Managing a recruitment business through the recession

The recruitment sector has taken many hard knocks during the recent recession in the UK. As firms look to reduce their headcount (or at least minimise their payroll costs), their demand for recruitment agency services is bound to fall.

This short interview with the CEO of Hays plc (one of the largest UK recruitment agency groups) is an excellent source of insights into management strategies in recession. Key points that students might identify include:

- How demand in the service sector can fall dramatically during a sector
- Remuneration structure of agency consultants contains both a variable (commission) and fixed (basic salary) element. So if demand falls, then payroll costs will flex downwards too
- In the tertiary sector, reducing costs is largely about reducing headcount - it can’t be avoided in a business like Hays
- The advantages of having a broad product range, which reduces the reliance of the business on a particular market segment (e.g. Hays public sector demand has held up quite well, despite sharp falls in demand from clients in the private sector)
- The opportunities of growth from emerging markets like China & India, which help to offset the effects of recession in the core domestic market (UK)

A very useful article for BUSS4 students, in particular