The COVID-19 crisis has had substantial ripple effects across the globe and we know that any economic downturn is going to have a negative impact on many organisations.
However, if we look at the other side of the coin, it also creates a huge opportunity.
For recruitment companies, leaders and recruiters, it gives them the chance to learn a huge number of lessons about themselves, their business, their markets and how we work with customers and enable them to put in place new ways of working.
With this perspective, we can be far more profitable, effective and scalable as organisations.
There are huge amounts of inefficiencies that you don’t really think about when the markets are good. When the markets are buoyant, we’ve become more casual about what we’re spending and how we’re doing things.
Now, we’re all forced to try and work out the best way of cutting costs and navigating through crisis. And I think that’s a really useful time to pivot.
It’s important to remember that revenue dips don’t have to be profit hits if you’ve got a firm strategic foundation.
At the beginning of the crisis, we advised recruitment agencies to stop their direct debits and cut any costs they could.
While a lot of markets saw revenue drop off a cliff during the coronavirus crisis, the agencies who cut a lot of outgoing costs saw that their net profitability hadn’t been too badly affected.
Coming out of the crisis, we need to examine what we learned from it. We’ve learned to examine whether we actually need half the things in our business, and what kind of ROI we’re getting from these different elements. We should be conducting this analysis regularly and making it part of our thinking and strategies.
When you’re working out your business strategies, you start with profitability and then work your way backwards, re-engineering what your business, structure, revenue, workflow and customer base needs to look like to create that profitability.
A lot of agencies focus on headcount growth and their revenue growth, but the agencies that are truly scalable and profitable are faring better during the crisis because they utilise this bottom-up strategy.
This blog is an excerpt from the eBook, How to cut agency costs and regain profitability, a collaboration between James Osborne (founder of The Recruitment Network) and JobAdder. Download the free eBook now to discover more key insights, including:
- Cut costs and focus on yield and contribution
- The biggest inefficiencies in any recruitment agency
- How remote working can address these inefficiencies
- How we measure success and our efforts
- How technology can help