Two weeks back I have raised a question in Linkedin Q&A.
Well my intention was to find out the thoughts of few managers, analysts or experts in recruitment industry about diversifying a business model, and as usual I got many answers..some irrelevant too!!
Here I have cut short the answers which I have received from some senior people/experts in this industry
1. Any business model should focus on what they do best and in the case of recruitment if this is executive search then diversifying into other areas may (but not always) dilute the quality of the service.
Like with anything in life - if you want someone to take you truly seriously, particularly to pay money for your service or choose you over someone else then do what you do best!
2. Yes it is good to focus on one thing, not just consulting firms for that matter any business.
But if the firms are in budding stage then they need money flow, so they tend to/should do other things because company surviving is an issue there, However while doing other things we should not forget our goal of in what direction that the company should grow.
And one more thing never get into Training unless you have some genuine trainer or experts from the industry, otherwise it will spoil your company's reputation . because in case of training the word of mouth spreads faster.
3. In the present scenario, it is better to have multi business models within each business.
In HR segment, you should focus on consultancy, temp staffing, training etc as part of your business models
4. Looking from the strategic prospective every consultancy should first strengthen the business in what they are as in if they are into executive search they should grab a chunk of the market share and then they should diversify as business expension should be both organic and inorganic after a certain level organic growth is not possible it has to be done by inorganic way through diversification mergers and acquisition.
Executive search firms can look into these areas
1. OD Consultation
2. HR Auditing
3. Staffing and Resource management Consultating
4. Legal Process out sourcing
5. Staff training and Development
Definitely In Business there is only thing constant that is change and to cope up with the market one has to aim to grow and diversify. But most of the businesses die an early age because they don't strengthen their core areas and try to diversify at the early age itself. So the growth has to be steady and constant
5. If you have the competencies you should offer the service. However, I would always lead my offering where my strength is and use the other services to broaden and deepen my relationship with clients.
Two functions are valuable across almost all industry lines...HR and Sales.
Would you rather be known as the best in one aspect across industry lines or the best generalist in one industry?
6. It depends on how you define the model and what the consistent themes are. Each firm should work on its own particular business model and philosophy, but depending on how the market is defined, there could be a number of complimentary services provided.
7. To have a core competency is preferred in any business, not just consultancy. But I also think that once you have placed processes in place for your core competency you should go ahead and explore other areas.
8. It is good to diversify provided you have the resources to diversify in to various other activities.
9. If the profile and the expertise of the promoter/CEO is the one of strong executive hiring background, such organisation would like to focus on only Executive Search. On the other hand, if the promoters come with diverse background in HR functions, they may like to start and expand the enterprise in all areas like temporary staffing, consulting, training, hr process outsourcing... Finally, it also boils down to the vision of the organisation as to where they want to reach.
10. A HR Consultancy specially in times of recession can always fallback on its other services like temp staffing , HR process Outsourcing HR interventions, Evaluation etc if the core business i.e. executive search is not able to provide sufficient revenue. Expansion is important , but the quality of the services provided has to be maintained as one will be providing the entire range of services to the client, so if one fails to keep up to expectation of the client in one of the areas , the client might not subscribe to the other services on offer.
11. Servicing the wishes of your clients is always the first rule of success and long term relations.
The second thing is to look at your internal goals and expertise. I firmly believe in market knowledge and therefore am an advocate for specialization. It is also easier for consultants to become successful in one field than in multiple fields.
From the corporate side my experience is that the generalists deliver less result than the specialists.
Having said that I do realize that from a business model it is easier to generate more turnover as a generalist than as a specialist. However the margins for a specialist should be higher.
So it depends on the strategic goals. Are you looking for turn over and quick wins? Then generalize. Are you looking for longer term higher margins then: specialize, specialize and specialize.
12. From my professional perspective as a management consultant, I have realized the value of world-class consultancy, offering professional services based on business Best Practices.
By doing so, any reputable consulting firm should offer such a services taking advantage of its core competencies, and considering that the framework on which organizations take decisions requires from updated knowledge and practices from consultants.
A HR Consultancy strategically oriented should be focused in helping to its customers to develop and deploy the best practices based in updated knowledge of subjects of Talent Management such as Employee Brand Management, Employee Performance Management, Employee Engagement, Change Management and Competency Management, that are relevant, pertinent and needed for troubled organizations, facing the tough repercussions of the current economic recession.
It is nonsense that a HR Consultancy may be competitive by assuming a strategic profile and at the same time decides dedicating resources to fulfill the needs of a transactional HR Department, as is usual in offering outsourcing payroll, outplacement and services of hiring and recruiting.
A certain degree of specialization is advisable for a HR consultancy that wants to be competitive in satisfying the needs, either transactional or strategic of its corporate customers.
13. I think everything depends on the time, if the time is bad well laid strategies also fail, but if time is good even a small initiation can do wonders. Recession has wiped out biggest companies, were they not strategically right? We should be prepared for the worst, so depending only on single business model in today's time is very risky thing.
Specializing in any thing doesn't make you total risk free. There should be a back up plan for a company to survive, be it working on different business models, strengthening the weaknesses or being strategically right.
14. I believe that this would entirely depend on your business strategy. However, if your business markets itself as an HR consultancy then I would expect it to offer the range of services provided within the HR umbrella: employee relations; employment law; training/development; recruitment; outsourcing etc etc. There may be areas of specialization but to develop a true partnership relationship with your clients, even if you don't have the expertise yourself, you need to be able to call on associates that can deliver what your client requires. For long term sustainability it's important to diversify and push the boundaries.
15. Good business model should focus on the competitive advantage. Diversification will only be rewarding if there is a clear competitive advantage and is done at reasonable price.
Strong competitive advantage is only achieved by having low costs and/or doing something different from the competition. This must add value to the customer, who then pays a premium price. He is glued to the company, which will earn dependable revenue streams and be in the profit zone.
Before diversification to other areas the following should be carefully considered: skills of existing employees or resources to acquire new skills, recurring revenues, sticky customers, product differentiation, competitor’s weaknesses and your market niche.
16. I believe a lot depends on the evolution of the consulting firm. In case, it has been a mid or a large capital involving firm, it can always start with a variety of services. However, in the case of most consulting firms, there is one specialization which has seen them excel over the years. An executive search requires a very different platform that cannot be set for a staffing activity. Similarly there lies a lot of fundamental difference between a mass hiring activity and lateral hiring. It is always wiser to pick that one field of excellence. Expand only when you have the right resources, experience and capital to do so. To add more to this, any search firm is best known for one excellence. An egon Zhender for example has never been heard for staffing. The whole brand positioning goes for a toss if firms of repute start experimenting
17. The core area of any business(in this case executive search) should be strong enough before diversifying in other related field. At the same time if the diversifying is not at all a bad idea provided one has the resource to give high quality of service in this area i.e. Great Team, finance,
and leadership skills. I emphasize on the team coz when you have a good team to deliver you can do wonders when in process of diversification. Finance comes the second in my opinion as the breakeven and later on profit will come automatically.
18. Rule #1: Develop on core strength and then move on to another then another... one at a time.
Rule #2: In recession days, normal rules do not apply. Do all that is ethical/moral and will help u keep nose above the water till tides are low again.
Newspaper goes Glossy !! 
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