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Episode 51
268 Plays8 months ago
News for the week beginning 4 March 2024 and Question of the Week: "How successful will the SEEK Recruiter Network be?"
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Transcript
Introduction
00:00:07
Speaker
This is the news for the week beginning the 4th of March, 2024. I'm Ross Clennet.
Australian Salary and Gender Pay Gap Update
00:00:13
Speaker
According to Australian Bureau statistics data released last month, the average Australian full-time annual salary reached $98,217 in November, representing an increase of four and a half percent year on year. Beyond Java, Sabias' head of labor statistics highlighted a narrowing in the gender pay gap, which now stands at 12 percent down from 13 percent in May 2023.
00:00:37
Speaker
marking its lowest level on record. The mining industry retained its status as the highest paying sector with male full-time employees earning an average of $158,563 per annum and females $133,582 per annum. Western Australia had the highest average full-time earnings on a state-by-state basis at $109,564 per annum.
00:01:03
Speaker
and Tasmania had the lowest at $86,840. Public sector employees earned an average of 11% more than private sector employees.
SEEK's SME Network Trial and History
00:01:15
Speaker
Additional information is now available about SEEK's Recruiter Network, SRN. The concept currently at trial stage connects SMEs who have been unable to successfully fill a job via a SEEK ad with recruitment agencies who specialize in recruiting such roles.
00:01:31
Speaker
What's known so far is SEEK charges the employer 15% for a successful placement, takes their 25% cut and pays the recruiter within 21 days of the candidate starting. SEEK takes full responsibility for the collection of the fee. The guarantee is a no charge replacement within 90 days of the start date and recruiters agree to abide by the RCSA Code for Professional Conduct whether they are RCSA members or not.
00:01:57
Speaker
The trial appears to only involve permanent accounting roles in both Sydney and Melbourne, and direct engagement of the recruiter by the SME is forbidden for 12 months. The lure of using tech to successfully connect employers with recruitment agencies has seen several startups enter the field over the past two decades. Large-scale commercial success has eluded all players to date with recruitment revolution and recruiter critic early failures, find my recruiter a more recent failure, and tell it vine the most high-profile existing player attempting to scale.
00:02:28
Speaker
The tech foundational to the SRN will identify the jobs posted on SEEK that are most likely unfilled based largely on the duration of the live job ad and will also identify a shortlist of relevant recruiters via source of profile ratings and testimonials. The employer will choose the recruiter from the SEEK generated via source of shortlist and is encouraged to provide job exclusivity to the recruiter for 30 days. SEEK's Head of Recruitment Segment, Con Marcheson, said the trial didn't have a specified duration
00:02:57
Speaker
It will continue until SEEK gains sufficient data to decide what the next step in the platform's development would be.
Financial Results of ASX-listed Companies
00:03:05
Speaker
ASX listed people in reported revenue for the July to December 2023 period yesterday of $603 million, up 1% over the previous corresponding period.
00:03:17
Speaker
Underlying EBITDA dropped 37% and underlying net profit before tax dropped by 63% to $8 million. People in current market capitalization is $118 million. ASX listed labour hire and training firm Ashley Services reported revenue for the July to December 2023 half year of $291 million, an increase of 10.8% on the year prior.
00:03:44
Speaker
EBITDA on a reported basis stood at $5.1m down 51% on the prior year period, primarily due to the $3m of write downs on goodwill and customer relationships from the disastrous Link Personnel acquisition. The company has a current market capitalisation of $49m.
00:04:05
Speaker
The Adeco Group reported revenue of €6.1 billion for the fourth quarter ending 31 December 2023, an increase of 1% organically and trading days adjusted. Operating income was up 74% in constant currency and EBITDA was up 40% to €209 million. Adeco ANZ revenue was up 65% on the back of the commencement of the ADF recruitment contract.
00:04:32
Speaker
On a group basis by service line, temp and contract revenue was up 2%, permanent placement income was down 14% and career transition income was up 45%. Adeco's market capitalization is currently 6.6 billion euros. Global search firm Hydric and Struggles reported 2023 fourth quarter revenue rose 7.4% to 253 million US dollars.
00:05:00
Speaker
Annualized fourth quarter executive search net revenue per consultant fell to $1.8 million down from $2 million year on year. For the 2023 calendar year, group revenue declined 4.3% and net income dropped 31.5%. The firm had 414 executive search consultants as at the 31st of December, 2023, compared to 390 at the end of 2022.
00:05:29
Speaker
Heinrich at Struggles Market Capitalization is currently US$583 million. ASX-listed gig platform Freelancer reported full year 2023 net revenue decreased by 4.1% to US$53.3 million. EBITDA was half a million dollars, a significant turnaround from the US$6.7 million loss the previous year, primarily due to cost cutting.
00:05:58
Speaker
New Zealand-based IT recruitment firms Potentia and Crew Technology Recruitment have announced their intention to merge. Both agencies will continue to operate under their established brands with no changes to their names or leadership teams. Auckland-based Potentia was launched in 2004 and Dunedin-based Crew was established in 2015. Potentia stated, while Potentia has built up a strong brand in the North Island over the last couple of decades, it
00:06:26
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was practically non-existent down south with no boots on the ground. The group said that with crew merging with Potentia, it now has most of the country's tech hubs covered with offices in Auckland, Wellington, Christchurch and Dunedin.
Global Workforce Trends
00:06:40
Speaker
Staffing industry analysts North America Temporary Work Survey 2024 found that 51% of temporary workers worked remotely, with 36% saying they worked an entire assignment remotely.
00:06:52
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and 15% saying they worked an assignment partly remotely. The remaining 49% of temps did not work remotely. Typically, high paid workers and those in professional occupations had the highest rates of remote work of those earning at least $60 per hour. 63% said they worked entire assignments remotely. In comparison, only 5% of those earning under $16 per hour did so.
00:07:18
Speaker
Only 18% of office and administrative support workers worked an entire assignment remotely. Amazon, after an investigation triggered by an Amnesty International report into migrant worker abusers in Amazon's Saudi Arabian warehouses, said it had paid $1.9 million restitution to more than 700 contracted workers. The Amnesty report, which drew on the accounts of 22 men from Nepal,
00:07:46
Speaker
who worked in two warehouses going back to 2021, found the migrant workers had suffered appalling living conditions on the job safety risks and wage theft. Amnesty accused recruitment agents and two Saudi labour hire companies of deceiving migrant workers who thought they were being employed directly by Amazon and took out steep loans to pay illegal recruitment fees. The accused labour hire companies had also threatened to impose steep fines on workers wanting to cut short their contracts, effectively stranding them in the Gulf.
00:08:16
Speaker
Alongside the restitution, Amazon has made commitments to their warehouse workers to upgrade living accommodation, provide lockers for personal belongings, limit the number of occupants per room, upgrade fire safety systems and generally ensure living conditions meet Amazon standards. An internal letter criticising SAP's back to office policy has attracted more than 5,000 signatures in less than two weeks, with the German software company's employees threatening to look for other jobs rather than return to the office.
00:08:46
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We feel betrayed by a company that until recently encouraged us to work from home, only to ask for a radical change in direction," said the letter. The company's European Works Council, a group that represents SAP's employees on the continent, said the requirement to be back in the office was unreasonable after employees had been told they could continue working remotely. SAP, Europe's largest software company, outlined a new guidance in early January that will require globally
00:09:15
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workers to work in an office or onsite with a customer three days a week from April. SAP Chief Executive Christian Klein had pushed back on the Works Council's opposition and said that working from home will cost SAP its culture and teamwork. Less than a month after presenting the back to office policy, SAP announced a global headcount reduction that would affect 8,000 of the company's 108,000 employees.
00:09:45
Speaker
Most of the UK companies that took part in the world's biggest ever four day working week trial in which staff worked 100% of their output in 80% of their time have made the policy permanent. Of the 61 organisations that took part in a six month UK pilot in 2022, 89% are still operating the policy a year later and 51% have made the change permanent. 82% of participants reported positive effects on staff wellbeing,
00:10:13
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while 50% found it reduced staff turnover and 32% said it improved recruitment. Meanwhile, a British government spokesperson said we have no plans to introduce a four-day working week. Ultimately, it is for employers and employees to agree what working arrangements work best for them. However, we will make changes to our flexible working legislation in April, including the right to request flexible work from day one of a new job. And that's your news up to date for the week commencing the 4th of March, 2024.
In-Depth on SEEK's Recruiter Network Trial
00:10:41
Speaker
I'm Adele Last.
00:10:52
Speaker
Question of the week this week is prompted by a news article that we just read in the news about Seeks SRN, the Seek Recruiter Network, which is a platform service they have created to refer SME small employers to recruitment agencies, particularly after they've had an unsuccessful outcome, perhaps after advertising on Seek. So I was interested to ask you Ross, how successful
00:11:21
Speaker
will this sort of referral network be in our industry? Well, let's start with the history of this type of offering at Earl, because it does have a history stretching back almost two decades. Recruitment Revolution and Recruiter Critic were two early offerings of a similar nature that failed pretty quickly. And we had Find My Recruiter, which was launched in 2018, and that failed.
00:11:51
Speaker
Saucer, the original business model of Saucer was similar, bringing employers and their unfilled jobs together with recruiters. It is the current business model of Talentvine, which is probably the longest standing of the current platforms. And you've also got a relatively new one called Find A Recruiter. So many different types of entrepreneurs have attempted to make a go of this type.
00:12:22
Speaker
And it's pretty obvious why, because bringing employers and recruiters together, if you can do it successfully, potentially, there's a lot of money to be made. Well, why hasn't it worked then? I mean, you're talking about potentially two decades of attempts and fails, new people having a go at it each time. Why hasn't it worked?
00:12:42
Speaker
Well, I don't think it's worked for either side of the platform. So the employers have not been able to get enough jobs filled at the price that they want by the platform. And I think recruiters have generally found a lot of tire kickers that the companies that they were dealing with were companies that had a very low price focus and didn't really value recruiters.
00:13:07
Speaker
And it turned out to be quite a bit of work for not enough placements. And so recruiters lost interest in whichever version of the platform that they were working on. And that is an interesting aspect to me around SEEK launching this sort of service, because to me, that is a different customer in terms of their need. So the customer, the employer who is recruiting themselves is going direct to the SEEK job board and advertising a job themselves.
00:13:35
Speaker
because they're trying to keep the cost down is unlikely to be the same customer that would agree to be referred to a recruitment agency and now pay a 15% of the placement fee fee. It's a very big jump from the fee that they've paid SEEK to the recruiter fee and a very different kind of service in fact as well. So I find it interesting that SEEK's chosen this as a means of an alternative solution to their customers.
00:14:03
Speaker
Well, you can see why SEEK are trying Adele. Certainly in my world, you look at the reasons that the other platforms didn't work and you look at what SEEK does have. So SEEK's got cash.
00:14:16
Speaker
Cash is clearly important. They can afford to invest. They've got significant tech resources, clearly one of the most well-resourced rec tech companies in the whole market. They've got the customer base on both sides of the platform. They've got lots of SMEs who advertise on the seat job board.
00:14:38
Speaker
And they've got lots of recruitment agencies who also advertise on the SEEK job board. So they've got four significant advantages, much greater advantages that any other player had or has. And so you can see why it's attractive for SEEK to go, okay, well, if we can make this work, the possibility of making money on scaling this is significant. What are they missing then? What are the risks?
00:15:07
Speaker
Well, you can see in what they've started with in the trial point to what they've learned about the failures of other similar platforms or the feedback that they've got from recruiters. For a start, the fixed fee, 15%. So clearly that's smart because recruiters were turned away from the previous versions because it was a race to the bottom.
00:15:32
Speaker
10, 9, 8, 7, 6% fees for permanent placement. No recruitment agency is going to do that in the long term and make money. Secondly, related to that is SEEK is guaranteeing the payment. If you make the placement and the candidate starts, SEEK will pay you. They'll pay you within 21 days. That clearly was a big issue in the past that
00:15:56
Speaker
the recruiter was relying on the employer to pay the placement fee. So clearly, clearly that's attractive and Seeker saying to the recruiter, we're going to make the contact with the employer
00:16:11
Speaker
we're going to explain the concept of SRN, they're going to agree to it and then we're going to put the two of you together. So there's going to be a significant qualification step before the recruiter gets to effectively meet or be connected with the employer. So those three things I think are significant pluses in terms of a recruitment agency
00:16:39
Speaker
And those things are probably going to be significant ones in having more recruitment agencies decide, OK, we'll give it a go. What about the point around not contacting them for 12 months, though? How do you think most recruiters are going to manage or think about that? They've been introduced. Yes, they haven't had to do the business development. They get handed a client on a platter from SEEK, but they can't deal direct with that employer again, unless I'm assuming, unless it's back through SEEK.
00:17:09
Speaker
at the 15%. So what do you think of that point? Well, I understand why I seek put that in the contract. I would question how they're going to police that. Like realistically, how are they going to know it's going to take resources, dedicated resources to be, I don't know, following up with both sides to find out what's going on. I just, I just can't see, see doing that. I, you know,
00:17:39
Speaker
Basically, I just can't imagine that they expect both sides, the employer side and the recruitment agency side are going to abide by that requirement of the contract. It's a little bit of devaluing of the service as well, because on one hand, CECE are saying, if you can't solve your own solution through our platform, we're going to introduce you to a specialist provider who can help you, but don't go back to them again.
00:18:07
Speaker
Yeah, you're right. Bordering on offensive to the recruiter, really. You value my service enough to solve your customer problem, but not the second time. Thanks very much. Let's face it, many recruiters, if they do bring that client on, will probably be running an add-on seat to fill that
00:18:27
Speaker
employer's job so yes typically the agencies are paying less than the employer for the job ad but not that much less so SEEK is still going to get the work of course not every job will be advertised on SEEK but many will be so I would have thought for the goodwill that they're generating on both sides
00:18:49
Speaker
frankly, it'd be worthwhile letting the employer and the recruiter build a relationship. And I think SEEK will still get indirectly a cut of the money flowing in that relationship. So what's the likelihood as a final conclusion of SEEK being successful at this? Where do we predict its solution? Well,
00:19:15
Speaker
If anyone can make it work, seek can, I think, or have got the greatest likelihood of making it work because of those four big advantages that I mentioned earlier. But I just, I don't know, like it hasn't worked in the past and recruiters have found the promise of this.
00:19:41
Speaker
theoretically very enticing but the reality of how hard they have to work to make a placement and keep the placement ultimately has meant that the previous platforms have not worked and I just don't know whether this
00:19:59
Speaker
version of bringing employers and recruiters together is going to solve that problem significantly enough to make this work. So I'm going to say on balance, I don't think it's going to survive the trial or if it gets to full launch, I just really have my doubts that there's enough money in it for C to justify the resources they're going to need to invest in it.
00:20:28
Speaker
Well, hey, as you said, if anyone can make it work, it's most likely seek. If seek do the trial and decide to back out of it, maybe it'll put this whole platform business to bed and we won't need to hear from any more new tech startup platforms in this space. Certainly for the next decade, I'd say yes. That's true. All right. We wait and see. We look forward to seeing the outcome of that trial.
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00:20:55
Speaker
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