There’s more than one way to look at recruitment growth. As we’ve done before, for the purposes of this blog post, we’re going to focus on independent, third-party recruiters and recruiting agencies. So when we talk about recruitment growth, our discussion will include what it means for them.
One way to look at recruitment growth is the number of placements. This could include the following:
- The number of placements that the individual recruiters in an agency make
- The number of placements that the agency makes overall
- Both the number of placements that individual recruiters make and the number of placements that the agency makes overall
Another way to look at recruitment growth is the amount of billings earned as a result of placements made. Once again, this could include the following:
- The amount in billings that the individual recruiters in an agency make
- The amount in billings that the agency makes overall
- Both the amount in billings that individual recruiters make and the amount in billings that the agency makes overall
Recruitment growth: placements vs. billings
Now, the fact of the matter is that not all recruiting fees are created equal. After all, a placement fee of $32,000 is, quite literally, twice as much as a placement fee of $16,000. However, one placement is one placement, even if one placement is worth twice as much as another placement. You can see how this could become a dilemma when trying to determine the best way to achieve recruitment growth.
So there are a lot of factors at play, including how much each placement is worth. So how can a recruiter or search consultant make sense of it all? What’s the proper approach in terms of recruitment growth? What should you focus on when setting your recruiter goals?
To help answer these questions, we’re going to we’re going to draw upon the wisdom of Terry Petra, one of the recruiting industry’s leading trainers and business consultants. Petra has extensive experience as a producer, manager, and trainer in all areas of professional search, including retainer, contingency, and contract, as well as clerical/office support and temporary.
According to Petra, he receives calls all the time from owners and managers who ask the same question:
“What billings goal should we have for our consultants?”
This is a fair question. As a prudent business owner, it’s important to understand the billings/cash-in numbers required to support your operational objectives. This includes determining your monthly operational break-even point or “nut,” as well as calculating revenue projections and profit margins.
From that point, you can establish minimum and targeted production figures for each position in the organization and for the organization as a whole. However, in managing your staff, focus on unit placements first and dollars billed/cashed-in second (number on assignment, length of assignment, and gross margin for temporary or contract staffing). The focus should be on the throughput of job orders going through your recruiting software that result in a successful placement.
The fact remains that most of the experienced producers in our industry, if allowed to concentrate only on dollars billed/cashed-in, reach a production comfort level somewhere between $100,000 and $200,000 per year. With an across-the-board average fee of about $15,000, that equates to little more than one placement per month.
A specific example is an experienced search consultant who is on course to bill approximately $192,000 this year. However, his average fee is $32,000. That means he will finalize only six deals/placements this year.
Recruitment growth: think in terms of UNITS
Although the overall billing numbers do not look bad, consummating six placements within a twelve-month period of time means this consultant is continually walking the fine line between success and failure. If one or more of these deals do not come to fruition, his overall billings number shrinks dramatically.
As an industry, we tend to recognize high billing numbers, and to some extent, we should. However, as owners, managers and producers, a more accurate picture of our capability is reflected in our number of unit placements. This is why recruiting firm owners and recruiters should think in terms of units . . . not dollars.
In those recruiting and staffing firms where the focus is on unit placements, minimum individual performance standards generally align with the following numbers.
Professional search and placement:
- By the end of their first year, producing at the minimum rate of one full unit placement per month
- By the end of their second year, producing at the minimum rate of two full unit placements per month
Clerical and office support:
- By the end of their first year, producing at the minimum rate of two full unit placements per month
- By the end of their second year, producing at the minimum rate of four full unit placements per month
Calculate your average fee and multiply it by the minimum numbers listed above. How do you and your firm measure up? Remember, these are minimum numbers.
Focusing on unit placements and not just billing/cash-in dollars sets a performance standard that more accurately reflects competency, effectiveness, and efficiency.
Most recruiting and staffing firms are handicapped by operating with performance standards based on billing/cash-in numbers. In many instances, meeting these standards provides the owners and producers with a limited return for the investment of their time, effort, and resources.
The first step toward realizing your full potential and that of your staff is to establish realistic performance standards. Basing those standards on unit placements allows the billings/cash-in number to adjust naturally based on your average fee. The focus is on achieving results (i.e., unit placements). The billing/cash-in numbers will take care of themselves.
As an additional benefit, having performance standards based on unit placements allows you and your staff to better understand the importance of effectiveness ratios and activity numbers. On a daily basis, these are the figures that really count.
Top Echelon Recruiter Training Library
Top Echelon offers a free monthly webinar as part of its Recruiter Coaching Series. After the webinars are over, we post the recorded version of the webinars in our Recruiter Training Library. These webinars touch upon a variety of recruiter-related topics. These topics deal with both candidates and clients. As always, our goal with these webinars (and corresponding videos) is to help recruiters make more placements.
In addition to training and webinars, Top Echelon offers other recruitment solutions. These solutions include the following:
For more information about Top Echelon and the products and services that it offers, visit the Top Echelon website by clicking here.