Undercutting happens in every walk of life.
When value is created, rather than looking at what an industry charges, it is when a recruitment consultancy makes the step up.
Our ongoing discussions from the TeamJobs members looks at a practice that has been around for generations and an all too common recruitment practice. Let’s talk about agencies drawing clients away from the competition by charging less.
Joining the discussion is Karen Brodie (Bournemouth Branch Manager), Michelle Mitchell (Strategic Sales & Development Manager), Rob Bruce (Technical Manager), Vicki Reeks (Industrial Manager), Becky Russell (Commercial Recruitment Consultant).
Undercutting is something that we see every week. Karen highlighted “The team recently visited a potential client who were looking for new customer service roles and it was very interesting to see other agencies undercutting by 5%.’’
“Our approach to this problem was centred on providing a recruitment solution in terms of recommending temporary staff with the intention over time to move to permanent. What this provided was flexibility for a client to build the right team. The final decision was not based on price alone.”
Karen said “This happens in every industry. For instance, if a five star hotel starts charging the same as a two star hotel, it can affect a whole town in a domino effect. The knock on effect affects many people.”
Rather than highlighting the solution just yet, let’s stay with the practices that undermine the industry.
Vicki mentioned another practice, “Agencies can target candidates and make contracts vulnerable. For instance, an agency can entice someone out of the role they are in, so there becomes a vacancy to fill. In short, if a company takes someone out, they know there will be place to fill.”
Practices for capturing and nurturing clients comes in all shapes and sizes.
What Do People Get?
It is not what you say, but what you do.
A lot of the work from within a recruitment consultancy is intangible. Michelle highlighted “Too many people may look at our industry in the same way as an estate agency. By this I mean people not seeing what they get for their money. This can be everything from filtering roles, meeting people, building the candidate database, selecting the best candidates and negotiating offers.”
This sentiment was echoed by Becky “It is down to a recruitment consultancy to show the difference, not just say it.”
As well as visibility, for a recruitment consultancy to be trusted in a competitive marketplace, there has to be a level of empathy. Karen explained “Compared with a limited relationship centred on price, the opposite is understanding the culture. This creates a mutual understanding and respect from consultant to client and vice versa.”
Extracting value is so important for a client to know they have made the right decision. Karen said “We receive phone calls where the conversation invariably starts, ‘I have been using a recruitment agency and struggling to fill a role, what rate do you charge?’ From this start, I already know where the conversation will go. It is clear that the agency does not have a full understanding of what they are looking for. Strong relationships are not centred on cost. For instance, if you bought a suit from Primark you know that the outfit will not look as good at the end of the year. However, if you bought a suit from somewhere such as Hobbs, you know it will last for a few years, it’s an investment”
“For every client, the greatest return is when they get the most value out of an agency.”
Leaving The Undercuts In The Bin
So, if undercutting is something that will always be a part of business and society, to achieve strong relationships and longevity, integrity is key.
Rob highlighted the importance of being open and sharing with others how a company operates. “I was at a recent conference and one of the talks highlighted the importance of loving the hands that make something. This was highlighting that not every message has to come from behind a faceless logo or going heavy on how well a company is doing, but for others to associate with individuals. A consultancy has to be confident in what they do and believe that the service they provide is going to support a client.”
“Here at TeamJobs we all represent specialists. The company is built around people who know their subject matter. Combine this with accessibility to the right candidates who have the skillsets required for a particularly industry means that undercutting does not enter any conversation.”
Knowledge and understanding is a trait that filters between client and consultancy. This could be meet-up sessions in order to get the brief precise.
Karen stated “This is not about advertising for roles, this is about getting to know how a company works in order to make the best suggestions and allocate the right fit. This approach is in a completely different place from where a relationship starts by being told what someone else is willing to pay.”
Bringing To A Close
Matching values between a client and recruitment consultancy is where successful relationships develop. This is in a different place from treating the world as a mass marketplace where every relationship is purely transactional.
Alignment is very important. Within TeamJobs we have always believed that openness with others is how we become relatable. Undercutting can undervalue the recruitment industry. However, following a path that you create, not what someone else has already set is how businesses can stand apart.
Paying for value is a far healthier place, than becoming the lowest common denominator.