The Death of the ‘High Street’ Recruitment Agency

Evolution.  It’s how every great story starts right?

From our early hominid beginnings through to present day intelligent beings, one thing our species has always been at the forefront of is evolution.

Change is how we move forward, achieve more and generally get better.  

That’s why we are gathered here today to discuss the timely death of the high street recruitment agency. R.I.P.

Early Beginnings 

Believe it or not, the first known private employment agency in the UK was founded in 1873 by John Gabbitas who recruited Schoolmasters for Public Schools in England. The concept began to evolve with the demand for skilled and unskilled staff following the Second World War and huge growth in infrastructure and economy.

To bring us up to the present day the private employment agency industry reported sales of £38.9 billion in the UK last year, according to the REC Annual Recruitment Industry Trends Report. 

The industry has developed over time, predominantly to keep up with shifts in technology and the economy – but the basic model has remained static since the 1870’s.

Contingency and Complacency

The high street recruitment agency concept has always been focused on the end result – crude it may be, but essentially bums on seats.  The commercial viability of the entire business model hangs off making contingency placements.  If you aren’t familiar with the process, a business will engage with a recruitment agency to fill a vacant position.  If the agency introduces a suitable candidate to fill the vacant position, and that person is successfully employed – then a fee is due to the recruitment agency.  Sounds simple enough.

But here’s the thing.  If the agency doesn’t fill that vacant position, the recruiter will likely do all the work, as instructed by the client, for free.  If the recruiter is skilled at their job, the only reason they won’t make that placement is because the hiring business will have engaged with other recruitment agencies with the same instruction.  It’s a race to the bottom.

This practise of fastest finger first has created a Wild West of recruitment agencies over the years. It has given many of us who bear the word ‘recruitment’ on our CV’s or within our current professions, something of a bad name.  An internal eye roll by others in the room when we say what we do.  A perception of unscrupulous T&Cs, huge, inflated fees and no skill or expertise – just pound signs in our eyes.

And the high street recruitment agency industry is itself completely to blame for this perception.  One of the biggest issues lies internally – their own staff attrition. 

Ambition vs Attrition

Recruitment for most people, particularly agency recruitment, isn’t a career for life.  Lulled in with the promise of huge commissions and spending all day ‘talking to people on the phone’ sounds to many extroverts as though they could be living their best life and getting paid a wad to do it.  

Their product is people, and it’s their job to sell their product into companies and receive payment for it.  However, once the rollercoaster starts to kick in, they lose a big placement to a competitor or they get their first rebate request, the rose tinted glasses start to fall off.  They receive their (often paltry) basic salary for months on end, whilst ‘building their desk’ so it’s no wonder that standards slip, and the mud slinging starts.  And by that, I mean, slinging as much of it at a wall as possible and seeing how much of it sticks.  Sending countless, often irrelevant candidates to businesses, whether the business is engaged with them or not, in the desperate hope that one of the candidates just might be what that business is looking for – and sometimes it works.

Then there’s the all-encompassing T&Cs.  If you’ve ever engaged with a traditional high street recruitment agency, you will know that their T&Cs are King.  The insurance policy for the buyer of candidates.  Focused around protecting the agency and using the candidate as a commodity.

This all paints the picture of an industry – despite its monetary worth – of a low value perception to the wider business community.  A necessary evil, as a business owner I know once described it.

The Business Ruins of COVID19

Fast forward here to 2020 and our tentative Post COVID19 landscape.  

Many businesses are still reeling and rebuilding in the wake of the pandemic, and part of that rebuilding will involve finding better ways of doing things.

Our business community is shifting rapidly into a value driven and knowledge transfer led environment.  We’re slowing down, becoming more mindful of the alliances we’re making and looking for long-term rather than quick fix.

Also consider the demise of the high street itself.  

Bricks and mortar retail were, arguably, already on their last legs and COVID19 saw several smaller and larger brands go into administration and close multiple stores to survive the crisis.  High Street agencies rely on high street footfall for candidates, visibility, and brand awareness.  With many of our high streets set to become a ghost town for the foreseeable, the office rental and expenses that many of these agencies will incur in having their pivotal high street position will start to no longer be commercially viable.

But what then?  A move online?  It’s a saturated and busy marketplace, and by not anchoring themselves to a locality, a town, a high street – a fixed identity – many high street agencies will find themselves adrift in a sea of noise and 8% placement fees.

But what then?  A move online?  It’s a saturated and busy marketplace. However, by not anchoring themselves to a locality, a town, a high street – a fixed identity – many high street agencies will find themselves adrift in a sea of noise and 8% placement fees.

Evolution – Survival of the Relevant

Recruitment has evolved.  The pendulum is rapidly swinging towards a desire for long-term relationship building, knowledge and strategy.  Adding value – not simply selling candidates.  Understanding how the recruitment process should work, candidate psychology and the needs of the business being hired for.  

When it comes to candidate retention, culture fit should always be priority.  You can generally tell from a CV if the candidate could do the job – but that isn’t what makes a successful employee.  It’s about an alignment of values, drivers, and vision.  Something that mud slinging exercises simply won’t identify.

A successful appointment is the organic result of getting all the other stuff right.  The strategy, the process, and the employer brand.

However it’s positioned, a high street recruitment agency will never offer that.  For as long as it is a fee based, contingency model, they will want the placement.  The straightforward transaction of candidate for money.  Simple – and fair enough, that is the business model as it has been since the 1870’s.

Many employers are also looking to move their recruitment in-house if they have the budget and the volume, which will also impact agency models as this business strategy picks up pace.  

In this value and knowledge-based economy.  In the Post COVID aftermath.  With the decimation of the high street.  With simple Darwinian selection and industry evolution – I no longer see where high street recruitment agencies sit in the outsourced recruitment marketplace.  They are quickly becoming irrelevant.

Rest In Peace

So, it is with a heavy heart that I predict the death of the high street recruitment agency.  I spent the first few years of my career in a few of them. I’m sorry that it has come to this but,  without evolution, it’s an outdated model that feels like it harks back to a different time in business history.  

As the curtain closes on the coffin of outdated practises, tenuous T&Cs, and scary fee structures, it raises the question – what does this mean for outsourcing recruitment in the future?  

With recruitment subscription models and retained recruitment options on the rise, maybe the future of outsourced recruitment, that of a long term and exclusive partnership with a hiring business, is only just starting.