Thursday, 20 March 2014

Why compliance is killing your margin

Written by Tim Parker of Yu:talent

As any good recruitment manager knows, driving business profit is not just about generating fee income.  The control and management of costs is a delicate balancing act that differentiates an exceptional manager from the average.  Spend nothing and your business may wither on the vine; spend liberally and watch that fee income evaporate.

When it comes to advertising and other costs that appear on a P&L, control simply requires a measure of due diligence.  It is far harder though to manage the costs that don’t come with a black and white figure attached to them.  They exist in a number of areas but particularly when it comes to service delivery.

The cost of service delivery manifests itself in staff time and one of the greatest time drainers in recent years is compliance.  Sourcing and delivering the talent is one thing, but the amount of background checking and vetting has continued to grow, simultaneously coupled with an increase in pressure to reduce fee margins.  This is not just in the temp market but contract and perm too, though where the greatest pressure exists is arguably in the markets with highest volume and lowest fee value.  Many contract centre recruiters will tell you this, particularly those supplying to industries such as Financial Services.  This is of course understandable in many respects when supplying staff into high risk business areas.  Whether all the compliance processes are necessary or truly deliver the reduction in risk they are designed for is a different matter.

Regardless, the need to comply with compliance is not likely to reduce in the near future. So how can you best manage this?

Utilise your knowledge base
Use the people who have the best knowledge of the client and their processes.  This might at first seem obvious, but while you might be pushing for a consultant to deliver in a traditional sense, you might actually be taking them away from working on areas of the project where they would deliver more for you in terms of overall contract profitability.  

Deploy best skills in best areas
Leading directly on from the above, ensure everyone in the team is playing to their strengths and working within their greatest comfort zones.  If everyone is comfortable with what they are doing and enjoying it then you will achieve far greater productivity.  Admin intensive activities probably are best diverted to a member of support staff or a temp hired to support in delivering the project.  Do be wary though, that training someone new does not prove more costly in time and mistakes than leaving the responsibility with a more senior team member who is competent and happy with the task.

Define everyone’s roles
You may know who is best doing what, but ensure they do too.  Define everyone’s roles clearly to both the individual and the team.  Identify those who you believe are capable but may not believe that themselves.  Ensure they have the necessary encouragement and support to guarantee they will deliver to the level you believe them capable.  Be prepared to make adjustments and changes if unforeseen weaknesses emerge, but don’t chop and change erratically.  Be strategic so solving one staff problem does not create another with someone else.

Simplify, simplify, simplify
Bizarrely the act of trying to manage a complex set of processes dictated by a client can result in creating more and more processes internally.  This is not as illogical as it sounds.  In order to ensure that the clients processes are followed, having an internal set of checks and procedures is a logical safety net to guarantee that all is progressing as it should be. However, this can easily escalate out of control as it is easier to add more and more process than it is to be disciplined in adding only what is necessary.  Be strict in this regard.  The more you have in place, the more margin there is for error.  Aim for ‘minimum process delivery’ - the most minimal process chain possible that will still deliver the required result.

Use the technology available to you

In order to achieve ‘minimum process delivery’ use all the tools you have available to you.  Admit when you are unsure of what is available and again use team strength for ideas in areas where your knowledge is lacking.  Use your CRM/ATS system to its fullest extent in storing documents where they are easily accessed for checking.  It should be the core of the simplicity workflow.  If it is unable to deliver what you need fully then additional tech may bridge the gap, but beware that spreading the process into different tech areas can quickly undermine the simplicity flow if not done well.  If too many gaps exist, or you don’t use a CRM/ATS to manage your recruitment projects then it might be time to start looking.  If this is the case then carefully analyse exactly what you need the system to do for you before you go to market.

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