If Michael Page is anything to go by, 2012 has been an unusually challenging year for the financial services recruitment industry in the UK. Earlier this week, Michael Page’s chief executive divulged that revenues in its UK banking business fell 50% year-on-year in the first half. Nor, he said, was there any sign that an improvement was likely to happen soon.
Michael Page’s gloom appears to be borne out by Morgan McKinley. The rival UK financial services recruiter thinks that 21,155 new jobs were released onto the UK market in the seven months to July 2012. This compares to an estimate of 40,333 for the same period of 2011.
Short of giving up and running a restaurant in rural Surrey, how are recruiters reacting to this year’s challenging conditions? It seems that there are several distinct strategies. In some cases, recruiters would undoubtedly argue that their strategies are not directly related to poor market conditions, but in fact a reflection of their strength in tough times.
Strategy 1: Spinning out
Some long-established recruitment firms are rethinking their future, reshaping their physiques and spinning out parts of their business.
The principal proponent of this strategy is The Cornell Partnership, out of which a new firm has emerged: “Dartmouth Partners.”
Logan Naidu, founding partner of The Cornell Partnership and CEO of Dartmouth Partners, says the spin-out will contain most of the employees who worked at Cornell and will (like Cornell) be focused upon ‘graduate to sub-director level’ candidates.
“The spin-out allows us to embark on a clearer strategy in the current market,” says Naidu. “As two separate brands and businesses we will be able to serve better both our clients and candidates. “
Strategy 2: Viral marketing
In current conditions, you might argue that financial services recruitment firms have little need of attracting new candidates. However, the prospect of candidate inundation doesn’t seem too troubling to recruitment NJF Search, which has released 8 viral videos to promote its new iPhone App.
Strategy 3: Cutting pay
In 2008 and 2009, several recruitment firms either failed to pay their staff on time or switched to commission-only structures. We haven’t heard of this happening recently, but we have heard of one major international search firm based in London reducing salaries by around 20%.
Strategy 4: Doing deals with banks
Now that banks have less money and are doing less hiring, they’re in a position to negotiate more favourable terms with search firms.
Senior recruiters at some leading investment banks in the City tell us they’ve negotiated reductions of around 30% in the fees they pay search firms per hire. In return for this, banks have agreed to funnel as much of this year’s business as possible through the firms charging lower fees.
Strategy 5: Trying to sell themselves
It also appears that financial services recruiters are, belatedly, trying to cash out. Rumour had it a few months ago that Omerta Group had been approached by Heidrick & Struggles and possibly others. It’s not clear whether anything came of this, however. As one recruitment entrepreneur argued on these pages recently, headhunting and recruitment firms are not very sellable.