Talent Talk: Q&A with Clare Barton, MD Barton Mills

The recruitment industry has been hit hard by the economic downturn. But how deep are the problems? What is the current supply and demand scenario for recruiters? Are recruitment firms still hiring? I explored some of the issues facing the recruitment industry with Clare Barton, Director, at Barton Mills, an international Recruitment to Recruitment (R2R) firm based in Sydney.

DT. In the last few years, growth in the R2R industry is fuelled mainly by a strong Australian economy and a reciprocal boom in demand for the services of recruitment firms, now that times are harder how are R2R firms adding value in a recessionary economic climate?
CB: Obviously the situation varies from firm to firm and it must be remembered that the question of ‘adding value’ holds true for the whole recruitment industry, not just the players within the R2R space.

• We add value to our clients in a number of ways. We target passive candidates. We bring a higher skill set and more experience to the table.  We can introduce a superior candidate.  Yes it is in our interests to advertise and be aware of the candidates who are doing the rounds via SEEK, but we are aware that for a minimal cost our clients can tap into this market themselves.  With nearly all of our placements over the past 3 months, we have encouraged clients to see candidates generated through their own channels and to benchmark them against who we have represented.  I would say that in 80% of cases, our candidate has won through and therefore justified our fee.
• Part of our job is to raise the profile of our clients. We have a number of clients, who for various reasons have had problems with their employment brand in the market.  The roots of the problem have been rectified but the negative perception remains.  We are able to bypass this and explain the changes, the new opportunities, changing culture etc to candidates who previously would never have considered working for these companies.
• Our market knowledge is in demand as companies look for additional revenue streams to supplement their business in the current climate.  Areas of interest are not limited to but include salary guides, sector performance, performance by state, changes to commissions etc.

DT. What is the supply and demand situation for recruiters in Australia? Is demand stronger in some sectors? What types of skill sets are currently in demand? Are 360 degree recruiters the answer for lean times?
CB: With many companies going through numerous waves of redundancies, we have experienced an influx of recruitment consultants.  This has created an allusion of abundant supply of recruiters. However, good consultants are quickly snapped up. Many others have left the industry or in the case of overseas recruiters, returned home. The current disparity between supply and demand, we believe, will be short lived.

We also noticed our clients expectations have changed significantly.  In short, to be hired as a recruiter in this market one needs to be really exceptional. The bar has been raised and the supply to meet these increased expectations is simply not there.  At BMR, our challenge lies not in finding companies who are hiring and will use our services but in finding these superior consultants.  Sound familiar?  For us in R2R land, the situation is not drastically different to 12 months ago – for us the pool of talent, for whom we can justify asking a fee,  in this market is incredibly small.

Demand for recruiters is certainly stronger in some sectors than others.  Sectors that remain buoyant include education, Health (medical, scientific, pharmaceutical and technical) nursing, and specialist engineering. In recent weeks both our clients and media reports also point the banking sector recovering.

Whether 360 degree consultants are the answer to the current climate or just a knee jerk reaction by employers remains to be seen, but they are certainly the people in demand.  Skill sets we are being asked for are simple: Sales skills, new business skills, contacts, local knowledge and ideally experience of a previous downturn.

There are exceptions to every rule but unfortunately we are finding it very difficult to help overseas candidates with minimal local experience and local contacts.  As the legislation around 457 visa holders tightens, our clients are becoming increasingly wary of looking at candidates that require sponsorship, even if they have qualified for sponsorship previously.

DT. Who are your main clients, why do they choose to engage a R2R firm?  Has there been any interest from the corporate sector for your service, apart from recruitment firms?
CB: We have been servicing the recruitment industry in Sydney for the past 5 years.  During that time we develop a very broad client base; everyone from the specialist recruiter, boutique start-ups to large generalist multinationals. We are now obviously in a very different market and there has definitely been a shift in our client base.  As a general rule of thumb, the larger international companies who are often driven by shareholder return have gone through major cost cutting exercises and are not hiring, certainly not through R2R firms.

Where we are finding our business is predominantly within the SME market.  Privately owned, national or one state agencies are using this downturn as an opportunity to “up skill” their teams and building a much stronger recruitment practice.  These agencies can and are using our services to source the best talent.  They are prepared to take a hit on their bottom line and looking at a longer term strategy as far as staff are concerned.

We have never actively chased the corporate sector, seeing ourselves as specialists to agency recruitment.  However, it is a market that we have been researching.  Unfortunately based on feedback we are receiving, R2Rs who have tried to break into the corporate sector had mixed results. Companies are also “weary”.  Candidates have been floated to the corporate HR for the wrong reasons i.e., not because candidates have a suitable skill but because they have agency and sales experience, and incorrectly think internal recruitment is an easier prospect.  The reality is the corporate sector offers different and new set of challenges – it is not easier – just different

DT. It can be argued that every recruiter in Australia have a LinkedIn profile, which arguably makes it easier for recruitment firms to find new staff. Do you see social media as a threat to the R2R business?
CB: No more so than it is a threat to the more traditional recruitment streams. Exactly the same question was posed when online job boards made advertising vacancies a much more cost effective option available to any employer.  Social media is constantly evolving and increasing in popularity as a networking tool however it is exactly that – a tool to be used alongside traditional methods of recruitment.   Social media does not and cannot replace a behavioural interview around culture fit and motivation.  It does not and cannot replace thorough reference checking.  It does not offer solutions around the issue of negative brand perception that some companies suffers from.

DT. A large number of recruiters in Australia have UK roots, and many Australian recruiters seek stints in the European market. Is cross border movement of recruitment talent still strong? Is Australia still a good destination for international recruiters. What perks does Australia offers?
CB: With the world economy reeling, Europe and the US arguably more affected than the Asia-Pacific region, we are receiving large number of queries and demand from overseas recruitment consultants regarding opportunities in Australia.

Twelve months ago a large percentage of our revenue was gained through placing overseas candidates (especially UK)  into Australia companies.  In today’s climate there are very few opportunities for overseas recruiters who does not have local market experience and contacts.

Australia is still seen as a favourable destination for international recruiters from a lifestyle perspective, but the message is quickly getting through that it is virtually impossible to get in at the moment.  In the last three months, Australian recruitment companies have brought the shutters down on the possibility of sponsoring overseas candidates.

DT. What do you think are the main challenges faced by the R2R industry in the coming months? Do you see consolidation happening?
CB: As a result of the downturn, the R2R industry will face a number of challenges in 2009. It is particularly vulnerable because the very nature and main income of the industry is almost exclusively based on permanent recruitment.  In agency land there are minimal opportunities to build a solid contractor book, therefore, there is no contractor revenue to fall back on when times are hard. To survive, R2R agencies must keep billing month on month. There have already been a number of victims, including long standing competitors.  The challenges, like all other mainstream recruitment agencies, is to demonstrate the value of our services, which mainly is our access to the cream of the active and passive talent pool.