Australia’s recruitment industry is undergoing a significant transformation after relatively few changes over the past three decades. With 470,900 job vacancies as of August 2022 - up 107.4% from February 2020 - and a 3.4% unemployment rate, recruiter services are in high demand. This makes it an exciting and challenging time for anyone considering starting a recruitment agency.
As Australia and New Zealand Country Manager at Armstrong Craven Martin Retschko pointed out, “We've seen enormous demand for recruiters and with the spike in activity the volume of recruitment is much higher than what it was. So the recruiters that I know out there and that are in demand are dealing with much greater volumes… the productivity of recruiters is really challenged because of supply issues that we've got here in many talent markets. So it's taking a lot longer to hire, recruiters are working a lot harder, so I think what's played out in this market is that in general recruitment teams have grown.”
At the same time, the pandemic has changed how people view work. Trends that have dominated the global labor market, such as preferences for permanent remote or more flexible working arrangements, re-prioritizing of work-life balance, hiring and retention challenges, and the skills gap, are also playing out in Australia.
As employers across industries seek to replace workers or expand employment in certain strategic roles, they are leaning on recruitment agencies and professionals more than before to meet talent acquisition needs in a hyper-competitive labor market. According to IBISWorld, the Employment Placement and Recruitment Services industry was estimated at $4.9 billion in 2022 and was expected to grow by 7.3%.
Entrepreneurs attempting to build a recruiting agency in this environment will have an advantage over incumbent agencies such as Uplers, the Belkirk Group, or ALRA since they will not be limited by legacy systems and processes. To ensure that you are prepared for anything that comes your way in the first months of your enterprise, make sure to take these eight critical steps.
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The first essential step in starting a recruitment agency is assessing the market to determine where there might be opportunities for you to make an impact. This means deciding whether to set up a generalist or specialist recruitment agency.
Generalist agencies look to fill roles for clients across industries and tend to focus on filling entry-level jobs or roles that do not require significant experience. While focusing more broadly will give you more access to a wider pool of applicants and clients as well as more flexibility in response to changes in the market, you may not have deep enough relationships to source candidates for more senior roles or in specialized hot industries.
Specialist agencies, on the other hand, will have more knowledge of specific industries or narrow recruitment efforts to executive levels that garner higher fees from clients. This can make recruiters more in tune with employers’ hiring needs, help them to forge deeper relationships with candidates, and give them an advantage with regard to where to look for the most qualified candidates. However, a shift in market demand or a slowdown in hiring in your chosen area can be detrimental to business growth.
In Australia, there is a significant need for specialist recruiters in industries with high demand for workers, such as healthcare, education, and information and communications technology (ICT). The more intense competition for skilled talent combined with low unemployment levels and high job vacancy rates has led employers to seek out recruiters who are able to identify specialist talent quickly.
You will need to determine the following to decide your agency’s niche:
The next important area to consider when starting a recruitment agency is your competition. As a newcomer to the market, you will need to obtain a clear understanding of the players in your chosen niche and appeal to potential clients by exploiting gaps in competitors’ services or by offering new types of services that appeal to clients’ current needs.
An example could be providing recruitment services virtually or focusing on underemployed populations that could benefit from upskilling before job placement.
Additionally, the shortage of migrant workers and other long-term visa holders with working allowances - due to the closed borders during the pandemic - has intensified the competition for talent. This means it will be essential to differentiate your recruitment services by showing clients that your agency can source the right candidates for their job vacancies quickly and efficiently.
Distinguishing your agency’s brand identity and value proposition quickly will be crucial to the long-term success of the business. It will attract the right employees and clients to stand out from the pack.
Another critical step is to determine how much it will cost to set up and run your recruitment agency. This includes planning for the one-time and ongoing expenses along with the fee structure to ensure that your business has enough cash flow. Neglecting this step can lead to even the best business idea failing.
Start-up costs will typically include the following:
Next, determine the costs associated with recruitment operations such as posting on job boards, purchasing a LinkedIn premium membership, joining professional associations like the Association of Professional Staffing Companies (APSCo), employee salaries, IT and accounting support, and marketing.
These costs should be weighed against your agency’s potential earnings based on your business model. For instance, contingency recruiters are paid a one-time fee equivalent to 15-20% of the role’s annual salary after providing them with a successful candidate. Retained recruiters charge a higher fee for placing specialized or executive positions.
Labor and employment laws can be fairly complex if you are unfamiliar with how it works. When starting a recruitment agency in Australia, business owners should obtain a license from the Fair Work Ombudsman and become a member of the Recruitment and Consulting Services Association (RCSA) to ensure that your agency is following Australia’s labor practices set out by the Fair Work Act 2009 (FWA) and the Fair Work Regulations 2009. It is crucial to make sure that your agency is not breaking any of the country’s laws governing labor, privacy, workplace standards, and payroll to protect your agency’s reputation.
Creating a successful recruitment agency in Australia starts with having a clear vision for how your agency will operate today and in the future. A clear strategic vision encourages you to have bold plans and see the potential paths your business may take. It will also ensure that you have a business model that is scalable and agile in response to market changes. An essential part of establishing the company vision is defining the values that will guide employees to meet their goals.
In addition to the services you offer, the way that your recruitment agency is marketed can have a substantial impact on the company. Starting a recruitment agency is not easy, so a marketing plan provides the blueprint for how your recruitment agency will be presented to clients and job seekers. Creating authentic, customized messages for your key audience group will help you build a loyal following and a positive reputation in the market.
Digital marketing practices are delivering tremendous value to companies at a time when authenticity and personalization are key expectations of consumers. It is incredibly important to determine how your agency will utilize online and traditional channels to raise awareness and build the brand. Equally important is minimizing negative experiences and erosion of brand value so that your agency can have a real and positive impact on revenue.
Technology can also make a noticeable difference when starting a recruitment agency. Digitalization is accelerating rapidly in many industries, including recruitment, and technology can offer a key advantage over traditional incumbents with legacy solutions and processes. Professionals also prefer to work for companies that allow them to learn how to use leading-edge technologies or provide career advancement opportunities. In this way, investing in tech tools can help you attract top talent and potential high-performers.
Along with solutions that are dedicated to specific business functions like finance or payroll, recruitment agencies should consider investing in a cloud-based CRM and ATS solution to simplify daily tasks, speed up candidate sourcing and hiring processes, and provide intelligence about how the business is functioning. Powerful recruitment technology like Manatal combines the ATS and CRM capabilities into one solution to make recruiters’ jobs easier. Ensure that you are selecting tech solutions built with security and local regulations in mind that will grow and evolve with your business.
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The most important piece of starting a recruitment agency is your workforce. Consider how many employees you will need to get your business off the ground and ensure that their roles are well defined. Even as a start-up, employees should have a clear sense of how their career may benefit from working with your agency.
Employees are the face of your organization to candidates, clients, and future colleagues. Keeping them happy and motivated is a must to maintain a low turnover rate and protect the agency’s reputation.
Some important ways to invest in your workforce include:
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Starting a new business is no simple task. However, with a clear vision, a solid plan, and trusted partners, your recruitment agency will have a chance to succeed in an evolving recruitment industry. As you get your recruitment agency up and running, look to partners like Manatal to protect your business in areas like security and compliance while you focus on the daily responsibilities of running a business in Australia.
Being a recruitment professional means keeping up with the times and identifying what recruiting software will be a must-have ahead of time. If you want the best recruitment support in one place, Manatal is the answer.
Its AI recruitment software is a SaaS cloud-based solution, giving you access to top-notch ATS and CRM platforms. Try our 14-day Free Trial and discover how Manatal can prepare you for 2023 and help you stay ahead of the game.
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