This is NOT a “one size fits all” answer. Your decision needs to be based on your current situation, your budget, cash flow, the vision you have for your company and the solution that is best for your business to attain the goals you have established.
Before you begin to ask yourself this question, you need to objectively and thoroughly analyze the current realities of your business. Below are 14 questions that a recruiting firm owner can use to determine whether or not they should expand or downsize their firm:
- Is my company attaining goals set?
- If yes, how and why?
- If no, why not?
- Are my employees assets or liabilities? (review statistics)
- Which employees are profit generators?
- Which employees are no longer assets?
- What does your P & L reveal?
- Do you have revenue that can support an expansion?
- Do you need to cut expenses, overhead, and payroll?
- Are you profitable?
- Are your profits limited by the size of your sales force?
- Are you on target to hit your goals year to date?
- Are these numbers in line with your company’s vision?
- Is your business focused where your company makes the highest margin of profit?
I think it’s important to share a true story that relates directly to this topic. One of the owners in my Coaching Club shared his frustration over last year’s sales. He had set a goal for his company of $2.2 million in direct placements. His office produced not quite $1.6 million in sales in a very healthy economy. He had set his budget, expenses, and projections at his goal of $2.2 million. Obviously, his expenses did not decrease, so his bottom line took a real hit.
I asked him to describe the structure of his office to me. He explained he had six recruiters, four with experience and two new recruiters with less than one year of experience. He was also a working owner and the top producer of his firm.
I asked him what he produced and he said $320,000. Using very simple math, everyone in his office, including his two new hires, would have had to produce close to $320,000 in order for his office to hit the sales goal of $2.2 million. His two new hires combined to produce $224,000.
If you subtracted their production and his, the remaining four recruiters in his office would have had to produce $414,000 each in order for the company goal to be achieved. This owner had set himself up for failure without even realizing what he had done. The irony of this story is everyone in his office hit the goals they had set and couldn’t understand their owner’s frustration.
If you do not have a large enough sales team to meet your goals, you need to hire additional producers. If you have a job order flow that is too heavy for your current team to cover, you should consider hiring a “candidate specialist” who only works the candidate side of the placement process or use the services of an independent sourcer or researcher.
It’s important that the people who work for you understand your vision and goals. You then have each one of them commit to achieving a portion of your production goal. When you add up the production commitments, you now have a very clear picture if you have the appropriate team in place. Attempt to keep emotions out of your decision. These decisions must be made on facts and numbers.
Whether you’re considering an expansion or the possibility of downsizing, your vision, budget, and current reality must guide your actions. When a company is going through a difficult time or weak economy, it usually downsizes, which means jobs are cut. Most companies claim that their people are the greatest assets, but the truth is the RIGHT people are your greatest asset.
There are times when you have no choice but to downsize because you did not anticipate a trend or cycle that negatively impacted your company. I have found that often entrepreneurs who own recruiting firms use tough times to do something they should have done long before: fired the individuals who were destroying their bottom line.
You are in business to make profits, not provide jobs for your sales team!
— — —
Barb Bruno, CPC/CTS is a guest writer for the Top Echelon Recruiter Training Blog, and you can hire her for your next conference or event or for in-house training. Barb’s training techniques have guided thousands of recruiters to a higher level of sales and profits. She is best known for her methodical, easy-to-implement strategies that she shares with her audiences. Her enthusiasm is contagious! If you would like to hire Barb, please call 219.663.9609, email support@staffingandrecruiting.com, or visit Good as Gold Training online.