Commoditisation and how to resist it

Every business sector runs the risk of devaluing its offer by making it too standardised, and recruitment is no exception. So how do you avoid the pull of commoditisation, asks Peter Foy.

In an age of mass production, it is unsurprising that many goods have become commoditised. The era of hand-built cars, furniture and even houses has passed. Nowadays, everything is made to a standard specification, packed neatly in a box, and constructed with painting-by-numbers ease.

But surely the service industries are able to resist such a drag to the lowest common denominator? Sectors like recruitment, for example, ought to be able to differentiate between providers so that buyers make informed choices about who to procure from.

Alas, not so. Because even industries that seem at first sight to be innately people-focused, and therefore impossible to standardise, have somehow become commoditised. So, for example, a one-size-fits-all approach is adopted in accountancy, legal advice, architecture and even health care.

Small wonder that recruitment has not escaped, therefore. In the business of which I am a director, Just Recruitment Group Ltd, there is a constant pressure to offer out-of-the-box solutions to our clients and candidates. Even when we’re supposed to be exquisitely attentive to the particular needs of an individual business or person, we’re all the time being pushed by economic forces to offer an off-the-peg service that fills vacancies as quickly as possible.

Now, for some of the work a recruitment consultant delivers, that’s only to be expected. According to the Recruitment and Employment Confederation (REC), more than three quarters of the economic value of our industry in 2016 came from placing temporary workers. Given that many such appointments are what we term “arms and legs” roles – i.e. finding people who can perform fairly routine tasks with minimal training – it makes sense that our part in the process would be commoditised. Put bluntly, the people we’re supplying are treated as commodities, so why should our part in their recruitment be any different?

The push towards commoditisation is given impetus by advances in technology and the capacity to crunch big data to match candidates with vacancies. Because so much of the recruitment process can now be automated – and quite right, too, because it fills vacancies with far greater efficiency than in the past – it can be difficult to discern what the recruitment agency adds in terms of value. Or, to be more precise, it can be hard to see what any particular agency adds, making it seem a matter of no consequence which one you choose.

But this is where an attempt to resist commoditisation could well enhance the service a company like Just Recruitment delivers to clients and candidates alike. Following the advice of a report by management consultancy Roland Berger entitled Escaping the Commodity Trap (2014), smart businesses in all sectors are redefining themselves and developing their offer.

For our business, commoditisation prompts entrepreneurialism and a desire to add value. For example, rather than simply providing arms and legs to work on a production line, we can manage the whole process, effectively enabling the client to outsource their production processes to us.

That may seem like a big leap from basic recruitment, but it’s a natural development of what we do. After all, we’re sourcing candidates, often managing payroll and HR functions, and have a keen grasp of the processes they’ll be engaged in once in post. So why not take the whole thing over, thereby developing a more sophisticated model that takes even more strain away from our clients?

Another example of the way we can bring more depth to our offer is through the use we make of big data. For while it can seem to reduce the role played by the recruitment consultant in the appointments process, the data itself is only of value if analysed. And who better to develop such analytics than a recruitment specialist?

So, for example, a company like Just Recruitment could provide predictive analytics to clients that enable them to anticipate staffing needs and therefore be proactive in recruitment, rather than reactive. We could even use analytics to identify HR problems before they arise, optimising business performance and assisting staff motivation.

After more than 30 years in business, we have a sizeable amount of our own data to draw on. And if the whole industry worked together, perhaps facilitated by a trade body such as the REC, we would have a huge amount of aggregated data to use, enabling the discernment of trends and patterns, as well as longitudinal mapping over an extended period.

Of course, that would involve surrendering one aspect of our competitive advantage over each other – i.e., the value of our data. But given that it is in all of our interests to add value to our work and deliver a more sophisticated service to our clients, it strikes me as a risk worth taking.

Few experts have addressed the question of whether an entire industry can work together to resist commoditisation. The likes of Professor Howard Yu, for example, have focused on the ways individual players can differentiate themselves from competitors. But I wonder if a joined-up, industry-wide approach will help restore the professional status of recruitment, and give us a level playing field when it comes to winning business.

With that in place, success will be achieved by building long-term relationships of trust and reciprocity with clients and candidates. In short, it will put soft skills back at the heart of the industry. Commoditisation will have been resisted, and our value to clients restored.

More importantly, it will put people back at the centre of the recruitment process – which is surely the best thing for everyone involved. 

© Copyright Just Recruitment 2018

If you liked this article you may like to read – Why it's time for the recruitment industry to think big

You may also like to read – How will the Taylor review affect your business?