In the second episode of the Hinterview podcast Recruiting Alchemy, Andy Simpson is joined by Nigel Fox to discuss growing a recruitment business, balancing contingent permanent and reoccurring revenue models, building deep client relationships and more
Watch Episode 1 here
Andy Simpson is joined by Nigel Fox, CEO of Annapurna Recruitment.
They discuss how to grow a new recruitment business, even in a down market; how they've blended different business models, sector specialisms and geographical focus to balance security and growth.
Show notes:
(01:05) Nigel's start in recruitment
(03:55) Launching a recruitment business
(08:45) The HR recruiting space
(11:00) The evolution of the Annapurna Recruitment
(12:40) Strategy vs opportunity
(13:24) Embedded delivery model
(14:10) Innovating out of the contingent delivery model
(19:05) What's the revenue mix and why
(21:55) Maintaining company culture across delivery models
(24:00) Creating and keeping client relationships
(27:50) Video calls vs meetings in the post COVID world
(31:05) Customer retention(33:08) Where is the business going
(35:45) AI in recruitment(40:30) What have you learned from the recent downturn?
(43:50) Have we reached the bottom of the downturn?
(47:00) UK politics vs the market
(51:05) The future of the industry
Get in touch to hear more - hello.hinterview.com
Nigel Fox: [00:00:00] The boom was so big. The bust has been massive and in such a compressed time frame, I think it's a thing that everybody's found mentally incredibly challenging. For a brief window, people felt like for 18 months they were going to the moon. Yeah. And then all of a sudden they were burning up on re entry, right?
And there's nothing they can do about it. Yeah.
Andy Simpson: Hi, and welcome to another episode of Recruiting Alchemy with me, Andy Simpson. I'm joined today by Nigel Fox, Co founder and CEO of Annapurna Recruitment, Nigel is the leader of an organization focused on the HR change transformation and go to market sectors across both the UK and Germany.
And I'm delighted to welcome him to the show. Hi, Nigel. Morning. Thanks for coming. No problem. It's just great to have you. I guess what I'd love to do is, as always, start the show with what I like to call the two beginnings. So a bit about you and your background, and then maybe a [00:01:00] little bit about your organization, how it came into life.
But why don't we start with you, for the sort of benefit of the listeners. Tell us where it all began.
Nigel Fox: How far back do you want to go? How interested is it? Not very. I suppose I despite my accent, I'm not actually English. I'm from Ireland. Originally I moved here in, I think 1980.
And I grew up in North Surrey, Southwest London. Went to university, thought I was going to be a scientist or an engineer. And obviously, like most people who end up in recruitment, that is not in fact what I'm doing. I had no, no real idea at the end of the university process what I thought I was going to do.
And then I randomly got talking to a friend of mine who was a year older, and he'd he'd moved to London, was working in recruitment for a sales recruitment business called BMS, which some people might know.
Andy Simpson: Yeah.
Nigel Fox: And Basically, sorry. Yes. And a
Andy Simpson: happy customer of interview.
Nigel Fox: Okay, good. Yeah.
Shout out to Nick Goodwin, Gooders who's now got a business in Coventry. Who was that particular individual, it's his fault, all of this. [00:02:00] And so he said, you'd be good at recruitment. Why don't you give that go? And I had a look in the newspaper and which I guess is an old fashioned concept, I guess now.
And there was a job that said the headline was, do you want to earn a hundred grand a year? And I said, yes, I do. And I phoned that, that place up. That place was Huxley Associates. And I spoke to a team leader called Justina. And she said, can you send me your CV? I said, I don't have a CV.
And she said what, why do you think you'd be good at recruitment? And I. Without really knowing that it was a good thing to do, I did what all good recruits should do and I basically sold myself without a CV. She thought it sounded decent enough to offer me an interview. And I came down, had the interviews and I guess the the rest was history as far as that that period of my life was concerned.
I got the job at Huxley and I was there for eight, nine years.
Andy Simpson: Amazing. As a segue, the no CV selling was like, that was like peak. Yeah. success in recruitment back in the day, wasn't it? If you could sell a candidate in without sending, if you could book an interview without sending the CV, I'd forgotten about that.
That was like recruitment royalty. [00:03:00]
Nigel Fox: Yeah. I didn't even have an email address, right? So the idea that I was going to be able to I was in fact of I don't know, found a computer, typed out a CV, printed it and put it in the post, which as again, a segue is something that we used to do, back in the day.
Yeah, I didn't, as I say, I had no concept really that was a thing to be doing at the time, but it did work from the point if you get me in the door.
Andy Simpson: So a successful career at Huxley Associates, part of the S3 group, genesis of many a recruitment business and a recruitment technology company.
Correct. So let's do the second beginning. Tell me a little bit about how and why you made the, big call to, to leave and launch your own recruitment business.
Nigel Fox: Sure. I'd been at Huxley probably Seven or eight years at the point in time when I start to think maybe I'll go and do my own thing and That was really something that I'd always planned to do I come from You know a family of people who were Shopkeepers actually, but like they were self employed
Andy Simpson: employee.
Yeah,
Nigel Fox: and so I'd grown up never really knowing anybody that I [00:04:00] Worked in an office or, was employed by big business. And so I'd always thought that was where I'd end up. But the period at Huxley Associates was brilliant fun. Loved it. As you said, I did really well.
You were a small part to play in that success, shall we say. And obviously don't like to talk about it, but, one is three manager of the year and the contracts team, again, which you're part of one team of the year. And really it was at that point where I think.
I start to think back to that the idea of start my own business again because I had a lot of success there really enjoyed it had gone really well but ultimately I was probably 30 at that point and you know I think I at this point had my son and I start to think about okay What's the next phase?
Do I stay here, double down or do I move on and do the thing that I think I always wanted to do? And in the end, that was the that was obviously the choice that I made. And at the time I'd been doing tech contracts, commercial, so non banking and non financial services businesses, whereas our primary custom base.
And I'd also started the HR brand for Hux Associates which we did for probably about [00:05:00] 18 months before I left. And I think really that was part of the trigger. My experience had only been in tech contracts, extremely competitive. Quite atomized as a market, I'd say. The difference with HR was that it was more niche less populated by agencies, so it was less commoditized.
And I looked at that and thought there's an opportunity there to be a real difference maker and be able to do something quite different to what perhaps the rest of the market was doing in that space versus what you might see with, traditional tech recruitment companies. And I think that in itself was probably a bit of a trigger.
Andy Simpson: And did the results transpire as you expected?
Nigel Fox: Yeah, it's a difficult time because we left in the middle of the banking crash, the global financial crash. But we'd already made the decision at this point, obviously I'd got my business partners, my co founders, Charlie Appiahard and James Ballard involved.
And they were feeling very similarly and wanted to go and do something different. So the three of us have made the decision. And then basically the market collapsed, but we'd already committed and we'd handed in our notice. So for about the first year, it was pretty [00:06:00] challenging.
Andy Simpson: So how, sorry, let me just stop you there. So when, so Lehman's was 2008.
Nigel Fox: Yeah, it was about that time.
Andy Simpson: How close to that? So you started a recruitment business in the middle of the globe, of probably the worst financial crisis in a hundred years, right? Yeah. Terrible timing or not. Yeah. But yeah, tell me about that.
Like you must have, did you panic how far
Nigel Fox: down the lot had you started or were you about to start? We had not started. I think Lehman went bust in probably in the September. I think it's one of the more bare stones. I forget which way around it was, but we handed in our notes in the August and then the biggest of the two, whichever it was, then went bust like four weeks later.
And Yeah. We didn't, we weren't overly concerned about it. Obviously, we had savings. James and Charlie didn't have kids. Obviously, I did. So that was perhaps slightly more concerning from my perspective. But I think we knew that we could ride out a certain period of time of it being difficult from a kind of a cash perspective.
Andy Simpson: Yeah.
Nigel Fox: And I think we were all reasonably confident that even if it were to go horribly wrong during [00:07:00] that period of time, then the chances are we'd be able to, if we needed to be able to go back into some kind of meaningful employment.
Andy Simpson: Yeah.
Nigel Fox: Afterwards. Yeah.
Andy Simpson: But luckily that never transpired.
I
Nigel Fox: didn't transpire. And I think in part because the energy and the the way that we tried to make a difference in that market did have, meaningful impact in a relatively short period of time. And we were able to get going and we've made a few hires probably within our first 12 months, I think.
Andy Simpson: Yeah.
Nigel Fox: And by then the market wasn't, Brilliant, but it was starting to recover and people were hiring. You can imagine the first three months, really. Or the first, yeah, because we started the business in November. And, mid November. So into the Christmas period, not a lot happening.
Yeah. Still pretty quiet in January. But I think by the sort of February, March time we'd start to do okay.
Andy Simpson: Yeah. Is the HR space. Particularly resilient, doing in an economic downturn, do people need more HR people or less? How does that work?
Nigel Fox: There is my personal view on this is mixed.
So I think some [00:08:00] people will say a lot of people say, Oh, presume you need more HR people during a downturn because you've got to get rid of people. That's true. But generally speaking, I think most relatively sophisticated businesses staffed up enough to be able to cope with that demand.
You might get in an additional contractor sometimes to help with things from from any our perspective by and large, I think it's reasonably resilient. We'll have seen, of course, over the last couple of years that the talent acquisition space in particular has been hit really hard internal as well as obviously in the agency space as well.
So that's a little bit more up and down that particular aspect of it. But I would say that in terms of whether it's generalist HR skills or reward and comp even to a certain degree L& D organizational design and development, all those kinds of areas, especially areas of HR, reasonably resilient.
Andy Simpson: Yeah. Yeah. Because I think, I'm no expert, but I think the internal TA recruitment functions of, especially I think in larger organizations. they seem to have had a really hard two years. And that, is there any signs of a thawing there?
Nigel Fox: I think [00:09:00] that we've done okay in that space over the course of the last couple of years, actually, one particular consultant who's one of our top performers who works that space and does really well.
And it's continued to do so over the course of the last couple of years. So I think if you work the market in the right way and you do the right things it's still been okay. But I can't deny that there are a lot of people that have found it incredibly difficult. I do think it's probably turning a corner.
I think there's an awful lot of people on linkedin that obviously we're connected to that you can see publicly have had a tough time over the course of the last couple of years who are now beginning to find work again. And hopefully that corner has been turned.
Andy Simpson: Yeah. So let's just talk a little bit about, I always think that over the course of 10 or 15 years, you don't really run one company, you run many different companies, it evolves and it changes and.
The people move, people change management changes. If you look back on the 15 or so years that you've been running this obviously really successful company, have you seen that, that evolution and if [00:10:00] so, how would you categorize those chapters, if you like of your organization and how have you seen it evolve?
Nigel Fox: So I think we built the company, we saw it as having different chapters. Right when we originally conceived of it right so the intention was that we were beginning HR and that went once we had established ourselves in that space and build good relationships with HR departments we were going to be in a position where we were likely to be able to leverage those relationships in order to work other spaces like tech which is obviously what we've gone on to do and so we always saw that as being a thing there was always going to be.
Different kind of chapters of the business, as you put it and that's certainly been true, whether that's work moving into the tech space whether that's been moving into Germany which we've done a 11 years ago now or more recently moving in to the embedded or delivery space.
So not just 360 recruiters, but also a 180 model that's built in there as well. So that there have been a whole bunch of different developments over the years, some of which were foreseen and some of which [00:11:00] were not and some of which have been, obviously driven by circumstances often outside of our control, as particularly everyone would have seen over the course of the last four years.
Andy Simpson: Yeah. And as these things develop, how much of it. is strategy versus opportunity. Are these things planned or is it happenstance, circumstance, the moment in time where you go, Oh, that's, let's do that. Have you got a, I'd love to hear about that.
Nigel Fox: I think there's a temptation all the time to do things that you don't plan.
And for me, part of part of running a business is about, trying to maintain some level of discipline around what your business plan might be. But, notwithstanding that, there will obviously be times where something opportunistic, comes up and you do take advantage of it.
But I would say that most of what we've done has been planned. If we take the move into embedded and delivery, we were actually we actually launched that in, I think, roughly the middle of 2019. So pre pandemic, pre boom, pre everybody else doing that thing. And we actually found it quite difficult to gain traction in that space [00:12:00] initially.
And then the pandemic happened and we made a few adjustments to it. During the kind of downtime that we had where everybody was in lockdown, there was really nothing else going on. And so we did restructure some of our teams and look at it a little bit differently. And then we happen to have got to a point where we, it was positioned correctly for that shift in the market.
So that went from, from nought to 60 in a very short period of time, but it was planned, not option, not opportunistic. Yeah. It just happened to be the case that circumstances came to pass that, that it worked well.
Andy Simpson: Yeah. And so let's just on, let's just talk about that in a bit of detail because I think that's what our listeners will be interested to understand because we hear an awful lot and we talk about it all the time at interview, right?
How do we escape or trans escapes, maybe not the right word, but how do we transition away from this kind of no cure, no fee contingent? Payable on success model that is so established in our clients, psyche, that's the [00:13:00] way that most people work. And obviously you're trying, you've tried to innovate out of that, right?
By your erupts product, right? Annapurna Erupt. That's the embedded and delivery model. Yeah. Okay. So how did you design what that looks like? And how, most importantly, how do you communicate that to a customer in a way that they understand?
Nigel Fox: I think the question that I asked them, I I, in situations where I'm talking to them, I'd always ask them, like, why do you think recruitment is so expensive?
Andy Simpson: Okay.
Nigel Fox: And so it's less about me telling them.
About what what, what I think their problems are. I know what their problems are by and large.
Andy Simpson: Yeah.
Nigel Fox: But it's like anything, it's about somebody sort of drawing their own conclusions. The answer to that question is.
Invariably, that you're, you're paying businesses who are only probably got a one in four or one in five fill rate, you're, you're paying for that cost that time for the other three or four jobs that they're not filling if you're working with them on a contingency basis. And obviously that's a very short way of, of giving you an answer there.
But by and [00:14:00] large, I asked that question, why do you think recruitment is so expensive? And. That's where we get to. Yeah. If you if you have an organ, an organization that you you combine into and that you can trust. 'cause really that's what the problem always is. It's the doubt, it's the fear, on a customer side about whether or not that will, whether or not you are going to be able to do the things that you say that you can do.
Because if you can and they believe you, then it's there. There's really no downside. The client to the client, unless, again, for good reasons, sometimes an organization wants to build that internal capability on a permanent basis, I would debate the value of that.
And I don't think it's a huge amount in it in terms of cost. And the flexibility that you get on a few, obviously, if you look at the, what's happened over the course of the last couple of years, the argument for, a more flexible situation is probably enhanced rather than anything else.
So there's a number of, value wins for any customer that, that wants to engage in that model and it works. It does work.
Andy Simpson: I heard somebody say, just on that point, I heard [00:15:00] somebody say on LinkedIn that the fundamental contracts between, has been broken between TA professionals and high growth companies.
And I think what he meant by that was COVID came, everyone was made redundant, then the vaccine arrived, everyone was back in again, then the markets turned and everyone's been made redundant again. And people are saying, there's no such thing as a permanent job in TA anymore, because it's just so up and down.
And therefore that does that lend itself to is there a transition in that world to. On demand, freelancer first, like the things that you've said there about the flexibility, is that the future for that space?
Nigel Fox: I think with so many things, the answer is probably somewhere in between, right? I suppose if I was working in house as a director or head of TA, I'd be thinking about it in terms of some kind of blended solution.
So you want a core capability that's in house, right? That [00:16:00] that are fully tied to that business that have a vested interest in the organization and its success. I think then you can add to that as and when you need, and you get you pick the right organization and, to help you with that, that's going to work well.
So I think obviously there are lots of organizations that have dipped their toe into it over the course of the last during the COVID period, and I can't speak as to how successful that's been for, for everybody, both on the agency side and on the client side.
But I think you see there are a number of organizations out there that are, that seem to be geared for long term success as far as that model is concerned.
Andy Simpson: Yeah. And to get into the detail of it a little bit, do you consider it to be, you're still a recruitment agency. Yes. Is that a fair statement or not?
Nigel Fox: Yes. Look, the majority of our business still comes from our 360 model, which is increasingly retained. And our contract business, which is about 40, maybe slightly over 40 percent of our revenue.
Andy Simpson: Okay.
Nigel Fox: So we very much are almost, I would suggest, It's like a full talent
Andy Simpson: solution. Yeah. Okay. And so if you think [00:17:00] about the makeup of your revenue mix, you've got embedded, which is recurring in nature.
Yep. You've got contracts, which is recurring in nature, and then you've got a kind of retained perm business. So is that is strategically, is that where you're trying to take the business so that there's more forecastable revenue flow?
Nigel Fox: Yeah.
Andy Simpson: Is that
Nigel Fox: a fair interpretation? Definitely. Two of the three founders of the business, myself and James, came from a contract background.
So it was always going to be a significant part of the mix. And we've always viewed it as crucial. And again, I think that's proven outright. If you look at over the course of the last couple of years, There's been a number of high profile recruitment companies that have gone gone to the wall.
Andy Simpson: Yeah.
Nigel Fox: And there's been lots of smaller businesses that have gone to the wall as well. And why is that? I think you can broadly trace that back to no doubt, people were overspent during the pandemic, grew too much, all those kinds of things. I'm sure we all did that. But most of those businesses tended not to have much in the way of recurring revenue.
Whereas it's always been a cornerstone of the way that we think about business.
Andy Simpson: So [00:18:00] how predictable, how forecastable, how recurring the revenue might be. Yeah. And do you think that the pursuit of that type of revenue, is it like, I think one of, one of Sam, who I work with, his favorite phrase is that, slow is smooth and smooth is fast.
But I guess the point I'm trying to make is does the pursuit of that type of revenue, does it slow you down a little bit as an organization, but in the long term it makes you go faster?
Nigel Fox: Yes, in a word. Yeah. So the challenges along the way are it's the temptation is to go for permanent revenue because it's cash.
And you're generally in the pursuit of, cash flow as a actually any size of business, cash flow is important.
Andy Simpson: Yeah.
Nigel Fox: And again, probably a number of the businesses that have struggled over the last couple of years and maybe gone maybe gone into administration have been ones that maybe are okay businesses, but ran out of cash.
The knock on effect of that is if you chase that, that short term revenue then it's very difficult to close the gap or to have a, some level of parity between contracts and perm and contract or any form of of [00:19:00] recurring revenue is about building. So you do need to invest over a long period of time to get to the point where that, that part of your business has value.
Andy Simpson: Yeah. Yeah. Was it fair to say you've got three pillars then? We've got embedded, you've got contract, and then you've got retained perm. Is that accurate?
Nigel Fox: Yeah,
Andy Simpson: that's pretty much it.
Nigel Fox: Yeah.
Andy Simpson: And how do those three models coexist alongside each other? Internally, so if I rock up into your business tomorrow and start working there, is it three slightly different cultures that run side by side or is there an umbrella kind of mindset?
I'm sure there is. But yeah, how do those three things work together? Because I would imagine the activity drivers are probably quite different. Or not, maybe not.
Nigel Fox: I don't think that the activity stuff, other than obviously the 180 or delivery versus 360, is fundamentally different in at least 50 percent of the job.
I'm not sure that the rest of it's that different. Culturally I don't think there are huge differences. I [00:20:00] think some of the problems that we did experience and to some degree still, still will, is if you look at 180 versus 360, There will tend, I'm sure in any business that operates more than one model like that, there will be tend to be perhaps some kind of superiority complex, almost about 360 versus 180.
Andy Simpson: Yeah.
Nigel Fox: And we've, we work quite hard to to try to ensure that doesn't gain any traction in our business. We knew it from the outset. And you could end up having this kind of two speed model. Yeah. And what we do really is we talk about the the value that the individuals that work in different parts of our business present and how those things aren't, they both have value.
They're not necessarily different values. Yeah. Yeah. If you're working on a client on an embedded model, the numbers or the work That they're doing the maybe they're not generating themselves, but the value that revenue has the business because it's in a recurring model, for example, is almost worth that pound is worth more than a pound.
Maybe on perm.
Andy Simpson: Yes.
Nigel Fox: So the value that they bring to the organization is strong, even though they're not necessarily doing [00:21:00] exactly the same job. Got
Andy Simpson: it.
Nigel Fox: And because you're right,
Andy Simpson: the whole thing about contract as a, and a former contract recruiter, more than perm what contract gives you.
Is an ongoing dialogue with somebody in the organization and if you are really good at the job, you can use that person as a bit of a, I'll say I'll use the word Trojan horses, maybe not the most part, but that person can be your eyes and ears on the ground. Do you find that the, if you build good relationships with your contractors that helps you open dialogue elsewhere?
Is that strategically
Nigel Fox: part of the approach? I think if you think about the basic underlying concept of the business, it's all about. That's not necessarily from a contract point of view, but just from a relationship perspective. So our goal has always been literally stated from the outside, from the three of us, our perspective was that we wanted to cross sell.
We wanted to be able to leverage the business that we might do in one part of the business with a, a different business unit in order to be able to grow into the [00:22:00] future. So the idea of ongoing dialogue, I don't think is limited to contract. If you look at some of the things that we do in terms of the way that we position ourselves, the events that we do.
Round tables. We've been doing them since since 2009, early 2009. And I know a lot of people now, a lot of other people do these things as well. But I would say that we were one of the, certainly one of the first to go into that space. But it's a, it's, A cornerstone of how we think about our business and how we build those relationships and how we make sure that we're in constant dialogue with those people.
Because if you think about hiring manager, hiring's maybe 20 percent of their time, like max. And so what are you talking to them about that has any value? And if you've got nothing to say to them. Yeah. That's a problem. Yeah.
Andy Simpson: Yeah. Because you have always remained resolutely committed to physical in person events, right?
Maybe not withstanding. The COVID period. The COVID period, when it was literally illegal. Have you always been committed to that? Because you. You believed in it. It's not [00:23:00] cheap, right? You've got to put these events on. It's an effort to get people there. You've got to pay for the hotel or the function room.
What is it that you feel that gives you that makes it worth both the time and the money? So
Nigel Fox: again, I think it's about that depth of relationship, right? So perhaps now's not the time to get into it about where I think the market's going, but I'm of the perspective. And I guess we always have been of the perspective that the depth of your relationship with an individual.
Is what is the difference maker, right? The number of them, yes but the depth of the relationship, the amount of time that you spend with somebody physically is relevant. And I think we saw that during the pandemic, because obviously we'd always done in person events, doing a virtual event wasn't a thing, really.
I know people did do webinars and things like that, but it wasn't really huge. And we saw that during the pandemic when we did them, and they weren't as effective. So all that really did was reaffirm our, our notion that was where the value lay, being able to, go and meet people in person the idea that consultants can go to those events as well that they have a [00:24:00] a vested interest and a significant part to play in the success of those events.
So they they buy into them and then they go to them and they're learning opportunities, but not only from the point of view of meeting people and understanding how to network properly and all that kind of thing, but actually from the point of view of understanding the industry that they operate in, because when we go to them, they're not talking about recruit.
Yeah, it might be a TA based event, but by and large they're talking about things that are relevant to their businesses. Yeah. And so it gives our consultants an opportunity to go and actually learn about what their customers do and how they operate and how they're thinking and all of that kind of stuff.
So there's value on multiple levels.
Andy Simpson: And because I think it was the first casualty of COVID was in person and some people just never went back to it fully remote, I could count on one hand pre COVID the number of video calls I had with a client, but now it would be slightly weird to go and meet a customer and talk about I'm not in recruitment anymore hands on, when you would go and like your KPI would be, I want to go [00:25:00] meet.
I've got a client meeting. Yep. Is that still thing?
Nigel Fox: It is. Obviously we do still have a mix now virtual and face to face individual meetings that are not events. Yeah. And we do count them, right? Because that has become normalized. Yeah. I don't think a client would necessarily see a huge amount of difference, but it will be Yeah.
hugely personal to the individual. So some customers will be, will be super keen to meet in person or some candidates will be super keen to meet in person. Yeah. Others will consider it to be, of less importance to them.
Andy Simpson: Because for
Nigel Fox: me, I think the
Andy Simpson: best part about the job was getting out and about, meeting people, interacting, feeling like you were, that intermediary, that kind of broker, I'm out and I'm making stuff happen.
And I feel like that's, I feel like that is great. Yeah. virtually, despite the fact that, I've got a, I've got a significant dog in the fight for for video ultimately, I still believe in the power of IRL. Yep. You know what I mean? And and I think, and maybe we can talk about that now.
One of [00:26:00] the things that I think stood out or Made organizations either succeed or struggle in this current climate is the depth of your relationships. So if there's 30 percent of the same, if there's only 30 percent demand available that there was two years ago, you really need to make sure that you're at top of the list.
You're the first name in the little black book, whatever it might be. Has your commitment to physical interaction borne out, do you think, in helping you survive the last couple of years or ride it out when other companies have struggled desperately?
Nigel Fox: Yeah, look, we've struggled, it's been difficult for us to, it would be disingenuous to pretend that it's all been it's all been rose over the course of the last couple of years, but yeah, I think it's been a definite factor.
Yeah. I think there are many people senior HR leaders that we've known for a very long time.
Andy Simpson: Yeah.
Nigel Fox: And that is definitely helpful. We also commit, not just because obviously we do business in Germany, right? It's a significant part of our revenue. And that's, almost exclusively in the tech space.
Thanks. And we go out, so we go out there every couple of [00:27:00] months and we do events out there and we send the consultants, go out there and they'll meet their customers. And that is definitely the case that, as we've started to see improvements in the market over the last couple of months, the last few months, those relationships are the ones that are coming back.
They've been saying to us for a while, look, we're not hiring at the moment, but we're going to be hiring and you guys will be first on the list. Yeah. And that is true. Yeah. That does come to pass. Yeah. And I do believe that is a function of the time that we spend with them. Okay.
Andy Simpson: Yeah.
Nigel Fox: Because I think that's, it's a real
Andy Simpson: challenge. Like I said, if you're, the stories that I hear is that customer retention is a real headache. Now, retention is not necessarily about somebody giving you a job every month or every week. It's about making sure that when they have a job, they contact you and that they're willing to work with you in a meaningful way.
And I think that, You know what? One of the things that we speak a lot about with our customers is [00:28:00] the commoditization of your service typically is borne out in two key ways. One is price and the second is client loyalty. So the price is permanently under pressure because there's 10 other people queuing up outside the door to offer exactly the same solution you're offering.
So that's headache number one. But then headache number two is. The client has no real motivation or reason to stay with you because the service you're offering, unless it's what you're offering, the contingent recruitment service is just so homogenized, copied, everyone's offering the same thing.
So I think for me, that's where. That's where it really matters is that sense of retention is not just about it doesn't have to be a job every day, every week, every month, but it's just making sure that, that the client will return to you when recruitment picks up hasn't when, and I think that's what's really, that's those who are recovering faster today.
[00:29:00] I think those as those companies start to regrow, they're getting, the more workers coming through the door. So if we think about the organization today you are clearly the, you're a sort of super brand in the HR space, in my opinion. And obviously you, you've grown into tech change transformation in other areas.
Where do you see the business going over the next 24, 36 months. Is it doubling down on your home markets and ensuring that you are, staying true to your roots? Or do you have plans to expand and diversify further? Or where does the future take you?
Nigel Fox: Yeah, I don't think we've got any plans really to diversify.
I think that it's a double down really on the existing strategy. Our primary markets are the UK and Germany. We do business in the Nordics as well a little bit. But those are our core markets, HR, tech transformation to go to market in those spaces. We are really looking at how, again, how do we continue to move up the food [00:30:00] chain in terms of the types of business that we're doing, the value of the business that we're doing, and how much of that is retained and is more on a search basis.
So the model that we apply anyways is largely search focused the idea that. We've got an advert and get candidates for that advert and then that's how the placement occurs, I think is a widely held view from the, from a lot of end client perspectives, but it's not how we do business at all.
We apply a search methodology and it's just, we've just been on this constant move towards more and more of that all the time. From a perm perspective. So really it's a double down in the existing spaces. And it's just making sure that we are we're competing at the at the top end of of the type of work that's available rather than, lower end activity, should we say, which we've never really done, right?
We've always had a healthy, average salary, the kind of person that we place, but increasingly through the years, it's just got higher and higher. And I think to be honest, with things like AI coming in and some of the adjustments that will make, I think some of the lower level placements that agencies currently make today, I [00:31:00] think some of that might be at risk in the future.
And so it makes sense strategically to be looking at, how do you move up the food chain? Working on your average deal size, your average yield per consultant, huge focus for us. Yeah. And we've moved away from the grab model. We're just an experienced hire shop now.
So we're only looking at people who I've got a track record not necessarily in the spaces in which we might move them into but who we can buy into who see business the way that we see it. And and want to move forward and develop themselves to the next level. They may well be successful where they are, but it's about, can you make them 50 to a hundred percent better?
Yeah. this time around with us. Yeah. And I think that is, is by and large the strategy.
Andy Simpson: Sounds good. Fingers crossed. AI is on everybody's mind. You're pretty tech literate, I would say. How does, how do you foresee that AI will manifest and show up in an average recruiter's life? Say if we wind the movie forward by a year or two or three, what kind of things will, what will be the lived [00:32:00] experience for a recruiter day to day?
I think there'll be
Nigel Fox: less proactive looking for candidates, shall we say. So most of the technology that has been focused on at the moment is around search and match. And I think that's fine. I would expect that to be a bog standard offering. And some will be better at it than others.
And that will manifest itself probably in terms of some kind of efficiency saving. I have concerns about it because, to my point about relationships, I'm not sure how that will foster a culture of relationships within an organization. Making sure that you are going back to the kind of the best candidates rather than just simply creating new candidates all the time, which is a kind of an issue that I believe exists with linkedin.
I think a lot of consultants go back to the drawing board every day.
Andy Simpson: Yeah,
Nigel Fox: they just, they just go back and they search again and they go through the same people on linkedin or they look when they think about business development, they go and they look at new contacts all the time. Whereas I think they should be focused more on what they have.
So I think such a match is a part of it. I think that from my point of view. The way that we should be thinking about AI is about organization. And how do you get a consultant [00:33:00] doing the right things at the right times? And the kind of prompts really from a business development perspective would be where I would be focusing it.
I don't think that's where most of the AI businesses are thinking right now. But when I look at their product, that's typically the feedback that I'm giving them. And I think that the problems that will exist with AI will be around too much email automation too many emails going out.
You already see open and reply rates plummet over the course of the last couple of years through, through that automation and AI assisted automation. And I think you're gonna have issues with a similar kind of thing happening with phone calls, because the availability of mobile numbers is just there now.
And so pick up rates on dial outs are, increasingly lower and lower people don't bring people at businesses anymore. They if you suggest to anybody that leave a voicemail, they look at like you mad because nobody listens to voicemails except everybody over 40. So I think that's the thing that people are going to see.
You can see in lots of businesses, there'll be a rush to this. A rush to search and match, a rush to automation AI assisted automation, and all of these kind of things that people think will reduce [00:34:00] busy tasks. And some of it I think is useful and ultimately I think that's only going to damage the relationship issue that a lot of people have.
make it worse rather than better. And in our organization, although we will leverage the power of AI where we think it's relevant, I think ultimately we see it as a double down on the relationship thing, right? The more time we spend with people, the better, the more likely they are to be receptive to the emails that we do send them, the more likely they are to pick up the phone when we do call them.
These are the things that I will be measuring our consultants on. Your ability to be able to get a client on the phone when you want to get them on the phone, currently not really a metric, and it's a slightly odd one, but I think will be key.
Andy Simpson: Yeah. One of the things that people have been telling me in the last six months is they just spent too much money on tech, right?
And their tech stack was costing them an absolute fortune. There was inflationary prices, so obviously all your key suppliers are putting their prices up, then they're trying to cross sell you different things. Have you been guilty of that, do you think, in the past? [00:35:00] Or have you resisted the temptation to buy everything?
Nigel Fox: No, I think, look, we've probably been guilty of that. Yeah. We, most of our tech stack sits within within Bullhorn. So Bullhorn partners and integrations. And yeah we probably have had a bit too much. And my experience is that people don't use half the things you give them.
Yeah. So that, less would be more from my perspective the simpler, the better. And, and obviously you have this constant issue, really whether it's integrated or not with, linkedin versus your system. Yeah. And I think that's one of the biggest things that that we'll be looking at.
Andy Simpson: Understood. And then for a lot of recruitment CEOs out there. It's been a really hard 18 months, two years, right? There's no sugar coating it. It has been rough for some. What have you learned about your business, yourself, your team, your clients, the market, if anything, over the last 18 months? And have you had, is it just, all part of the rough and tumble of life and recruitment?[00:36:00]
Or do you think that as you look to the future, will you build a different type of business as you grow, reaccelerate with the market?
Nigel Fox: What have I learned? I've learned that I still have the ability to be surprised in spite of 25 years doing this what's happened in the course of the last few years is it's not like I haven't been through downturns before because I have a number of them and I anticipated this would be similar, but I think the problem was the boom was so big.
The bust has been massive and in such a compressed time frame, I think it's a thing that everybody's found mentally incredibly challenging. For a brief period of, a brief window, people felt like for 18 months they were going to the moon, and then all of a sudden they were burning up on reentry.
And there's nothing they can do about it.
Andy Simpson: Yeah.
Nigel Fox: That's been interesting. I think I've learned that having said that, it's a bit, with it being difficult, I probably, I've probably been calmer than I expected. And I think, that level of experience has been useful.
Having seen some of these things before having a high degree of [00:37:00] confidence in terms of the business model has been useful in terms of not panicking. And, and some of that sort of forethought in terms of our the way that we structure our revenue models, again with the hedges that we've got.
So not only are we hedged from the point of view of different industry sectors, whether that's HR or tech where hedged geographically across UK and Germany. Germany's obviously got its own problems structurally economically. And we are, but then, our hedging in terms of our perm versus, recurring revenue type models.
Has also meant that we've done okay. And it's never been, too much of a too much of a panic notwithstanding, of course, that it has been difficult. So I think I've learned that, that element of discipline and making sure that you stick with the plan has been has pretty, has been pretty crucial as well.
Andy Simpson: Yeah. And I think somebody described it, the, this particular economic cycle was like jumping out of a sauna and into the snow, the difference was that stock that, it was. It came so quickly and it, the downturn was so deep and it just [00:38:00] seemed to infect markets overnight. Maybe less so than Lehman where it really was a single fiscal, a single event that occurred.
But the difference here compared to that, in my opinion, is it's taken a long time. I'm not even sure it has finally bottomed out. I think it has, but it seemed like it to reach the bottom seemed to take ages. Whereas normally it's a, we're it feels like you're up and out of it relatively quickly.
Nigel Fox: Yeah. I would have expected it normally to be about 12 months. Yeah.
Andy Simpson: And we're knocking on two years. And do you feel like, does the land now we're recording this 24 hours before. the American presidential election. Yeah. So I'd like to caveat that, but who knows what might happen if if it goes one way or the other, but do you feel like structurally the bottom has come and gone?
And if so, What does the recovery, what is the [00:39:00] global macro picture look like over 24, 36 months from an economic point of view?
Nigel Fox: That's a good question. So I think that we are I do feel that we, we have reached the bottom and it's a little bit up and down. I feel like we have reached the bottom a little while ago.
And that typically more manifest itself by a month to month. It's a little bit up and down.
Andy Simpson: But
Nigel Fox: what we're not seeing is like it just. Can worse, constantly. And so we're having, I think most businesses that I'm talking to got lots of friends who obviously do the same thing as I do.
And we're all saying the same thing like a good week, bad week, good month, bad month. And that's where it is. I'm hopeful that in the new year. I didn't really buy into a lot of stuff that was said about this year, I'll, wait till the summer or wait till whenever but I am hopeful now that there's been an awful lot of elections globally this year, a lot of uncertainty, the biggest year ever, I think, from an election perspective across the world, and so what can that do but create global uncertainty and so I think once that's done, Regardless [00:40:00] of the outcome, and obviously I have my own views on what I would like the outcome to be in America tomorrow I think things will improve and we will start to get back to some level of of normality over the course of next year.
And I expect we'll see a maybe something similar to what we saw post global recession, right? Which was a relatively gentle upward trajectory. But in a market in which there are less agencies, Yes, which is to the benefit of those that have made it. And I think you consequently will see, results that tipping point is often not as far away as you think.
Andy Simpson: Yes. And
Nigel Fox: when you reach tipping point, it can go really well quite quickly.
Andy Simpson: And that's, I think that's exactly the thing that I say to people is that you don't need a gangbusters economy. To do really well in recruitment, what you need is a sensible level of demand on a significantly smaller market, because clearly the volume of people working in the recruitment industry 18 months ago was enormous compared to what it is today, maybe twice the [00:41:00] size.
I don't know, but significantly higher. So there are less amount, there's fewer mouths to feed, there's fewer competition. And in a recovering market where, job creation reaches sensible levels. We should hopefully see a steady but consistent recovery. And I guess just to, to finish up, let's just talk a little bit about the political situation in the UK, which is around highest level of taxation ever, a new labor government, and obviously there's all sorts of pearl clutching going on about, Oh, Capital gains tax about employees, national insurance and how there's going to be this exodus of entrepreneurs.
Now I've got my own views that, I won't I won't share too much here. But what is your take on, the relationship between, the existing political goal. incumbency or the current political operation, the level of taxation and [00:42:00] your view on the future of, of profit operational profitability, is it a problem?
Nigel Fox: Look I don't think it's a problem. For organizations like ours, I can't speak for, for all service sectors. And I understand that some will be worse hit than, than others. My personal perspective is that I'm not a big poster on LinkedIn, but some might see my post of course, the last couple of weeks I found a lot of the stuff that was going on around business owners for the comments around some of them very frustrating second guessing before it even came out, it wasn't that bad.
And, I think what I was struck most by is how few people they're quite, loads of people are happy to go on the internet and complain, very few of them got any solutions. Whereas the government is in a situation where it has to come up with some kind of solution to what's going on.
I think that people who've got no money, who are very sick don't make good customers. So even on a purely practical level, never mind an ethical one or a moral one it's good to make sure that people, are not dead and that they've got some money in their pocket that they can spend on your products.
So if you're a business owner, I do feel like there's, there is obviously a balancing act. But you should broadly support those [00:43:00] aims. And I didn't feel like there was a lot of that going on. Yeah. My view is that it was fine. We'll find, we'll find a way, again, our organizational goals in our business, at least.
are centered around, growth through through yield and not necessarily through huge headcount gains. Yeah. And the reason why we do that is obviously the profitability per individual. We're not carrying a tail of grads who are not making any money anymore. And so some of these additional costs, I think, aren't going to be the end of the world.
It forces businesses to think differently about how they provide their services. And their business models and all of those kinds of things. And in the end, people come up with solutions, right? And then you, and you move on. I don't think there'll be any mass exodus of people to, to God knows where. I'm not sure where they think all these various places are, that they can go where there is like no capital gains tax, or Dubai is apparently the place out here.
If you want to go and live in Dubai, mate, go and live in Dubai.
Andy Simpson: That's the thing, right? Dubai bye. Yeah, because I think from my point of view, whether you're paying 20 or 22 or 24 percent CGT, [00:44:00] surely if you're going to relocate to the other side of the world, that isn't in and of itself enough of a lever.
But the general consistency or the general message that was coming out on LinkedIn was one of abject outrage about the, the new level of taxation. And clearly it's a challenge, but it's a result of wild overspend during COVID. Frivolity and a ludicrous amount of of corruption.
There is that too. And, it's not a political podcast, although it could be. But yeah, so I think for me, I think as you've rightly pointed out, there's no point crying about it. We've just got to get on with it. And we will see in five years time, whether or not the electorate gives, gives the thumbs up or the thumbs down, but for, fundamentally the books have got to balance.
Yeah. And so that for me is, it's evident. I guess look to finish us off today. I guess what I would really welcome is your thoughts on, the future for the industry, how you see the world evolving and [00:45:00] any kind of final thoughts you might have for our listeners who are mainly recruitment company leaders, owners, CEOs, who might be during their own challenges and troubles, what crumbs of comfort might you give them about the road that lies ahead?
Nigel Fox: I think if you've if you've never been in this situation before, Because there will be lots of people like most people in my business right there was like a just there wasn't really a downturn for 12 years or something right so most people in working industry a lot of people in the industry have never been through anything like this i think the crumbs of comfort if you like are they will end and it will get better and it'll get back quite quickly and the things you just need to tell yourself is whatever the mistakes are that you made, right?
And I'm sure we've all made some that, that you learn from those and that you try to put yourself in a situation where you maintain enough discipline that those things don't happen again in the future. Don't make the same mistakes. It's hard not to, in particular, I think things like salary growth in the recruitment sector over the course of the boom during COVID was ludicrous.
It was self evidently never sustainable. And we made some good choices around that [00:46:00] period in time. And not everybody did. And I understand that particularly if you've never been there before, but, stick to, basic principles around your operating models.
Your operating profits should always be foremost. You should be thinking in terms of long term in the round, what is a reasonable number for, for any given consultant to be generating. Can't assume that the person who's billed 500 grand this year is necessarily going to bill 500 grand next year.
It's not how it works. And it's just thinking about, I think about thinking about things in the long term, rather than just right now, it's great right now. It's terrible. If you do that, your chances are you'd be okay.
Andy Simpson: That's really great. And thank you very much for for spending some time with us today Nigel.
It's been a real pleasure. No problem. Enjoyed it. Cheers. Thank you.
