(This is part of a series of articles on becoming a Recruitment Entrepreneur. These articles are meant for first-time recruitment entrepreneurs and the more experienced recruiters may find some parts elementary. I shall start dwelling deeper into each aspect once we get done with the basics. If you wish to contribute to this topic please write to firstname.lastname@example.org I will be happy to incorporate your ideas as well. You may also mail me if you wish me to write on any specific topic.)
For any new entrepreneur, business development
activity becomes the key to survival and sustainable growth. The good news is
that in a ‘permanent recruitment’ business, the billing and payment is ‘success
based’ with no credit for just the effort (unless you have taken a retainer
fee). In such a scenario a hiring company can always give a job mandate to
multiple agencies as it only pays for one candidate who finally joins the
company. Well, this does not mean that a hiring company shares its job
requirement with whoever wishes to work on it. Most established companies are
choosy about the recruitment agencies they work with and it would be sometimes
difficult to get on to that list.
Your first business development call
As a new recruitment entrepreneur, the best way to
start would be to pick up simple positions (the low hanging fruits) unless you
have specific expertise and connections is a specific niche industry or
functions. The easiest way to get started is to get an introduction to
HR/Procurement (or whoever empanels recruitment agencies). Typically in small
and mid-sized companies, the empanelment process is pretty simple. The larger
the company the more structured and cumbersome the process.
Request a meeting with the concerned person and go
prepared with a brief presentation. The presentation can cover some basic
information regarding your expertise (maybe the kind of work that you have done
in the past when you were employed) as also your industry experience and
connect. If this is your first prospective client then you do not have any
reference to present assignments. However, as you start working and get more
and more assignments the business development becomes that much easier, your
presentations have more information and references.
Prepare well and let the client know that
Go well prepared for your meeting. Read up everything about the company you are visiting and gather any and every information (from the person who has introduced you or any other source). Also ‘google’ the person you are meeting and gather all relevant information. Go through her LinkedIn (public) profile, look at her education, college/university attended, previous jobs, roles, etc. One thing that never fails to impress a prospective client is the feeling that you have really done your homework well. It displays the efforts you are putting in to bag their business.
Also, make sure the client knows that you have prepared well. A simple thing like saying, “you have another three offices/plants in so and so place, are you planning for any hiring there as well” or “ I know I cannot win this argument with a mechanical engineer” will do the job. You need to find the appropriate part of the conversation to display your homework.
I have already covered (in Article 2 The Recruitment Prerequisites – Getting Started ) the various aspects to be included in the MOU/agreement and which need to be clarified upfront. Typically if this is your first client you may not be in a great position to negotiate. Therefore it makes sense to pick up the assignment as far as it is with standard terms for that industry and geography. In most countries, the recruitment fee varies from 8.33 percent of annual salary (one month salary) right up to 16.67 percent of annual salary (two months).
Once you have your recruitment agreement in place you start executing the task. So far so good. This is fine trying to get your first client. However, as your team size increases, you will need to handle things differently.
The ‘Hunter’ and ‘Farmer’ concept
So let us start from the first hire. Typically the first hire the entrepreneur would make would be a recruiter (or an assistant). While the entrepreneur does the business development as also the fulfillment, the assistant just helps with coordination and other simple time-consuming jobs. As the entrepreneur picks up more positions to fulfill, she hires another recruiter. As the team size grows to four or five there is more than one person doing business development. Here it is important to understand the concept of ‘Hunting’ and ‘Farming’. ‘Hunting’ is going out in the market and signing up with new companies/clients.
However once the operation team takes over and handles client relationship and fulfillment, it is their responsibility to get more business from that existing client by providing good services. That is ‘farming’. Thus nearly all recruiters dealing with a client (other than those doing explicit back office work) need to be ‘farmers’.
Your first business development hire
The business development resources are the ‘hunters’ whose job is to get new business. In my opinion, the 5th hire ( well could be 4th or 6th as well) in the team must be a business development resource. It always helps to build specialization. You will need at least one resource dedicated to only business development if you are to keep 4-5 recruiters gainfully occupied. The sooner the better.
Choosing your prospective clients
Now you have a business development resource and will
slowly build up this team as well. So how you need to figure out how they
should go about expanding your client base. Ideally, when you are starting you
will need to figure out whether you will focus on a vertical or a horizontal. A
vertical would typically be an industry sector where you focus on specific
skills. For example, technical professionals working on oil rigs or IT
professionals working on specific platforms or languages. A horizontal would
typically be a support function, say, HR managers or corporate finance
professionals. The choice depends on various factors which I shall cover in a
So business development like any other activity needs to be a planned activity and not a random one. If your team has decided to work on the recruitment of retail sales managers/associates then the business development team needs to first map all the companies that require such skills or even similar skills. Some I can think of are grocery store chains, car dealers, food retail chains, electronic stores, etc. Now, these would be in various size & shape. So how do you now choose who to work with? It would be a good idea to choose one (or two companies) of each type. If you work with all the car dealer in town whom will you poach from? Two companies may have similar requirements of numbers (say 20 positions to fill per month).
Now, this could be a large company with normal attrition (that needs to be replaced). It could be a smaller company but with higher attrition (and therefore still 20 positions to fill though on a smaller employee base). It could also be a small company rapidly expanding and therefore requiring 20 positions to be filled every month. I would prefer to work for the last one, a smaller company which is scaling up. Why? That is because the company rapidly growing is doing something right, is probably well funded and offers better future opportunities to new employees. I would surely stay away from the company facing high attrition and use it more like a hunting ground.
Pre-requisites for good business development
One of the key things that business development people need to do is to be well connected online & offline, keep abreast with the latest that is happening in the business world, especially so in the industry or skills that they are targeting. Remember other than the company website (which creates the first impression) the first face to face business development meeting is the most critical for the client to decide to work with your agency or not.
The business development person needs to be extremely well prepared and clued up on the recruitment operations as well. She would do well to have broad details of the kinds of positions the agency is working with, some specific recent placements, salary levels, details of skill pool in specific areas, recruitment cycle times, some references of similar work done, the experience levels of recruiters, etc. Virtually anything and everything that can impress a client needs to be on your fingertips. Care, of course, needs to be taken to not oversell and make lofty claims or promises that cannot be fulfilled.
It is always a good practice to have a recruiter attend the subsequent meeting with the clients when the agreement is being finalized. It helps that the recruiter is completely aligned with the expectations of the client and any tall promises by the business development team are ironed out well before signing on the dotted line. I have seen enough cases wherein the business development team has picked up a lousy business ( difficult to execute) and dumped it on to unsuspecting recruiters.
Enthusiasm & Innovation in business development
As an agency grows larger and spreads into multiple industry verticals and functions the canvas of the business development team also increases. The decisions regarding which business to take and which to let go become critical and they can get as innovate to find business. In one of my previous organizations, we had one such enthusiastic business development manager. Those days (about 15 years ago and even now) there was a lot of foreign direct investment coming into the country. Many multinationals setting up operations in the country would be having their senior leadership visit regularly. The first thing most MNCs would do is to hire their initial start-up team.
Most people got to know of this much later when such set-up was officially announced. However, our business development manager had found a novel way of reaching these MNCs. He would visit all the embassies in town meeting their officials and leaving our contacts (and brochures) at the embassy. He would also manage to get email ids or contact of such MNC officials who have visited or planning to visit. By being the first one to connect with them he would bag their initial business most of the time. Yes, it was the pre-LinkedIn and pre-social media days. Now, this is what I would call innovative business development. Even now I’m sure there can be innumerable hacks like this to get an advantage.
When a recruiting agency grows bigger with more than
50-100 recruiters then, there is also an opportunity to bag larger businesses.
Many large companies as also government enterprises appoint vendors
(recruitment agencies) through elaborate RFP (Request for proposal) processes.
Mostly there would be qualifying criteria to even submit such RFPs. These would
be in terms of size of the organization (number of recruiters), annual
turnover, number of locations served, past experience handling similar work,
etc. This is a very different ball game and is not even worth spending your
time on unless you have grown large enough to meet the minimum qualifying
requirements. There is no way to circumvent this.
I guess this much understanding is enough for a new
entrepreneur to get started. There would be of course innumerable learning
along the way.