How a recruiting firm (finally!) learned how to hire for scale

A big issue for us has been mis-hires. Our historic mis-hire average, over the 8-year history of our firm, has been nearly 30% (29.65%, to be exact)! Nearly 1 out of every 3 people we would hire as a recruitment consultant left within 6 months of joining. That’s hugely inefficient.

It’s not only a waste of hiring time (we have a bunch of our team meet each potential hire), but also of on-boarding, training, and one-on-one time. So many resources squandered, what a waste of time, on someone who leaves just after we’ve trained them. Furthermore, employee turnover costs a lot more than you think.

You can’t scale a recruitment firm that way. I had ambitions for us to go global much quicker, but with such poor hiring we didn’t even have enough talent coming through to execute — let alone to develop leaders who can build a new business unit, or a new office.

This is part of the reason it is so hard to scale recruitment firms. As a professional service business, headcount increase is the prime lever to increase revenue.

Most recruiting companies don’t get past the 10 person threshold. Even fewer get past the 30 person threshold, and fewer still beyond that. Structure, management, moving beyond the charisma founder, and a whole bunch of other factors play a role in few recruiting companies being able to scale, but if you aren’t hiring the right people, and your turnover is high, you’ll face a lot more headwinds to growth.

Recently though we have turned this around. Dramatically.We’ve increased our successful hire ratio from 70.35% to 92.86%.

It’s been a while since we’ve had a mis-hire. But we won’t be complacent, we still have lots of work to do to discovery the right people, get even better at matching our and their goals, on-boarding them, and having a good, productive journey together. Often recruiting companies used to say (still say?) to their potential recruits “It’s not rocket science.” But it is. People are about as complicated as it gets.

Now when people ask me what “My biggest issue is leading the company?”, “Hiring” is not my first response. Now it’s more likely to be “culture shock towards Japan. Because of our IPO preparations.” And that’s after I’ve been here for 18 years!