There’s been plenty of turmoil in the Stock Market during the past 12 months. It’s difficult to predict what’s going to happen next. (Although some financial experts are predicting a recession in either 2020 or 2021.)
That would be an appropriate way to describe the typical recruitment desk. You just don’t know what’s going to happen next. There will ups and downs for sure, but what should you do when there’s more downs than ups? This is why creating a balanced recruitment desk business plan should be a top priority.
In the financial world, experts recommend that those investing in the Stock Market have a balanced portfolio of both stocks and bonds. With such an approach, investors don’t have “all their eggs in the same basket,” so to speak, and they minimize their risk.
What risk would that be? The risk that the Stock Market will eventually go down and usher in a new recession.
Recruitment balance in the face of recession
Let’s face it: recessions happen from time to time. Anybody who’s been in the recruiting profession for any length of time has endured at least one recession, and battle-tested veterans of the industry have persevered through many more than that.
In the same fashion that a balanced investment portfolio of both stocks and bonds can minimize risk, striking a recruitment desk balance with both direct hire and contract staffing services can also minimize risk. Why is that?
Because during recessionary times, companies are less likely to hire employees on a direct hire basis. Instead, they choose to utilize contractors to help complete projects and meet deadlines. As a result, a recruiting agency that offers just direct hire services will suffer much more than a firm that offers both direct hire and contract staffing.
Just like people who only invest in stocks suffer much more when the Stock Market drops than those who have a more balanced portfolio.
Is there a recession on the way? While it’s almost impossible to predict when a recession will strike, history suggests that one is inevitable. In fact, recent market cycles suggest that a recession hits roughly every seven to eight years. That means that we are currently overdue for one!
The most recent recession—dubbed “The Great Recession” due to its severity—began in 2008, 11 years ago. Based on this fact alone, it could easily be argued that another recession could begin as early as this year or next year. How prepared are YOU for a recession? Are you able to create a recruitment desk business plan that can combat a recession at least as severe as the most recent one?
These aren’t pleasant questions to consider, but they’re necessary questions for any business owner and any recruiting agency owner to consider. Those agency owners who are proactive about preparing for an economic slowdown will be in a much better position to deal with such a situation, and contract staffing can play a pivotal role.
In fact, there are five main ways that contract staffing can help you to achieve recruitment desk balance during a recession:
#1—Off-set the loss of direct hire business.
As mentioned above, direct hire placements typically take a dive during a recession. However, contract assignments often increase due to the fact that companies still need to get work done. If you offer contract staffing solutions to your clients, then your contract income gives you enough to at least cover your overhead.
You can even make up lost direct hire placement income by taking on more contract placements. Over the years, countless recruiters have told us that contract staffing kept them in business during recessionary times.
#2—Make placements even with a hiring freeze.
Just because a client has instituted a hiring freeze, that doesn’t mean you can’t still make placements with that client. Once again, as mentioned above, companies still have deadlines to meet and projects to complete. If there’s a hiring freeze, how are they going to do that? They’ll do that by hiring contractors for a specified amount of time because traditional contractors come out of a different budget than direct hire employees.
#3—Close more deals by offering contract-to-direct candidates.
In some instances, a company might be hesitant about bringing a candidate on board on a full-time basis. Perhaps they’re not 100% sold on the candidate. Maybe due to budgetary constraints, they absolutely want to make sure that this candidate is the one they want. Whatever the case, offering to place candidates on a contract-to-direct basis could be the answer your clients are seeking.
This will give the client the opportunity to “try before they buy.” In this type of deal, you’ll earn hourly income during the contract period. Then, if the client decides to hire the contractor on a full-time basis, you can also earn a conversion fee. More companies are choosing this option because if the contractor isn’t a fit, they can simply end the assignment.
#4—Make contract placements with the same client base.
The good news is that you do NOT have to market your contract staffing services to an entirely new client base. That’s because you can just use your existing client base (even if they’ve instituted a hiring freeze)! The only thing you really have to do is let your clients know that you can place contractors. Since you already have a relationship with them, it will increase the chances that they’ll also turn to you for their contract staffing needs.
#5—Build more cash flow consistency and flexibility into your recruitment desk.
Have you considered the advantages of more cash flow consistency and flexibility on your recruitment desk right now? How much more could you use them during a recession? Not only can you make a substantial amount of money by adding contracting to your recruitment desk business plan, but you can also earn it in a steady fashion. You continue to earn money each hour that your contractors are working, and since most clients pay invoices on a weekly basis, you’ll be able to enjoy weekly cash flow.
Recruitment desk business plan for an uncertain future
The first quarter of 2019 is already over. Have you been proactive about preparing for whatever uncertainly might lie ahead?
This is the perfect time to conduct an audit of your recruitment desk business plan. What would you do if direct hire job orders started to dry up? Are you in a position to offer contract staffing to your base of clients? If not, what steps do you need to take?
One day in the near future, a recession will be here. It’s an economic and historical certainty. Don’t get caught flat-footed. Reduce risk and vulnerability by building a fully balanced recruitment desk with both direct hire and contract staffing.
Contract staffing helps recruiters balance their desks . . . and it could help you, too.