s total number of medium and large businesses is just 38,000*.
Frankly, 20,000 is simply ‘too many’ recruitment agencies for the UK. Fact.
How the heck did there get to be so many? How do they all survive? What possible value are they adding?
How recruitment agencies make (or scrape!) a profit
There seem to be two main models that lead to profitability. You can focus on being…
- Niche specialist. Spend all your time building a network of extremely niche specialists, and the companies that need them. Then use your expertise and knowledge to match them up, and take a sizeable commission (i.e. 10-30% perhaps.)
- High volume. Concentrate on lower-skill, high volume roles. Fill your books with candidates and sell them into companies on a contract / semi-permanent basis. Lower margins, but profitable at scale.Both these models are proven profitable. Model 1 tends to be taken by boutique to mid-sized agencies. Model 2 can work for global, hefty companies like Manpower and Michael Page.
If the UK had a good contingent of agencies running each type of model, we’d really have our fill. Clients would have all the candidates they need, and candidates wouldn’t get hounded. Everyone could take a nice tea break.
But then there’s Model 1.5…
Recruitment model 1.5 – the low-value no-man’s land…
Model 1.5, sitting in no-mans land between ‘specialist’ and ‘high volume’. Without focus, the consultants offer no particular skill. And without an established database of candidates, there’s no economy of scale for client’s to tap into either.
This, though, is exactly where the vast majority of agencies (or individuals – recruiting from their front room) seem to sit. Luck, here, is as important as skill. Will a cold call result in a role? Could you be lucky enough to reach the best candidate first?
1.5 recruiters trade on the fact that job-hunting is a chaotic, confusing process for candidates. Jobs are ‘marketed’ on any one of 1000’s of online channels, social media or offline. Candidates navigating this encounter a bewildering array of opportunities, but find most shrouded in a mysterious shroud of vacuous mumbo-jumbo language and lack of genuine information.
Through the chaos, recruiters of all kinds reach out to these confused candidates, touting their own path using whatever persuasive method works best. It can be easy pickings.
Competition is fierce, but it’s not always about being better – often it’s just about being first.
Candidates and businesses from all fields will have encountered the Model 1.5 recruiter. They add practically zero value to proceedings. Worse still – they play no part in matching the right people with jobs where they can thrive and build a proper career. Poor placements can ruin self-esteem, livelihoods and lifestyles. There’s real damage – or at least negligence – being done.
Still, ample money is up for grabs, accessible to the most competitive of 1.5s.
How long will we put up with them, though?
Trimming the industry – survival of the fittest
Plainly, 20,000 is way too many recruitment agencies – any professional who’s dared to open their LinkedIn account, or submitted their CV to a database will be well-aware of the overload.
Online, the industry has been consolidating its digital tools. The glut of job boards are slowly being absorbed into ‘mega-portals’. Responding to candidates’ frustration with the search process, these ever-more powerful channels are putting up ever-stronger barriers for recruitment professionals – demanding value or investment in exchange for candidates’ attention.
The chaos candidates have experienced online is, therefore, calming. And as barriers to candidates increase, there will surely also be less space for middle-men recruiters who once traded off the chaos.
In competitive business, natural selection is a fact of life. Just as the staff of recruitment agencies themselves swim or sink, so too do businesses. The waters are getting choppy for those agencies who relied on disorder to make a quick buck.
Undoubtedly, it’s the multitude of 1.5 middle-grounders – those who offer neither specialism nor volume in their recruitment services – who’ll find themselves prey to these changing tides.
(By the way… I’m aware this article was a bit on the harsh side. As a candidate, I feel I had to get this out of my system first. But I also now work in recruitment (!!), so intend to write many more positive, future-focussed articles in the near future.)
* There are, to be fair, a heck of a lot more small businesses (under 49 employees), though the vast majority have under 9 staff.
