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The Key Challenges Facing the Recruitment Industry

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Our latest survey took a snapshot of the current state of the recruitment industry within the UK. Whilst we were predominantly looking for the key reasons a recruitment agency succeeds or fails, it also provided an opportunity to gain an understanding of the key challenges the industry currently faces.

When asked what they thought were the biggest challenges for the sector, 76% of the recruitment agency owners surveyed suggested that the biggest challenge was the mismatch of skills against the criteria employers were looking for, and a continuing lack of jobs versus available candidates. This suggests that employers are placing more and more emphasis on ensuring that they get the right person for the job, which is probably as a result of the financial circumstances businesses find themselves in these days, and how much of an investment recruiting is for them.

This in turn has given rise to what some have termed a ‘super’ contractor. With 72% of respondents stating that they have seen a growing preference for more temporary or contract workers as opposed to permanent placements. This allows those with the right skill sets to charge a premium for their services and also allows businesses to make less of an ongoing financial commitment.

In terms of success within the industry, 68% of respondents stated that the main reason for the failure of recruitment agencies was the lack of experience of those setting them up.  This is probably not surprising when the same respondents stated that the ease of setting up a recruitment agency was one of the main reasons they did. It also points to the need for these new start, or recently established, recruitment agencies to seek support when it comes to areas such as back office administration, cash flow management and growing a client base. Unfortunately, having knowledge of a sector is just one of many crucial skills required to manage a successful business.

The other key challenges the industry faces come in the form of legislation. With pensions auto-enrolment now in full swing the added administration responsibilities this has brought has placed a great deal of strain on recruitment agencies, with many unable to cope with the complex back office and communication requirements. The survey respondents also for see trouble coming in the form of the 2016 immigration laws, that state non European Economic Area workers will need to earn at least £35,000 if they wish to settle in the UK. 67% of those questioned believe this will prove detrimental to recruitment agencies, as the available pool of candidates will shrink.

For a full breakdown of the results you can download our summary here, whilst our “Overcoming the obstacles” guide looks at some of these challenges and how to overcome them.