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Index report qtr 2 2013


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Index report qtr 2 2013

  1. 1. A confusing picture in business services recruitmentWith the economy flat lining, the fear of risk is beginning to change the behaviours ofboth recruiters and candidates, according to the BMS Quarterly Sales Index.Whether or not the latest GDP figures are an ‘encouraging sign’ as Chancellor, George Osborne commented, or ‘just backto where it was six months ago’, as Ed Balls, his opposite number thinks, the fact is that the UK economy has flat lined.With just 0.3% growth in GDP in the first quarter of the year, it was hardly surprising that this quarter’s sales indexconfirms a continued downward trend in vacancy numbers, with jobs growth ending the first quarter of 2013 2.4% downon the same period last year. But as we will see, the mood is changing and avoiding triple dip could mean this heightens inquarter two.Chart One: Sales jobs growth 2011 – 2013 (Source. BMS Sales Recruitment Index Report Q1 2013)
  2. 2. Risk is changing behaviorWhat is perhaps more relevant for both recruitment professionals and candidates is the heightened state of risk in whichboth are now operating.For candidates the risk is in the move. Higher salaries, better benefits and improved career opportunities must be offsetagainst current job security and an ability to pay bills to day.Sales roles, by their nature, are heavily results orientated. Moving to pastures new where clients, and sometimes markets,are unknown has always held an element of risk. Today though, with purchasing budgets under intense scrutiny, salescycles are increasing, and it’s becoming harder to close the deal.That’s not to say that candidates aren’t willing to risk a move. They are. But those who do will inevitably want to becompensated for it. As we can see from chart two this has resulted in a gradual increase in salary expectations fromcandidates.Chart two.Company salaries vs. candidate expectations Oct 2012 – Mar 2013 (Source. BMS Sales Recruitment Index ReportQ1 2013)
  3. 3. While the chart indicates advertised vacancy salaries are also on the up, they have yet to meet candidate expectation. Thispattern has been consistently repeated over the preceding 12 months, and indicates employers too are looking to balancerisk and reward.Their first priority is, of course, to retain top performers, and firms are working hard to do so.According to the BMS Index data, sales training and increasing OTE bonuses top the charts for strategies to reduceattrition. This is a great example of risk-free investments. Bonuses, of course, encourage revenue generation, while trainingshould, in theory, improve opportunities to close – particularly in the FMCG and business services sectors. Here productsoffer few points of difference so the sale becomes about the ability of individuals to influence and accelerate the buyingdecision.Even for the more technical areas, such as IT, sales training and development is crucial. Today’s purchasing behavior isincreasingly driven by solutions selling, and the ability to create a ‘vision’. Large scale IT purchasing is no longer basedsolely on speeds and feeds. So while having an encyclopedic knowledge of the technology is a bonus, today’s technicalsalespeople require an increasingly commercial skill set.On the performance-based point, focusing on OTE offers an element of risk too. In last quarter’s Index we looked at theissues of high OTE levels being seen as increasingly unachievable in today’s economic climate. Candidates, therefore, havea healthy distrust of high OTE offers, preferring higher base salaries to reduce their risk. However, increasing thecommission-based elements of existing employee packages makes sense if targets are achievable – and salespeople in thejob will know whether or not that is the case.Chart three. What are you doing to lower attrition rates of top performers? (Source. BMS Sales Recruitment Index ReportQ1 2013)
  4. 4. Long term investments or short term leaders?Back on the candidate side, and the BMS Quarterly Sales Index highlighted increased training levels as something of a trendacross the sector last quarter. As chart four shows, firms looking to stay competitive in the recruitment market are lookingoutside established markets and taking on raw (graduate) talent, as chart four highlights.Chart Four. What steps will you be taking to remain competitive in the search for good sales people over the next 6months? (Source. BMS Sales Recruitment Index Report Q1 2013)Training here is therefore critical in upskilling these new team members. But as one construction executive commented,when responding to the BMS survey: ‘within our Industry it takes several years to be good enough to really make adifference’.Sales teams that 18 months ago recruited raw talent are now beginning to see significant returns on their investments.Those that did not are having to play catch-up. Building for the future certainly makes sense but a balance must be struckbetween nurturing teams and getting in talent that can hit the ground running today.
  5. 5. Losing the salary gameBy focusing on training and development as attraction methods, rather than salary, firms are effectively limiting theiroptions to building for the future. And they are significantly reducing their opportunities to influence and attract provenperformers who can add value today, as we see from chart five.Earlier in the report we saw that salary expectations are rising in relation to advertised vacancy levels. Here we see theimpact of failing to meet them. Salary is the main reason why firms are missing out on good candidates. With fewexceptions, this is a trend the BMS Index has been identifying for over 12 months. It is also a major frustration foremployers. But as the data indicates, firms are either unwilling or unable to do anything about it.Chart five. If you have missed out on a good candidate in the past, what was the main reason? (Source. BMS SalesRecruitment Index Report Q1 2013)
  6. 6. Internal frustrationAs we’ve seen, firms offering higher base salaries are themselves increasing their risk in the face of pressure to drive costfrom the recruitment process. But we are seeing other strategies. Internal restructures in HR departments and attempts tobring recruitment in house may be reducing cost, but they’re causing concern too.Responses to the BMS Index survey indicated both sales and recruitment managers are frustrated by some of these costsaving measures – from ‘a decline in investment by the corporation’ and ‘insistence by corporate HQ to use internal, US-based recruitment teams’ to ‘a lack of flexibility in offer T&Cs’.At least for these firms, more internal recruitment activity and less flexibility when it comes to discussing the package ishaving a negative impact on their ability to find and secure the best people.Its interesting to note, therefore, that despite efforts to cut recruitment costs, nearly a third of manufacturing firms, andalmost a quarter of business services companies are looking to strengthen partnerships with recruitment consultancies toremain competitive over the coming months.Whatever the feelings on the internal/external debate there’s little doubt that sales leaders feel processes could improve –and in so doing may reduce the number of good candidates being lost to counter offers by existing employers, competitiveoffers by new ones, and by long, drawn out processes.Candidate quality and CV accuracy upThe quarterly sales index highlights another disconnect – this time with candidate quality. Asked, as an open question, toname their firm’s biggest challenge, a range of connected concerns appeared: ‘calibre of candidates at the moment is reallypoor’, ‘there are very few closers out there!’ and the ‘CV never matches the candidate’These are perennial problems. But it’s interesting that when we look at an average across all sectors, the BMS Index showsthat candidate quality, and CV accuracy, is actually increasing.In Q4 2012, recruiters rated 74% of ‘candidates recently interviewed’ as being average to excellent. In Q1 2013, thatnumber had increased to 85%. Similarly, 66% of recruiters felt ‘CV to candidate matches’ were average to excellent in Q42012. That number rose to 76% in the first quarter of 2013.So while challenges persist, perception may not always map to reality. And indeed, these increases may go some way toexplain why recruiters are more confident of increased recruitment activity as we move into Q2.
  7. 7. An upturn in confidenceSet against this challenging background of prevailing economic gloom and candidate acquisition challenges, the BMS Indexshows sales recruiters are in a more upbeat mood than they were just three months ago. 66% of respondents to thisquarter’s BMS Index felt confident about the UK’s economic prospects in 2013 – a rise of 1% on the previous quarter.When asked back in January whether recruitment activity would increase or decrease in the second half of the year, a thirdof respondents expected it to decrease [see chart six]. By April this figure had fallen to a quarter, while those predicting anincrease had risen to 18%.So while the overriding feeling is one of ‘wait and see’ there seems to be some evidence that recruiters are feeling theworst may be over, and are looking towards the second half of the year with renewed confidence.Chart six: Will your recruitment activity for the second half of 2013 increase or decrease compared to the first half of 2013?(Source. BMS Sales Recruitment Index Report Q1 2013)
  8. 8. In conclusionThe BMS Quarterly Sales Index paints an interesting picture. Recruitment levels are mapping to the wider economy, andvolumes are down on the same period last year. Conversely, candidate quality is felt to be improving and confidence is onthe rise.Whether the recent positive GDP growth figures, and news that the UK has avoided a triple-dip recession will furtherincrease this generally positive feeling remains to be seen – and, of course, we’ll report back next quarter.But there’s no getting away from the fact that the dynamics in the recruitment world are changing. Businesses are findingit increasingly difficult to secure good sales talent. And while the recession has increased the size of the candidate pool,there is plenty of evidence to suggest quality hasn’t increased.The majority of good people appear to be staying put to ride out the storm. Those confident enough to make a move arelooking for potential employers to share their risk by way of larger base salaries. As we can see, failing to meet thoseexpectations means losing the best people.We’ll see how this develops, but there’s little doubt that a more flexible approach from recruiters is needed if the economycontinues to flat line – and there’s no sign of that changing soon.A confusing picture in business services recruitmentQ1 2013 sales recruitment data paints something of an inconsistent picture for the Business Services sector, according tothe latest BMS quarterly Sales Index. The only report to specifically analyse sales recruitment trends, the Index shows adramatic fall in vacancy numbers during this first quarter – 3.3% down on volumes for the same period last year.Despite this downward trend, when analysed in the context of a 3.3% growth rate for the same period last year, we seerecruitment activity flat lining, rather than dramatically declining.Chart seven: Business Services Sales Vacancy Growth Rate Year on Year (Source. BMS Sales Recruitment Index Report Q12013)
  9. 9. Figures published in April 2013 by Markit and the Chartered Institute of Purchasing and Supply support this more positiveanalysis. It’s PMI for March of 52.4 reflects the sector’s strongest performance for seven months in response to improvedclient confidence and a greater willingness to enter into new contract arrangements.Commenting on the figures, CIPS CEO David Noble said: “These positive figures culminated in a decent first quarter for thiscritical sector, but growth at the present rate remains tepid and below the long-run average. However, there are signs thatunderlying trends are improving, even defying and limiting the effect of the bad weather on firms.”Salary disconnect causing confusionDespite this more positive outlook, and a greater willingness across the services sector to take on staff to fulfil increasingorders, sales recruitment remained stagnant, and ultimately challenging. In common with other sectors, the biggest factorfor losing good people at interview remained an inability to meet salary expectations, as chart eight highlights.Chart eight: If you have missed out on a good candidate in the past, what was the main reason? ((Source. BMS SalesRecruitment Index Report Q1 2013)
  10. 10. Interestingly however, and in direct contrast to the majority of other sectors, the BMS data indicates that average vacancysalaries have consistently remained higher than those expected by candidates.While this is characteristic of a sector that has historically outperformed the industry average in terms of growth andemployment opportunity, this doesn’t explain why recruiters continue to lose candidates through their failure to matchsalary expectations.High performers command high salariesWhile it’s possible to speculate on a number of causes, the most likely is due to the hard fact that the very best candidatescan still command above average salaries. This takes us back to the concept of risk. For proven performers to risk a move,they will demand a higher salary. If this isnt on offer, chances are they will stay put.There’s no doubt that business services employers are responding to these challenges; looking to stay competitive bylooking outside their market for top talent, recruiting graduates and offering training, as we see from chart nine.Chart nine: What steps will you be taking to remain competitive in the search for good people over the next 6 months(Source. BMS Sales Recruitment Index Report Q1 2013)
  11. 11. But, as with firms across the sector spectrum, whether business services recruiters are willing to share candidate risk byoffering higher base salaries to the very best people remains an open question.