Process bloat: Why is it suddenly costing more to deliver the same service?
Something strange is happening in the recruitment business.
On paper, you’re doing everything by the book. You’ve invested in better systems. You’ve strengthened your compliance frameworks. You’re winning the same amount of business.
But your margins are shrinking. What is going on?
Let's dig into the details.
That new CRM system came with additional data entry requirements. The enhanced quality process added three more approval steps. The strengthened compliance framework introduced weekly reporting that nobody reads.
These changes all made sense in isolation but they're quietly killing your profitability.
A web of unseen costs
The true impact of process bloat only becomes apparent when margins are reviewed year over year.
A new approval step adds five minutes to each placement process. An additional quality check requires ten minutes of senior consultant time per candidate. Individually, these additions seem negligible. Collectively, they increase operational costs and can reduce consultant productivity by 15-20%..
One of the biggest contributing factors to all of this is increasing regulatory burden. The recruitment supply chain is shouldering more responsibility and increased administrative overhead.
Take the ever-changing dynamic of IR35: This regulation requires that "end user" clients complete the Status Determination Test to determine whether a contractor falls "inside" or "outside" the rules. For recruiters, this means chasing clients who frequently miss deadlines, triggering a series of follow-up actions. These processes are mandatory, they expose agency owners to legal risks, yet the associated costs aren't offset by additional fees.
All process, no progress
Three key factors, though often seen as necessary, contribute massively to operational inefficiencies:
Risk Aversion. This leads to more approval steps, extra verifications, and excessive documentation, all designed to mitigate potential risks.
Technology Overload. This happens when new systems are introduced without removing outdated processes, leading to redundant tasks, duplication and complexity.
Compliance Creep. This happens when internal controls exceed regulatory or client needs, overcompensating for compliance concerns.
Data management, especially under GDPR, is another critical area that becomes bogged down in process. I was recently involved in a project with a mid-sized engineering agency that led to significant improvements in fee performance, efficiency, and reduced commercial risk. By auditing their data, we identified and eliminated redundant records, enhancing compliance and making automation more effective. This change resulted in a 40% increase in fill-rate efficiency, clearly demonstrating the value of streamlining operations.
Beyond the obvious time cost, layers of processes mean more approval steps and slower decision-making. Consultants find themselves bogged down in admin. Increased complexity drives up training costs and error rates. And then we have all the lost opportunities. I've observed recruitment businesses where consultants spent up to 40% of their time on administrative tasks instead of business development, relationship building, or candidate coaching.
Can you still justify these layers?
Conquering the bloat requires a systematic approach.
Successful recruitment businesses map their entire placement process from initial client contact to final billing, documenting every approval and checkpoint. Next, each step is categorised by its direct value to the client, candidate, or business outcome. Anything that doesn't meet this criteria is streamlined or eliminated.
The most sophisticated businesses conduct what I call "process archaeology”. They trace the origins of each procedure to understand why it was introduced. Many processes persist long after the conditions that created them have changed.
Recruitment is a sector particularly burdened by legacy issues with processes handed down from previous generations that are now out of step with our economy and our tech.
We have to remember that clients’ expectations have evolved. They no longer view candidate sourcing as a standalone service worth a fee. At a recent think-tank event, several experts from end-user organisations made it clear that recruitment should be integrated with other outsourcing functions, delivering a complete process that’s faster, cheaper, and better than clients could achieve on their own. Yet, many agencies continue to shoehorn candidates into roles, rather than adapting to the new demands of the market.
It’s critical that agency processes are aligned with the value clients expect.
Streamlining without sacrificing
Effective process streamlining isn't about cutting corners - it's about focusing your efforts on creating genuine value. The agencies that excel here identify their core value-creating activities, then they build streamlined processes around them.
They also distinguish between essential controls that prevent genuine risks, and defensive bureaucracy that exists primarily to make managers feel safer without actually improving outcomes.
And the most successful streamlining efforts involve front-line consultants in the process redesign. Their insights often reveal simple solutions that management overlooks.
Streamlining also requires structural innovation to ensure processes are executed by the people with the right skills and capabilities. Too often, I see businesses ask ‘sales’ people to manage processes that demand attention to detail and a more empathetic approach. This is doomed to fail.
Our advice is to break down processes into their core elements, then assign the right people, leadership, and technology to achieve optimal outcomes. Clients who have embraced a more agile approach immediately generate better results, have happier staff and outperform competitors
The road back to lean
Getting margins back on track requires a fundamental shift in how businesses think about operational complexity.
The most successful recruitment firms treat simplicity as a competitive advantage. They've learned that the best process is often no process at all. They hire people who make good decisions and they trust them to handle exceptions intelligently. Instead of creating elaborate approval chains, they establish clear decision-making authority and accountability.
At its root, this is about recognising that recruitment is a relationship-driven business and bureaucracy often creates more problems than it solves. Clients want responsiveness. Candidates want clear communication.
Complex processes get in the way of delivering what your market actually values.
