Recruitment Agencies spend a lot of their available capacity building relationships with talent that they hope become candidates and eventually placed for a well-deserved fee.
You would think that the Agency relationship with these placed resources, especially temps and contractors, would be fiercely protected. Which is why it is surprising that the relationship with placed temps and contractors is often allowed to be diluted by using service providers that don’t always have the Agency’s interests at heart.
Leading recruitment and leading a business.
Many recruitment agencies are run by superb recruitment leaders that genuinely impresses with their 24×7 dedication, enthusiasm and success in all steps of the recruitment process. These leaders are across all the extras that allow a talent pool to be developed, jobs to be won from a wide variety of clients, and regular placements to be made for good fees.
However, there is an increasing focus on non-recruitment aspects of business in order to survive today. Consider that many businesses:
- Fully outsource contractor management and finance.
- Manage placements, invoicing and commissions from a spreadsheet.
- Prepare cashflow management on a spreadsheet, or worse, from the available bank balance.
- Founders are paid via dividends when funds are available.
- If contractor funding is required, it is provided by the contractor management firm.
- The Financial Accounts are updated when tax office submissions are required.
- Statutory obligations like contractor superannuation are managed by the outsourced provider.
- Workers Compensation is estimated and paid without question.
- Lost control of the relationship with contractors: timesheets are collected by the Contractor Management company and payroll enquiries are handled by the Contractor Management company. Some contractor management companies even seek opportunities to “payroll” talent into other clients.
- The legal position becomes clouded – has the two-way employee relationship between the Agency and its client now turned into a threesome?
When we discuss changes in the recruitment industry over the past decade the mind turns to technology, procurement methods and the international nature of our industry. But it is the compliance and legal requirements placed on business owners that has changed the complexity and sophistication required to run a recruitment agency today.
There is an opportunity for recruitment agencies to have a focus on: what is critical to their business performance; what is required to stay legal and compliant; and what can be outsourced for cost, flexibility and performance benefits. This framework exists.
Working from the perspective of legal compliance, then business critical processes, then business effectiveness, changes the way in which a recruitment agency can look at its strategy and operation.
Best of Breed works for services, not just technology
For front office operations much has changed, but the principles remain. Building relationships and the right to communicate with talent and potential clients is the priority for most organisations. Turning those relationships into live candidates and placement opportunities remains the art of recruitment. Providing the working environment – leadership, learning & development, technology, performance and productivity continue to be a challenge for owners and managers.
The back office has grown in scope and complexity. Increased regulation leads to a greater number of tasks to be managed to ensure their compliance.
What has really exploded in importance is the role of middle office. Recruitment is now becoming as complex as many highly regulated industries, and it is in the middle office that this needs to be managed. The legal and reputational implications of errors when hiring, administering or terminating an employee in Australia are business threatening.
Middle office is where the control happens. It undertakes the processes that deliver timely and compliant outputs for the business. Your middle office is the source of truth (if it’s set up correctly) for all margin related questions and from that you get real answers to real business questions.
We will provide further information on the rise of the middle office role in other articles.
Having this front-middle-back office framework allows owners and managers to focus on what is critical to their business performance. Maintaining their assets (their working contractors) is one objective, and maintaining compliance is another.
Mapping out processes that are critical to the organisation now allows a structured conversation about what functions can be outsourced and how that outsourced function fits into the organisation.
Middle Office professional services
Middle Office was formed by experienced industry professionals who provide an exemplary service that puts you in control of your business.
We stand behind you, providing skills, experience, technology, flexibility and cost effectiveness that you can’t repeat inhouse. We’ll grow with you and ensure you are compliant. And that allows you to be the best recruitment agency manager possible.
Call us to discuss further.
Photo by Artem Maltsev on Unsplash
Rod is a 40-year veteran of Australian and international IT and corporate advisory organisations. His executive-level credentials traverse many segments of the staffing and recruitment industry and include corporate advisory assignments, mergers and acquisitions mandates, and advisory to multinational and other public and private organisations. Located in Perth, Rod provides local industry acumen and global knowledge to recruitment agencies internationally.