Is it Time to Change the Way We Remunerate Recruiters?

 

As someone who is champion to the science of Marketing, many an executive throws down a gauntlet for me in terms of Marketing innovation: In a recent Pricing Workshop, someone challenged me to develop a better “model of exchange” in recruitment. Well here goes…

 

For a long time, some business leaders have harboured a certain dissatisfaction in the price-value equation for recruitment services in Australia.

 

For employers, there has been a suspicion that recruiters are paid excessively for what they do. For recruiters, there is a perception of the importance of correct recruitment that justifies their high commissions. For applicants, there is a frustration that they have been screened out with inadequate diligence, and that recruiters deliver an inefficient service to both applicants and employers.

 

Recruiters argue commissions of 30% of more for senior and key appointments are justified, citing “costs and overheads” that form an impeccable service. Sophistications such as advanced CV screening, diligent and deep reference-checking, background research, best-quality personality testing and other “overheads” are presented as depth and value in the service provided, giving the employer the best chance of securing an “A-class” candidate.

 

However, recruiters are very quick to limit their liability to a three-month trial period, before the waive all responsibility and leave the joined match to its own future.

 

For quality candidates who refuse to lie or exaggerate in their CV, there is a loss of trust in a system that doesn’t give a honest applicant a “fair go”.

 

A bad appointment can mean the end with blame being purposeless

All too often the employee doesn’t reveal weaknesses or inability to deliver until well past that point… with employers discovering all too late that they should have employed someone else.

 

Recruiters blame their clients for incomplete or inappropriate briefs, or simply the decision responsibility being beyond their mandate.

 

Employers blame recruiters for presenting tool limited a field of appropriate candidates, not consulting in a fiduciary manner, filling the brief rather than offering alternative (better?) options, of simply doing a personality match rather than a skills/competence match.

 

Regardless, a bad appointment can mean loss of profits, milestone negative implications that can extend to downturn, loss of jobs, or even the end of the organisation.

 

A Better Way to Remunerate Recruiters?

It is only right and proper that recruiters who genuinely match the best possible candidate to the right employers be handsomely rewarded.

 

At the other end of the spectrum, it is also unproductive to reward recruiters if they present inappropriate, badly selected, unsuitable or inadequately competent candidates.

 

An alternative Model to Reward Recruiters

What if recruiters could be rewarded for quality of employee service?

What if recruiters could be rewarded for duration of employee service?

What if recruiters could be rewarded for contribution to employee performance?

Wouldn’t it be fairer if recruiters shared in employees’ bonuses?

Wouldn’t it be fairer if recruiters shared in employees’ salary increases?

Wouldn’t it be fairer if recruiters shared in employees’ career progression?

I wonder if it is time to reward recruiters with a superior win/win/win approach?

How about rewarding recruiters on a longer-term basis? What if they were paid an override for every year of service? 10 years in the job would be a great appointment – worthy of a handsome commission. 18 months of hair-pulling agony, sub-optimal results, and organisational disharmony not rewarded significantly means recruiters have “skin-in-the game”.

The override could include bonuses and pay-rises… that would be fair too, while NOT receiving huge commissions for appointing short-duration candidates would also be fair.

 

FEEDBACK Please!

I genuinely would like to hear comments on this … form recruiters, employers AND candidates… it could be an opportunity to bring about constructive change… but if it is not, I’d like to hear other thoughts.

There is a crisis of engagement. With 87% of employees disengaged worldwide, Gallup states in a 2016 report that “employee engagement has barely budged in years”. In the United States and Australia these figures are 68% and 76% respectively. These levels of disengagement represent billions of dollars in costs to organisations and governments.

Why are so many employees disengaged? How can organisations increase engagement? What effect do disengaged customers, students, welfare recipients and other stakeholders have on the bottom line and on organisational success? How can you find a superior means to overcome these engagement problems?

With a market in need of a viable solution, management has to address the symptoms, the foundations and find the solution, including a next generation of engagement tools.

Leaders MUST address the issues, the direct & indirect costs, the effect on customer experience, and the philosophies around minimising, and explore new & engaging methodology to deal with this problem.

MARKET STATUS QUO

Increasing employee engagement investments of 10% can increase profits by $2,400 per employee, per year. (Source: Workplace Research Foundation). Employers are rapidly catching on to the positive ROI of investing in their employee engagement efforts.

Highly engaged employees are 38% more likely to have above-average productivity. (Source: Workplace Research Foundation). This is a huge part of where we see increased profits coming from. Kevin Kruse (@Kruse) coined a great term to define this ripple effect that employee engagement tends to have on an organization, he calls it, “The Engagement Profit Chain”.

Companies that foster engaged brand ambassadors in their workforce report an average of 2.69 sick days taken annually per employee, compared to companies with weak engagement efforts, reporting an average of 6.19 sick days. (Source: Workplace Research Foundation). Sick days can be very costly in the way of lost productivity and reduced workplace morale. Reducing these costs is just another benefit associated with employee engagement efforts.

Companies with engaged employees, outperform those without by 202%. (Source: Dale Carnegie). “Employee engagement is the emotional commitment the employee has to the organization and its goals. This emotional commitment means engaged employees actually care about their work and their company. They don’t work just for a pay-cheque, or just for the next promotion, but work on behalf of the organization’s goals.” – Kevin Kruse

Companies that implement regular employee feedback have turnover rates that are 14.9% lower than for employees who receive no feedback. (Source: Gallup). This is a big one folks! There are a lot of estimates on the cost of employee turnover, and honestly, that number is going to be different for each employee, location and company. The exact number doesn’t matter as much as the prevention of that cost. What is employee turnover costing you?

Only about 25% of business leaders have an employee engagement strategy. (Source: Dale Carnegie). There’s another powerful statistic. The benefits of building an engaged workforce are undeniable, yet so many companies haven’t made the investment yet. This disconnect seems like the opportunity for a strong competitive advantage over the other 75% of companies who don’t have a strategy.

The numbers don’t lie, organizations are going to need to invest in employee engagement in order to stay competitive, drive productivity and improve the bottom line.

THE FIRST STEP

Leaders need to develop sincere, motivating, inspiring alignment of teams for many reasons… Remove silos, undo secret agenda, create unity of effort, inspire initiative, minimise mistakes, etc.

At Launch Engineering, we deal with this under the “8th “P” of Marketing, “Politics”… were we recognise that Internal Marketing is key to Marketing Strategy & Planning. Readers should contact Launch engineering or visit…

http://www.launchengineering.com/MissionVision.htm

 

 

Brand Equity Grows with Business Productivity from People

Engagement Levels Around the World

“The 22 Immutable Laws of Marketing: Violate them at your own risk”. (Reis, A., & Trout, J. – 1993)” still inspires debate, reflection and grounding among professional marketers.

In reality, it’s an empirically proven list of importance leadership tools for quality CEO’s to consider in the course of nurturing a business.

Entering my 40th year in business, I reflect more frequently on the absolute truth of Law 18, the Law of Success, that says, “Success often leads to arrogance, and arrogance to failure.”

One quip about consulting goes, “The people who want your advice don’t need it and people who need your advice don’t want it.”

This is so true with my existing clients right now… the one’s that collaboratively share, and open their minds, grow profitably and consistently…

Looking back over my career (this is not about me, per se, but demonstrations of real outcomes)

It was a humble executive that asked my to derive a strategy 30 years ago that has delivered $250M p.a. in sales for a FMCG brand that his company had fail on launch. It was humility that opened the minds of a large transport company, so I could create strategy that allowed them to find $250M in profit that had alluded them for years.

It was a humble pharmaceutical Marketing Director that opened his mind to my interpretation of academic models that created a new product line in analgesics that has generated $320M of sales in the past 20 years.

On the other hand…

It was sheer corporate arrogance that has stopped Australia’s leading retailer from securing $400M increase in EBT per annum since 2007.

It was defiant arrogance that had a senior finance executive turn his back on me when I suggested I might be able to help his bank deal with troubled divisions, resulting in a 2.5% slump in share price as a result.

When I warned Australia’s Childcare chain, there were indicators that showed they needed my help, told me they didn’t need help… two years before they went bust… the same with Sydney’s oldest confectionery manufacturer.

A few years ago leading Singapore Corporation told me they knew it all and pursued a 6-Sigma project. It ended up costing them $750K and they generated a 0.5% increase in profits as a result. Comparatively, my firm took the same idea to a similar corporation (without arrogant executives) in Thailand, that cost them only $150,000 and generated a massive 22% increase in profit.

When asked, as a child, what I wanted to be when I grew up, I naively answered, “A time and efficiency expert”. In my earliest learning years, I studied for a decade and a half to just to empower myself with the kernel of understanding that needed to grow for another 15 years.

Only in the last decade have I grasped that the key is political finesse and diplomatic charisma, COMBINED with street scars and academic knowledge, but the Catch-22 is that a single individual cannot possess both charm and ability. Arrogance is a cross that some bare openly and others try to conceal and other, still, deny exists.

Leaders can develop a culture that can hamper arrogance, but arrogant leaders will nourish it. Yet is seems unavoidable. Perhaps it is the business circle of life… creating opportunity for new, fresh organisations to grow, while mega corporations choke to death on it?

I’d be interested to hear what others perceive regarding Law 18, please comment, particularly if you have answers to dealing with Corporate Arrogance.

One of the profound things I learned after 13 years studying “Marketing” at Uni, from tutoring & lecturing in “Marketing” to MBA students and debating “Marketing” with my peers, is the commercial advantage of using academic knowledge that has meaning and relevance in the commercial environment.

FOR MARKETING CONSULTANTS

One of the things taught in higher Economics is that “super-normal” profits only comes to businesses that fall into the economic industry-classification of “Monopolies” or “Monopolistic Competition” (e.g. Oligopolies), while industries where competitors, existing in “Perfect Competition”, inevitably will not maintain long-term “super-normal” profits.

Likewise, in Strategic Marketing Industry Life Cycle Analysis, we KNOW that high margins and premium pricing is much more difficult in “Market Maturity” than in “Growth” and that all industries are likely to enter “Industry Shakeout” at early Maturity stage, primarily because it is more profitable to merge, than it is to grow organically.

Experts among us might shout “in professional services, price is a yardstick of quality” and “Price is in-elastic” but only when the service is heterogeneous in the mind of the buyer.

Product Management “Product Analysis” theory tells us that augmented product metamorphosises into actual product over time – in the case of Marketing Consulting this means clients expect Marketing Consultants to know more, deliver more, contribute more, be more…

History shows formidable marketing successes over the past 40 years have routinely originated by applying higher-level strategic marketing models, so are we NOT  being negligent in ignoring these rules in any marketing consulting business, and industry?

There is a saying, “Only a fool knows everything” that might convert to, “Everybody has something uniquely special they can contribute”… Even Philip Kotler said, “Marketing takes a day to learn and a lifetime to master”, although I’d debate this… I believe Marketing takes a lifetime to learn and is impossible for a single individual to “master”.

Why No Single Marketing Consultant Has ALL the Answers

Think about it… There are 8 “P’s” of Marketing… The 4 “P’s” that everyone (who does a basic business course) learns: Price, Product, Place & Promotion…. are the simplest, but even these  simple topics are complex and extensive.

For instance, JUST “Promotion” breaks down to:
1. Advertising,
2. Public Relations,
3. Sales Promotions, and
4. Personal Selling

… AND, that small subset called “ADVERTISING”, requires professional training in Mass media (Digital, TV, Radio, Print to name a few), direct marketing (CRO online, post, off-the-page, and others), web (YouTube, SEO, PPC, SEM, SMM, CRO, content)… each requiring creative, production, media buying and implementation skills…. coordinated with position, targeting, segmentation, buyer behaviour, buyer adoption stage… and 1001 other professional specializations.
… BUT PROMOTION ALSO INCLUDES Public Relations, Sales Promotions, and Personal Selling… which are all (if not more) as complex and arduous as advertising.

How can an Advertising Expert be a Marketing Expert?

Look at “PRODUCT”… there’s branding, portfolio management, new product development, market research management, packaging, product typing, product differentiation, product management… and on… There’s Boston Matrix, Ansoff Matrix, Brand Equity Management, the Product-Service continuum, levels of involvement, etc, etc and all these vary across 2-5 segments!!!

How can a Product Management Expert be a Marketing Expert?

“PLACE (Distribution)” and “PRICING” are even more complex and divergent… and that is before we move into PEOPLE, PROCESSES and so on…

… and then the synergy can be lost by silos that divide (and cannabalise) marketing efficiencies…

What Would Marketing Consultants Do (in Theory) to Maximise Their Value, their Efficiency & Their Profits?

The business world NEEDS to understand & adopt adopt the “Hierarchies of Marketing” – or some model like it – because, right now, the profession nurtures those who “don’t know how much they don’t know” as employers, naive of the depth and breadth of the discipline of “Marketing”, hire one person to be a jack of all trades instead of many that they should really recruit. (Feel free to request a copy of my [free] e-book, “The Four Faces of Marketing”.)

There is opportunity businesses to make HUGE bounds forward by NOT hiring a ‘gun’ Marketing Manager, for say $170,000 pa, but appointing a Marketing Consultancy for the same money and getting a team of leading experts who collaborate and delegate work to team member/s best qualified to deliver exceptionally good output.

There is a HUGE win/win here… the customer gets BETTER STRATEGIC MARKETING input, and generates better marketing OUTPUT, makes more money, re-invests more… and the marketing firm shares success accordingly.

The only ‘catch’ is the marketing consultancy HAS to deliver exceptional, extraordinary marketing… which no individual can possibly do.

My colleagues and I incorporated Launch Engineering 10 years ago and brought in the best possible minds we knew – in the key areas of Market Research, Information Management, Digital Implementation, and so on, but a small, boutique firm will always reach a flattened sales curve: The world isn’t quite beating a path to our firm’s door as much as we’d like. Why? Well there’s a host reasons that go beyond this post, albeit great strategists cannot yet be 100% brilliant in all operational marketing disciplines.

Should boutique marketing consultancies merge, or compete, and why?

If other marketing consultancies, reading this, see some merit to the points I’ve made, perhaps they would care to offer some feedback and comment… … and tell me, “Should boutique marketing consultancies merge or compete, and why?”

If you’ve read this far and want to delve deeper into Marketing “science”, PLEASE read (for free) about the Hierarchies of Marketing, and other marketing issues, in this e-book by downloading from this address…
http://bookboon.com/en/the-four-faces-of-marketing-ebook

I wrote this book (see below) for different folks:

    • Business Leaders wanting to build an amazingly resilient business
    • Marketing Professionals
    • SEO Professionals
    • Management professionals
    • Wikipedia – who maintain a completely wrong definition of Marketing on their site but refuse to change it
    • People who think Wikipedia’s definition of Marketing is right

Download a FREE copy of my latest book – The Four Faces of Marketing http://bookboon.com/en/the-four-faces-of-marketing-ebook

Pepsi challenge #marketing, a tactic which pits No.2 and against No.1, always succeeds if used properly – but many people don’t realize how.

Many might be surprised to find that Coke’s sales INCREASE when Pepsi does a taste test challenge, The growth in Pepsi’s sales and share comes from minor brands suffering and losing market share.
What the strategy does is send a strong message “There are only two brands worth considering”, the focus of consumers’ interest ensures trial and adoption from OUTSIDE the Coke franchise as well as reinforcing brand equity of the existing franchise – a double edged sword… only soured by the knowledge that it assists your major competitor too.
Coles & WW are using it, with a price war that couldn’t have been better organized if they had colluded to do it on purpose 😉
NOW Facebook and LinkedIn have adopted this strategy in a movement that is likely to hamper growth and undermine THEIR competitors.
While short-term benefits may offer a consumer advantage, the long term development of unconquerable oligopolies offer an inevitable industry wielding too much power and to the larger populations’ disadvantage.
Great if you’re a shareholder, of senior executive on a performance bonus… not so for the masses 😦

How to make a Marketing Plan truly POWERFUL? G.R.A.I.S.E!

Many, many marketing plans are dust collectors – they get written, put on a shelf and forgotten – basically because they do NOT help management get “the job” done.

But a GOOD marketing plan… is actually an everyday tool that makes marketing management and achieving marketing objectives a reality!

So what turns a rubbish plan into a brilliant, key focus of business activity? G.R.A.I.S.E!

Grip: It is soaked in reality (not some fluffy piece of verbose jargon) and is achievable, executable and implementable.

Relevance: It means something to every participant. It helps them understand their function and do it to the best of their ability

Action Steps: Every strategy (how are we going to achieve the objective) is broken down to an Action Plan, with indivisible, individual tactics delegated to a specific person, whose job it is to see the tactic is done to a quantifiable measure including a time-constraint.

Interdependence: Every participating department can identify how each relies on each other for the organisation to achieve the objectives.

Simplicity: It can be read and understood by every person it involves

Exposure: Don’t follow the plan and everyone in the organisation will know who has stuffed up!

So, how do you write a GREAT marketing Pan?

For 100 years academic schools of business have been chasing this allusive goal. Sadly, as academics become more academic, and less commercial, their distance for reality increases. And few are privy to the inner sanctums of the world’s most successful, and discretely quiet about sharing their methods, marketing planners.

Fortunately, launch Engineering, a consultancy that only recruits senior consultants with 25+ years of commercial experience in marketing management that MUST include an outstanding individual success AND advanced marketing qualifications, has provided the answer.

It’s a marketing plan workbook, in Excel format, that works like a guide to writing relevant and appropriate marketing plans.

Better than a marketing planning template, and worth thousands due to its real, commercial value, it is available for a hands for of dollars at Marketing Planning Workbook

ANY marketing professional will look at it and go so what… UNTIL they use it… then they’ll go this is POWERFUL stuff!

One senior marketing executive with a leading Asian Telco, said, “This is so good, I’m introducing is as compulsory in our corporation as soon as I get back to the office!”

This Marketing Planning Template Workbook has been used by government, large national and international companies, and down to small FMCG manufacturers, banks, and even SME’s. Results have spanned 20% growth to over 100% in as little as 18 months.

So if you’re a marketing professional, of any description, you’d be wise to grab this very useful marketing planning tool for the next marketing plan you write. And see just how good it really is in helping write a great marketing plan.

Or if you just need the Marketing Communications Plan, Sales, Plan, or a simple Marketing Planning Template in Word format for SME, try… http://www.launchengineering.com/marketing-plan-templates.htm