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Episode 23
423 Plays1 year ago
News for the week beginning 21 August 2023 and Question of the Week: "Are reference checks still an integral part of the recruitment process?"
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Transcript
Weekly News Introduction
00:00:07
Speaker
This is the news for the week beginning the 21st of August 2023.
Australia Labor Market Update
00:00:13
Speaker
The labour market data released last Thursday was against the trend of the year to date with total employment dropping 0.1% and the total number of unemployed workers rising 7% month on month. The seasonally adjusted unemployment rate in Australia rose to 3.7% from 3.5%.
00:00:33
Speaker
The Internet Vacancy Index reported a 2.1% rise on job advertisements for July 2023 to stand at 283,600, only 7% off the IVI peak of 304,000 recorded in June last year.
Legal Action in Victoria's Labor Market
00:00:51
Speaker
The Labor Higher Authority of Victoria commenced legal action in the Supreme Court against a Keesborough Labor hire provider operating in the horticulture industry.
00:01:00
Speaker
The authority alleges Monorrom Labours Power Proprietary Limited, MLP, which provides workers to regions including the Yarra Valley and Kui Rup in the state of Victoria, allegedly failed to notify the Labour Higher Licence Authority of multiple changes in company directors and secretaries. The case also alleges that one director and secretary of the company was not a fit and proper person as defined by the Labour Higher Licensing Act, a breach carrying maximum penalties exceeding $600,000 for a company
00:01:30
Speaker
and $150,000 for an individual. MLP director Saravong Tath was alleged to have been a director of two companies that were placed into administration within the preceding five years and therefore not a fit and proper person to be a director and secretary of a labor hire provider under the Act. MLP also allegedly made numerous changes in company directors and secretaries over a six month period in 2022 without a notifying the authority.
Seek's Market Disappointment
00:01:58
Speaker
Seek's four-year results and current year forecast underwhelmed the market with their share price suffering. The headline results were revenue up 10% to $1.225 billion, EBIT up 7% to $546 million, and reported net profit after tax down 16% to $203 million. With the economy expected to continue to suffer the effects of interest rate rises, Seek Group CEO Ian Reve
00:02:27
Speaker
offered subdued 2024 guidance with revenue in the range of 1.18 to 1.26 billion, which is mostly lower than the 2023 figure, while forecasting EBITDA will remain at 2023 levels. Six shares had gained 22% since the beginning of the new financial year six weeks ago. However, half of that gain had been wiped out by the close of trading two days after the release of the 2023 results.
00:02:58
Speaker
Shortlist reported Sydney headquartered global tech recruiter and IT services company Talent recorded another record result in the financial year ending 30 June 2023 with EBITDA of $27.5 million on a gross profit of just north of $100 million.
Robert Half's Revenue Decline
00:03:15
Speaker
Revenue and Talent's core contracting business was up around 16% year on year while PERM placement income was down 25%.
00:03:25
Speaker
US headquartered Robert Half reported second quarter revenue fell 11.7% year over year on an adjusted basis. Temporary staffing revenue fell 14% while permanent placement revenue fell 25%. The company forecasted a decline in year on year third quarter revenue of 16%.
Impact of Inflation on Wages
00:03:46
Speaker
The wage price index rose 0.8% in the June quarter 2023 and 3.6% annually.
00:03:54
Speaker
according to the seasonally adjusted data released on Tuesday by the Australian Bureau of Statistics. The latest data confirms workers, on average, continue to see a fall in real wages as the CPI rose 0.8% in the June 2023 quarter and 6% annually in the latest inflation data. Meanwhile, across the Tasman, median weekly earnings from wages and salaries rose 7.1% to $1,273 New Zealand dollars year over year in the quarter ended in June.
00:04:24
Speaker
It was the second largest annual increase since 1998. Last week, Oztender announced additional suppliers to the Federal Government Labor Higher Panel with Hudson Global Resources, Programmed Health and IPA among the higher profile additions, the total 36. The expanded panel currently has 84 suppliers for a contract period that expires 30 June 2027.
Healthcare Worker Shortage Solutions
00:04:50
Speaker
Australia's healthcare worker shortage has again made its way to federal parliament with a committee investigating how to attract overseas doctors. The hearings are part of a parliamentary joint standing committee on migration investigation into the inflexibility, cost and complexity of the existing system. Healthcare in rural and remote communities was in sharp focus with committee deputy chair and a Victoria Nationals MP Anne Webster
00:05:17
Speaker
saying the lack of local GP graduates is creating havoc and leaving communities vulnerable. But while international medical graduates, IMGs, are often seen as a solution to workforce male distribution, Rural Workforce Agencies Chair Peter Barnes told the committee, overseas doctors often find the experience of applying for work in Australia to be awful. Rural Doctors Association of Australia President Dr. Raymond Lewandowski was born in the United States and migrated in 2011
00:05:45
Speaker
told the committee he has firsthand knowledge of navigating the visa system. But while he believes international graduates are critical to the current and future Australian workforce, Dr. Lewandowski said there was a lack of support for both employers and employees. We have to have a premium package if we're going to attract premium doctors, he told the committee. Currently, more than half of Australian GPs are IMGs, making a critical portion of the nation's workforce population.
RCSA Annual Conference Preview
00:06:15
Speaker
And finally, next week, of course, is the event that the local recruitment industry has been looking forward to for quite some time. It's shape time. We have the RCSA's annual conference.
00:06:27
Speaker
on Hamilton Island. The welcome drinks kick off next Tuesday evening. That's the 29th of August. Then we have a full conference day on the Wednesday and the Thursday. I have been to an RCSA conference at Hamilton Island previously and it was very enjoyable. I mean, what's not to like about a Queensland Island in September?
00:06:48
Speaker
So Adil, what are you looking forward to in terms of speaker content from the front of the room? Yeah, it's a really impressive list that they've released. And one of the ones that really stood out to me, Ross, was Dr. Catherine Ball, who is a scientific futurist. I love to hear what futurists have to say and the types of indicators that they base their predictions on. So I'm really looking forward to hearing what she has to say.
00:07:17
Speaker
Another one that stood out to me was Robert Van Stockram, who's a former president of the RCSA, and he's going to share the story, I believe, about the sale of DFP, a very successful privately owned recruitment business now owned by a major Japanese firm. So that will be a really interesting story to hear the details of. Obviously, we know about the story, but to hear the details from him,
00:07:43
Speaker
And I think a crowd favourite is probably going to be Eddie Betts, I would say. What do you think, Russ? Well, I love the sound of all of those. I'm not a big fan of the Carlton Football Club or the Adelaide Crows, but Eddie Betts, a spectacular footballer and a very fascinating human being. So certainly looking forward to hearing Eddie's story. Our long term MC, Andrew Klein. We all love Koshi, Andrew Klein, looking forward to
00:08:14
Speaker
The jokes that Andrew will make. Dr. Gemma King. Dr. King is a stress sleep and recovery expert. I have had a significant boost in my energy since I've sorted out my sleep issues. So keen to hear what Dr. King has to say on that topic. Marisa Fong, her and her business partner, Winnes Armore successfully established and built and sold Madison recruitment.
00:08:41
Speaker
in New Zealand and I've always been fascinated by that story so looking forward to hearing what Marisa has to share about that and you know if we look a little bit deeper into the list Sue Healy loves Sue she's been around the recruitment industry a long time very very successful owner and she's still at it and
00:09:05
Speaker
loving Sue's energy. So looking forward to what she's got to say. And of course, Simon Lusted, SEEK, whatever SEEK are prepared to share with the recruitment industry I love. So Simon is the MD of Strategy Product and AI. So who doesn't love a little bit of insight about Strategy Product and AI? So looking forward to what Simon has to say. I know you'll be front row for that one, Russ, of course. Of course.
00:09:30
Speaker
big hello to Con from C and Recruitment News Australia has some news Adele, what's our news in terms of the SHAPE conference?
Insights from SHAPE Conference
00:09:39
Speaker
Well we will be front seat as I said so Ross and I will be attending the full event we are recording our podcast from the event so we will have our regular podcast released next Tuesday with our news and our question of the week
00:09:53
Speaker
but we will also record two supplementary podcasts next week, one on Tuesday night, released Wednesday, one recorded. No, no, no, no, one on Wednesday night, released Thursday, one on Thursday night, released Friday at L. I'm jumping ahead of myself. I want to get up there and get behind, get the cocktail slowing maybe. Yeah, so two extra podcasts that we'll be recording, which are summaries of the event. So we're going to talk about speaker content. We're going to talk about takeaways. We're going to give a summary of,
00:10:21
Speaker
of the exhibition and the exhibitors there and the general vibe of the event. So for anybody that's not attending, we encourage you to subscribe to the podcast to get a really good summary. Yes, so next week there will be three RNAs, the normal episode as Adele said on Tuesday and then extra episodes on Thursday morning and Friday morning. Yeah, so looking forward to that. So Adele, I'll see you at the airport next Tuesday. See you there.
Relevance of Reference Checks in Recruitment
00:10:58
Speaker
Question of the week this week Adil, are reference checks still a relevant part of the modern recruitment process? And let me tell you why I'm asking this question. I was fascinated to read on shortlist earlier this year an article that was headlined in-house recruiters abandoning two slow reference checks.
00:11:23
Speaker
So let me just read to you what Shortlist had reported, Adele, and I'm going to be fascinated with your comments. So firstly, reference checks are falling out of favor according to talent acquisition leaders who say they slow down recruitment processes while not adding enough value to hiring decisions. We're losing candidates to our competitors, so we've stopped doing reference checks, said one delegate at a think tank event last week facilitated by talent table director Andrea Kirby.
00:11:54
Speaker
Even when automated by third-party software integrated with an ATS, the step takes too much extra time and effort, relying on referees to enter information manually. TA leaders in attendance said. Further, there's the increasing problem of candidates getting a bit sneaky, one delegate said. We've seen a few dodgies in the people have just filled in the forms themselves online.
00:12:16
Speaker
Then we get an alert and they track the IP address to the candidate's own computer, she said. But I think that's one of the advantages of using software. You get the validation then tell the hiring manager, no. Adele, what do you think? Oh, gosh. Our our fellow brothers and sisters in talent acquisition are really not helping themselves with this one. It really makes me laugh. I mean, that's our job. Part of the recruitment process involves
00:12:43
Speaker
checking and verifying data about people before making a hiring decision. So the fact that some of them are openly admitting there that they are no longer doing reference checks baffles me and talking about taking too long to collect the data or getting dodgy data. Again, as I said, this is what we're supposed to do. We're supposed to verify that information from the candidate. We're supposed to verify the information from the reference.
00:13:09
Speaker
you know, here's a brainwave, you know, contact your candidate and get the reference data directly from the candidate. I know that there are tools out there that will do that for you, but if it's taking too long, then you need to keep the process moving. So that just baffles me, that one. Yeah, I agree with that. Okay, listen to this, the article goes on. Another TA leader said that while her company still conducts checks,
00:13:33
Speaker
There was a time when a response reflected poorly on the candidate, yet the hiring manager still chose to go ahead with the hire. The hiring manager was in love with the person. She said, they've looked up what's there. I assume that's what's been written in the reference check. They've rationalized it to themselves and they still wanted to go ahead with the offer.
00:13:56
Speaker
Again, Adele, what do you think of that? Yes, this is going to happen. We're humans. There's bias. We know this and people will use information to their advantage or disadvantage as appropriate. So yeah, look, referees, you know, references, if done well, are going to give you or should give you as much sort of subjective data as you can. And yes, a hiring manager could rationalize out that data if they choose to
00:14:25
Speaker
but it's not going to hide red flags. Huge red flags are going to stand out, and that's what you're doing that for. So a few minor things that a hiring manager might say, look, I'm happy to overlook that, or I'm happy to work with the person on that. That's human nature. I don't think that's a reason not to do the reference. I think I'd rather know going in, this person is going to need a little bit of assistance with their knowledge of picking up the computer system, let's say, or they're going to need a little bit more assistance with dealing with difficult customer conversations, whatever it might be.
00:14:54
Speaker
I'd rather hire someone knowing what I was inheriting rather than going in blind because we didn't do a reference check. But I really do think it's an important part of the process. It is time consuming, but it is about verifying the information.
00:15:10
Speaker
Yeah, I've got to say I'm fascinated by bad. Like, what's a bad reference check? To me, it's all contextual. Who provided the reference? What was their position? How long did the candidate work for that person? What questions were asked? What probing was undertaken?
00:15:30
Speaker
Because unfortunately, in my experience, reference checks can be palmed off as an administrative task to a junior in a TA division, and they're just simply going through a form. They're not listening for what's being said, they're perhaps not taking into account.
00:15:49
Speaker
the tone of the voice of the referee. There are many things that you and I, as people who've been around the block for decades, would pick up in taking a reference check that someone that's new to the job that would not. So I do take issue with bad, like what is a bad reference check? Is it actually a bad reference checker or a poorly trained one?
00:16:14
Speaker
Mm, agreed. Yeah, there's a bad reference and then there's a bad reference checker, I agree. But you know, Ross, what's the alternative? I mean, if talent acquisition are saying we're doing away with them, we're not going to do reference checks anymore, they're not valid, they're time consuming and people don't really use the data properly, what's the alternative? We don't do them at all. And then you're making a decision to hire a person for what could be a very long time in your company based sometimes on one meeting.
00:16:43
Speaker
If you're competing with the market, you're trying to make a decision really quickly, but you only had one interview. So what's the other solutions?
00:16:50
Speaker
Well, and also the reality is that the best liars are generally the people who are very confident and charismatic at interview. So those people are that way because in the past they've left a trail, sorry, some people who are like that have left a trail of very disappointed employers in the past because they talk a big game, but they can't actually
00:17:20
Speaker
And I've written a blog or actually a few blogs about Jeff Flanagan or Andrew Flanagan and his various misdeeds when he talked his way into many positions and was fired from all of them just as quickly. So I think it's a very, very big risk that employers are taking if they're stopping conducting reference checks altogether.
00:17:47
Speaker
I'd love to hear from anyone who is no longer doing reference checks or maybe has some sort of alternative verification process that they do. Would love to hear about that out there in recruitment agency or any of our talent acquisition listeners as well. Yeah, absolutely. Get in touch. We would be fascinated to hear if you're not doing reference checks anymore and what impact that's had and what alternatives you may be pursuing.