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Episode 108 - Are recruitment industry disruptors delusional?
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Episode 108 - Are recruitment industry disruptors delusional?
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Transcript
AI's Role in Recruitment
00:00:10
Speaker
Hey Ross, did you know Bullhorn can help you grow your business without growing your workforce? I did, Adele. I think they're called AI agents. Recruitment AI agents. They can do everything your workforce does today, source, screen and qualify candidates to get new job orders, chase timesheets or approvals and even answer payroll questions.
00:00:32
Speaker
These AI agents and assistants elevate your recruiters to focus on what they do best at every step of the recruitment process and so your agency can fill placements faster. Contact Bullhorn today about AI everywhere.
Staffing Market Forecasts
00:00:47
Speaker
This is the news for the 6th of May 2025. I'm Adele Last. The global staffing market is expected to remain flat in 2025, held back by trade tariff uncertainty and other macroeconomic and geopolitical issues, according to Staffing Industry Analyst's new global staffing market forecast.
00:01:08
Speaker
Downgrades to global GDP announced by the IMF in April will have a direct impact on staffing expectations given the close correlation between GDP and staffing growth in most developed staffing markets.
00:01:21
Speaker
The full tariff impact on the global economy is uncertain given that the final negotiated outcomes remain unknown. However, SIA estimates that the negative 0.5% global GDP growth downgrade for 2025 announced by the um IMF equates to a $9 billion dollars loss of global staffing revenue.
00:01:40
Speaker
Furthermore, for every additional 1% reduction in global GDP growth, the staffing industry will lose 3% growth annually.
Economic Challenges & Growth Prospects
00:01:48
Speaker
Still a handful of staffing markets are expected to grow this year, including China at 13%, India at Spain to japan four percent and australia two percent Negative outcomes this year are anticipated for Germany, US, France and the UK, while the Netherlands and Belgium are anticipated to remain flat.
00:02:11
Speaker
SIA's forecast also includes 2026 estimates for the 17 largest staffing global markets. Following a difficult 2025, SIA expects most major staffing markets to return to moderate growth next year.
00:02:26
Speaker
Headline inflation increased by 0.9% over the March 2025 quarter, with Australia's annual headline inflation remaining at 2.4%, a more than five-point decline from the high of 7.8% in December 2022. The fall marks the third consecutive quarter of annual headline inflation falling within the Reserve Bank's target range.
00:02:50
Speaker
The trim mean the Reserve Bank's preferred measure of underlying inflation increased by 0.7% over the quarter and moderated to 2.9% over the year. This marks the first time annual underlying inflation has been within the Reserve Bank's target band since December 2021.
Skills & Recruitment Trends
00:03:10
Speaker
LinkedIn's recently released list of skills on the rise in Australia predictably ranked AI literacy at the top of the list. Communication was the second-ranked skill on the list.
00:03:21
Speaker
The remainder of the top 10 comprised strategic thinking, large language model proficiency, adaptability, customer service management, market analysis, regulatory compliance, conflict resolution, and budget management.
00:03:35
Speaker
LinkedIn's methodology was based on three pillars. Skill acquisition, which counts the rate at which LinkedIn members add new skills to their profile. Hiring success, which is measured by the share of a skill possessed by members hired in the past year.
00:03:49
Speaker
And emerging demand, which measures the increased presence of a given skill in paid job postings. Growth rates for all metrics are measured by comparing LinkedIn data from the 2024 calendar year to the 2023 calendar
NSW Police Recruitment Initiatives
00:04:00
Speaker
year.
00:04:00
Speaker
to the twenty twenty three calendar yeah Yesterday, the largest class of New South Wales Police Forces recruits in 11 years graduated from the Goulburn Police Academy with the 302 new probationary constables, 221 men and 81 women, now ready to start work across New South Wales.
00:04:18
Speaker
New South Wales Police Commissioner Karen Webb said, Since November 2023, we've seen a 33% increase from female applicants, which is a critical addition to the force.
00:04:30
Speaker
Since the New South Wales government announced paid study, more than 3,900 people have applied to join the New South Wales Police Force a 70% rise compared to the previous period.
00:04:41
Speaker
The New South Wales government also announced the Elite Athlete Recruitment Pilot Program. The program is designed to attract top-performing athletes and provide them with a flexible, supported pathway into policing while continuing their athletic careers.
Corporate Legal Battles
00:04:58
Speaker
Deal Inc., owner of local recruitment industry vendor Astute Payroll, is escalating a bitter legal fight with a major rival in the United States. The company has filed a defamation lawsuit in Delaware State Court against PeopleCenter Inc.' 's Rippling for allegedly spreading lies about Deal to undermine its business.
00:05:18
Speaker
Rippling accused Deal last month in a separate lawsuit in California of corporate espionage and misappropriation of trade secrets. Late last month, Deal asked a federal judge to dismiss that case.
00:05:30
Speaker
According to the Delaware suit, Rippling pressured an employee to tell the court a distorted and implausible story about Deal cultivating him as a spy, to steal trade secrets. The suit also alleged that the employee was a whistleblower who had raised concerns about Rippling's accounting and business practices.
00:05:47
Speaker
Rippling also allegedly solicited Deal workers for confidential information and placed an insider at the company to eavesdrop on Deal's internal communications without Deal's permission, according to the Delaware complaint which was filed two weeks ago.
UK Recruitment Industry Challenges
00:06:02
Speaker
No matter how difficult times might be for the local recruitment industry, it's looking much bleaker in the United Kingdom, where recruitment agencies are closing at their fastest rate in 15 years as British companies tear up hiring plans amid rising taxes and global economic uncertainty.
00:06:20
Speaker
As many as 120 recruitment businesses have appointed liquidators in the past six months, insolvency disclosures have revealed a jump of 17% compared to last year and the highest rate since the GFC more than 15 years ago.
00:06:34
Speaker
Last month, the British Government's Office for Budget Responsibility slashed its 2025 predicted growth for the UK economy from 2% to 1% and forecast the unemployment rate to continue rising from its current rate of 4.4%.
00:06:49
Speaker
Earlier last month, Hayes became the latest recruitment business to highlight the severity of the market challenges in the UK after reporting a 13% slump in UK fees in the first quarter of the year, a steeper drop than the 9% in Germany, 11% in Hayes ANZ and 7% in its other global markets.
00:07:09
Speaker
Hayes said it had cut about one-fifth of its UK headcount compared to the first quarter of 2024. Given increasing macroeconomic uncertainty, we expect near-term market conditions to remain challenging, Hayes said, adding that the difficulties were likely to persist into
Employee Engagement Issues
00:07:26
Speaker
2026. The firm's share price is down 16% over the past month.
00:07:33
Speaker
Global employee engagement declined to 21% in 2024 from 23% the year prior, with managers experiencing the largest drop, according to Gallup's State of the Global Workplace report.
00:07:45
Speaker
The report noted that engagement has only fallen twice in the past 12 years, in 2020 and 2024. Last year's two-point drop in engagement was equal to the decline during the year of COVID-19 lockdowns.
00:07:58
Speaker
According to the report, the drop in manager engagement drove the global economic engagement decline. Manager engagement fell from 30% 27%. Individual contributor engagement remained flat 18%. individual contributor engagement remained flat at eighteen percent Two categories of manager were particularly affected.
00:08:15
Speaker
Managers under 35 recorded a five-point decline in engagement, while female manager engagement dropped by seven points. Gallup stated in its report that if managers are disengaged, their teams are too.
00:08:26
Speaker
When we consider the decline in both manager life evaluations and employee engagement, a deteriorating workplace environment is the common denominator, the report noted. As with engagement, the consequences are existential for a business.
US Job Growth Concerns
00:08:41
Speaker
Hiring in the US slowed in April, according to official figures, with the workforce adding 177,000 jobs as Donald Trump's aggressive trade strategy clouded the economic outlook.
00:08:53
Speaker
As the White House pressed ahead with sweeping tariffs on imports, claiming this would revitalise the US economy, employers across the country continued to add jobs at a steady pace.
00:09:03
Speaker
The April report is down from the revised 185,000 jobs reported for march and above the expected by economists. the us unemployment rate was unchanged at four point two percent While April's hirings were stronger than predicted, the Bureau of Labor Statistics also shaved 58,000 office tallies for February and March's job gains.
00:09:29
Speaker
April's largest hiring gains were in healthcare care and transportation and warehousing. April's job survey was conducted in the middle of the month, two weeks after Donald Trump had announced his tariff plans.
00:09:42
Speaker
And that's the news for the 5th of May 2025. I'm Ross Clennett. Stay tuned for Question of the Week.
Viability of Recruitment Disruptors
00:10:01
Speaker
Our question this week is, are disruptors delusional in our recruitment sector? Ha ha ha! ah Why are you asking me this question, Adele? Have you been reading my blogs recently? Yes, I'm very interested in the blog that you wrote recently and the companies that you're mentioning there. Tell us more about that, Ross.
00:10:22
Speaker
Well, we yeah saw JobMatched becoming the latest addition to the recruitment industry disruptor space.
Startup Challenges & Leadership
00:10:34
Speaker
Have you heard of JobMatched, Adele? I had until I read your blog, so it's ah it's an interesting story. Okay. Well, JobMatched is the brainchild of Australian-American Kayla Parry, which promises a recruitment platform that combines the simplicity of dating app swiping with AI-powered soft skill matching. Are you excited?
00:10:59
Speaker
Are you excited, Adele? Are you excited? Absolutely right. Like such an innovation. Oh, God, I just can't believe someone hadn't thought of this before. ah maybe they have.
00:11:11
Speaker
All right, okay, I shouldn't be so dismissive, but I don't know. Do you know what gets me rolled up about all this, Adele? What's that? Well... It's that these people, founders of these types of products, they just seem to be so obsessed with their product, they don't understand what's come before them. In other words, similar products that have been offered to the recruitment industry or as alternatives to recruitment agencies that have not done so well.
00:11:44
Speaker
and Do you remember some of those types of businesses from the past, Adele? Give us some names, Ross. well Recruit Loop, Guru, Search Party, One Shift, Route One.
00:11:59
Speaker
I don't know, do those sorts of names ring any bells? It's a little graveyard of disruptor tech by the sounds of it. Yes, I mean, there are many others and all those ones I mentioned no longer exist. And some of them, for example, Guru, were ah publicly listed companies.
00:12:21
Speaker
So it seems extraordinary that a business could get to the point of being publicly listed and then crash and burn. Why do you think that might be, Adele?
00:12:32
Speaker
Well, I guess fundamentally, like you said, they've got to work out – the problem that they're solving, you know, they have to start there and look at, you know, have they, has anyone done it before, as you said, but fundamentally, are you really solving a problem? Because sometimes I think that's what it is. It's such a, such a minute element of, of a customer situation that they're working on that it doesn't really get the traction it needs. People kind of go, yeah, it's cool and it's tech, but do I really need it
00:13:04
Speaker
Yes. And, Kayla Parry, ah don't know Kayla Parry, but she comes to this entrepreneurial venture with no recruitment industry experience. Now, she's been an employer that's hired staff, but if her LinkedIn profile is accurate, have no reason to doubt it, she's never been an internal recruiter in any business apart from her own and she's never worked for a recruitment agency.
00:13:35
Speaker
So she's starting from a long way back. Probably that being best indicated in Startup Daily, she said she thought be ah she'd be able to have the product up and running within three months and she, guess what, it took two years.
00:13:51
Speaker
So what would possess somebody who has not worked in the industry, doesn't seem to have a lot of knowledge about our major challenges, go ahead and
Sales & Distribution in Recruitment
00:14:01
Speaker
try and solve a problem for us.
00:14:03
Speaker
Well, firstly, they get excited about what they think is a unique solution to the problem. And of course, it's not a unique solution. Maybe the way they're thinking about it is unique.
00:14:15
Speaker
But there are many others that have tried to go down that path and some of them succeeded initially. But ultimately, all of those ones that I mentioned have failed. And why do you reckon ultimately they fail, Adele?
00:14:30
Speaker
You tell me. Well... Let me quote to you, because this is far more substantial than my opinion. and It's actually a quote from Peter Thiel's book.
00:14:42
Speaker
Now, Peter Thiel is a legendary Silicon Valley investor. And he wrote an excellent book called Zero to One Notes on Startups or How to Build the Future. And I highly recommend it for anyone who wishes to be an entrepreneur, particularly in the tech space. And this is what Peter Thiel said.
00:15:05
Speaker
If you've invented something new, but you haven't invented an effective way to sell it, you have a bad business, no matter how good the product. Superior sales and distribution by itself can create a monopoly, even with no product differentiation.
00:15:23
Speaker
The converse is not true. No matter how strong your product, even if it easily fits into established habits, and anybody who tries it likes it immediately, you must still support it with a strong distribution plan.
00:15:41
Speaker
so he's saying the sales and distribution are more important than the product and it's fixed. Exactly. Exactly. And that's why if you're looking at this sort of product, you'd look at SEEK to go that's the first place you'd start. Why? Because SEEK has the most powerful distribution model in Australia.
00:16:01
Speaker
You look at their access to candidates via the number of candidate resumes they have captured And then you look at their employer database by the number of employers in Australia who have registered at least one job or published at least one job on SEEK.
00:16:16
Speaker
So that's the place to look. And ah I don't reckon Kayla Perry's looked at what SEEK have done or where they've invested money because it's ah it's a leading indicator because SEEK has that distribution muscle.
00:16:33
Speaker
Yeah, and do you think that she has spent that two years, as you said, focused on the product and um from the way it's described, you know, making it really easy to use and functional and very, you know, dating app-like and, you know, the modern elements of it ah rather than looking at ah not just the sales and distribution, but I guess, as I said, that need and want and and desire in the marketplace for a product like that. Do people really want it?
00:17:01
Speaker
Do they need it?
Scaling Recruitment Tech
00:17:03
Speaker
They say they they're going to want it. I'm sure she's done some basic research and people, employers, people she knows have gone, yeah, that sounds great.
00:17:13
Speaker
But has she done the work to look at what alternatives are currently available that are a similar type of solution? And how are they scaling that particular offer? Because that's the critical thing. Like, how is she going to scale this offer? Is she going to employ a sales force?
00:17:32
Speaker
Is she going to use, i don't know, AI? but certainly not been mentioned in this article. And i based on what I'm reading, and suspecting she's going to make the mistake that every other business has made in this space is that They've focused too much on the product and not enough, if any, substantial time on the distribution channel.
00:17:59
Speaker
So let's just say she's got some sort of little magic dust and she's going to be successful at this. You're talking about her taking on the likes of SEEK. You're talking about her gaining such market traction that she attracts the vast majority of the employable workforce, particularly in Australia and, say, New Zealand,
00:18:18
Speaker
to the platform to start using it instead of Seek. Is that right? Well, um she said, and I'm going to quote from the Startup Daily article, she's now set her sights on going global.
00:18:32
Speaker
This is just the beginning, Parry said. We're not just building an app. We're building a movement and creating a future where everyone finds work that doesn't just pay the bills, it fulfills them.
00:18:45
Speaker
And this points to another fact that that is a problem is that, again, owners or entrepreneurs get so invested in the mission of their business, which is great. i mean, clearly you've got to be fueled by something more than just making money, that it clouds their commercial judgment about how this thing is going to make money.
00:19:07
Speaker
And not just in the short term, but in the long term. Because unless Kayla Parry has unlimited financial resources, and I doubt it, at some point she's going to need investors.
00:19:18
Speaker
And that's the first thing investors are going to look at. how are you going How do you propose to scale it profitably? How have you done it so far? And how can you scale it to a much bigger level? And certainly everything I've read would suggest she hasn't really thought about that or proposed a solution for that at the moment.
00:19:35
Speaker
And I suspect those investors are also going to ask her about her connections and engagement with the very industries that need to kind of actively use it. So i guess that's one thing Seek did very well in the early days. They they really um went hard on the recruitment agency market in terms of, um you know, Seek used to be free actually when it first started. You could post jobs for free. And so they really kind of tried to capture ah the agency market as a starting point. So That's what investors will ask her as well. How have you engaged with the industry or industries like the recruitment sector that are going to be, you know, one of the biggest customers of yours in terms of posting jobs and attracting candidates to the platform or directing candidates to the platform? So I'd be interested to know if she's had any of, we don't know her, as you said. So if anyone has had involvement with JobMatched and you've had a look at it or you've been contacted by Ms. Parry, let us know, you know, even the RCSA, I'd be interested to know if she's reached out to, you know, governing bodies and places where she could get a whole lot of data information. It'd be really interesting to know.
00:20:42
Speaker
Well, Adele, in summary, it's just a classic example of where outsiders look at what they perceive to be ah problem that needs solving, and they look at the way the recruitment industry is attempting to solve that problem, or the way they perceive the recruitment industry is attempting to solve that problem, and they're dismissive. They go, oh, they're too old, they're too slow, they're too 20th century, they're not doing it, I can do it better.
00:21:10
Speaker
And the history of all of these products would suggest that no matter how good the product is, the distribution and reach of the recruitment sector overwhelms every other advantage that any of these products might offer the end user employer.
Fundraising for Cancer Research
00:21:31
Speaker
Adele, do you know what this Sunday is? It's Mother's Day, Ross, so I'm hoping it's breakfast in bed. I hope so for you as well. And for me, what do you think I'm going to be doing? Ringing your mum and making your wife breakfast in bed, perhaps.
00:21:44
Speaker
I'll be doing both those things, but also I'll be participating in the Mother's Day Classic. Do you know what the Mother's Day Classic raises money for, Adele? Tell me, Ross. It's for research to prevent breast and ovarian cancer.
00:22:00
Speaker
And every year since 2012, I've been raising money and each year I attempt to raise $20,000 because unfortunately, very sadly, my sister Mary died of breast cancer at the age of 44. So do you know how RNA listeners can help Adele?
00:22:18
Speaker
Please tell us. donate to donate to my fundraiser all you need to do is go to the mother's day classic website mothersdayclassic.com.au and in the search for fundraiser function put my name ross clennett and you'll be directed to my page and you can pay or donate with any major credit card. So I would appreciate any and all donations.
00:22:46
Speaker
I've raised nearly $150,000 across 13 years, and I'd love your support for my fundraising goal this year.