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Episdoe 62
92 Plays7 months ago
News for the week beginning 20 May 2024
and Question of the Week "Is AI a double-edged sword?" featuring Ross's insights from three Talent X sessions from last week.
#rna #recruitmentnewsaustralia #recruitmentpodcast
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Transcript
Australia's Labor Market Overview
00:00:09
Speaker
This is the news for the week beginning the 20th of May, 2024. I'm Ross Clennet. Australia's seasonally adjusted unemployment rate rose 0.2% to 4.1% as the number of unemployed people ticked over 600,000 when the April labour market data was released last Thursday by the ABS. Total employment rose 0.3% to 14.3 million and the participation rate rose from 66.6%
00:00:37
Speaker
to 66.7%. Full-time employment increased by 19,600 and part-time employment increased by 11,300.
Allegations Against EY Australia
00:00:47
Speaker
Big Five consulting firm EY Australia has rejected a manager's claim he was sacked because he complained about being told to work up to 80 hours a week, had time off with the flu and took a month's leave for his wedding and honeymoon.
00:01:02
Speaker
In his statement of claim filed in the federal court, Conrad Jazooski alleged he was told on his second day back from annual leave in November last year, having just returned from his honeymoon after his wedding the previous month, that his leadership role in Melbourne's finance consulting team was being made redundant. Jazooski alleges he was the only leader of six leaders in his division to be made redundant.
00:01:26
Speaker
Mr. Jasuski alleged he made four complaints in 2023 regarding his workload, both having too much and too little to do. Among the allegations Mr. Jasuski claimed in late 2022, a senior manager told him to cancel all personal commitments and work up to 80 hours a week on a new project. If he refused, he would be given a negative performance review. Last year, a 142 page report compiled by former sex discrimination commissioner Elizabeth Broderick
00:01:55
Speaker
made damning findings about toxic behaviour by senior management. The report found EY staff felt bullied, harassed and overworked by partners and senior managers and too scared to report bad behaviour by their superiors because it might harm their careers.
Financial Struggles: The Go To People Limited
00:02:12
Speaker
The go to people limited reported revenue fell by 71.6% to $20.9 million and its loss after tax increased by 146%
00:02:23
Speaker
to $13.4 million for the year ended 30 June 2023 compared to the 2022 financial year. The company and its subsidiaries entered voluntary administration on the 1st of May last year.
Growth in Japanese-Owned Purcell Kelly
00:02:38
Speaker
Purcell, the Japanese owner of local brands, programmed and Purcell Kelly reported revenue for the full year ended 31 March 2024 of US$8.51 billion, an increase of 6.8% compared to the previous year. Gross profit was also up 6.8%. Operating profit was up 22% and net profit was up 32% compared to the prior year.
00:03:03
Speaker
by segment, staffing was up 5.7% and Asia Pacific was up 6.8%.
Revenue Declines at Hudson Global and Will Group
00:03:10
Speaker
RPO provider Hudson Global reported revenue fell 20.1% in the first quarter because of lower than usual hiring volumes. Revenue fell across geographies with the biggest decrease in Hudson Americas where revenue fell 35.4%. Revenue in Hudson Europe was down 6% while revenue in Asia Pacific fell by 18.3% in constant currency. The quarterly loss of $2.9 million US dollars compares to a profit of $354,000
00:03:39
Speaker
for the same period last year. Will Group, owner of local brands, DFP recruitment, key appointments, UNU recruitment partners and Ethos Beach Chapman reported revenue of US$887 million for the full year ended 31 March 2024, a decrease of 4% when compared to the same period last year. Operating income declined 15% and net profit dropped 17%.
Recruit Holdings' Revenue Rise
00:04:08
Speaker
Recruit holdings, owner of local brands Chandler McLeod and People Bank reported revenue for the fourth quarter ended 31 March 2024 of US$5.4 billion, an increase of 1.9% when compared to the same period last year, but down 4% excluding the positive impact of exchange rate fluctuations. Adjusted EBITDA rose 2.6% and pre-tax profit rose 39% for the quarter compared to the corresponding period last year.
Negotiation Fears in Job Market
00:04:39
Speaker
New research published in Organizational Behavior and Human Decision Making Processes suggests negotiating is unlikely to jeopardize a job offer. The researchers investigated how accurate job candidates are in understanding their likelihood of jeopardizing a job offer if they negotiate. In the studies, the researchers asked both candidates and hiring managers to estimate the likelihood that a candidate who negotiates will have the offer rescinded.
00:05:05
Speaker
Across seven studies with a total of 3,338 participants, primarily full-time working adults in the US, many of whom had management experience, the searches found that candidates' perceptions of this likelihood are consistently exaggerated. In aggregate, candidates perceived the likelihood of jeopardizing a deal as 33% higher compared to hiring managers. The results were consistent among both men and women and across roles.
00:05:32
Speaker
The research also shows that because candidates believe they are likely to jeopardize a deal by negotiating, they may avoid negotiating altogether. The researchers put forward two reasons why candidates overestimated this likelihood. Firstly, candidates think of this interaction as much more zero-sum and competitive than hiring managers. That is, candidates think that any gains on their end would come at the hiring manager's expense and any deal that would be good for the organization would be bad for them.
00:06:02
Speaker
Secondly, candidates think they have little influence or power in this interaction compared to hiring managers' ability to influence the interaction. In the same study, candidates perceive their influence or power in the negotiation as about 20% lower than hiring managers did.
Australian Job Advertisement Trends
00:06:18
Speaker
According to the Jobs and Skills Australia Internet Vacancy Index, national job advertisements decreased by 3.2% in seasonally adjusted terms in April 2024 to standard 239,400.
00:06:32
Speaker
The post-COVID high remains June 2022's 304,000 job ads. However, job ad numbers are still around 40% higher compared to the monthly average for 2019.
Exploitation of Filipino Workers Exposed
00:06:46
Speaker
An employer, its director and a supervisor have been ordered to pay more than $2.1 million in penalties and compensation in a federal court judgment earlier this month after they underpaid vulnerable employees and threatened to kill their families if they complained.
00:07:02
Speaker
In October 2021, the Federal Court found that Foot and Tie Massage Proprietary Limited, its director and an employee, underpaid seven employees across four years, a total amount of $971,000. The court found the employer required the employees, originally recruited from the Philippines, to work unreasonable hours, failed to pay minimum hourly and penalty rates, made false records and required them to pay back
00:07:31
Speaker
a significant portion of their wages, specifically in cash with the obvious purpose of avoiding detection from authorities. The employer also threatened to send them back to the Philippines and to have their families killed if they reported their working conditions to the authorities or anyone else, and discriminated against them because of their race or national extraction, the court added. Justice Kasman ordered the employer and director to pay $1.17 million in compensation, comprising the underpayments as well as payment
00:08:00
Speaker
for non-economic loss for each employee. And noting there was no evidence the director or supervisor had learned anything from the Fair Work Ombudsman's investigation or the proceedings, just as Kasman fined them $150,000 and $37,000 respectively and she ordered the employer to pay $778,000 in penalties.
Tech Industry Layoffs: Indeed and Google
00:08:23
Speaker
Indeed plans to cut around 1000 mostly US based employees or roughly 8% of its workforce. The job search website second culling in two years as it seeks to simplify its business in a cooling labor market. Owned by recruit holdings, indeed is significantly restructuring the R&D team, reducing layers of management and eliminating most of its sales and customer support roles that are currently based at its site in California.
00:08:50
Speaker
The cuts come after indeed slash 2,200 positions last year in a bid to trim costs and slow revenue. By contrast, the new reductions aim to reduce organizational bloat and speed decision making. Google, owned by NASDAQ listed Alphabet, is laying off at least 200 employees from its core organization, which includes key teams and engineering talent. As part of the units reorganization, the company will hire corresponding roles in Mexico and India.
00:09:19
Speaker
Core teams include key technical units from Information Technology, its Python developer team, Technical Infrastructure Security Foundation, app platforms, core developers and various engineering roles. Alphabet has been slashing headcount since early last year when the company announced plans to eliminate about 12,000 jobs or 6% of its workforce following a downturn in the online ad market. The company's head of search told employees at an all hands meeting in March
00:09:48
Speaker
that Google plans to build teams closer to users in key markets, including India and Brazil, where labour is cheaper than in the US. And that's your news for the week beginning 20 May 2024.
AI in Recruitment and Cybersecurity Risks
00:10:01
Speaker
I'm Adele Last.
00:10:15
Speaker
Question of the week this week is a further deep dive into some of the topics that were covered in Talent X recently. We wanted to go through something in particular that showed up in a couple of different speaker presentations, and we're calling this the double-edged sword of AI. Obviously, it's a really hot topic across the industry. Tell us, Ross, about what you learned in some of the sessions you set in.
00:10:44
Speaker
When I sat in on the AI panel, it became pretty clear that recruitment agencies are thinking a lot more deeply about AI and thinking about the advantages of AI. And I wrote about this in my blog last week and specifically the power of proprietary data. So to give you a very simple example,
00:11:14
Speaker
that if you've got a very well populated database, so you're logging all the communication that you have with candidates and hiring managers,
00:11:24
Speaker
So whether they're text messages, emails, notes from phone calls, or actually having phone calls that are being transcribed and all of that's in your database. So that's very valuable information generally, but particularly now with AI and large language models, because
00:11:47
Speaker
The ability is with proprietary data to go in, sorry, I should rephrase this, the future, and I'm sure this is absolutely available now, but not with standard recruitment databases, the AI looks at the communication between the candidate who's about to be offered a job. So let's use the scenario of being offered a job. The candidate who's going to be offered a job,
00:12:14
Speaker
the hiring manager that's been involved in that process and the recruiter. And you ask the AI to produce a script that will maximise the likelihood that you put the offer to the candidate in the most compelling way. Wow, how powerful would that be?
00:12:33
Speaker
And of course, the more vigilant you are and the greater the integrity of the data that you have around all those communications will mean the more useful the script will be. So as a recruiter, you get the script, you practice it, you make sure it sounds like you and sounds authentic. You perhaps ask the AI, what are likely to be the issues or objections from the candidate and how can I prepare for those? So the AI gives you that as well.
00:13:03
Speaker
And so you're in a much better position to maximize the likelihood you put the offer to the candidate in a way that the candidate is going to accept. So that's, so that's the plus. Now, here's the challenge is that the second session Bastion Treptle.
00:13:28
Speaker
speaking about cybersecurity as a specialist, said that recruitment agencies are particularly vulnerable to hackers because hackers know that a well-populated database is potential gold for them. So for exactly the same reasons that I've stated in terms of the benefits to a recruiter of all of that information, for a hacker it's equally beneficial because if they can hack in,
00:13:56
Speaker
get access to all that communication across all candidates and all clients, the AI can be commanded to create a digital copy of very senior people, a CEO or an MD. And this is where companies are already vulnerable because I've had two of my clients in Melbourne
00:14:20
Speaker
where in both cases, the bookkeeper or accountant of each of those agencies received an email that was purportedly from the managing director in both cases, but it actually wasn't. It was a hacker ghosting in on that company email and had crafted an email, which basically said, please pay, I think it was like four or six or $10,000 into this account immediately.
00:14:48
Speaker
Now, one of those bookkeepers made that transfer and the other one got suspicious and checked with the manager before they did that. Now, both of those cases were three or four years ago. So you think about how much has progressed in the three or four years hence. Hackers getting access to that type of quality information makes recruitment agencies very vulnerable.
00:15:15
Speaker
And here's another aspect that I got from one of the speakers, Kevin O'Neill from SIA, was that in some of their research last year, they asked owners of recruitment agencies, would they recommend
00:15:37
Speaker
their front office system, their main front office system, in other words, it would be the database and the main back office system. Would you recommend it to a friend or colleague? And do you know what the net promoter score came back Adele? It's bad, right? It was really bad. So to give people context, anything above 70% is really good. And anything above, I think 40 or 50 is pretty decent.
00:16:04
Speaker
front office minus 11% back office minus 20%. So can you hear the contrast, the value that could be gained from having really detailed data and up-to-date data and yet how
00:16:29
Speaker
poorly most recruiters regard their front office system. So they're unlikely to be able to or motivated to have updated information, to be really rigorous with the database. They're basically just using it as admin.
00:16:46
Speaker
rather than as a competitive advantage. And so all of that potential advantage in terms of the way you could use AI is not going to be available to those agencies, because the quality of data is not going to be there. But guess what, they're going to be less valuable to a hacker. But of course, a hacker doesn't know how valuable the information is until they're in there. So the importance of cyber security
00:17:10
Speaker
is absolutely critical here. And these issues are ones that have been very, I would say, peripheral pre-COVID, whereas now I think they're very, very front of mind. It's this really interesting intersection, isn't it, between the technology and the human element, which is obviously, you know, there's hundreds of studies and books written and, you know, whole thesis is on this subject. But, you know, that intersection between
00:17:39
Speaker
between us as humans and this technology that is getting really close to us now. Technology has always been a means of enabling us to do the things we want to do. And this kind of technology in terms of AI can be reported in the same way. But now we're getting some crossover and we're getting the risks and the danger of it, I suppose. And it's really interesting when you say that that result about the negative
00:18:07
Speaker
feedback on people's data, on their own databases is interesting to me because it's, and I suppose a lot of ATS systems and CRM systems would know this, it's about user behaviour. It's about getting users to get on board with the platform quite literally and use it to its best ability in order to get the value from it, in order to be able to maximise the business opportunity of why you'd pay for such an expensive piece, an expensive asset to the business.
00:18:38
Speaker
I don't think people don't use it because it's, you know, risky and they think, oh, people could hack in if I put stuff in. That's not why recruiters are not using it. You're right. I think it's because it's seen as admin or we're lazy or it's an after effect. But there's, you know, this intersection now is getting tighter and tighter between the human and the technology piece. And I find that really interesting. It's going to be a really, really interesting
00:19:05
Speaker
landscape, particularly for the recruitment space, because we do trade in so much information. And you think about the way things have gone in sport that opposition analysts are now a thing like or even a department in some of the very largest sports teams, because the digging into the numbers and looking at what works and what doesn't work. And I think for recruitment agencies, no doubt some of the larger agencies have got these people employed.
00:19:35
Speaker
But many wouldn't simply because they know the integrity of the data is so compromised that you can't really justify having data analysts if the data they're using or looking at or attempting to turn into IP is way out of integrity. And I think this is a major issue for recruitment agency owners. And I know all owners
00:19:59
Speaker
would typically go, yes, we need to be better at our database. But it's always been like, oh, you know, we'd really like to be, but it's not really compromising us in terms of being a good agency or profitable agency if we aren't. Well, I reckon those days are rapidly coming to an end. And I reckon the next couple of years, those owners,
00:20:20
Speaker
who can really ensure that they've got the database that maximizes their business model and they have a culture inside that recruitment agency of strong database compliance together with high cybersecurity. I think those are the recruitment agencies that are likely to come out substantially ahead and be able to drive productivity at a much higher level compared to other recruitment agencies.
00:20:49
Speaker
Thanks for sharing your deep dive insights Ross.