q1 bms business services sales index report

Quarterly Business Services Sales Index

About IndexThe report is compiled from a variety of sources including vacancy data, candidate salaries, client survey information and specific sector reports. As a business we interview over 500 sales candidates per week, speak to 2000 decision makers and have a national presence with 7 offices throughout the UK. This gives us access to a wealth of regional and national data, information on candidate salaries and job expectations and insight into the challenges facing decision makers. The index is produced quarterly and provides organisations with a good barometer of trends in the UK sales recruitment market.

About Us

We specialise in recruiting high calibre people across the UK, Ireland and Australia. Our network of offices gives us strong local presence and allows us to support a long list of blue-chip clients who view us as partners they can trust.

We have grown to become a leading force in our field placing more people than ever before. But we haven’t let our standards slip. We take the time to get to know you, your business and the type of people you need. We tailor our services to ensure the right recruitment solution for your business. In short, we make things run smoothly and produce results.

2| BMS Quarterly Business Services Sales Index - Published May 2013

BMS Quarterly Business Services Sales Index

With the economy flat lining, the fear of risk is beginning to change the behaviours of both 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 back to 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 index confirms a continued downward trend in vacancy numbers, with jobs growth ending the first quarter of 2013 2.4% down on the same period last year. But as we will see, the mood is changing and avoiding triple dip could mean this heightens in quarter two.

“Avoiding a triple dip recession may well have a psychological benefit but finding good people

that want to move in a flat economy remains a challenge”

Chart one: Sales jobs growth 2011 – 2013

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What is perhaps more relevant for both recruitment professionals and candidates is the heightened state of risk in which both are now operating.

For candidates the risk is in the move. Higher salaries, better benefits and improved career opportunities must be offset against current job security and an ability to pay bills to day.

Risk is changing behaviour

“Companies are more upbeat than last quarter with 66% of

respondents feeling ‘confident’ about economic prospects over

the next 6 months”


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, sales cycles 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 be compensated for it. As we can see from chart two this has resulted in a gradual increase in salary expectations from candidates.

“There’s a negotiation happening in the market between candidates and

clients and the risks they are prepared to take when moving

jobs or recruiting”

Chart two: Company salaries vs. candidate expectations Oct 2012 – Mar 2013

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Candidate Salaries Vacancy Salaries

While the chart indicates advertised vacancy salaries are also on the up, they have yet to meet candidate expectation. This pattern has been consistently repeated over the preceding 12 months, and indicates employers too are looking to balance risk 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 reduce attrition. This is a great example of risk-free investments. Bonuses, of course, encourage revenue generation, while training should, in theory, improve opportunities to close – particularly in the FMCG and business services sectors. Here products offer few points of difference so the sale becomes about the ability of individuals to influence and accelerate the buying decision.

Even for the more technical areas, such as IT, sales training and development is crucial. Today’s purchasing behavior is increasingly driven by solutions selling, and the ability to create a ‘vision’. Large scale IT purchasing is no longer based solely

“Candidates expect to be compensated for the risk of moving with higher salaries but only 7% of companies said they will do so in the

next 6 months”

“Companies are reducing their own risk profile by linking attraction and

retention strategies directly to sales performance”



on speeds and feeds. So while having an encyclopedic knowledge of the technology is a bonus, today’s technical salespeople require an increasingly commercial skill set.

On the performance-based point, focusing on OTE offers an element of risk too. In last month’s Index we looked at the issues of high OTE levels being seen as increasingly unachievable in today’s economic climate. Candidates, therefore, have a healthy distrust of high OTE offers, preferring higher base salaries to reduce their risk. However, increasing the commission-based elements of existing employee packages makes sense if targets are achievable – and salespeople in the job will know whether or not that is the case.

Chart three: What are you doing to lower attrition rates of top performers?

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Q4Q1

Back on the candidate side, and the BMS Sales Index highlighted increased training levels as something of a trend across the sector last quarter. As chart four shows, firms looking to stay competitive in the recruitment market are looking outside established markets and taking on raw (graduate) talent, as chart four highlights.

Long term investments or short term leaders?

“Looking for talent outside immediate markets, taking on raw talent and offering sales

training are all strategies being employed to attract people in a

tough economy.”


Chart four: What steps will you be taking to remain competitive in the search for good sales people over the next 6 months?

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Look fortalent outside

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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 a difference’.

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 struck between nurturing teams and getting in talent that can hit the ground running today.

Losing the salary game

By focusing on training and development as attraction methods, rather than salary, firms are effectively limiting their options to building for the future. And they are significantly reducing their opportunities to influence and attract proven performers 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 the impact of failing to meet them. Salary is the main reason why firms are missing out on good candidates. With few exceptions, this is a trend the BMS Index has been identifying for over 12 months. It is also a major frustration for employers. But as the data indicates, firms are either unwilling or unable to do anything about it.

“Companies are reducing their own risk profile by linking attraction and

retention strategies directly to sales performance”



Chart five: If you have missed out on a good candidate in the past, what was the main reason?

Internal frustration

As we’ve seen, firms offering higher base salaries are themselves increasing their risk in the face of pressure to drive cost from the recruitment process. But we are seeing other strategies. Internal restructures in HR departments and attempts to bring 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 cost saving 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 is having a negative impact on their ability to find and secure the best people.

It's interesting to note, therefore, that despite efforts to cut recruitment costs, nearly a third of manufacturing firms, and almost a quarter of business services companies are looking to strengthen partnerships with recruitment consultancies to remain competitive over the coming months.

“Internal pressures to reduce recruitment costs could be harming

many short term strategies to attract those star performers into the business that can affect your

bottom line now”


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Counter offer Long recruitmentprocess

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Other Unable to meetcareer aspirations

Unable to meetsalary

Q4Q1

Candidate quality and CV accuracy up

The Quarterly Sales Index highlights another disconnect – this time with candidate quality. Asked, as an open question, to name their firm’s biggest challenge, a range of connected concerns appeared: ‘calibre of candidates at the moment is really poor’, ‘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 shows that 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, that number had increased to 85%. Similarly, 66% of recruiters felt ‘CV to candidate matches’ were average to excellent in Q4 2012. 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 to explain why recruiters are more confident of increased recruitment activity as we move into Q2.

An upturn in confidence

Set against this challenging background of prevailing economic gloom and candidate acquisition challenges, the BMS Index shows sales recruiters are in a more upbeat mood than they were just three months ago. 66% of respondents to this quarter’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 third of respondents expected it to decrease [see chart six]. By April this figure had fallen to a quarter, while those predicting an increase 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 the worst may be over, and are looking towards the second half of the year with renewed confidence.

The BMS Quarterly Sales Index paints an interesting picture. Recruitment levels are mapping to the wider economy, and volumes are down on the same period last year. Conversely, candidate quality is felt to be improving and confidence is on the rise.

“85% of people that had recently interviewed felt that candidates were average to excellent, up on last quarter”

“18% of companies expect to see their recruitment

activity increase over the next 6 months, up from

13% on last quarter”



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, competitive offers by new ones, and by long, drawn out processes.

Chart six: Will your recruitment activity for the second half of 2013 increase or decrease compared to the first half of 2013?

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In conclusion

Whether the recent positive GDP growth figures, and news that the UK has avoided a triple-dip recession will further increase 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 finding it 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 are looking for potential employers to share their risk by way of larger base salaries. As we can see, failing to meet those expectations 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 economy continues to flat line – and there’s no sign of that changing soon.

“The recession may have increased the size of the talent pool but not necessarily the quality.

Evidence suggests many are staying put”

“Companies that want to attract the best sales talent in a flat economy have to

be flexible and competitive in their recruitment

strategies”


A confusing picture in business services recruitment

Q1 2013 sales recruitment data paints something of an inconsistent picture for the Business Services sector, according to the latest BMS Quarterly Sales Index. The only report to specifically analyse sales recruitment trends, the Index shows a dramatic 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 see recruitment activity flat lining, rather than dramatically declining.

“The business services sector was a tough place to recruit sales people last quarter but confidence is

growing”

Chart seven: Business Services Sales Vacancy Growth Rate Year on Year

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Market Average Business Services

Figures published in April 2013 by Markit and the Chartered Institute of Purchasing and Supply support this more positive analysis. It’s PMI for March of 52.4 reflects the sector’s strongest performance for seven months in response to improved client 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 this critical sector, but growth at the present rate remains tepid and below the long-run average. However, there are signs that underlying trends are improving, even defying and limiting the effect of the bad weather on firms.”



Salary disconnect causing confusion

Despite this more positive outlook, and a greater willingness across the services sector to take on staff to fulfil increasing orders, sales recruitment remained stagnant, and ultimately challenging. In common with other sectors, the biggest factor for losing good people at interview remained an inability to meet salary expectations, as chart eight highlights.

“The biggest factor for losing good people at interview remained an inability to meet salary

expectations”

Chart eight: If you have missed out on a good candidate in the past, what was the main reason?

Interestingly however, and in direct contrast to the majority of other sectors, the BMS data indicates that average vacancy salaries 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 and employment opportunity, this doesn’t explain why recruiters continue to lose candidates through their failure to match salary expectations.


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High performers command high salaries While it’s possible to speculate on a number of causes, the most likely is due to the hard fact that the very best candidates can 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 isn't 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 by looking outside their market for top talent, recruiting graduates and offering training, as we see from chart nine.

But, as with firms across the sector spectrum, whether business services recruiters are willing to share candidate risk by offering higher base salaries to the very best people remains an open question.

“Business services firms are remaining competitive by looking

for talent outside their market, recruiting raw talent and offering

sales training”

Chart nine: What steps will you be taking to remain competitive in the search for good people over the next 6 months?



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6%6% Look for talent outside market

Provide sales trainingTake on raw talent and trainImprove employer brandingIncrease salariesShorten the recruitment and offer processStrengthen recruitment partnershipsEngage other attraction methodsNone of the above