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On Recruitment and Pig Farming

A report by rec-to-rec ion Search shows in 2014 the average billings per head across all companies in UK recruitment was £92,323

My Dad gave me one piece of business advice growing up. (He was much more vocal with advice about not dating boys or wearing tight jeans). And so I always remembered it.

“Amy, if you want to be successful, you have to specialise in something. It doesn’t matter what it is. It could be pig farming. But make sure you are THE expert in pig farming.”

As a father of 3 girls, Dad didn’t hear this very often, and I only say it now because I know he’s not listening. Dad – you were right!

I have stayed true to this mantra through building Recruitment Entrepreneur. First of all, we only invest in the recruitment space. Every single member of my team is an absolute expert at what they do, and as a result, we have built what I believe is one of the strongest sector specialist investment teams in the world. When we invest in a company, it’s never just about the money. We’re confident that we can offer significant relevant advice and support and are constantly challenging ourselves to stay up to date on everything going on in the sector.

We also extend this concept of specialism to who we choose to invest in. Yes we have invested in recruitment companies in a whole spectrum of sectors, from high end procurement search for Global companies to HGV drivers in the Midlands and North of England. But every company we have invested in has one thing in common; they’re absolute specialists and experts in whichever market they have chosen.

Why? Because it really pays off.

A report carried out by rec-to-rec ion Search shows us that in 2014 the average billings per head across all companies in UK recruitment was £92,323 (up from £86,129 the year before). This equates to an average of £7,694 per consultant per month. And I think we would all agree that’s exactly what it is… average. Assuming people usually take home approximately a third of what they bill, this means the average earnings for recruiters in the UK is around £30k-£35k. Given that I’ve met people this year that took home £1 million in personal earnings from executive search – the gap is incredibly wide.

What’s the most worrying thing about this number? It hasn’t changed in years. What an average biller is billing today, is no higher than it was in the 1980s. This was one of the key points of James Caan’s speech at the Linked In Social RecruitIn event earlier this month. How is it possible that with all the technical advancements in the last 30 years, we haven’t improved? In the 1980’s your only way of contacting people was the telephone. You couldn’t find people online, how did you even know the perfect candidate existed and where they were hiding? If you wanted to collect or deliver a CV faster than Royal Rail, you had to do it by hand, in hardcopy. Feedback wasn’t instant, and don’t even think about the dramas involved in trying to recruit globally!

And yet…. With the world now at our fingertips, we aren’t doing any better. Base salaries of course have risen in the last 30 years. So actually, starting a profitable recruitment company now is not only harder in terms of the number of competitors, but also in terms of how expensive your staff are becoming. And how critical it is not to waste all your money hiring the wrong people!

The good thing about an average, is that there are always people beating it. So who are the people successfully achieving over this average? And who are the people dragging it down? Quite simply, the answer to consistently making good money in recruitment is… Specialise!

There are around 20,000 recruitment companies in the UK. The same report tells us that only 78 companies (78! That’s 0.4%) had an average fee level of £100k per consultant or higher in 2014. And only 30 companies had average billings of over £120k (£10k per head per month).

And what did these 30 top companies have in common compared to their peers? They are all sector specialists. They all have more than 25 consultants working together to create critical mass in that sector, but by the same token, only 3 of them had more than 100 consultants (the point at which it becomes hard to maintain).

Joining a large, multi-sector company is statistically less likely to make you rich. Joining a big brand that covers a multitude of sectors makes it hard for an average consultants not to make at least some money. In a niche company there is less to hide behind, and only the best companies can weather a recession. But if you put the effort in, know your market, care about adding value to your clients – being an expert within a brand known as experts can be very, very rewarding. There are niche companies out there where the average billings per consultant are over £300,000. That’s pretty amazing.

We only invest in entrepreneurs who are true specialists. Who are obsessed with their market and spend all their time growing their passion through both learning from, and educating their clients and candidates. Recruitment is absolutely a profession in which being a specialist really pays. You know when you’re a true expert when people start coming to YOU for advice on their market. When clients look forward to your calls because you act as a true consultant and advisor – and it’s never just another sales call. And the statistics in the Ion Search report are proof that, for once, my Dad was spot on (even if I do still get the last word by wearing skinny jeans to work!)

By Amy Golding – Founder of Recruitment Entrepreneur

For advice about starting a recruitment company, or about a career in a niche, specialist, company, visit the RE website or call our head of Talent Sophie Woofenden on 0777 573 6191

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