The headline of the Glasgow Evening Times read ‘425 jobs to go in £25m City Council Cut’, as recruiters gathered at Saint Jude’s Hotel in the city centre on 27 November for Recruiter’s latest regional roundtable event.

The recession has hit Scotland but the four independent recruiters assembled - John Hailstone, managing director of First People Solutions Group; Chris Logue, director at Eden Scott; Martin McCrum, director, Aspirare; and Shan Saba, director at Brightwork Specialist Recruitment - see no reason to throw in the towel.

The quartet are moving their businesses forward through collating the right data to drive informed business decisions, reducing costs through securing retainers and taking a consultative approach to recruitment despite challenging economic conditions.

Informed response to recession

For Hailstone, who has been in the industry since 1986 and has a head office in Glasgow with seven offices nationwide, it was imperative to read the warning signs early.

Following a holiday in June, in which he had time to read the gloomy headlines, Hailstone resolved to take action upon his return to the UK. At such times, he said, “there has to be complete visibility from the top to the bottom”.

His steps to shine a light on all parts of the business began with increasing the regularity of company-wide management meetings from quarterly to monthly. He also had his team put together daily lists of vacancies on the company’s books and assess the quality of each vacancy so that he could fully understand the company’s vulnerabilities.

“If we don’t have enough vacancies today, then our figures are shot in three months time,” Hailstone explained.

Logue, also a survivor of the last recession, agreed, saying that threatening economic conditions require recruiters to access data early on through regularly compiling vacancy numbers. But he also stressed the importance of educating consultants who may not at first understand that a crisis could be at hand.

“They think you are just selling to them at first — just another management technique to make more money,” Logue said. “Once they realise that the world has changed, you get to change their behaviour. It is no longer the case where they come in and they get told they have to do their business development; they are proactively doing that. They understand the mechanisms that are going to be successful for them.”

McCrum, the third survivor of the last recession, told the forum that the monitoring of the business also meant being wary of of the contracts you take on. “We suffered two or three bad debts… it was an area we had to look closely at. We were caught by one this year — it was only £5,000 but it was a real frustration to lose that money,” he said. “You look at the risk attached to it now.”

Shan Saba admitted he was the “new boy on the block” as far as his experience in dealing with recruiting in a recession. “I started in recruitment at the turn of this century — that was when the market really started to hot up,” he said. However, he said he was sure his firm could “get through the hard times”.

Retained business

Some recruiters report that retained business is easier to come by in a recession when clients are more selective about their new hires. Retainers are clearly a benefit to most — helping recruiters forecast cash flow, as well as fronting the costs of the search for the right candidate, particularly if the vacancy is ultimately pulled by the client.

Being able to negotiate a retainer is dependent on the client relationship, according to McCrum. His firm enjoys a relationship in which a retainer is paid on a monthly basis. “If you’re essential to that business, you’re seen to be essential and they’ll pay it,” he said.

The closeness of that relationship often influences a client decision on whether or not to pull a vacancy. “I think a lot of clients think we can’t spend lots of time on jobs that we are not going to push,” Logue said. “So can we take an element of the fee up front? They know you will deliver that. There is no additional cost for them and I think if there’s a chance it could get pulled you should get some up front.”

If retainers are not possible, deposits can be negotiated, Hailstone suggested. “The volume areas where you’re dealing with £25k, it is just not possible to get retainers up front. It is a completely different process that you are working to,” he said.

Recruiters on the market

Recession has already resulted in recruitment firms cutting loose the consultants and account managers deemed surplus to requirements, with even senior level managers not immune to cutbacks. Hailstone said that he knew of six senior managers that had been let go from Scottish staffing firms alone.

Industry sources have told Recruiter that recruitment is suffering from overinflated salaries — a situation that while tolerable in good times, is intolerable in bad. “The problem in a buoyant market,” said Hailstone, “is you keep hold of mediocre staff. A lot of these staff can command high salaries and salaries start getting out of kilter with their value to the business. Now you are starting to see those people come to market because they can’t actually justify the salaries they were getting.”

McCrum added that he had witnessed an increase of consultants coming on to the market and described the quality of some candidates he had interviewed as “shocking”. He added: “I have seen some that can’t even work out a margin. That is why they are on the market.”

All four expressed concern that the current generation of consultants lacks basic skills and the right grounding in consultancy service requirements. The tried and tested methods of recruitment and the grounding in consultancy have been lost in the past 10 years, they agreed.

“The percentage of high quality recruiters is very low. Back in the late 1980s, if you didn’t make it in the first three months you were gone,” Hailstone said. “You really had to understand the importance of process, the detail needed to cover all of the steps, the central themes about prepping a client, taking down a quality job spec.”

Shan Saba said that although it was easy when he first started, he had benefitted from training early in his career. “When I started at Hays, everything that John [Hailstone] said was drummed into you from the start. Making KPIs your focus, taking down a job description for a client — it gave me a good grounding and has stood me in good stead.”

Logue added: “It is our fault because what we have done over the years is targeted job fillers rather than consultants because vacancies were plentiful.”

The recession is certainly making its presence felt in Scotland but it was evident it is possible not only to survive but to thrive in Scotland through making informed decisions and cutting costs in well thought-out measures — but most importantly going back to basics and offering real consultancy to clients.

The roundtable was sponsored by RBS and totaljobs.com.