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Is it easier to start a recruitment agency now, compared to pre-COVID times?
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Episode 89 has news for 18 November 2024 and Question of the Week, "Is it easier to start a recruitment agency now, compared to pre-COVID times?"
#RNA REcruitmentPodcast #RecruitmentNewsAustralia
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Transcript
Introduction to Bullhorn's Recruitment Solutions
00:00:09
Speaker
Bullhorn's powerful easy-to-use applicant tracking system lets you manage the entire recruitment process from a single interface, from desktop or mobile device on any browser. From job submission to candidate placement, Bullhorn eliminates manual data entry, streamlines the end-to-end recruiting process and enables your team to move faster and work smarter. Visit Bullhorn to find out more.
Current Job Market Trends in Australia
00:00:34
Speaker
This is the news for the 18th of November, 2024. I'm Ross Clennett. Australia's unemployment rate held steady last month as employers kept hiring at almost the pace of population growth. The jobless rate in October was 4.1% for a third consecutive month, according to the ABS' labor market update released last Thursday. The result was in line with economists' forecasts. The economy added 9,700 full-time jobs and 6,200 part-time roles making a net change of 15,900 positions, slightly under half the monthly average net jobs growth of 34,000 over the last 12 months. A slight drop in the participation rate by 0.1% to 67.1% last month caused the unchanged jobless rate.
Impact on Recruitment in Professional Sectors
00:01:22
Speaker
The data prompted the NAB to push out its forecast for when it expects the ah RBA to start cutting interest rates from next February to next May.
00:01:31
Speaker
The Australian Financial Review's 2024 survey of the top 100 accounting firms reveals that the big four slashed their graduate recruitment by an average of almost 28% last financial year, hiring over 1,100 fewer grads. PwC oversaw the largest decline, cutting its intake by 39%, so 691 grads. EY took on 504 grads, a drop of 37%.
00:01:58
Speaker
Deloitte cut its intake by 19% to 1,151 grads, and KPMG shrank its program by 20%, taking on 700 fresh recruits. I don't think it's a precipitous decline, said KPMG partner Dorothy Hisgrove. She noted the cuts were linked to a broad-based reduction in demand for consulting in a slowing economy. Our expectation is for our graduate intake to hold flat, if not increase in some capabilities in 2025, she said.
00:02:27
Speaker
The jobs market for law graduates has held up much better, with top law firms surveyed in the Financial Review Law Partners survey reducing graduate recruitment by only 1.5%.
Corporate Movements and Acquisitions
00:02:38
Speaker
SEEK has entered into a scheme implementation deed with Xref, confirming SEEK's proposal announced last month to acquire all issued ordinary shares of Xref for 21.8 cents per share in cash through a scheme of arrangement. SEEK has also declared the offer price as its best and final in the absence of a competing proposal. The acquisition will be funded from SEEK's existing debt facilities.
00:03:03
Speaker
Recruit Holdings, Japan's largest staffing business and owner of local brands, Chandler McLeod and People Bank, reported revenue for the September quarter of US$5.66 billion, u s dollars up 4.9% over the same period a year ago. Adjusted EBITDA was up 11.7%, and operating profit was up 22% to $922 million. dollars revenue in the HR tech business, including job aggregator, indeed rose 10%. Revenue in the staffing segment was up 2.8%, led by Japan's 7.2% rise, which offset the 0.9% decline in the revenue from recruit staffing businesses in Europe, the US and Australia.
00:03:46
Speaker
Purcell, the Japanese owner of local brands, programmed, and Purcell Kelly reported revenue for the first six months ended 30 September 2024 of $4.3 billion, an increase of 9.6%. Operating profit was up 21.7% and adjusted EBITDA was up 22% compared to the same time last year.
00:04:08
Speaker
By segment, staffing revenue was up 4.7%, APAC revenue was up 16.8% with APAC EBITDA climbing 32%. Commentary specific to programmed and Purcell Kelly included, overall working hand revenue is currently at an all-time high of $3.8 billion. A key contract on Rottnest Island in WA was extended for a further five years with recent contract renewals signed for the Victorian School Building Authority and Melbourne Airport.
Wage Changes and Employment Lists
00:04:39
Speaker
In response to ongoing recruitment and retention problems, NSW Police are set to receive their highest pay increase in three decades. Under the four-year once-in-a-generation agreement, officers will receive a wage hike of between 22% and 39%. More than 10,000 officers will receive a pay rise of at least 25% during the period. The deal also includes back pay to 1 July.
00:05:03
Speaker
This offer exceeds any other police jurisdiction across the country," said Kevin Morton, President of the Police Association of New South Wales. The deal, including allowances and accelerated pay scales, has been struck to address the current headcount deficit of more than 2,000 officers. Under the offer, a constable will be able to reach the level of senior constable within nine years, six years faster than the current system. As well, senior officers will receive a one-off leadership retention payment of $5,400 for training new officers. The offer will be put to a vote of the members of the Police Association of New South Wales with the union's executive recommending members accept the government's offer.
00:05:46
Speaker
The 2024 Global Power 150 Women in Staffing list was published last week by staffing industry analysts, and for the third year in a row, it failed to feature an Australian-based woman. Last year, London-based Australian Sandra Hanke made the list. Hanke left her role as Global Head of People and Culture at Hayes in June this year. In his 10th year, the list highlights 100 women from the Americas and 50 globally who have made significant contributions to the success of their companies and the workforce ecosystem.
00:06:16
Speaker
The most recent Australian-based woman to make the list was Brunel Australasius, Perth-based managing director, Tanya Cinnabaldi in 2021.
Education and Employment Outcomes
00:06:26
Speaker
The latest jobs and skills Australia graduate outcomes of vocational education and training vet students showed significantly improved financial outcomes for all cohorts. In the year following completion, of vet graduates in 2019 and 2020 had a median income uplift of $11,800 and earned a median employee income of $48,500. First Nation students had a median income uplift that was higher again at $13,000. Nationally, 84% of vet graduates were employed after completing their vet qualification, representing a 15 percentage point increase from before enrollment. The report was compiled from the outcomes after course completion for 430,000 domestic non-school students
00:07:13
Speaker
who completed a nationally recognized VET qualification in the 2019-2020 financial year. Workplace Consultancy Leesman released its most recent research into assigned workplaces for employees compared to unassigned workplaces or more commonly known as hot desking. The major findings were the share of employees required to hot desk has increased from 38% in 2020 to 60% in 2023.
Workplace Trends: Hot Desking and Job Advertisements
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The assigned and unassigned workplaces provide, on average, very similar levels of employee experience. However, the critical factor underpinning a positive employee experience in a hot desk environment was having a variety of different workspaces available to employees.
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By region, Oceana employers were the most enthusiastic adopters of hot desking with North American employers the least. By industry sectors, biotech and pharma, government and public administration and IT software and internet have the widest adoption of hot desking workplaces. The most significant positive factors for employees with assigned workplaces are personalization followed by storage.
00:08:24
Speaker
The main differentiator between excellent and poor outcomes in a hot-desking environment is whether the workplace offers a variety of workspaces that support different types of activities and personal preferences. Leesman surveyed 411,750 employees in 1,591 workplaces. Job a advertisements decreased by 2.3% last month to stand at 226,500.
00:08:50
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according to the October Internet Vacancy Index released last Wednesday by Jobs and Skills Australia. The SEEK Employment Report also released last Wednesday reported job ads declined 3.1% month on month in October. South Australia up 1.4% and WA up 0.4% were the only states to record job ad growth in October. Job ads grew in only four industries, advertising, arts and media, engineering,
00:09:17
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design and architecture and banking and financial services. Ad volumes were down 3.9% in Victoria and 3.2% in New South Wales. In both states, the decline was predominantly in trades and services and retail and consumer products. Applications per job ad, which have been growing consistently for over two years, fell slightly in September, dropping just 0.9%.
Generational Challenges in Recruitment
00:09:43
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91% of hiring managers have reservations about hiring Gen Z employees for customer-facing positions, according to a survey of 1,000 US s hiring managers released last week by resumetemplates.com. The top three concerns among hiring managers when hiring Gen Zers for customer service and client-facing roles were unprofessional tone, poor attention to detail, and reluctance to go above and beyond.
00:10:08
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The survey also found that 74% of hiring managers believe Gen Z employees require extra customer service training compared to older generations. And that's the news for the 18th of November, 2024. I'm Adele Last. Stay tuned now for our question of the week.
Starting a Recruitment Business Post-COVID
00:10:38
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Question of the week, is it easier to start a recruitment business now compared to pre-COVID times? No, definitely not Ross. No. Oh, okay. I'd say yes, but okay. Let's hear why you say no. It's definitely harder now. There are so many more hoops to jump through, so much more around compliance and such as what?
00:11:04
Speaker
Labor hire license jumps out for one, you know, I speak to people every week who are wanting to start their own recruitment business. And many of them don't even know about the labor hire license. And as soon as I mention it, um they start, you know, changing their plans virtually. So, you know, compliance on so many elements around, um you know, temp, risk, safety,
00:11:25
Speaker
um you know, making sure that you've got all of the the legislative requirements covered. Just make it... Same job, same pay, I suppose. Same job, same pay. Yeah. um You know, rates, calculations, knowledge around awards and, you know, all of the elements that you need to be careful of around, particularly probably temp and contract recruitment, more so than, than perm. But it means it's just harder. It's hard. You still got to be across it, even if you're going to do permanent recruitment. You might get asked by clients, can can you contract someone to us instead? So You have to be across these things and that just makes it so much more complex to start a business now. m Well, okay. I accept those things, but I think they're counterbalanced and outweighed by something very significant compared to five years ago that makes it a lot easier. And that's outsourcing. There is so much now you don't need to actually know yourself or go and find out yourself. You can acquire.
00:12:21
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either by paying or maybe not even paying. So for example, there are companies that provide back office services, franchise-like services for budding recruitment agency owners. So you've got your own marketing database. All of that is already sorted out for you. Payroll financing. You don't have to have as much cash yourself. You can, of course, at a cost, have ah access to financing.
00:12:51
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You've got the power of generative AI, chat GPT. You don't need a research assistant. You don't need a para consultant. You can set up chat GPT.
00:13:02
Speaker
ah GPT-4, and of course the paid versions to do a lot of the grunt work for you, writing job ads, writing position descriptions, generating email outreach, LinkedIn outreach. Like there's so much that used to be done by humans, even only five years ago that can be done by tech now. So all of that outsourcing, VAs haven't even mentioned that. I mean, again, not the VAs weren't around five years ago, but the prevalence of VAs and the ease of hiring a VA, the general competence of VAs, that makes it um a lot easier. So I'd say all of that outsourcing capability to me is a very significant factor in me saying, I think it's easier to set up now. Do you have any other points? Otherwise I'm going to declare myself the winner. No, no, I've got lots more points for you. This is a yeah hard-hitting one. People.
00:14:02
Speaker
I would not want to set up a recruitment agency now compared to five years ago because it is so much harder to find, train and retain people. I mean, this is the core business of what I do in career lasso, right? So I'm at the forefront of this. It's really hard to find good people with experience. Yes, but now they their expectation on salary I believe is higher compared to, you know,
00:14:31
Speaker
comparatively to skill set, I think it's really hard to compete with some of the bigger agencies who have, you know, unlimited budgets around, you know, things like like salaries and commission structures, but all of those other perks and benefits as well. So when you're starting out, that's really hard. A lot of small agencies are doing um a lot of the work in you know, so finding people and converting them into recruiters and training them up and losing them to some of the bigger agencies, I think. So if that's where GNAI is, your friend, you don't need as many people, you can use tech to replace humans. You don't have to rely on human recruiters in the way that you used to five, six, seven, eight, nine, 10 years ago. Oh, you can't say that. or
00:15:16
Speaker
I'm going to I'm going to really object to that one. Recruitment has and always will be about people and Those tools allow us to be better at the consulting part of the job that we do, the people relationship building part of the job, but they'll never replace good people. And that's one of the hardest things for me now, I think, compared to five years
The Role of Technology and Remote Work in Recruitment
00:15:35
Speaker
ago. I think it's really hard to find good people, retain them, find ways to keep motivating them, even managing them for a lot of business owners. We know how many recruitment agency owners are great recruiters. They start out because they're really good at what they do.
00:15:49
Speaker
but They're not really good at managing people or growing your team. And that's ah another whole skill set. That is true. So i I will give you, it might be more difficult to find people like that, but I'm going to counterbalance that by saying, I just don't think people are as important in the overall success of a recruitment business. That might be quite controversial, but I'm going to assert that. Anyway, I'm going to make my next point. And that is, and I think this is a very big factor. Wait for it. Remote.
00:16:19
Speaker
I knew you'd play that one. Yes. See, back pre-COVID days, it was really only a hobby business that didn't have a physical address. Whereas now, I'd say it's completely acceptable not to have an office. It's completely acceptable to have a fully remote business.
00:16:37
Speaker
It's completely acceptable not to interview candidates in person, whereas five years ago, it wasn't really an interview unless you'd seen the candidate face to face. So I think the ability through Zoom and other video tech to be able to interview candidates wherever they are, ah no matter what time of day or night, makes it much, much easier.
00:17:02
Speaker
to interview more candidates, to refer more candidates, to make more placements compared to the traditional burden of candidates having to come into your office and the amount of wasted time when candidates ghosted you. I think there is also a much greater acceptance by clients that you could be based anywhere and still recruit for them.
00:17:25
Speaker
Whereas pre-COVID, largely, not always, but largely, if the client saw that you were located, I don't know, more than 20 Ks from their office, they wouldn't really regard you as someone that was suitable to recruit for them. Whereas these days, I just don't think it really matters. I mean, sure with labour hire, it might be much more important to have a physical office, but I,
00:17:52
Speaker
particularly for white collar recruitment, I just I think it's an optional extra these days, which makes it much easier. And of course, much cheaper. I mean, accommodation, that's a big financial commitment. And for agency owners contemplating setting up on their own, like that's just cash flow that they prefer not to spend. Look, all of the things you're mentioning are true, but they're all things that make it easier. um You know, once you've once you're going, you know, that's why, that's what I'm trying to say. I think it was easier to get started um prior to COVID. I feel like it's much more complex now. Yes, there are other tools and all of these things you mentioned, but they actually add to the complexity to me. It used to be a business of, you know, having good core recruitment skills, having good client relationships, being able to source candidates,
00:18:43
Speaker
and you could start. That's all you really needed. At the very base level, it was just the really core part of what we do. You could get going without having so many other, as I said, hoops to jump through and things that, yes, you can access and and can make things easier once you get rolling, but they just add complexity to me. I don't think it's easier now. I would um i would have preferred to start before COVID if it were my choice. Well,
00:19:09
Speaker
Another thing that I should have mentioned is, and it sort of goes back to your point about people, isn't it easy to go out on your own thinking, well, if it doesn't work out, I'll always be able to find a job again as an agency recruiter. Someone will employ me if it doesn't work for me going out on my own, whereas I think maybe five years ago,
00:19:29
Speaker
There would have been suspicion. Oh, you've gone out. That hasn't worked. You're going to try again. What does it mean about your skills? Blah, blah, blah, blah, blah. I just don't think there's that sort of stigma anymore. And the people are more inclined to give it a go thinking, well, if I fall on my face, I'll just go back and get another job. Yeah, that's a fair call. Well, I'm interested to hear from our listeners, Ross. We don't agree on this one. And I'm interested to hear whether people think it it is easier now than it was five years ago. Perhaps if you've started your own business post-COVID, we'd love to hear from you. And um maybe there's the odd person who started pre-COVID and then went back to employment and then started again post-COVID. And then maybe they might be able to give us a a real ah experience point of view ah compared to our speculating.
00:20:23
Speaker
Hey, are you liking listening to our podcast, Recruitment News Australia? If you are, it would really help if you could give Ross Kleiner and I a five-star review on whatever podcast app you listen to it on. Please hop onto the review section and give us a review next time you're listening on your favorite episode. And thanks for listening.