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Episode 164 - Is rookie hiring dead?
44 Plays5 hours ago
Episode 164 explores the impact on the industry if rookie hiring is a thing of the past.
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Transcript
Challenges in Recruitment Agencies
00:00:06
Speaker
Adele, what's one of the biggest challenges recruitment agencies are facing right now? That's easy, Ross. Recruiters are spending too much time on admin and not enough time talking to clients and candidates.
00:00:16
Speaker
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Wingman Recruitment's Solutions
00:00:34
Speaker
If you'd like to see how your agency could scale without adding more local headcount, visit wingmangroup.com.au and go to the Services tab. Welcome to Recruitment News Australia. This is the news for the 9th of June, 2026. I'm
Claire McCartan's Departure from Davidson
00:00:49
Speaker
Ross Klenit.
00:00:49
Speaker
And I'm Adele Last. Adele, it seems the senior resignations just keep coming at Davidson in Melbourne. They do, Ross. This time it's one of the company's most senior executives, Claire McCartan. She was on the executive leadership team in her role as national managing partner for Davidson's search and advisory division.
00:01:10
Speaker
After just over 10 years at the company, McCartan departs for an unknown future. This is a massive blow to Davidson, not just in Melbourne, but nationally.
00:01:21
Speaker
Why is it such a big deal, Ross? I mean, turnover of senior executives is just as commonplace in our industry as it is in many others.
McCartan's Career and Impact
00:01:29
Speaker
Okay, look, fair enough, but let me give you some history and context. Claire started her recruitment career at Saks Consulting in 2002. As it happens, I was working at Saks when Claire started. I left about four months later, so we only worked in the same office briefly. Okay, so did Claire stand out that early in her career? She definitely did. Saks owner Andrew Umadi quickly realised he had hired a gun and gave Claire significant responsibility even just in the first few months.
00:01:58
Speaker
Fast forward 13 years, she's Marty's 2IC and a SACS director. It was quite a coup for Davidson to recruit her to head up their aggressive expansion plans for Victoria.
00:02:08
Speaker
And how did she go? Well, SACS specialised in permanent executive recruitment, primarily for the local government and not-for-profit client sectors. And it wasn't too long before Davidson was picking up a fair swag of that work.
00:02:21
Speaker
This flow of work was accelerated by Claire's former SACS colleagues, Gerard McLaughlin and Cameron Norton, joining her at Davidson. And almost to rub salt into the wounds of Andrew Marty, Claire won the Sarra Recruiter of the Year title in 2016, a year after she left SACS.
00:02:37
Speaker
And since then, Davidson has become a dominant player in
Davidson's Executive Exodus
00:02:40
Speaker
that market. Yes. However, since the beginning of last year, slew of senior executives has been a problem for Davidson, with McCartan's exit just the latest.
00:02:49
Speaker
Last week, we reported on Seamus Scanlon's recent exit and noted that McLaughlin and Norton both left the Davidson Melbourne search practice in April last year. Two months ago, General Manager of Client Engagement and Strategic Partnerships Stuart Lindsay also left.
00:03:06
Speaker
Do you know if there was any friction around Claire's departure? I don't, but a departure of her seniority is rarely good news for any employer. I noted that in Claire's LinkedIn post an announcing her departure last week, she did not acknowledge or thank by name any of Davidson's directors or executives.
00:03:25
Speaker
Davidson has so far made no public announcement about her departure.
Speculation on McCartan's Next Move
00:03:30
Speaker
People can draw their own conclusions from those two things. Do we know what she'll do now? i mean, it seems hard to escape the obvious joining of the dots that she'll set up her own search firm.
00:03:41
Speaker
I contacted Claire for comment and she sent me a statement that concluded with, while it's never easy to leave an organisation you care deeply about, I'm excited about the opportunities ahead and look forward to contributing to the profession in new ways. I wish Davidson every success for the future.
00:03:58
Speaker
Not really sure what that even means. ah Do you think she's going to set up a search business with Seamus Scanlon? I don't know. it seems likely Claire has a non-compete to wait out. She was also eligible for long service leave. So I suspect it's probably later this year or even next year until we know.
ProMan Group's Strategic Acquisition
00:04:17
Speaker
I see another big Australian recruitment firm has been sold to a foreign buyer. ProTech owner Mark Maley has sold a majority share to ProMan Group, a French staffing business. What do we know of them?
00:04:30
Speaker
Well, um firstly, has to be confusing. ProMan has bought ProTech. I didn't know anything about ProMan until I read about the sale. My brief research tells me that they rank as the 10th largest staffing firm in the world with 6,500 employees across 18 countries and 2024 annual revenue of 4.4 billion euros, which is about 6.4 billion Australian dollars.
00:04:56
Speaker
And the purchase ProTech represents ProMan's first foray into staffing markets outside Europe and the Americas. Even for a business of that size, ProTech is a significant acquisition, $650 million dollars of revenue from 26 branches in its most recent financial year, according to staffing industry analysts.
00:05:16
Speaker
No doubt ProTech's specialisation in the construction, mining, engineering and renewables sectors was a big attraction for ProMen as they're all growth sectors for the Australian economy. really is quite an achievement for Meili. He founded ProTech in Brisbane in 2006 without any background in the recruitment sector. To sell to a major global business is quite an accomplishment after 20 years of business.
00:05:39
Speaker
Do we know the sale price? It wasn't disclosed and as Proman Group is a private company, we'll probably never know. However, for comparison, WorkPak, a similar sector-specific business, although more established, was sold for up to $61 million dollars to a local listed company.
Hays' Legal Victory in Unfair Dismissal Claim
00:05:56
Speaker
I'm going to guess the ProTech figure was at least that and maybe more. boss A comprehensive recent win for Hays Australia involving a former temporary worker pursuing an unfair dismissal claim through the Fair Work Commission.
00:06:11
Speaker
Yes, the case involves on-hire worker Nikita Ulanan, who started an assignment at a Sydney-based client on the 27th of October last year. on day three, he raised a workplace health and safety complaint, but was also accused of verbally abusing a co-worker, which led to Hayes' client requesting that he not return to the site.
00:06:32
Speaker
Ulanan treated this as a dismissal and filed a general protections claim under Section 365 the Fair work Act. However, the Fair Work Commission found that while his specific assignment ended, his employment with the agency remained active and Hayes actively sought to place him in other assignments.
00:06:51
Speaker
Hayes won the case because a General Protection's dismissal claim only works if the person was dismissed. And Hayes successfully argued Ullinen wasn't dismissed. His assignment had ended. but his casual employment prospects with Hayes were still active. As the evidence clearly showed, Hayes kept trying to find him other work.
00:07:13
Speaker
Hayes provided evidence that they had arranged an interview for a permanent role within two weeks. Also critical to their case was the digital records that proved they had sent him text messages regarding casual warehouse shifts paying $35 an hour to match his requested rate.
00:07:30
Speaker
Business manager Nabil Huck testified that plenty of other work was available at the $33.50 mark. but that was not offered to him because Ulanen wanted a higher rate. Fair Work Deputy President Easton determined that the conduct of the agency, in this case Hayes, was entirely consistent with Ulanen remaining in a casual employment relationship and as such, no dismissal occurred.
00:07:53
Speaker
The Commission dismissed Ulanen's application on the 22nd of May. It is a vital reminder for agencies to maintain comprehensive records of candidate activity in case these sorts of disputes are taken to regulatory bodies like Fair Work.
Changes in Australia's Wage Policies
00:08:08
Speaker
One of the most anticipated decisions each year was handed down last Tuesday, Adele. Yes, Ross. The Fair Work Commission announced the outcome of the 2026 annual wage review, and it is a significant one for around 2.8 million Australian workers who earn the minimum wage.
00:08:25
Speaker
The FWC has awarded 4.75% increase to the national minimum wage and minimum award pay rates. Starting on Thursday 1 July, the lowest wage rate for ongoing employment will rise to $26.44 per hour, which equates per week. the existing minimum is the commission noted that this decision strikes a balance between different interests landing between the six percent increase unions wanted and in the three point six to three point nine percent range sought by employer groups
00:09:03
Speaker
Given the recent rising inflation data, it's not surprising the FWC landed where they did. No doubt the Reserve Bank will be watching the CPI in the second half of the year, hoping the recent rise to 4.2% is not the beginning of a trend that continues.
00:09:17
Speaker
Beyond the simple percentage increase, the FWC also announced a structural adjustment targeting the lowest classifications in the modern award system. Specifically, the C-13 wage rate is being phased out over three stages, making the C-12 rate the new minimum floor for ongoing employment.
00:09:35
Speaker
These changes will take effect from the first full pay period on or after July 1st this year. So employers, including the recruitment industry, need to be ready for the transition, along with payday super that also starts at the same time.
Employer Responsibility in Workplace Safety
00:09:49
Speaker
Ross, a significant court ruling has delivered a major win for Labor hire giant work PAC, after a judge found it had no liability for a catastrophic workplace accident that left a worker permanently disabled.
00:10:03
Speaker
That's right, Adele. The case centred on a 2021 underground mining accident at Appen Colliery in New South Wales. An on-hire worker employed by WorkPAC mining suffered horrific injuries when his arm was crushed in a vehicle incident underground.
00:10:21
Speaker
The injuries were devastating, a shattered and degloved elbow, 15-hour reconstructive surgery, permanent fusion of the joint, severe nerve damage, PTSD and the loss of any realistic chance of returning to his trade as a mechanical fitter.
00:10:39
Speaker
The damages awarded reflect that severity more than $3.5 million. dollars But what's particularly relevant for the local staffing sector is who the court found responsible for the accident. Many people would assume that because the worker was employed by WorkPAC, the labour hire company here, that um they would share liability.
00:10:58
Speaker
And the court disagreed. It ruled that Illawarra Coal Holdings, the operator of Appen Coalery, was solely responsible for the worker's safety. The judgment relied on the legal doctrine of pro-hack-vice, which essentially means that if a company exercises almost complete control, Over a worker's day-to-day activities, it becomes the employer for that purpose.
00:11:21
Speaker
While WorkPAC handled the payroll and administrative side of the employment, Illawarra Coal controlled the work environment. The mine operator provided the site-specific training, directed the driver's daily tasks, managed the workplace systems and supervised the work. The judge concluded that WorkPAC's role was largely administrative.
00:11:43
Speaker
The court also identified some significant safety failures by the mine operator, including insufficient supervision in what was recognised as a high-risk labour hire environment.
00:11:55
Speaker
What message do you think this sends to host employers who rely heavily on labour hire workers, Adele? It's a pretty clear one. you can't outsource responsibility for workplace safety simply because someone else's name is on the employment contract. If you're directing the work and controlling the workplace, the courts are likely to treat you as the employer when things go wrong.
00:12:16
Speaker
And from a recruitment and labour hire perspective, that's an important distinction. Absolutely. Labour hire firms still have obligations, but this case reinforces that host employers carry a non-delegable duty to provide a safe workplace. Where they exercise complete operational control, they may find themselves carrying 100% the legal liability.
Impact of Economic and Tech Shifts on Rookie Hiring
00:12:37
Speaker
So while the injured worker received substantial compensation, the broader significance of this case is the legal clarification around responsibility. In this instance, it cost Illawarra Coal Holdings a whopping $3.59 million dollars to cover the on-high workers' loss of income, medical expenses and permanent disability
00:13:05
Speaker
Question of the week, is rookie hiring dead? Where does this come from? Well, actually came from Michael Jones, who is actually a recruitment professional of the year, actually, for 2026. But he's a recruitment trainer and has worked in the industry for many years as a recruiter. He posed this question to us around concerns that the industry is not hiring as many rookies anymore.
00:13:27
Speaker
Well, I can understand that. The Future of Recruitment panel that I hosted at TalentX with Clara Fallon and Susie McInerney, they both agreed that recruitment agencies generally will reduce hiring of humans while they get AI productivity improvements sorted out. So that's that's ah some form of indicator, I suppose. And we have discussed this previously in the podcast, Ross, the impact that AI is having having specifically to lower level positions, entry level positions. And in our industry, that's the rookie.
00:14:01
Speaker
ah It is. And I think when you look at the large businesses in our sector, the hazes of this world and others like them, that they are the biggest hirers of rookies and in terms of volume.
00:14:15
Speaker
So when those big businesses that are all under significant financial pressure, all of them, certainly the ones that are publicly listed, have got their share price in the toilets. and none of them are posting great financial results, an easy way to try and reduce costs is just um reduce hiring. And hiring of rookies, trying to get the productivity of your existing people up is a relatively easy decision.
00:14:40
Speaker
That's been kind of the process, I suppose, to date. The larger organisations, the Hayes, the Manpowers, Randstad, Deco, have often had large intakes of rookies, large intakes of new graduates that they would do every year. They would provide fairly comprehensive training in recruitment to these people. They would work in those businesses sometimes for, you know, months, sometimes years if they were lucky. And then they would flood down and trickle down, I suppose, through to the rest of the recruitment industry. yeah And they would find other jobs or sometimes start their own businesses as well. So it was definitely kind of a pathway and a steady stream of people into our industry.
00:15:23
Speaker
No doubt. And of course, smaller businesses also hired rookies, naturally not at the same ah volume. But I just think the reduction in rookie hiring across the industry, that's clearly going on at the moment. I mean, there's no doubt that talking to other people who train rookies, that that's absolutely the case. And I just don't see any change in sight. Clearly, recent inflation data and interest rate decisions and business confidence indicators suggest that the economy is in a pretty precarious place at the moment.
00:16:04
Speaker
So it's hard to see recruitment agencies being all gung-ho hiring rookies. Well, I can talk from some personal experience about this, as many would know that I have a business called Career Lasso, and its primary focus when I first started the business was in finding people who wanted to become recruiters. I would train them in recruitment practices, and then I would place them into agencies. And most of those were smaller, some medium-sized, but mostly smaller businesses.
00:16:31
Speaker
ah Coming out of COVID, I was pretty busy. In fact, I recall my phone ringing literally on the 1st of January 2021 and it did not stop for about 18 months. I had this steady stream of requests from agency owners saying, I desperately need people. I will take a rookie. They had a more flexible mindset around the fact that they needed somebody who at least had had some training, had the right motivation, was happy to come in and fill jobs because there was this steady stream of jobs coming in the door.
00:17:01
Speaker
flip that around, you know, a couple of years later and everybody is looking now for experienced recruiters only, ignoring any long-term plan around hiring rookies and keeping that stream of new people coming in because there's always going to be a hole in the bucket. People will leave at the other end or leave their businesses and go and start other companies. So, you know, I said, I've got this firsthand knowledge around it and seeing that stream, which was, you know, ah a really big gushing kind of river, you know, into a trickle. And i really feel Michael is right in this. It's going to have a serious and significant impact to our whole industry over a long period of time. The recovery of this could take years. Yeah. Look, there's no doubt. My own experience, I've run a online ah live hosted webinar rookie program for 15 years. And I've run that three times a year for a long time.
00:17:57
Speaker
And I've had typically between 20 and 35, I think maybe 38 was the maximum I had in that program. But in the last year or so, it's barely got to 15. And that's been, I suspect, a direct reflection of hiring plans generally And again, there there doesn't appear to be any indicators that suggest that there's going to be any turnaround in rookie hiring.
00:18:25
Speaker
And like you said, we we know people are feeling the economic impacts of current situation. We know the the hesitation around hiring rookies because there is a bit of work involved in terms of getting someone up to speed. There's a risk that they're actually not cut out for the job, ah that you'll train them and then they'll leave. You know, I've heard them all, of course, um in running my business. So, you know, I can understand for a lot of businesses, especially small businesses and the majority of the recruitment industry is made up of small businesses, it's a risk. But I think it's something that they have to really think about strategically because it just has to be a risk that people are willing to take.
00:19:06
Speaker
Well, for for the, I think, obvious point that the turnover of senior people, I suspect, is not really going to change. i mean, people will leave their employer, will leave the industry, I'm expecting at the same rate that they have before. So, if you're not refilling the bucket, it doesn't take much for suddenly salaries of experienced people that remain to start rising and rising quickly and and And I'm sure owners don't want to be facing significant hikes in base salaries to bring in someone who's just got a couple of years' experience.
Balancing Outsourcing and Internal Talent Development
00:19:43
Speaker
I just want to touch on one other angle of this, and we have our sponsor, Wingman Recruitment, who actually help agencies outsource work to overseas workers, particularly in the Philippines.
00:19:56
Speaker
There's no doubt that this kind of model has had a significant impact on the way businesses are coping with administrative tasks or scaling their businesses. And it's great that that service is available. But what we're talking about here is this local homegrown stuff, right? Like it's one element to outsource elements of the job or tasks or functions that you know can be done more quickly perhaps and and potentially cheaply overseas. But you still have to think about who's going to run your business at the end of the day on the ground.
00:20:27
Speaker
And you're still, and I think we agree, that the significant difference for recruitment agencies, yes, they'll need to get their AI stuff sorted and using outsourced workers in other countries will be another element. But ultimately, their competitive advantage is the quality of the people that they have conducting interviews with candidates and doing work face-to-face with clients. And you've just got to keep up the pipeline of those people. And it it does concern me that potentially whatever talent shortage we think we've had in this industry in the past, that potentially in two yeah or three years' time, it could be a lot worse.
00:21:12
Speaker
I do totally agree. I think if you ask any recruitment agency owner what their real differentiation is, it's really hard to pinpoint because in many cases it looks so similar from one agency to the next.
00:21:26
Speaker
It is about the people. The only major difference any agency could claim compared to their competitor is the people they have working for them and what they stand for, you know how they work, you know their ethics, all of
Evolving Recruitment Landscape
00:21:39
Speaker
those things. So, If you're not building that from inside, if you are completely outsourced, if you're completely tech and AI based, there's a huge gap or hole potentially forming right in the middle of your business. Oh, I've got no doubt. And the the other thing to consider is with the slowdown in hiring in other large white-collar employees of graduates, so the banks, the consulting firms, and so on, you'd like to think that the quality of people who would consider a career in recruitment is in fact rising, that there's fewer graduate jobs overall, more graduates competing for those jobs. So you'd like to think that when a recruitment agency does advertise for a graduate, ah someone who's going to be a rookie, that they're going to be, I hope, pleasantly surprised with the quality of people applying compared to, say, two or three years ago.
00:22:34
Speaker
I think that's a really great point to make, Ross, that the the field is very different to what it was years ago. But I also want to challenge the idea that a rookie is a graduate and that's somebody young without any experience because actually, again, with my business career lasso, the average age of the rookies that I was placing was 32. Wow. most of them had, and on average, about six years of work experience. That might have been hospitality, retail, something else. But ah they don't always have to be, you know, young ones straight out of school as well. Yeah, sure. And certainly in um labour hire, less likely to hire graduates than, say, in the metropolitan CBD markets in white collar recruitment. So yeah, I just think at the moment, it's a state of flux. And so many owners and leaders are just nervous about increasing their cost base. And if they are going to add a salary, they want to try and
00:23:30
Speaker
at a salary that they can see is going to add fees pretty quickly. And that inevitably means an experienced recruiter. Although, of course, just because someone's experienced doesn't mean they're any good, Adele. Absolutely right, Ross. Well, let's hope we've challenged some thought around this. Thanks, Michael, for the question. We look forward to continuing the conversation.