Let’s begin by stating the obvious. Last year was a tumultuous one and while we are now seeing the progress we’ve all silently hoped for, it’s going to take some effort to move past this.
Where does the recruitment industry go from here in 2021? How do we navigate a landscape that’s still shifting and will continue to do so in the months ahead? We reached out to a few experts well positioned to offer real insights and asked them the following question:
“What are the biggest trends likely to impact the recruitment industry in 2021 and how should recruiters prepare?”
“2021 is a recovery year for many sectors and therefore the need to find the best talent will be paramount to success. Recruiters that are able to identify passive talent that is perhaps nervous about moving in a perceived high risk market and put them in front of the right clients will thrive.
Relationships with clients and candidates will be more important in 2021 than ever and recruiters that invest genuine time to provide support and guidance to their network will stand out in the market. With the rise of flexible working models the talent pool has become more diverse than ever before and helping clients benefit from this will be critical. Recovery will be sector and regionally led – so it is important to focus on the right ones.”
“It’s perhaps safe to say that the entire recruitment profession is hoping for some sense of stability in 2021 following a rather disruptive year. However, change is without doubt the new norm and how we all adjust to this over the next 12 months will dictate the future success of the staffing sector. While we can’t predict the unpredictable (as the pandemic certainly demonstrated last year) we can prepare for the trends we do expect, and for recruiters, there are two predominant issues right now: the impact of the Brexit deal and the roll out of Off Payroll in April.
“If we look at the UK/EU deal, there are some finer details that need clarification still, including the compliant sharing of personal data across the two jurisdictions, which means that recruitment won’t feel the full effects just yet. There are, however, some encouraging opportunities to make changes to employment requirements in the UK, under the deal. The compromise on equivalence is one such example. This will leave the UK free to set its own standards in labour law, meaning we can diverge from EU regulation, even if it is in a limited way. There are other elements which will likely be challenged and APSCo continues to lobby Government on parts of the deal which we feel would be disadvantageous for the staffing sector and, in turn, the UK’s access to a highly skilled and flexible workforce.
“And while the initial delay to the roll out date of IR35 into the private sector (and implementing the changes into the public sector) was certainly welcome last year, the new deadline is fast-approaching. With the pandemic pre-occupying many firms last year, we do expect to see organisations quickly ramp up their determination processes over the next two months. How this roll-out will impact recruitment won’t be clear until Q2 and beyond, but with Brexit also impacting access to expert contractors we are preparing to provide greater support to any of our members that work with independent professionals to help them navigate this complex compliance landscape.
“While there has been some good news regarding the pandemic, with vaccines now being widely rolled out, the impact of the virus will be felt throughout this year and beyond. It’s impossible to concretely define what will happen next as Covid-19 continues to throw curveballs at us all. However, it is our strong belief that swift access to business support funds will be a necessity to help keep organisations afloat in these tough times, and we continue to lobby Government to ensure staffing companies have access to the right financial aid for as long as is necessary.”
“This year we will see a disturbing rise in candidates accepting counter-offers. They will ghost recruiters and employers, accept multiple offers at the same time, not turn up on the start date, and inexplicably ‘go silent’ in the middle of a job search collaboration, only to reappear as if nothing were amiss.
The labour market has been totally fragmented. People see a huge career opportunity in some cases and are just desperate for a secure role in others.
Employers who have “over-pruned the tree” in the depths of the downturn, will return to the market in a hiring frenzy. FOMO will run rampant on both sides.
Where the recovery had started, it is back to massive candidate shortages already, and all the issues that triggers.
So, my biggest advice?
Don’t make any assumptions. Ask in every conversation “has anything changed?” Zoom or not, get CLOSER to candidates than ever before. Ask qualifying questions. Pose scenarios.
Qualify your job orders to the nth degree. Sell exclusivity on your job orders. Pre-close your candidates, every step of the way. Uncover the REAL reason and motivation for the job move. I promise you, it’s rarely the first answer given.
Never in the history of recruitment have your questioning, listening and influencing skills been as critical as right now.”
“The recruitment sector has been incredibly resilient. There have been pockets and parts of the industry that have been fairly decimated for obvious reasons. But that’s the reality of what we’re facing, but the industry itself has gone very well, and has been very resilient. I’ve been surprised that it’s actually been positive on the contract and temp side, but also as much on the perm side as well.
Normally you’d expect the perm to get a big hit. Certainly from what we’re seeing and what we’re experiencing, we haven’t seen that. We’ve seen ups and downs obviously, but nowhere near as much of a big hit. I think in the industry, by the beginning of Q4 last year was back up to in most cases, at least 80% of the job flow pre-COVID times, which is fantastic considering.
I think the beginning of 2021 started on an absolute boom. I’ve never seen a year start like this. It was incredible. So we’ve seen so many people across The Recruitment Network (TRN) and other members who have had record months, record quarters. Quite a few had record years last year, to be very honest with you.
So that’s really exciting. I think one of the main reasons why that’s happened is obviously they’re in good markets and that helps. But I think also the way that their businesses were structured and set up in the first place, allowed them to bear the brunt of the situation, and so capitalise on the opportunities that this has definitely created. I think if I look at recruitment companies and what they’re doing right at the moment and what they should carry on doing, is staying very close to their customers. Positioning themselves at the partnership level rather than at a supplier level. It’s something that we’ve always wanted the industry to do more of anyway. I think COVID has fast tracked that.
So we’re seeing a lot more of recruiters being paid for their time now. A lot more retained business which is good. I think the consultancy side of recruitment is really coming out now. I think a lot of recruiters and recruitment consultants are being asked to act as consultants as much as being suppliers, which means they’re being more consultative, which means they’re trying to partner with their customers to solve problems with them moving forward.
So that repositions ourselves really nicely. That means you can command better fees and better margins. So whilst in some cases, job flow in some areas may have slowed or dropped where there might be less jobs on our whiteboard, there’s certainly more profitable jobs and more profitable business to be had.
In some areas we’re definitely seeing candidate shortages; you’d expect the opposite, but we are and that’s going to carry on growing. So as more demand in certain areas kicks off, recruiters need to be as much on their game around the customer experience then the sales process, the account management and account penetration, on working with existing customers and keep filling up the pipelines. They also need to have a very, very, big foothold in the candidate camp as well. Now more than ever, don’t lose sight of that because there’s going to be more and more shortages from that perspective.
From an economical point of view, which is obviously always the big caveat with all of this is. We can only do so much, but if the economy has got to go boom and bust, then we’re out of control. We’re pretty convinced we’re going to see an economic boom kicking off very shortly, certainly in Q2 of 2021. That’s our predictions based on economists and associate economists that we talk to.
It’s a really hard thing to say, because it’s still very tricky out there and it feels like we’re running through treacle a little bit. But actually we are running and we are running forward, but it’s just quite hard work and heavy and sticky.
It’s going to get scarred obviously in a lot of areas. But I think the reinvestment that’s going to come off the back of this by governments, by us. There’s more money in our bank accounts from a savings point of view than there’s ever been. So there’s going to be a spending boom, which is going to driveI the economy further forward as well. So with all that in mind, we’re positive about the economy; it hasn’t been tarnished enough to worry about in most areas. And we also think it was strong enough when we came into COVID anyway, so we had some room to manoeuvre on it.
The recruitment industry is resilient and strong and has adapted well to this in most cases. And I think actually they’ll end up being in a stronger position coming out of this because they will be positioned better with their customer base. One of the things that we’ve been focusing on hugely in this quarter in particular is about maximising the opportunities ahead.
In particular, looking at productivity across every part of your business. So productivity per consultant, per client, per deal, per everything. Measuring your business based on its contribution and yield rather than turnover and headcount, which is the old school way of doing it. There’s a bigger push at the moment of looking at all of your processes, wherever you can use technology to streamline your processes, automate and so on. Obviously I think a lot of people have been thinking about that naturally, as they’ve had to over this period. So that’s nothing new, flash or clever, but I think people just realised that they need to get on with it now.
I think tech is going to play a huge part in how we run our businesses moving forward more so than ever before. But, I think actually what’s also happened is, because COVID has driven a big dagger into the heart or the emotional side of business, we’re going to be expected to spend far more time doing the human side of recruitment with our customers. We’ll be getting closer to our customers again, spending more time in front of them. We’re doing it every day on Zoom now. We’re having more client meetings than we’ve ever had before. So whilst we can’t touch our clients and see them physically, we’re actually spending more time with them and we’re closer to them. I think that’s going to have a real prominent play moving forward.
So the human side of recruitment is going to come back in spades, supported by a really strong, resilient technology-driven foundation that sits behind it to allow us to scale quickly, deliver quickly, and reduce the cost of acquisition. Focusing on driving that profitability.
“Clearly there’s a lot of change going on in the market that people will talk about. We’re experiencing a big comeback and we know recruitment tends to start early in the recovery cycle. The client’s positions will have changed quite significantly; they will be quite keen to stay in control of their supply chain and move to a focus on how they build the talent that helps them do what they do now.
The biggest single trend that I see in client relationships in 2021 is for the recruiters who can find out what their clients’ problems are now. They are doing far better than those that are starting where they were prior to the pandemic. “I’ll talk to the recruiter who brings me an idea. Not the recruiter who talks about efficiency in my service. I want the recruiter who can help solve the problem I’m trying to solve.”
You’re dealing with HR and talent acquisition teams for whom the tectonic plates are shifting under their feet. They are looking for solutions to problems that have been posed. The challenge is how do you get alongside them? The first is active listening; the second is what could I do to help solve this problem rather than how does my product solve this problem? Part of that is about having the right relationships across the client. You’ll probably want a more strategic relationship as well and think about how you could foster that.
How do you put a team around a client, at least partially? Who do we need talking to clients? Is the right approach more a 180° rather than a 360°? Look to get seniority into those relationships. That symbiotic relationship that’s more deeply embedded with more people, that firmly implants the firm’s radar into the client will be super important to building those long-term relationships.
It’s very likely given where the economy is now, that Western economies will grow solidly for the next five years. So if you get it right now, there’s a lot of potential fruit on the branch in the next few years.
Specialism will help you to stand out. If you’re a large well sourced agency you can put structures in place that enable you to do this. If you’re a start-up how does your specialism or niche help solve the client’s problem?. It’s about understanding the pool you want to fish in. Better to have a go with 4-5 clients with a really niche product than cluster around 25 with a more generalist view.
I think we’ll see quite a lot of transitions in this sector in 2021. Naturally there will be a boom as this recovery takes off. We’ll probably see a bit of a bifurcation between deep specialist brands often smaller and larger brands with multiples specialisms. A little like you see in search at the high end of the income market. You’ll see more brands with multiple specialisms. And that will be a differentiator.
Another thing will be the ability to onboard candidates efficiently. Client focus may be paramount but that doesn’t mean CX doesn’t matter. In the UK market it’s still going to be tight for a long time. I think the spike will dissipate quite quickly for a couple of reasons: people leaving the UK where they have returned home to their own countries; secondly, the generation born in the 2000s, is much smaller than the generation that’s leaving, those born in the 1950s. We’re still going to have a tight labour market and so CX will still matter.
Finally, it’s critical that we can help people make transitions. If we look at what’s happened this year, clearly there’s a lot of unemployment in sectors that have declined. Hospitality will come back but high street retail was already in a secular decline and it employs a lot of people. One of the challenges is how do you transition people out of other areas of the labour market? Even at this moment, REC members are struggling to fill jobs in logistics, in driving, in food manufacturing, despite everything that’s happened. How do we help people working in retail for 10 years to do something else and how do we source them? How do we bring people into the sector for their first job?
“I see 2021 as very much a game of two halves with the impact of the vaccine roll-out and the removal of the furlough scheme at the end of April.
Brits have been saving cash and being understandably cautious with their spending since March of last year, however the signs are that the green sprouts of consumer spending are coming up with the snow drops.
The first sign is an increase in holiday bookings for the summer, a great demonstration the public do believe the vaccine is a genuine and real light at the end of the tunnel. Economic forecasting is even predicting a consumer six month boom from late summer as the country rides the wave of optimism and starts spending a chunk of the money saved up during 2020.
However nothing is ever certain with economic predictions so which recruitment businesses will staff-up to get ahead of the curve for this potential economic surge? And which ones will do the opposite and let people go when the furlough scheme runs out in April? Let’s hope for most of the former.
I think both these factors will also increase the number of start-up recruitment businesses. Some very good recruiters could be let go at the end of April and rather than find another job, set up for themselves. I know there are a lot of would-be new business owners who have been just holding out until they feel the market is turning and I expect this group to make the leap in Q2 and Q3. Both are good news for Davidson Gray as we have expanded to accommodate more partner businesses. I’m also very much in the camp of believing the economy will see significant growth starting in Q3, which will be a massive tonic to all the recruiters who’ve had to really tough it out during COVID-19.“
“Remote working, continued economic uncertainty and reimagined entrepreneurialism will underpin a surge in demand for contract-led employment. Recruiters should enable streamlined operations robust enough for a rapidly changing environment.”
“The last 12 months have given recruiters a lot of opportunity to consider where they’re at and the direction they’re going in. I’d say by and large, the more progressive firms in the agency market are looking at a couple things. The one major thing is that everybody now realises that you have to understand what your value proposition is. So the first thing is everybody’s moving in the direction of “where do I provide value”?
Finding candidates isn’t that value-adding; it’s finding the right candidates. It’s the compliance, it’s the insight. It’s the deeper level of knowledge. Recruiters can add information on the market they can provide to clients and candidates, which becomes critical.
Clearly the circumstance and the market changes mean that the pressure on people to get jobs is there. Agencies are going to have to be better at their whole candidate experience. So the whole candidate experience and the value adding proposition are must-haves for anyone who wants to survive and grow in the market.
Inevitably a lot of agencies now are trying to move into the outsourcing space through RPO or MSP vehicles because they see that as a mezzanine kind of solution to direct hiring. Obviously an abundance of candidates on the market means that companies need to get organised as there is a lot of volume, but they can recruit cheaper than paying fees.
The other thing I think is interesting, where the pressure’s being brought to bear by clients, not by the agencies themselves and that’s D&I. I’m very excited about this because it’s something near and dear to me that I work in. There’s a big push from organisations around the whole idea of really emerging after COVID with a heavier, more appropriate, more successful D&I agenda. And that then is going to push down agencies.
So agencies that are not accessible, that don’t understand D&I, that don’t have an equitable kind of solution to people of underrepresented groups, just won’t be the partners of choice of the corporates that are now looking at D&I as an intrinsic part of that supply chain. And so recruitment agencies are part of the supply chain around people and they will need to tie in with what their clients want.”
There are some clear themes that shine across the board: adding real value, D&I and the candidate experience.
These have always been important but this crisis we’re in the midst of has only served to shine a spotlight on them. The winners will be those that take these ideas and run with them.