The Most Placeable Candidate or The Sincerest Form of Flattery

Any recruiter “worth their salt” (a Roman term from which salary derives), routinely surfaces and markets most placeable candidates (MPC’s) to their client and prospect companies. A most placeable candidate represents the total package, a “rock star” if you will, capable of immediately adding differentiating quality to your company. These champions don’t typically post their resumes on a job board, they don’t scour their network for a next logical step on their career ladder. They’re equally hardest to find and most skeptical of their representation.

The MPC is broadly categorized as a passive job seeker. More times than not they are ferreted out by seasoned and respected recruiters, or are the direct result of a referral chain of events. As the old adage goes, great people know great people. Unsurprisingly, there is a significant correlation between a well practiced recruiter and the number of MPC candidates that they generate. Great and lasting benefits always accrue to those that perform their job duties reliably and consistently, with great ethics, over time.

Outliers, a recent book by Malcolm Gladwell, reasons that it essentially takes 10,000 hours of practice to become expert or proficient at just about anything. That’s five years, 40 hours a week. Why would recruiting be any different? Accentuate Staffing, since its inception some thirteen years ago, has focused upon providing an environment that attracts, motivates and retains the best of professional recruiters. In the coming months, we will celebrate two 10 year anniversaries, and a 5 year anniversary, of our recruiters. They will not be our first such celebrations, and likely not our last.

The dramatic increases in unemployment levels over the past year provide perhaps the last opportunity (if one is a believer in the demographics) to more readily locate, and lock up, differentiating talent for your company. Through no fault of their own, many MPC’s have been forced to look up from their work only to realize that their jobs and their companies are no more. Even if you don’t outsource some or all of your sourcing and recruiting activities to an external agency, we encourage you to use this unique market opportunity to internally generate MPC’s and upgrade your personnel.

The next time a recruiter, especially one that you’ve trusted for many years and even more transactions, offers you the first opportunity to interview one of their “rock stars”, give them some love and consideration. They’re saying to you that they are willing to place their reputation on the line. In the midst of their routine, which they perform with great discipline and great skill over and over, they’ve identified an outlier, worthy of your immediate attention. And as we all know, great companies are always hiring.

March 2009: An Unemployment Snapshot

According to data compiled by the Staffing Industry Report based upon Bureau of Labor Statistics, the unemployment rate in March of 2009 is 8.09%.  North Carolina is fourth highest in the nation, at 10.70%; Wyoming the lowest rate; Michigan the highest rate.  Unemployment rates rose in all states, as compared to one year ago.

If one disects the rates a little more, one finds that the unemployment rate amongst college-level graduates is at 4.34% nationally, an increase from 4.11% a year ago.  For much of the past decade, this number has fluctuated minimally around 3%.  While the percentage increase from the most recent 10 year average is substantial, the absolute number of unemployed college graudates is relatively minimal.  It is those that have failed to graduate from college that are feeling the weight of the current recession.   Their stories and circumstances are markedly different from those that have achieved academic standing.

Anecdotally, Accentuate Staffing is still having difficulty searching and securing certain skill sets, despite the overall market perception that all talent is abundant.  The old adage that “good people are hard to find” continues to ring true.      

We’re not going to project that times haven’t changed.  On the margin, the local Raleigh-Durham market has moved incrementally from favoring the employee to advantage corporate America.  But to say that we’re mired deep in a recessionary slump for “degreed” talent is untrue.  Generalities may provide the easiest story for the newspapers to recite, and misery does love company, but it is not reflective of the evidence.

Contrarian Hiring: Lead, Follow, Or Jump

They may be trite sayings but it’s rarely” the herd” that carries the day, nor is it ”the lemmings” that mindlessly jump into the sea that possess true vision.  It’s really those that are on the “other side of the trade” that seek to reap the long term rewards.  The other side of the ”firing” trade, is “hiring”. 

If one believes that economic prosperity will return (either in spite of, or due to the efforts of those in charge), then it’s time to get one up on the competition by being proactive, rather than reactive, to the marketplace.  This is the best of times to hire!  It’s potentially a once in a generation’s opportunity to upgrade your staff!  It’s the best of times to get a recruiter to pay attention to your needs, and get them to deliver the “nice to haves” along with the “must haves”!

I’ve been in the recruiting industry for more than two decades, witnessed a lot of ups and almost as many downs.  I’ve seen the Triangle “gold rush” of the past decade save Y2K, been in Hartford in the 1980′s as the insurance and real estate industries got slaughtered.  While I prefer the former, it’s the latter that similarly faces us today.

One of the benefits, that I guarantee won’t last long (or we’re all in a heap of trouble), is the availability of talent that is on the market, through no fault of their own.   When a company collapses, there is much collateral damage.  Employees, regardless of their skill level, even when it is exceptional, enter the job market.   Shouldn’t you take advantage of this opportunity before it vanishes?

Just as “down” markets present opporunities to capture share, they present opportunities to capture talent.  It wasn’t so long ago that I read of the Human Resource director who said that they “put a mirror in front of their applicants and if it fogged they hired ‘em”.   Ahh, those were the days!

I’m sure in the not-too-distant future I’ll be reading much of the same nonsense, as prosperity returns.  Many economists are starting to come out and indicate that the economy may bottom in the third quarter of 2009.  The stock market, usually an early indicator, is more than 20% above its disheartening lows.   So, before it’s too late, consider the contrarian view and go out and hire someone great.

The Gross Margin Playing Field

The Staffing Industry Report, a monthly publication offering insights into employment activity and trends, is geared to the staffing and recruiting industry.  Much public company information is available in each newsletter, providing the opporutnity to analyze and reflect. 

Given the economic challenges that are upon our industry (and probably yours), the numbers reveal that some staffing companies refuse to “go along with the herd” in terms of pricing.  As a group, we’ve tried to educate our customers that there is much “smoke and mirrors” behind many of their claims, however, we’ll let their numbers do the talking!

The March 2009 issue reported on the gross margin percentages of public staffing companies for the fourth quarter of 2008.  So, the information is quite timely.  Gross margin is a key metric for most companies, probably yours.  In the instance of a staffing company, it reflects the gross profits on contingent employees (the hourly bill rate minus the  pay rate, inclusive of all taxes, benefits, and worker’s compensation) and the gross profits on all permanent placements, added together.  This total is divided into total sales, to arrive at a gross margin percentage.

The vast majority of publicly-traded staffing companies are clustered between 20% and 25% gross margin, some earn higher.  Specialty or niche providers generally trend higher, diversified providers lower.  Manpower, for example, is at 20.8%;  Randstad, 20.7%;  Adecco, 18.2%;  and Kelly 17.6%.  Some of the niche companies, Computer Task Group, 22.4%;  Cross Country Healthcare, 26.4%; and Kforce at 33.5%.

There are only two public staffing providers that exceed 40% in gross margin percentage.  The two are Hudson Highland Group, and Robert Half International.  To temper the numbers somewhat, neither company chooses ”to play” in high volume, low margin accounts.  Their focus is upon smaller “retail” clients, that are less focused upon price as a qualifying feature.  

Accentuate Staffing’s gross margin percentage is currently at 20.8%.  Our business mix addresses clients of any size, where we are confident that we can add value and outperform the competition. 

The simple fact is that most staffing companies offer pricing within relatively narrow ranges.  The market has largely matured, most competitors are aware of what the market can bear, and most choose to operate within those parameters (born out by the clustering of gross margin percentages).  Given a couple of outliers, however, the buyer of staffing and recruiting services should carefully weigh the performance of those specific vendors against the premium prices that they charge. 

We would argue that a gross margin percentage on the order of 2x for Hudson Highland Group and Robert Half International is far beyond any potential value that they could “sell” to their clients.  Just as importantly, the amount of money that they extract from their contingent workers (to maintain their gross margin percentages) through lower pay rates, and less competitive benefits, seems equally egregious.  Encourage them to open their books to you and reveal the truths; gross margin percentages don’t lie!