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Episode 71
154 Plays4 months ago
News for the week beginning 22 July 2024 and Question of the Week: "Are agency owners too short-term focused?"
#RNA #RecruitmentPodcast #RecruitmentNewsAustralia
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Transcript
Economic Indicators: Unemployment and Jobs
00:00:10
Speaker
This is the news for the week beginning the 22nd of July 2024. I'm Ross Clennett. Australia's unemployment rate rose slightly in June despite the creation of about 50,000 mostly full-time jobs. ABS data released last Thursday showed the seasonally adjusted unemployment rate at 4.1% in June, up slightly from 4% the previous month. The Bureau's head of later statistics beyond Jarvis set a slight increase in the proportion of Australians aged 15 and over in or looking for work was the main reason unemployment rose despite such strong job creation.
Australia's Economic Strength and Interest Rates
00:00:45
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The participation rate in June was only 0.1 percentage point lower than the historical high of 67 percent recorded in November 2023, he noted.
00:00:55
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Betashire's chief economist David Bassanese noted the jobs data continues to defy the doomsayers and was evidence of Australia's economy's underlying strength. All up today's June employment report suggests the labor market remains relatively firm and so is no barrier to an August interest rate increase if the June quarter CPI is disappointingly high, he said.
Financial Reports: Robert Walters and Manpower Group
00:01:18
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Total employment is just over 14.4 million and the total number of unemployed people is just over 608,000.
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Robert Walters reported group net fee income fell by 12% in constant currency in its trading update for the second quarter ended 30 June 2024. Perm fees dropped 11% and temp net margin decreased 9%. Across APAC gross profit declined by 9% year on year to $71.2 million dollars with Robert Walters ANZ down 19% for the June quarter. Manpower Group reported business conditions in North America and Europe were challenging in the second quarter in their um market update released last week. The third largest staffing company in the world said revenue fell 3.5% year-over-year in constant currency to $4.52 billion, dollars while gross profit dropped to 5.7% for the quarter ended 30 June compared to the June 23 result. Manpower APAC reported only a 2% income decline to $541 million dollars for the quarter
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thanks to a 9% revenue rise in Japan.
Restructures and Job Cuts: Fortescue's Strategy
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The ASX 10th largest company Fortescue has announced it will slash 700 jobs from its global workforce of 11,000 as part of a major restructure as the company promises to deliver on green technology and diversity goals. The Perth-based mining company, helmed by multi-billionaire Andrew Forrest, announced to the ASX last week that hundreds of jobs will be lost due to a company restructure. The statement also said the new one Fortescue team will reflect the aim of having 50% women on the board.
00:02:58
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Diversity will continue to be a key measure of our performance with new targets implemented to drive diversity across the business," the statement said. Forrest issued a separate statement in which he did not mention the job cuts. Instead, he focused on the company's green future, saying it was absolutely resolute in his commitment to decarbonisation goals. The company has experienced significant staff turnover in the past year, losing a number of its executive team. The Fortescue share price closed at $22.36 on the day the job cuts were announced, down 25% on its calendar year high of $29.88, achieved on the 31st of January.
Recruitment Trends and Challenges
00:03:37
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Large Australian companies continue to announce significant job cuts, even as the ASX 200 achieved record highs, breaking through the 8,000 point mark earlier last week.
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According to the JSA Recruitment Experiences and Outlook survey of over 1,000 employers in June 2024, national recruitment activity declined sharply in June 2024 with 39% of employers recruiting and 8% decline compared to May. In addition, the share of employers expecting to increase their staffing levels in the upcoming three months decreased slightly from 19% in May to 18% in June. The recruitment difficulty rate also decreased slightly compared to May from 56% to 55% and is eight percentage points lower than it was in June 2023.
Executive Compensation and Economic Disparity
00:04:27
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Australia's highest paid corporate executives have raked in huge bonuses in the 2023 financial year as millions of workers have struggled with the cost of living.
00:04:36
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figures published two weeks ago by the Australian Council of Superannuation Investors Reveals. Medical device company ResMed paid its CEO Mick Farrell, the most of any ASX CEO, at $47.5 million. dollars Overall, the median pay of CEOs at ASX 100 companies fell slightly to $3.87 million dollars over the 2023 financial year, those soaring bonus payments more than offset the fall. ACSI's method of calculating executive pay, called realised pay, includes the millions that they are paid in base salary, plus the value of company stock they receive each year. At the median, realised pay hit its lowest point in 10 years for ASX 100 CEOs, but bonuses remained healthy. Bosses received 66.3% of the maximum possible payout
00:05:24
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and 98 of ASX 100 CEOs met at least their minimum performance targets to receive a bonus. At $3.87 million, dollars the median realised pay for ASX 200 CEOs is 50 times average adult earnings, with ResMed's Farrell earning 516 times average adult earnings.
Workplace Trends: Office Attendance Shift
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According to research by Robert Half, the proportion of employers in Australia requiring workers to be in the office five days a week has more than double compared to 2023. The June survey of 1000 full-time office workers found that 39% of workers in Australia say they must come into the office five days a week. In comparison to a survey of 300 hiring managers last year, that found only 19% had a policy of office attendance five days a week. 12% of workers reported being required to work at least four days in the office per week and 17% are required to work three days in the office per week.
00:06:22
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Overall, Robert Half reported 86% of workers this year said they had to go into the office at least one day per week. Robert Half's survey also found that 79% of workers, so they are satisfied with the number of days they are required to go into the office. However, the survey found the higher the number of mandated in-office days, the higher the level of employee dissatisfaction. Staffing industry analyst has identified 66 firms with $100 million dollars or more in IT staffing revenue generated in the United States last year, according to its largest IT staffing firms in the United States 2024 update report. These largest firms reported revenue of $30.9 billion dollars in 2023 and accounted for 80.7% of the market. The five largest IT staffing firms in the US are
00:07:13
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1. Tech Systems 3.7 billion dollars in revenue 2. Insight Global 2.9 billion 3. Inverse Solutions 2.2 billion 4. ASGN 2 billion dollars in revenue 5. Expirus owned by manpower group $1.4 billion dollars in sales. Market share among the largest IT firms continue to fall with the five largest firms in the US accounting for 53% of the market down from 58% in 2022.
RCSA Council and Conference Announcements
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Nominations have opened for the upcoming RCSA council elections. Any RCSA corporate member, employee or accredited individual member can nominate for a position on a council.
00:08:03
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Nominees should nominate for the council region where they work. Each of the councils is represented on the RCSA Board of Directors and each council member is assigned a portfolio that aligns with ah RCSA's four channels of member value and influence. Nominations close on Monday the 5th of August. Check the RCSA email sent to all members on Monday the 22nd of July to access the link to the nomination form. Recruitment News Australia is back at shape. our CSA's 2024 shape conference is being held in Noosa from the 20th to the 22nd of August.
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Over 200 recruitment leaders from across Australia and New Zealand will attend to learn how to grow revenue, develop their employees, increase efficiency and prepare for the future. 24 sessions and three social events across two and a half days at Pepper's Nusa will keep you educated and entertained. Adele and I are excited to announce we've secured a $1,000 discount for RNA listeners who are not RCSA members. Simply use the discount code RCSARNA at the checkout to gain member rates. for Shape 2024. This saves you 24% on the non-member price. That discount code again, RCSA, RNA, all one word. And don't worry, if you don't know any other attendees, you will know Adele and I. Please seek us out at the event. And that's the news for the week beginning the 22nd of July, 2024. I'm Adele Last.
Agency Owner Focus and Strategic Planning
00:09:45
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Question of the week is, are agency owners too short-term focused? What are your thoughts, Russ? Overwhelmingly, yes, I would say. And there's a pretty simple reason why. Most recruitment agency owners in this country run a small business. So typically they've got a number of employees that you could count on one or two hands. And as a result, They are the person who is responsible for the key client relationships. They're probably the person responsible for bringing in the highest quality jobs with the largest fees. And so therefore their focus naturally tends to be with those clients, bringing in new clients and ensuring when high value jobs come in, they're filled as quickly as possible. So invoices can be dispatched.
00:10:39
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That's a recruitment agency. Absolutely. That's exactly what you're describing, why people start their own businesses and are successful in their own businesses. So, yeah, I agree as well. I think this is a really interesting one that I think pops up for both you and I, Ross, in our separate businesses and in the consulting that we do with lots of different agency owners. And that's why we wanted to sort of answer this question. For me, I think the kind of breed of person that gets attracted to recruitment and then ultimately kind of starting their own business tends to be a person that is very action oriented, very responsive, highly um reactionary to to changes and to customer needs and to the market. And that's part of the success. That's what part part of what makes you successful as an agency owner.
00:11:29
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But it does also mean that we've got a higher than normal proportion of people owning agencies who are just very reactionary, very short-term focused, very immediate around things. And that's probably the biggest issue I see when I'm talking to recruitment agency owners out there in the market is this lack of planning that goes on because it is just so reactionary. it's so We're so good at you know pivoting that word that we hate, but you know we're really good at that.
00:12:01
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But it means that we don't plan very well. I see a very distinct lack of strategic planning across our industry. And this is something that you can understand because most recruitment agency owners have learnt the craft from the ground up. So they've come in at a relatively young age, typically as an employee. They've learned to be a recruiter by being very reactionary or responsive to day-to-day events. And so therefore, it becomes ingrained. And when you aren't in action all the time, it can feel like, well, I'm not doing my job, or there's something else I should be doing.
00:12:46
Speaker
And ultimately, I think the owner of the business should be the least busy person in the business. And let me qualify that the least busy person doing things, they should be the most busy person thinking, but they're not going to give themselves the time to think unless they carve out part of their week, every single week. to do that thinking and they regard it as critically important time, as time that's devoted to thinking about the future of the business and the long-term health of the business. Yeah, I see a lot of agency owners without without a plan altogether. you know To me, it's one of the first things I ask when I start working with an organization from a consulting perspective and I say, you know what's the business plan or where's the business plan?
00:13:40
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and very rarely do they have one. And when I ask why they don't have one, it's it's even more interesting that there's a bit of a fear around if I put something down on paper, if I commit to it, I'm stuck with it. I can't change it. I can't um i can't edit. i can't I can't pivot. And I'm scared to do that. I need to be able to be reactionary. But there's a real danger in this. You're you're essentially going out on a hike without a map, without enough water, without the resources that you need. You're not planning for yourself, you're saying let's just go out for a walk and it's really, really dangerous. So if you you're hearing this and you're thinking that's me, I'm one of those people, I don't like having a business plan or I haven't written one or it's really old or it's out of date, I want you to take this as a bit of a ah check. I want you to take this as a bit of a sign that we're telling you that you need to, as Ross said, take time regularly, weekly and commit to that, diarise that and commit to that time
00:14:39
Speaker
of getting out of the doing, getting out of the transactional day-to-day and into the planning headspace that you need to be in. and There's something else that I'd say that's important about that that.
Encouragement for Industry Engagement
00:14:51
Speaker
We're both talking about the importance of carving out time to stop and think, but I would add that just as important is carving out time to have conversations with people outside your business. And I'm not talking about clients and candidates. I'm talking about people in the industry who own other businesses or who lead other businesses.
00:15:18
Speaker
because in fact the RCSA conference is a really good example. So if you're listening to this as an owner and the first thing you do to decide whether you want to go to an RCSA conference is to look at the list of speakers and decide whether it's interesting enough, I'd say um I'm not sure whether that's quite the way I'd recommend you look at it. I'm not saying that the speakers are irrelevant, but to me, you're going to get just as much if not more from the conversations you have with other delegates, other attendees, other ah sponsors, exhibitors.
00:15:51
Speaker
Charles, the CEO, the RCSA, Penny, the President, like those are the conversations that are going to be valuable, because you're carving out two days and three nights of your year. to have different side types of conversations with different people and to get yourself thinking differently, thinking macro, not micro. Because whether you like it or not, when you're in your business, when you're at your business's premises, you're generally just going to be thinking micro. Hmm. Yeah. you You can't see what you can't see. You don't know what you don't know. And I totally agree. Much of the value of getting out of your office and getting out amongst people in the industry
00:16:35
Speaker
And like you said, for things at a conference is that physicality of being in a different location changes your your mindset and connecting with other people. Much of what you get from a conference like the RCSA conference is the connections and the conversations and um sometimes the disagreements and the thought provoking conversations that you sort of walk away and go, I don't agree with that person. And then you process it and and start thinking about how it applies to your business. That's the real value on top of the things the speakers will um give you, the tidbits and all of the advice and the information and great takeaways and all of that stuff that you'll get. But you can't replicate that kind of thing just sitting in your office. I mean, this is a podcast. We love you to listen to our podcasts and read and read blogs and all of those things are great as well. But it can't replicate replicate going out and connecting with other people in the industry, facing similar problems to you.
00:17:31
Speaker
solving some of those problems, you know, nutting it out and just feeling like you're not in this alone. Yes, it's those serendipitous conversations that you have. Maybe about topics you hadn't even thought about. You fall into a conversation with an owner you've never met, and that owner raises a topic within their business you'd not really thought about. And it's clear that this owner's thought deeply about it. And you think, shit, that's something I should have really thought deeply about and I haven't. And your whole conference value could come from that single conversation.
00:18:06
Speaker
But it's the unpredictability and uncertainty. Like, I can't promise any of those things are going to happen to every single person who attends the conference. But it's the, I'll take a chance. And if I go to enough events like this, overall, they're going to pay off. And at the end of the year, when the owner looks at the time that they've allocated and the money that they've allocated to go to I mean, not just the RCSA conference, but any event, I would hope that they reflect on that investment of time and money and go, Wow, I'm really glad I did that because it's relatively in the context of my company's income, a very small part or proportion of the income. It's a very small part of the hours across the year that I've devoted to my business. And yet the value that I've got is huge.
00:18:55
Speaker
You're also setting a really good example for any staff that you have got around ah around looking up and looking around and not thinking you've got all the answers. you know We say that to our staff. We want them to have some critical thinking skills and analytical thinking skills. and And it's hard to do that when your head's down in the business. So you're setting a really good example to the rest of your team by saying, yeah, I don't have the answers to everything and I'm going to go out there into the world and and bring back more information. Yeah, I heard I can't remember who said this, but um progress is not getting rid of your problems. Progress is having different problems to the problems you had this time last year. And I think that's exactly the right mentality. Because if you're just stuck in the day to day of generating and filling jobs, then fundamentally, your problem is going to be the same year to year. How can I keep generating more jobs and filling more jobs? How can I find better recruiters? How can I skill them up? And it's not that those problems ever go away, like they never will. But you want those to be smaller problems in the context of the other things that you're thinking about. In other words, how do I go from 20 people to 30 people? Or how do I go from this market niche to the next market niche? Like, they're the sort of problems that you want to be appreciating that you have rather than a repeat of last year's problems.
00:20:18
Speaker
I think that is a great um bit of final advice. And um yeah, and just talking about the conference coming up, ah Ross and I will both be there. If you're contemplating whether you want to come reach out to us and have a chat with us beforehand if you'd like to. And certainly at the event, Ross and I are our own little micro businesses. We attend individually and and we're there by ourselves. Come up and have a chat with us. If you're there alone, we'll connect you with people. We'll make some introductions and help you build that network. Yes, I've fully endorsed that Adele, please, if you're a first-timer and you're thinking, I don't really know anyone, you know us. So you use that as a prompt to come along. And again, what's not to love about Noosa in August.
00:21:00
Speaker
see you there
00:21:03
Speaker
To stay up to date with every episode of Recruitment News Australia, subscribe via our website RecruitmentNewsAustralia.com.au, follow our LinkedIn page Recruitment News Australia, and subscribe via your favourite podcast app. For more details about my services, simply go to RossClenet.com. And for more information about what's happening on my desk, you can visit CareerLassoo.com or the captainstable dot.com.au website.