Recruiters… If Greece was a company it would be in receivership…

I consider myself to be extremely lucky.  I have had a long career as a recruitment consultant, manager and – most recently – company owner.  I am now in a unique position where I talk to recruitment people all day long… Don’t feel sorry for me – I kind of like it.  Some people like listening to East 17 cd’s… me?…  I like talking to recruitment people… and… listening to East 17 cd’s… sometimes at the same time…

Point is that quite often in our industry there is a serious disconnect between recruitment owners’ expectations, and those of their consultants.

If you wade through all of the bull sh*t, and get down to the ‘nitty gritty’, the simple, and indisputable fact is that every consultant in a recruitment business needs to run a successful desk…  Wow! Craig you’re really on a roll with this post…who would’ve thought in a million years that recruitment consultants need to run a successful desk?! I mean, with nuggets of philosophical brilliance like that you are wasted here.  Jump on a plane to the Middle East, or Afghanistan, or FIFA Headquarters – your powers of understanding a situation and forming a solution are unrivalled across generations…(Self deprecation and sarcasm provided on your behalf free of charge…).

I know it’s a ‘throwaway line’ to suggest that consultants need to run a successful desk – but what is a successful desk?  Does it vary from country to country, temp to perm, specialisation to specialisation?  I’m going to be controversial here and say NO.

My firm belief is that every ‘desk’ should be treated as a ‘business’. And every business needs to be profitable.

Right there is your magic word.  Profitable… Like I said in the title, if Greece was a company the receivers would be in. China would probably buy the whole country – debt and all – for $1, sell off the ruins, get rid of the afternoon siesta and put a return on investment matrix on every man, woman and child…make the place Profitable… Unfortunately, you are not Greece, or China for that matter and to keep your job in recruitment, you must run at a profit.

To highlight the disconnect here’s a brief example of a conversation I had with a prospective candidate last week.  The candidate has been a Sales and Marketing Recruitment Consultant for the past 3 years and has been with the same company for the past 2…

‘So, Lady,’ the candidate kind of reminded me of Lady Gaga without the meat dress, but with the attitude – hence the name. ‘Why are you looking to move on from your current role?’

‘Well, Craig,’ She almost sang – Just like Lady Gaga… ‘I find my boss has unrealistic expectations.’

‘How so?’ I prompted.

‘Well, he says that I am not paying for myself – and that I am actually costing him money, which is absolute tosh.  I mean I am billing on average $10-12k per month.  I’m on an $87.2k package…  Can you please pass me your calculator?’ Picture me sliding my Canon Scientific across the table… ‘Thanks.’  Tap, tap, tap on the calculator… ‘That means I am costing him just under $7.3k a month, and if I’m billing $10-12k… I’m actually making him some decent money…’

Of course the interview rambled on from there, but the simple fact is many consultants do not know how to determine whether, or not their desk (read business) is profitable.

Let me break it down for you as simply as I can, remembering every workplace is slightly (sometimes majorly) different…

Let’s say you are on an annual package of $84k (that’s a $7000 per month salary cost to the business).

Then you need to add the following – these are considered costs associated with having you in the business.

  • Rent (divide by number of employees)
  • Electricity, Telephone, IT charges, Insurance, Stationary etc. (divide by number of employees)
  • Salaries of support staff – Reception, Admin, HR, Accounts, Resourcer etc. (divide by number of employees)
  • Salary of Manager, Owner, Board Members etc. (divide by number of employees)
  • External Resources eg. Accountant, Legal Team, Marketing Consultant, SEO etc. (divide by number of employees)

Then you add the marketing expenses

  • Advertising
  • Client Promotion
  • Candidate Promotion
  • Referral Program

The above list is by no means extensive, but hopefully you get the picture.  In real terms it generally costs a business between 2.5 – 3.5 times your salary package to have you in the business. Using the above example ( don’t forget you are on a $84k package),  that means you would have to bill somewhere between $17.5k – $24.5k per month before your ‘business’ even breaks even – let alone become profitable

Now I don’t expect your boss to share his or her P&L Expense data with you, but if you simply take your salary package and apply the 2.5-3.5 multiple – you have your ‘break even’ point and will be able to work out crudely your value (as a biller) to your business.

The final piece of the puzzle in assessing the profitability of your desk is cash flow.

It is all well and good to make placements and invoice clients, but if you are working with clients who are ‘bad payers’ or candidates who are ‘unreliable’ you are not a profitable consultant.  Most of us who have been in the game for a period of time would have had a ‘non-starter’.  The candidate who goes through the process, accepts the role and then never shows for their first day, or goes missing, or disappears in the first week before the client has paid the bill. (I have many names for candidates like that, but for now let’s just call them… ummm…what’s the worst possible printable name I can label them with…ummm…loverat…no…ummm…let’s just go with selfish).  You have probably also experienced -particularly in tough economic times – the client who makes every excuse under the sun not to pay your invoice, pushes out terms and sometimes doesn’t pay at all.

Basically, up until now you may have seen these inconveniences as simply that – an inconvenience.  It affects your commission at the end of the quarter, you bitch about it for a couple of days and then you move on… What if your desk – your business – was depending on that money to pay your bills? To pay your salary, the rent, the phones, the advertising, the Friday night drinks etc. etc. etc.?

A business – any business – relies on cash flow to survive – and that cash flow is generated by the profitability of your desk…

So Recruiters, next time – before you berate your boss for unrealistic billing expectations – think about the wider picture.  You are responsible for operating a profitable desk. You are responsible, along with everyone else in your business for generating the revenue that allows the business to survive and prosper.  Know your break even point, and exceed it – monthly.

And remember…. You should always give 100% at work… 12% on Monday, 18% on Tuesday, 26% on Wednesday, 32% on Thursday and 12% on Friday…

Craig Watson

1 thought on “Recruiters… If Greece was a company it would be in receivership…”

  1. Another great post. Profitability also needs to be measured in the context of time. You can expect a new starter to not be profitable for some time, but their profitability capability to improve after 2,3,4 years etc. Therefore the good manager needs to judge his/her team not just on immediate results, but also potential, which can be much more subjective.

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