Are you considering expanding in 2011?

Every organisation wants growth. The growing economy brings growth in the number of jobs and a rise in employment. According to the Australian bureau of statistics the number of people in employment rose by 24,000 and the unemployment rate went down to 5% in January, 2011 as compared to 5.3% in Q4, 2010. All these factors are conducive for recruitment agencies to grow and expand.

Business expansion for recruitment agencies can require as much time, effort and dedication as the start up phase. Like a new setup, business expansion would require a huge capital investment in terms of research, infrastructure and manpower. The recent RIB yearly report mentions that management and staff costs as a proportion of total gross profit rose to 53% for the last half year. The report said management and staff costs would always be the biggest expense for recruitment firms, and as such had the greatest and most direct influence on ultimate profitability. However, it can be reduced by partnering with an offshore Recruitment Process Outsourcing company.

Depending on the way in which it is structured, RPO can support recruitment agencies with their expansion activity. RPOs carry out the research on behalf of their client, share the investment in terms of infrastructure and recruitment of staff and operate as an extension of the client’s team. RPOs can support a part of the client’s recruitment process, or their complete end-to-end process, all the way from business development and marketing, to offers and candidate management ensuring that the client expands their business; achieve the required KPIs, and at a lower cost. The real benefit to the recruitment agency is the flexibility to grow or reduce their teams without changing the structure of their internal teams or increasing the cost of their internal teams.

RPOs can also support recruitment agencies with their current recruitment process where due to continuous influx of vacancies and insufficient time with the consultants, they are unable to fulfill all the job orders resulting in vacancies remaining unfilled. With and RPO partner, consultants can get an active support for sourcing candidates for those unfilled roles. This gives the Agency access to candidates which match the requirements, are actively looking for a job, and are thoroughly vetted. This helps an Agency fill more vacancies and increase their productivity and top line revenue.

To know more on how RPO can benefit your business contact Sonam Dave on +61 2 9037 1690 or by email email

Alternatively, submit the form below to download case studies.


Employee attachment drives retention and performance

As the employment market heats up in 2011, employers are facing the challenge of not only finding, but retaining new talent. Anthony Sork, a researcher and consultant in employee attachment, believes that when an employee joins a company they are entering a new social structure and how they assimilate to this structure will significantly affect their long-term employment prospects. The strength of “attachment” they have to the structure is extremely important for both the employee and employer.

Sork says that a two-way assessment takes place when a new member joins a business. The member assesses the organisation and the organisation assesses the potential contribution and cultural fit of the new member. But it is the strength of bond the new employee feels they have with the social structure of the company that is the most significant.

Many companies believe they are in control of whether a new member moves from provisional to full member status; however, it is actually the new member who ultimately decides if they would like to be part of the social structure or not. And if so, with what level of effort are they going to engage.

The strength of bond achieved with a new employee is based on the core attachment perceptions of:

* security
* trust and value
* acceptance, and
* belonging

And the strength of bond will drive key response behaviours which include:

* risk of attrition
* discretionary effort and performance

If an organisation wishes to retain and get high levels of effort and performance from a new member then it must strive to achieve the strongest attachment levels it can.
The business case for attachment

Millions of dollars are wasted every year because of poor attachment. Based on research from Sork HC, an investment of $100,000 over the first three months is regularly made by an organisation for a new employee. This figure is based on average direct and indirect costs.

Direct costs include:

* position review/advertising/agency fees/ interviews
* profiling/testing/reference checking
* Contracts/administration/resourcing
* training venue/training personnel
* salary during non-contribution period

Indirect costs include:

* lost productivity
* lost opportunity
* suppressed engagement of team with vacancy

Sork suggests that to fully understand the risk to this investment, organisations should calculate how long it takes to pay back $100,000 and break even. Research has shown that it will take between 12 and 18 months to achieve a return and that employers should be aware of their attrition rates within this period and add any loss to the replacement costs to be incurred again.

If an organisation achieves a high level of attachment, it not only reduces the costs of repeat loss and replacement but it also benefits from retaining talent that is contributing to a higher level of effort and performance. High attachment leads to a low risk of attrition and increased performance through increased effort. With high levels of attachment, an organisation will achieve a return on its investment faster and retain an employee that is contributing to a higher level. It becomes a win-win scenario.
How do organisations achieve high attachment levels?

Attachment perceptions and response behaviours are influenced most significantly by the behavioural impact of a manager or supervisor on a new employee, and occur within the first 120 days of employment. Sork identifies 20 workplaces drivers that impact attachment levels and claims that at the foundation of these drivers are the core perceptions of security, trust and value, acceptance and belonging. The stronger these perceptions, the stronger the attachment.

The impact of the manager or supervisor in the workplace is most significant, with over 80% of new employee perceptions being formed directly by the behaviours of, and interactions with, their manager. Managers need to be aware of the drivers and work to ensure they are positively handled.
The drivers:

1. recruitment and selection
2. pre-employment
3. orientation
4. central messages
5. rotation
6. incremental learning
7. accuracy of job representation
8. manager alignment and accessibility
9. business awareness
10. performance objectives
11. learning path
12. reasons for joining
13. vision and career path
14. senior leadership
15. work/life balance
16. co-workers
17. work environment and resources
18. climate/culture
19. systems and processes
20. safety and behaviour.

Attrition that takes place before the first three months is either because the right person is in the wrong job (poor job definition), the wrong person is in the right job (poor recruitment practices), or for factors beyond either parties control such as death in the family. In fact, Sork HC research shows that over 90% of attrition that takes place between three and 18 months of employment is due to poor attachment.

It is important for employers to understand that measuring and managing attachment is an essential part of the recruitment and on-boarding process. Sork claims attachment is even more important than having a probationary period in place. In order to manage and measure attachment Sork HC has developed and patented a tool – the Employee Attachment Inventory (EAI) – that can assist recruiters and HR consultants reach successful outcomes for their business.

Anthony Sork is the Managing Director of Sork HC, experts in leadership development. With over 15 years of experience in the field of leadership, engagement and performance, Anthony is the leading researcher, speaker and writer on employee attachment. He has been awarded two patents for his work in this field and his company, Sork HC, is the licensed provider of the world leading measurement instrument — the Employee Attachment Inventory (EAI).


What can I do to get my SME financially fit? — a check list for smaller companies

By Nigel Harse & Rod Hore

As the recruitment industry emerges from the downturn of the past couple of years there has been a rapid rise in the number of recruitment company startups. There are also a large number of established companies that feel they are back in start-up mode as they rebuild their business from a series of cuts.

This month we have put our thoughts together to present a checklist that business owners can use to verify their financial health. You may be surprised that it’s not all about dollars! Being fi nancially fit is not limited to, but includes, great cash-flow management. It also involves actions that give your organisation the right to earn revenue into the future as well as decisions that make your use of cash and capital as efficient as is possible.

(1) Go where you can make a difference or make an impact.

You have limited financial resources and sales and delivery capability so you can’t afford to chase opportunities that don’t give you a high probability of a return. A good rule of thumb is to be wary of going where the larger companies are as they can offer a different solution at a different price-point.

(2) Hold your nerve and be tough on your terms and conditions.

Remember that your business terms and conditions are a large part of your brand in the marketplace. If you want to be known as a business that works exclusively with clients then you need to win that type of work.
Recruitment processes

(3) Measure your activities and your results from day one.

“You can’t manage what you can’t measure”– as a small company it is recommended that you constantly benchmark your results so that you have blinding clarity about your performance and effi ciency. Last decade created wealth for business owners that didn’t accept their current position and had an attitude of continuous improvement.

(4) Choose your technology platform wisely.

As soon as is possible, get onto a technology platform that will grow with you and not restrict you in the future. Your future may include perm & temp, remote offices, staff working from home, outsourcing, customer portals – and your technology needs to keep up with you. Today there is a genuine leap forward in available recruitment technology
that is web-based, integrated, flexible and offered as a software service.

(5) Cashflow.

All small businesses need to have absolute certainty and clarity about their fixed costs and their variable costs into the near-tomedium term future and have mechanisms in place to review this on a regular basis. Cash flow management is a basic and essential business requirement.

(6) Borrowing money.

If you do need to borrow money as an overdraft or a factoring arrangement or even off friends and family, make surey ou are getting the best terms and the maximum flexibility possible. You need to allow about eight weeks to arrange credit so plan ahead. Your negotiations with the financial institution (yes, you can negotiate) must include the flexibility to get out of the arrangements as your cash reserves improve or your situation changes.

(7) Beg, borrow and steal, as the saying goes.

One stark lesson from the downturn is the stories of companies that folded because of their high fixed cost overhead structure. Don’t invest in fixed overheads, like rent, until you really need them. If you are a good leader and have an exciting business then accommodation facilities will not be a detrimental factor to your business in the short to medium term.

(8) Establish employee conditions that will work when you are larger, or change the process.

Decide early if you are going to pay individual commissions, team bonuses and special privileges. Will your staff bonus structure work when there is a middle management team in place? Are the special deals you are offering to early employees sustainable in the longer term? Do you plan extra features in the recruitment process such as technology, or resources, or outsourcing that will change the cost structure?
Directors and shareholding

(9) Structure your business and your personal assets properly.

There are a number of basic structural arrangements that should be put in place by anyone who is a director of a company. If you haven’t received any professional advice in this area, you should.

(10) Reward yourself.

Don’t forget to look after yourself. Small business owners take incredible risks and need to ensure they gradually reward themselves for the risk and effort. At a minimum business owners should pay themselves the equivalent of a standard salary.

A summary of the above points is to:
(i) preserve cash;
(ii) delay spending, and
(iii) don’t give away the future.

The Spirit of Innovation

Growing by acquisition

By Richard Hayward, Principal, HHMC Australia

There are really only two substantial ways to grow a business – organically over time, or by acquisition. Obviously growth is good for businesses but it does present risks because it puts pressure on a company’s financial and other resources. Growth can be one of the biggest killers of a business aside from no sales at all. Professor Sudi Sudarsanam, of the Cranfield School of Management in the UK, a leading author in the mergers and acquisitions field, warns firms, “must always consider the alternatives to acquisitions as a means of achieving its strategic objectives” because the risks associated with acquisitions are significant. Businesses generally look to acquisition as a means of gaining additional turnover, new clients, new service or product lines and to enter new markets. All these laudable aims can be achieved by organic means but acquisition is quicker and easier – provided you obey the rules.

Any “deal” should be able to pass stringent tests. Would-be acquirers, regardless of their size or the size of the company that’s being bought, need to answer these questions:

* What strategic aims must be achieved for this purchase to be justified?
* If those aims are achieved, what financial benefits (making profits and/or preventing losses) will be realised?
* Do the benefits represent an attractive return on the costs?
* What are the chances of the aims not being achieved and is that acceptable?

If the above points can be satisfied there are still further questions to ask:

* How is the acquisition to be implemented?
* What framework will be established for the combined venture? How will the new business be fitted in?
* How quickly will the benefits start to flow? What is the lead time?

These are all key decision points that must be reviewed before embarking on an acquisition action plan. The question of how long it will take to see the desired benefits is crucial; if you’re buying to save time, it makes no sense to get tangled up in a long and costly process of integration. The risks involved in mergers and acquisitions are intensified if these questions do not get proper answers.
Managing risk

Growth through acquisition is riskier than organic growth therefore before an organisation embarks on this path of growth it must carefully assess its target. Once the buying company has decided to pursue its strategic objectives by acquisition it must at least carry out a proper due diligence exercise and, with specialist advisors, undertake the necessary commercial analysis of the risk and return profile of the target. As part of the overall due diligence exercise the buying company needs to assess the following key business metrics:
Recurring profits

Recurring profits indicate the potential durability and strength of future profits, therefore the probability that they will be achieved again. If the target company’s results are underpinned by one-off events this could highlight a potential future problem and expose the target company’s potential frailties and susceptibilities should external economic events turn against the company. In recruitment this will include a mix of temporary/contract placements to permanent placements, the quality and number of preferred supplier agreements and the size of the business.
Client base

The target company’s client base needs to be assessed for its composition and profile. A sensitivity analysis will reveal the level of reliance on too small a group of clients for business over time and the consequence to the business of losing one or more of those core clients. Of equal importance is the level of business goodwill that is attached to the owners or other key managers. While there is likely to be an earn-out period, what are the risks of losing clients through a change of ownership?
Financial position

Appropriate accounting advice should be sought to determine the financial viability of the business.

* How volatile is the cash flow?
* How is the business funded?
* Is it too highly geared?
* Is it a going concern?
* Is the overall trading position of the business acceptable to justify acquisition?

Ultimately, the risk that things don’t go quite according to plan needs to be factored into any acquisition assessment, but having access to a sound, experienced advisor increases the chances of smoothing out the process, making the right decisions for the time and concluding a successful deal.


Selling your business? Follow these 10 key steps

By Richard Hayward, Principal, HHMC Australia

We have written about this before but it a very important topic and is worth re-visiting as we start a new financial year.

In so many of the discussions that we have with recruitment company owners we hear about their future plans and exit intentions. It is often the case that people are underprepared for what is required to complete a successful sale. With all the years of hard work and risk that has gone into building up a business it is a great shame to see owners getting into unnecessary difficulty.

There are no guarantees that you will sell your business. So getting the process right is in your interests as much as the buyer’s. What should be remembered is that the recruitment industry has relatively few barriers to entry and so it is always an option for any company considering an acquisition to, instead, add some more consultants and build up a sector organically. This option to compete rather than buy is harder to do in some other industries where the entry costs and barriers are higher and buying your way into a market is the only viable route.

A few years ago in recruitment extra we listed 10 key steps that help make deals conclude more effectively for all parties. Do they still hold up in 2010?

1. Place a realistic price on your business. Nothing has changed here. It is still the case that many sellers overvalue their business based on emotional factors such as the amount of time and effort they have put into the business over the years. Unfortunately, the “sweat equity” involved is not rewarded of itself by a higher price. Rely on external advice from experts with industry knowledge to help you determine a price that allows a “win-win” position. It’s important to take your ego and emotion out of this assessment.

2. Keep a “business as usual” mentality. Don’t become distracted from day-to-day demands. This can affect revenue, costs and profits. Since the selling process could take as long as a year, the buyer needs to keep seeing a healthy business.

3. Engage expert intermediaries to ensure confidentiality. A breach of confidentiality surrounding the sale of a business can change the course of the transaction. Expert intermediaries can keep the sales process discrete and on track.

4. Prepare for the sale well in advance. If possible, be sure your records are complete for at least three years and do all pertinent legal or accounting “housekeeping” beforehand.

5. Anticipate information the buyer may request. The buyer will need to understand the financial ins and outs of your business. All acquisitions involve risks and serious buyers need as much information as possible to mitigate those risks.

6. Don’t oversell. You are a salesperson or you wouldn’t have built up your business to where it is. But overselling could create a credibility gap which the buyer will notice.

7. Be flexible. Don’t be the kind of seller who wants too large a portion of the price upfront, or who won’t accept any contingent payments based on performance. Depend on the advice of your intermediaries. It is important to keep the “deal at the table” if there is genuinely a deal to be done.

8. Negotiate, don’t “dominate.” You are your own boss and have been for a while, but be prepared to learn that the buyer may be used to having his or her way too. With external advice, decide ahead of time when “to hold” and when “to fold”.

9. Keep time from dragging down the deal. To keep the momentum up, work with your intermediary to be sure that potential buyers stay on a schedule and that offers move in a timely fashion. It is easy for transaction timeframes to blow out with so many of the key discussions relying on as few as two people – a seller and a buyer – with the authority to progress things.

10. Be willing to stay involved. Even if you are feeling burnt-out, or planning to retire, realise that the buyer may want you to stay within arm’s reach for a while. Consult with intermediaries to determine how you can best effect a smooth transition.

We believe all these points are still very relevant and we have added a few extra that you may wish to consider. An attractive business should have the following:

* clear legal structure and shareholder agreements;
* depending on size have in place effective advisory board processes;
* clear and consistent management structure and reporting lines;
* a demonstrable business plan and operational plan;
* proper financial structure (financial reporting, debt management);
* clear and consistent management reporting against operational plans;
* efficient back office processes;
* enthusiasm for growth;
* separation of shareholder/personal activity from the company; and
* willingness for open and consistent information exchange.

Ultimately, any organisation needs to be efficient in its creation of bottom line profit to enable a fair price to be achieved. How you generate business, deliver your services and ensure future profitability is what reduces risk for the buyer and adds value to the seller. The buyer is interested in the ability to produce next year’s profits after they own it and will judge a business accordingly.

How does a company that has a ‘solid’ brand fare against a similar company of a less well known brand when it comes to the value of the business?

By Nigel Harse & Rod Hore

Positive brand recognition is worth its weight in gold. If creating and retaining that recognition is achieved cost effectively, you would expect to pay a premium for the company with the greater brand recognition. You would also expect to see the value of that brand recognition being reflected in the quality of the profits, operations and service delivery.

Brand recognition is important and of great value to all stakeholders. A company’s brand is often used as a factor in evaluating a company – public recognition of brand names and attitudes toward brands can be researched and measured.

Advertising copywriter and ad agency founder, David Ogilvy’s, definition of a brand is:

“The intangible sum of a product’s attributes: its name, packaging, and price, its history, its reputation, and the way it’s advertised”.

Our “relationships” with brands aren’t nearly as deep or meaningful as human relationships, but they do share some of the same characteristics. The extent to which you can create a sense of belonging, friendship and dependability is the extent to which you have a powerful brand asset.
Here’s why the effort to brand your company should pay off.

A brand serves as the strongbox for your reputation and good will. Branding is the pathway to creating a strong, distinctive and durable perception in the minds of staff, clients and candidates alike. A brand is a persistent and unique business identity entangled with associations of personality, quality, value, service, integrity and much, much more.

Successful brand recognition should deliver a variety of beneficial outcomes to the business which includes:

An image of experience and reliability – A strong brand creates an image of an established business. A branded business is more likely to be seen as experienced and will generally be regarded as more reliable and trustworthy than an unbranded business.

Premium image and service goes with premium pricing – Branding can lift what you do above the realm of a commodity transaction, so that instead of dealing with price-shoppers you have clients who will expect to pay more for your services. They will also comply with your way of doing things and rarely quibble about your terms of business.

Memorability – This may come from the business using and persisting with an unusual logo or colour combination (FedEx’s purple and orange), distinctive behaviours (McDonalds – do you want fries with that?) Or even with a style of clothing (Virgin Airlines – red uniforms). That sounds simple but is rarely followed. You must develop your own brand identifiers and secure them to your company name in the minds of your entire audience. It’s hard for customers to go back to “that whatsitsname store” or to refer others to “the brickie from the Yellow Pages.”

Loyalty – When people have a great experience with a memorable brand, they’re more likely to use that service again. People who bond with a brand identity are not only more likely to reuse the service, try out other related services and recommend the brand to others but they will also be more likely to resist the lure of a competitor’s price. True brand integrity and identity helps to create and secure loyalty.

– Branding has a big effect on potential staff, candidates and clients too. Psychologists have demonstrated that familiarity often induces liking. Consequently, people who have never used your services but have encountered your company identity enough times may recommend your services, even though they have no personal knowledge of your services. It’s true, it does happen!

Attractiveness – If you are looking to attract anyone to your business – you need to be “attractive”. Your brand needs to project an image that enhances your chances of being considered. It is built with consistency of application, constant communication and positive association. It is memorable, front of mind and positive.

A brand is an investment.


What a difference a year makes!

By Nigel Harse & Rod Hore

This month we have skipped our normal Q&A session to allow focus on the improving industry performance highlighted by the RIB Report.

The RIB Report collects financial data each month from 92 privately owned recruitment companies and we are pleased to share information from the 2009-2010 RIB Review (full report available for purchase).

Another reporting season is now behind us and a few positive boxes have been ticked, but the outstanding and most notable indicator of the past year’s performance was gross profit growth, or to be precise, the lack of it. The recruitment sector as with many other industry sectors has turned around and profits and dividends have started to recover but this has happened primarily on the back of cost and debt reduction.

Markets have clearly improved across the majority of sectors; however those companies that failed to address their lack of temp/contract market share are still feeling the pinch and this will again leave them vulnerable should the economy falter. As expected after any economic crisis the temp/contract sectors were the fi rst to recover and are now reaching levels that are the BEST since the RIB Report commenced. Chart 1 shows the RIB Average performance of both sectors.

With the heat off the perm market the demand for flexible temp and contract staff has returned once again. The RIB Average of Temp and Contractor Hours Processed per Income Producer during the year recorded a sensational 49% improvement in productivity (across all income producers).

RIB Average Gross Profit per hour has fallen in value by 18% compared to the prior year; a clear indication of lower pricing either through service mix or market pressure. Results over recent months suggest that this negative trend is continuing and that Average Gross Profit per hour is under pressure, but on the back of higher volumes.

How do you compare?

It’s good to see such healthy improvements in the volumes of business being conducted, however it’s important to reflect on the overall impact this has on the business. The RIB Average Temp/Contract Sales grew by 25% (that’s a huge demand on cashflow and collections), the hours processed grew by 31% while average charge rates fell 5% and gross profit fell to a 15.5% return. The outcome for all this additional work was an average 4% growth in Temp/Contract Gross Profit. The RIB Report Top Performing firms all achieved Temp/Contractor Gross Profit growth in excess of 40%.

The RIB Average was down 4% in the number of perm placements invoiced per participating firm for the year and is equal to volumes experienced back in 2004/2005. The improvement in performance in the second half of the financial year is very notable and a great sign of employer hiring confidence returning and this is clearly seen in Q3 and Q4.

The RIB Average value in perm sales fell by 4% on the prior year. The volume has dropped out of the market but the quality of the average placement fee has been relatively healthy and for some it’s softened the financial impact.
Productivity and efficiency

RIB Average Gross Profit returned for each $1 spent on TOTAL staffing (total package cost) for the year improved by 12% from $1.9 to $2.1 or, as some like to think of it, as a 2.1 multiple. Participants unable to achieve a return of more than $1.60 sustained a LOSS for the year. The RIB Report TOP PERFORMERS were at least 40% more productive than the RIB Average.

RIB Average Management and Staff expenditure was significantly reduced in volume and decreased from an unacceptable 60% to a more manageable 52% of gross profit.

RIB Average Profit before Tax for the 2009-2010 year increased by a staggering 258% on the prior year. 72% of participants achieved improved profitability, 14% recorded a decline in profitability and 14% traded at a loss for the year.


Australia and Asia, well positioned for 2011

By Nigel Harse & Rod Hore
Rod Hore:

Australia and Asia are well positioned for economic expansion in the recruitment industry in 2011. HHMC has been surprised, in a positive way, by the level of corporate activity in the latter part of 2010. Earlier in the year we predicted how the run into next year was going to evolve for our advisory and M&A business.

2010 predictions:

Firstly we assumed that the lessons of the GFC would stay close to the hearts of owners and managers of agencies for the remainder of 2010, leading to cautious business decisions and limited focus on non-organic growth. We predicted that the companies seeking to be sold would be those that had encountered financial and structural issues during the GFC and now that their business had stabilised would be seeking to divest in the latter part of 2010.
We predicted that most of the buyers in the market would be those seeking a “bargain” and looking for companies that had been impacted by the downturn.
As part of this picture we also assumed business owners would be keeping their cautious approach until the effects of this December/January holiday period were known and business had ramped up again in the New Year.

How wrong we were:

What has occurred this year has been much more positive and there has been a greater level of corporate activity.
Australia has returned to candidate short status in many sectors which is a return to good times in the industry. As the downturn proved, it is better to have a shortage of candidates rather than a shortage of job orders.
Many companies have rebounded to former levels of revenue and profitability. The speed of the rebound and the forecast sustainability of the rebound has given owners and managers the confidence to execute their strategies, whether being a sale strategy or a growth strategy that may include acquisition.
Asia, especially Singapore, appears to be absolutely booming and is very quickly getting back its position as the gateway to Asia (or at least the gateway to South East Asia). We are aware of many international companies that have relocated their Asia Pacific headquarters away from Hong Kong or Australia and into Singapore in recent times. This positive outlook has created renewed enthusiasm for Australian companies looking to expand their geographic coverage into Asia.
Europe, with the exception of Germany, has a poor economic outlook for the immediate future. At best it is stagnating and not providing the positive growth outcomes business owners and managers are seeking. In this environment there are an increasing number of companies seeking access to the Far East. Expansion to Australia or Singapore is seen as a sensible first option due to the ease of language and familiar legal environment. The number of enquiries we have received from Europe, especially the UK, is increasing monthly.
North America is a little harder to understand and predict. With the exception of the global companies, the economic circumstances of the US seems to have caused most recruitment companies to stay focussed within North America and HHMC is not seeing much Australian activity from these companies.

What does this mean?

We predict that 2011 is going to be a period of great corporate activity within the recruitment industry.
Medium to large privately owned companies will be auditing their capacity and capability before embarking on growth strategies across sectors and geographies. Some of this growth will be “built” and some will be “bought”. These companies will seek to compete with or acquire the smaller niche companies.
Smaller privately owned companies that have strength of clients, candidates and staff in their niche will again be targets for those seeking to expand into their sector or geography. For those owners seeking to exit, there will continue to be willing but demanding buyers available.
Australian listed companies will emerge into the market again using acquisitions to complete strategic objectives and provide accretive benefits to shareholders.
The impact of international transactions will be felt in 2011. In the past it has been the well known global companies that have acquired in Australia and New Zealand, but we expect smaller niche organisations to be leading the way as they establish global footprints to target scarce candidates. The way that these companies acquire, the benefits they bring, the prices they pay and the structure of the transactions will shake up the local buyers.
We expect a lot more local companies to expand their operations into Asia. This is a well known money-pit for organisations that do not approach this move carefully – the most successful tend to be on the back of great client relationships from another region. However a company gets to Asia, talent acquisition is problematic and can be a significant drain on resources.

And there is more:

All this proposed M&A activity sits alongside an increase in outsourcing, changes in technology, staff cost pressures, new methods of talent acquisition and the continued rise of social media. We’re in for a fun year.

2011 and it’s full steam ahead!

Nigel Harse:

Many business owners will look back at the 2010 calendar year and have good reason to be pretty happy with a much healthier bottom line performance. I believe it’s the year Australia returned to being “the lucky country” as we have been seen to stand out in the troubled crowd, as a nation and an economy!
The financial fiasco in Europe has yet to play out but we remain confident that the resources boom will again keep us out of trouble. There is no doubt that market conditions have improved in terms of volume, but margins and fees have been under pressure for 18 months and only in the tail end of the year have they shown signs of recovery. The data from the RIB Report suggests that temp and contractor sales are up 37% on average; however gross profit as a percentage of sales has fallen from 17% to 15% with PSAs having a growing impact on this erosion. Annual average charge and pay rates for temps and contractors are up 2%. Internal productivity when measured in terms of “hours processed/total internal headcount” has improved by 29% to an all-time high.
The good news continued with the perm sector bouncing back with an average 50% growth in placements and sales, the average fee remaining stable at $7,700. Perm contribution to total gross profit has returned to 40% and productivity when measured in terms of “perm placements/total headcount” has improved by 44%.
The average firm will have grown total gross profit by 28% along with a reasonable increase in operating expenditure of 10%. Profitability during the year continued to improve and closed with a staggering 300% improvement. Overall most indicators suggest we are back to the levels seen throughout 2007 (just nine months pre-GFC).
The national unemployment rate at 5% to 5.2% along with predictions that it may well fall to 4.6% in the near future suggests that the skills shortage issue will get worse and even more competitive as the resource sector strives to achieve its growth targets. The skills shortage will not go away and talented candidates will still be hard to find, yet the majority of recruitment firms will continue to place more value on a job order over the value of a candidate.
Immigration reform will have to be made to ensure that projected skill shortages and lack of qualified people do not slow down the projected $900 billion in infrastructure and construction investments planned for the next five to 10 years.
Advancements in technology, social media and the web will offer many more opportunities to reach a clearly defined audience, more creatively and quicker, and at a reduced cost. Some in the industry may be threatened by the advances being made by the job boards with competing service offerings springing up, and SEEK may achieve its stated aim “of owning (and capitalising on services driven by) the biggest and best resume database in Australia”, who knows?
LinkedIn will further capitalise on the power and reach of a fast, self-expanding professional network. The planned launch of its Referral Engine will prompt users (for financial gain) to make more referrals by identifying and alerting them to the most qualified employees from within their professional network. Next off will be Jobs For You which will allow users to select a target audience based on criteria like function, industry, past employer and seniority, and then channel their job ads to those people.
CareerOne’s launch of their behavioural targeting option will allow users to target local and international job hunters based on their known search behaviour. So overall an interesting array of new services will be available.
The demand for global recruitment assignments will continue to increase and the speed and cost of delivery will be the driver towards total technology dependency. Highly stylised web based registration, competency screening, reference checking and virtual interviews will enable greater access to and faster processing and placement of qualified candidates, from anywhere, to anywhere without moving away from the desk.
The general indicators and outlook for our industry in 2011 is good but caution is urged, don’t let the market draw you in to an over dependency on the perm market, it will drop away again by 50% to 60% the minute there is too much uncertainty around Europe or the global economy. Stay focused on achieving a sustainable business mix and if problems do occur you will be much better positioned to ride the storm. Happy recruiting!


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