Article
Two: Predicting the Future: Three Numbers You Need by Steve Finkel
Are you on the brink of an economic downturn which will seriously affect our industry and your firm? The true answer, despite much-ballyhooed trends and prognostications, is that no one knows for sure. Ronald Reagan, who held a degree in economics himself, once reminded us that “economists are pessimists, and have infallibly predicted eight of the last three recessions”. Words to heed.
At any time, in any economy, some niche markets will be in difficulty. Broadly speaking, however, as this is written, most search and recruitment firms are doing quite well. Nevertheless, it would be false and dangerous optimism to ignore the possibility that, dire prognostications are accurate.
Can a Recession be accurately predicted and prepared for? Indeed it can!
Here are three numbers to help you to do so:
1) Ratio of Marketing Presentations to Search Assignments
Lou Scott was the legendary speaker and trainer of the 1970’s in the US who was instrumental in developing Management Recruiters International. He believed that keeping track of this ratio would give a firm a six-month head start in predicting a downturn over a firm that did not keep such numbers. He was right.
The term “Marketing Presentations”, as used here, may be defined as either Marketing the Candidate Presentations or Marketing Your Services Presentations. So long as the percentage of these two calls remain constant, these numbers may be combined. If in doubt, separate them and monitor both ratios. Note that is presentations, not “calls”.
Niches suffer very differently in a downturn, and overall economic numbers may not have much to do with yours. A consistent drop in this ratio, however, is a clear signal of serious trouble ahead.
Do you keep this number, by recruiter and by entire office, and analyze it monthly?
There have been ten post-World War II recessions in the US, and not dissimilar numbers in the UK. Betting against another may not be a good choice.
2) Amount of Business Booked with New Clients
In good times, established recruitment consultants and search firms tend to fall into a dangerous rut — generating most of their revenues from established client companies. While this can be highly profitable, the reality is that many of these clients will reduce or freeze hiring in a genuine Recession. A firm that has not had a consistent influx of new clients is a firm at great risk. Beyond the economic cost is the fact that recruiters who have not regularly searched for new clients are unlikely to have the skills or habit patterns to achieve success. They are likely to fail in a market downturn.
What percentage of your firm’s business in the last quarter and year has come from new client companies? What percentage of your good (Class A) search assignments are from new clients? If you are unaware of the answer, it may ultimately cost you a great deal!
3) Qualifying Presentations to New Prospects
The specific information, methodology and organization involved in Qualifying prospective client companies on an on-going basis is covered thoroughly in the author’s new book Breakthrough! Exploding the Production of Experienced Recruiters. Re-reading the two appropriate chapters entitled “Organizing and Developing Your Client Base” and implementing the material is strongly suggested.
This number must be monitored and maintained on a daily basis. What should be the minimum? Five Qualifying Presentations (not “calls”) each and every day from every recruitment consultant, regardless of how many “open” searches you have.
Solution
Is there a solution to a market slowdown? Absolutely! But the first step is knowing what lies ahead.
These numbers, hopefully combined with other management steps, will go far towards maintaining a structure that will allow your firm to prepare to survive the deepest downturn and to increase your long-term profits in any market.
Acclaimed speaker and trainer, Steve Finkel is a veteran of 30 years and six recessions in our industry. The author of the best-selling book in our industry’s history (now in 25 countries), he has conducted over 400 in-house training programs on five continents for firms of all sizes, with 85% repeat business. Mr. Finkel has been referred to by Personnel Consultant Magazine, published by US National Association of Personnel Services, as possessing “the most in-depth knowledge of search and placement in industry history”. Website:
www.stevefinkel.com
or call (US) 314-991-3177
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