It feels like we’re talking ourselves into a recession in many ways, there’s so much doom and gloom, whether it’s high energy prices, the war in Ukraine or out of control inflation. We’re also coming off the back of a post-covid recruitment boom and, rather than a dire economic outlook, what we’re really seeing is a natural adjustment to the market that was always going to come along at some point.
Venture Capital (VC) backed businesses, particularly in the tech world have gone through a massive reality check in recent months. There’s no doubt that the global economy has toughened, even if it’s not the crash so many seem to think it is, and that’s made investors more cautious.
This is particularly true in the US where a whole host of businesses have suddenly been faced with an inconvenient truth. Without the previously unending runway provided by VC and private equity, they’ve had to start thinking about this dirty word in the world of start-ups called ‘profit’.
The reason this is such a problem is because many of them (and I will stress not all) have been run in a totally cavalier way. Highly paid CEOs have been living in a Silicon Valley bubble, spending billions of dollars on largely vanity projects.
Yes, there’s the occasional massive success, but far more end in failure. This has been sustainable for years, thanks to historically low interest rates and the lure of that rare unicorn that pays out and then some. This trend has caught on in the UK and has, along with a post Covid acceleration, boosted recruitment activity massively. But as the old adage says, when America sneezes, the UK catches a cold. The wheels have started to come off in the US with wide scale layoffs at businesses who seemed would sustain unhindered growth like Facebook, Twitter, and LinkedIn. This has flooded the market with a large number of talented individuals with very high expectations of pay and conditions.
In the UK, unemployment remains very low, but this is primarily driven by the lower skilled end of the market, which has been blunted by hardening attitudes towards immigration. Areas like technology, construction and finance are starting to be hit hard. This filters through to regular, non-VC backed businesses whose leaders use these much larger companies as a barometer.
So how, as a recruitment leader, can you set your business up for success during what will be certainly a flatter market?
Move with your clients’ needs
In a period of growth and plentiful financing, businesses were fixated with growing headcount to drive various projects and innovation. As things slow down, expect fewer new projects being given the green light. Instead, the focus will be on reducing costs and improving customer experience.
Cost reduction may seem like a euphemism for recruitment freeze, but you might be surprised. This will be the time businesses are forced to address those legacy systems that cost a fortune to run or those processes that are inefficient and generate poor outcomes for their customers.
In a tighter economy there are fewer customers, so competition increases. Start talking to your clients about how they plan to address this issue.
Focus more on contracting
There is a direct correlation between the strength of the economy and contracting activity, and it is an inverted relationship. As the economy goes down, contracting goes up.
Contrary to what you’ll read; business doesn’t simply stop in a downturn. But businesses are less inclined to bring on permanent hires and all the commitment that comes with it. They’d often rather pay the premium contracting attracts and benefit from increased flexibility.
Yes, IR35 has made contracting tougher but there are numerous solutions and tools on the market now that help manage some of these challenges.
Since Covid, face to face meetings have plummeted. Teams and Zoom may save travel time and costs, but they are no substitute for seeing the whites of people’s eyes and a handshake. You can set yourself apart by taking your clients out for lunch, meeting them in their offices and listening to their challenges.
Don’t try and sell, just listen. You’ll start learning about themes and common difficulties. Build trust and deeper relationships with your clients and you’ll be shocked how often you end up being the first person your clients’ call when they need help.
Productise your recruitment offering
So, you know your clients worries, you understand their market and you’ve earned their trust. Rather than focusing on recruitment of people, start looking at packaging up solutions into products that are highly tailored to those needs. For example, if you’re hearing a lot of your clients are struggling with legacy applications that don’t live in the cloud yet, propose putting a contracting team together that can solve that problem. Is their drop off rate too high on their online checkout? Create a UX and front-end development team who can solve it.
Optimise your business through technology
Take the time to look at your current systems to see how you can optimise your processes through tech. Can you replace those old manual, time consuming tasks like onboarding with automation?
One example of new emerging technology that has been specifically designed for the role of onboarding workers more efficiently and accurately, is Elements. Elements automates a vast number of time-wasting repetitive tasks, like retyping candidate data, screen hoping between software, identifying expired documents, running background checks, and verifying information with external agencies like HMRC and Companies House.
Replacing those inefficient back-office systems with a more consistent reliable technology, will allow you to scale up and down quickly in what may be a turbulent market, without needing a boom and bust back-office hiring/firing cycle. Reducing manual tasks that are at risk of human error will also improve compliance and cut the risk of time-consuming corrections or potential fines.
This will give you a competitive edge by speeding up your onboarding placements and providing a better user experience for candidates to help shutout the competition.
In closing, nothing lasts forever and these challenging times will no doubt pass, and there are many things you can do to make your business fighting fit and ready for the challenge.