Recruitment professionals expect big things in 2019 and beyond. Four out of five agencies expect 2019 revenue to outpace 2018 and the majority predict increases in placements and investments.
Growth is clearly on the agenda, but how do agencies expect to get there? Seventy-five percent of recruitment professionals expect to grow through traditional means: expanding business through new and existing clients. Ten percent of agencies plan to grow through mergers and acquisitions. Both growth trajectories represent viable options for agencies.
We’re Going to Grow, but How?
Growth is the goal, but what’s the method? There are numerous options for recruitment agencies looking to grow their business, and a look at the top priorities reveal a variety of paths to achieve those goals.
The one thing on which agencies can agree? The road to success relies on candidates, which is no surprise, given that the skills shortage is still the top challenge for recruitment agencies worldwide.
While agencies agree on candidate engagement, there’s little consensus on the other strategies they should prioritize in the years ahead. Judging by the top priorities for 2019, agencies plan to grow through one or more of the following three methods: technology, marketing, and expansion.
1. Leveraging Technology
Outside of candidate-engagement efforts, agencies see the greatest opportunities to improve operations through technology like automation and AI. Automating manual processes is an especially strong solution for agencies because of the ripple effect automation can have on business success.
Automation can improve an agency’s efficiency and increase the amount of business it can manage, but it also frees up recruiters to spend more time on building relationships, which allows them to attract more candidates and clients.
Recruitment pros remain largely excited about AI, but the exact implications are still fuzzy. The average respondent rated their understanding of AI and machine learning at a five out of ten.
2. Brand Development
The recruitment industry isn’t historically known for marketing—60 percent of agencies don’t have a senior marketing executive—but that could be changing. Brand development is a major focus for agencies in 2019.
Two areas worth examining are search engine optimization (SEO) and social media. These were two of the most popular choices for respondents when asked where recruitment professionals need the most training and development.
3. Expanding into New Markets and Offering New Services
About a third of firms are looking to grow through expansion: operating in new markets or offering new services. One huge opportunity for agencies is reskilling—the process of helping workers transform skills that are outdated to be ready for the modern world.
By investing in the reskilling of candidates, agencies can literally create newly qualified talent pools. Major players in the industry are already seizing this opportunity, yet only five percent of agencies list reskilling as a priority in 2019.
It’s the culture and leadership that ultimately translates into financial results.
4. Growing Through Buying
M&A activity is on the rise in the recruitment industry. In North America alone, M&A transaction volume increased 28 percent year-over-year in 2017 with a total of 88 staffing firm transactions. In the first nine months of 2018 alone, that number rose to 101.
There’s a real business benefit to putting two organizations together. You can create a combined organization that’s ready to disrupt the industry.
For agencies that plan to grow through selling their business, having a tight grasp on finances is essential. And articulating the narrative behind a merger or acquisition to appease employee concerns can go a long way in reducing attrition, says Netland.
Whether an agency plans to grow organically or through mergers and acquisitions, opportunity abounds. The current industry landscape is hospitable to both strategies. Agencies that favor preparation and innovation will be an incredible position to reach their growth goals.