Elite Leaders have in common a certain DNA and the desire to outperform the market, build competitive advantage and increase shareholder value, which reflects the mission of the Elite Recruitment Network. We have been aware through tracking member performance that Elite Leader member companies typically grew faster and more profitably than the recruitment sector as a whole, which gives members the confidence that they are taking the right approach.
While regular member survey confirmed the value that the members were gaining from membership (i.e. 97% of members confirmed that membership led to tangible improvements in business performance and profitability) we were keen to provide members with other more comprehensive methods of gauging their performance against others.
In 2014 we struck up a strategic partnership with the Recruitment Industry Benchmark, or RIB, to allow Elite members to compare their performance against other recruiters. RIB members represent over 20% of turnover the recruitment market and are therefore a meaningful benchmark against which a recruitment business can compare itself.
Across 35 different performance indicators, the RIB approach allows you to benchmark your performance against others, understand where you sit in comparison and identifying areas you can improve. As one Managing Director shared: “I saved £250,000 by acting on just one insight”.
Through working with RIB, Elite members are now readily able to understand to what extent they are performing. For a minimal investment in time – 10 minutes of data inputting a month – the return, in terms of the knowledge through which to improve productivity, efficiency, effectiveness and profitability, is significant.
Equally, it helped quantify to what extent the Elite members were indeed outperforming the market. Working with Belinda Johnson, Associate Research and Knowledge Director at RIB, we were able to share with our members at the recent Global Recruiter Exhibition in November that:
- Elite members significantly outperformed market turnover growth: while the REC’s Recruitment Industry Trends Survey showed that the UK industry had grown by 8.2% in FY 2013/14 – and forecasts 9% growth for 2014/15 – data for RIB and Elite RIB members shows encouraging signs. RIB members, which represent over 20% of the industry turnover, experienced 16.5% year on year turnover growth in Q3 2014 (July-September). By way of contrast, Elite Leaders’ turnover grew, on average, by a fantastic 28.2% in the comparable period.
- Elite members were more profitable: in Q3 of 2014, Elite Members significantly outperformed the market with NFI/GP of 34.6%, compared with other RIB members delivering who delivered NFI/GP of 27.8%. The all industry average for 2013/14, as recorded by the REC’s Survey, was 27.5%.
James Osborne, CEO of Elite Recruitment Network commented on this significant outperformance of Elite members,
“I believe this growth that many of the Elite members are experiencing is testament to the time they are investing into their strategies, enabling them to adapt quickly to the way the business environment is evolving, and to working collaboratively with like-minded recruitment owners and industry experts with proven experience in outperforming the market. This organised sharing of best practice and the willingness to be challenged on their strategy and performance is clearly proving to be highly effective when it comes to maintaining a competitive edge.”
That said, Belinda Johnson suggested to Elite members that the ways in which we currently measure performance may, potentially, need to be adjusted in the future if certain indicators of change play out within the market. These include:
- A shift to outcomes-based working: as the UK continues to struggle to compete, productivity-wise, on the global stage, a move to outcomes based worker reward has the potential to both help UK plc increase yield and address the issue of wage stagnation. If the worker is increasingly likely to be rewarded for their outputs, Johnson suggested that it is unlikely that the industry will be able to sustain a commercial model where it is rewarded solely for the introduction (permanent) and/or maintenance of an individual in post (temp/contract).
- Employers increasingly realising the value of the industry’s market data: in a skills short market, where sourcing for a higher degree of certainty of outcome will increase in importance, the industry’s transactional data and market mapping intelligence has tremendous value. Johnson pointed to the fact that the commercial use of this data has the potential to offset the aforementioned challenge on the industry’s legacy commercial model that outcomes-based reward may bring about.
- The principle of ‘ownership of skills’ extending to contingent workers: as non-permanent working increases in adoption, driven by the desires of both hirers and workers alike, Johnson believes that the industry will have a nurturing role to play in the future development of this increasingly significant cohort. Future success may be inextricably linked to the industry’s ability to recognise and make this shift in responsibility.
Elite Recruitment Network will be running more session with RIB throughout 2015 to both further explore the benchmarking data and look at the implications of inevitable future change for the industry.
If you are a recruitment business owner and would like to attend one of the Elite Leader meetings as our guest to find out more, then [email protected]