Become a Creator today!Start creating today - Share your story with the world!
Start for free
00:00:00
00:00:01
Episode 167 - What makes a recruitment business attractive and to whom?
54 Plays4 hours ago
RNA episode 167 has news for 30 June 2026 featuring the latest update on the Hudson administration, the latest labor market results, an Adelaide recruitment agency becomes collateral damage in Tasmanian politics, and more recruitment corruption in the NFP/government sector, with a fresh ICAC inquiry scrutinizing recruitment at the University of Wollongong.
Question of the Week is, "What makes a recruitment business attractive and to whom?"
Recommended
Transcript
Wingman Recruitment's Support for Agencies
00:00:07
Speaker
Have a busy desk, growing faster than expected, or need more time to grow? Don't let opportunity become overwhelmed. Wingman Recruitment gives your agency extra support when you need it most.
00:00:18
Speaker
Learn more at wingmangroup.com.au and visit the services tab.
Hudson's Survival and Rejected Proposals
00:00:24
Speaker
Welcome to Recruitment News Australia. This is the news for the 30th of June, 2026. I'm Adele Last.
00:00:30
Speaker
And I'm Ross Klenit. Hudson lives to fight another day, Ross. I'm sure the Hudson employees are relieved. For sure, Adele, the reconvened second meeting of Hudson creditors held last Wednesday the 24th of June voted in favour of a docker put forward by a consortium of pre-administration existing owners and several key management employees.
00:00:51
Speaker
Was this the only choice for the creditors? Somewhat surprisingly, no. Two other proposals were rejected. One of the proposals was put forward by Hitech Group. Are they an IT recruiter? Yes. In fact, they're listed on the ASX. Their recent results have been pretty good.
00:01:07
Speaker
ah The proposal included an initial $4 million dollars payment into a creditor fund, followed by up to $6 million dollars upon completion of due diligence, and a further $5 million dollars in deferred consideration tied to future operating cash flows.
00:01:20
Speaker
So roughly $15 million dollars offer, that sounds pretty good. Yes, except there are lots of caveats attached. If creditors approve the execution of that particular docker, then it would still be subject to due diligence, financing and regulatory clearances. Ultimately, Hitek's offer was not binding at the point of the meeting being held and therefore they wouldn't be legally obligated to proceed if any of the preconditions were not satisfied.
00:01:48
Speaker
So more waiting for the creditors and ultimately too risky. I understand why they didn't go for that one. What about the other proposal? There was another one and it was from WorkPak, but I don't know the details. The docker that was accepted is still subject to execution, so I assume Hudson remains in voluntary administration until that happens? Correct. Normally, execution of the docker takes about two weeks.
Hudson's License Cancellation and Worker Impact
00:02:12
Speaker
Unfortunately for Hudson, there was fresh bad news on Friday. What was that? Victoria's Labor Hire Authority notified Hudson that its Labor Hire licence would be cancelled.
00:02:23
Speaker
LHA Commissioner Steve Dargaville said the cancellation was due to a significant history of unlawful conduct, including allegedly more than $8 million dollars in wages and superannuation underpayments, and I assume he's referring to that 2021 case, and more than $20 million dollars in tax debts. Dargaville accused Hudson of not demonstrating meaningful accountability or governance reform.
00:02:50
Speaker
The LHA also cited several transactions before the administration, including forgiving $11 million dollars in debts to related parties, as well as likely representing breaches of directors' duties.
00:03:05
Speaker
I understand Hudson currently provides 300 workers to Victoria, including contractors across state departments, as well as agencies such as State Revenue Health Justice Corrections and the Victorian Civil and Administrative Tribune.
00:03:19
Speaker
Well, the Labor Hire Authority said it had notified state government departments of the cancellation to allow them to make alternative arrangements. So it'll be a free-for-all with every other agency trying to jump on those Hudson contractors.
00:03:32
Speaker
Well, if the ACT and Queensland Labor Hire Authorities follow the lead of the Victorian Labor Hire Authority, I think we can say Hudson is dead in the water.
Employment Trends and Economic Influences
00:03:42
Speaker
Badil, last Thursday was nerd heaven for people like me who love labour market data. Yes, I was thinking of you when they released the May labour market update and the quarterly vacancy data on the same day. so is the news good or bad, Ross?
00:03:59
Speaker
A bit of both. This has been the case case with a range of labour market data recently. However, mostly it was good news. Firstly, let's have a look at the results for May. I noticed that April's drop in employment was reversed strongly in May, with total employment rising by an encouraging 40,300 on a seasonally adjusted basis, and the unemployment rate dropped.
00:04:20
Speaker
Yes, although the rise in employment was overwhelmingly driven by part-time jobs, up by 35,200, while full-time jobs rose only Total employment is now million.
00:04:34
Speaker
More people found work while 18,300 fewer people were looking for work, pushing the unemployment rate down from 4.5% to 4.4%. At the same time, the participation rate edged up 0.1% to 66.7%, meaning more Australians were either working or actively looking for work. Overall, these are pretty positive results.
00:04:57
Speaker
Looking at the results by state and territory, the headline news was that Queensland's unemployment rate plunged half a percent to 3.7%, which is a huge change on a month-by-month basis.
00:05:08
Speaker
This result was sufficient to offset rises in all other states and territories except New South Wales, where the unemployment rate dropped by 0.1% to 4.3%. Tasmania recorded the highest unemployment rate at 5.3%, followed by Victoria at The slightly sour note was that total job vacancies fell 2.1% to 329,500 in the three months to May 2026. The last two quarters recorded rises in vacancies, so the May result is most likely a reflection of the economic uncertainty created by the war in the Middle East.
00:05:44
Speaker
Geographically, seven of Australia's eight states and territories recorded fewer vacancies over the quarter. Victoria led the decline at 8% down, followed by South Australia at 6.5% down. Tasmania was the sole exception, recording a modest 1.4% increase.
00:06:00
Speaker
Not all industries contracted. Manufacturing bucked the trend with a 16.9% rise in vacancies. Public sector vacancies fell more sharply than private sector roles, down 7.9%. compared with a 1.4% decline in the private sector.
00:06:16
Speaker
Overall, I'm sure the federal government is very relieved by these results after a disappointing April set of labour market figures and increased scrutiny on the various unpopular changes announced in the federal budget. These broadly positive results give the government good news to reinforce.
Recruitment Criticisms and Irregularities
00:06:34
Speaker
An interesting development in Tasmania last week, Adele, involving an Adelaide recruitment firm. Yes, I read that Harrison McMillan was indirectly dragged into political point scoring last Monday when Tasmanian state opposition leader Josh Willey accused the Liberal government of massive waste in their recruitment of TAFE teachers.
00:06:55
Speaker
it seems the Tasmanian government paid Harrison Macmillan about half a million dollars over three years until the end of 2025 to lead the recruitment of 100 new TAFE teachers promised during the 2021 election. However, the Labor opposition claims that this hiring target was never met.
00:07:11
Speaker
What makes the contract controversial is not anything Harrison Macmillan has done. They are blameless. It's the demand from the state government that TASTAFE now has to find $45 million dollars in savings over the next four years to help the Tasmanian government's finances that are going south at a rapid rate of knots. It's rumoured that 12 courses will be cut and at least 56 jobs are vulnerable in the short term.
00:07:35
Speaker
That was even before the $400 million dollars cost blowout with the port facilities for the upgraded spirit of Tasmania ferries and the more than $1 billion dollars that will be needed over the next seven years to fund the new AFL stadium in Hobart.
00:07:49
Speaker
An Adelaide recruitment firm that doesn't list education as a specialist sector on its website and doesn't have any teacher vacancies listed seems a curious choice for a campaign to recruit teachers to Tasmania. I'd love to have been a flyer on the wall for that pitch.
00:08:04
Speaker
Adele, what is it with government and not-for-profits in New South Wales and corrupt recruitment practices? Unbelievable, isn't it, Ross? The New South Wales Independent Commission Against Corruption has just finished the public hearings into the former CEO of the City of Parramatta Council, Gail Connolly's various recruitment and termination decisions.
00:08:25
Speaker
Now we have a new ICAC public hearing scheduled for three weeks into similar allegations at the University of Wollongong. It's all quite shocking. During the first few days of the public inquiry, which started last Monday, the Commission heard that the university's governance selection panel was essentially stacked with friends of the former Chief Governance Officer, Alyssa White.
00:08:46
Speaker
It goes even further than that. The first witness, Stacey Un, admitted that Alyssa White helped her prepare for the job by reviewing her application, giving feedback, helping with an interview exercise and even providing draft interview questions beforehand.
00:09:01
Speaker
Dr. Un agreed this gave her an advantage over the other candidates and accepted it significantly undermined the integrity of the recruitment process. Under further questioning, Dr Un also admitted assisting in a series of other recruitment processes involving people known to Ms White. She agreed Ms White drafted interview questions despite conflicts of interest, used her as an intermediary to distribute material, and that her own conduct undermined the impartiality and probity of multiple recruitment processes.
00:09:29
Speaker
To top it off, the Commission was shown evidence that Ms White frequently ignored the university's conflict of interest policy while she sat on selection panels which White reluctantly agreed was true.
00:09:40
Speaker
Wow, what is it with these people, Adele? Rather depressingly, in both the Parramatta Council inquiry and from what we've heard so far at the University of Wollongong inquiry, it's almost 100% women who are behaving badly. It's normally men behaving badly in these sorts of corruption cases.
00:09:58
Speaker
Gender equality rather sadly on show here. I agree, Ross.
What Makes a Recruitment Business Attractive?
00:10:02
Speaker
Stay tuned now for all Question of the Week.
00:10:09
Speaker
Question of the week, what makes a recruitment business attractive and to whom? Well, that's the point. I think, Ross, it depends on who's looking at it, right? If an employee is looking at joining a business, they'll have a very different set of criteria around attractiveness versus someone maybe who's buying the business, right?
00:10:29
Speaker
ah Definitely. And this is where it comes from. One of those experts in buying and selling recruitment businesses, Rod Hoare, last week on his Substack, published a post entitled Attractive and Valuable. And he talks about recruitment agency owners confusing the difference between what makes a business attractive and what makes it valuable. So Adele, how would you differentiate those two things?
00:10:57
Speaker
Well, I think if you think about brand awareness as a starting point, like how well known is the brand, how easily recognizable is the name and the assets and its reputation, I suppose, is a starting point that I would think about when you talk about attractiveness of a business.
00:11:14
Speaker
Yes, i I would say it's recognition. how How recognised is that business? ah What awards might they have won? How many LinkedIn followers do they have? What's their Instagram following? Like all of those things are...
00:11:34
Speaker
You might say superficial, maybe that's too strong a word, but ah it's it's that recognition factor compared to valuable, which ultimately, as we know, boils down to one critical thing, which is money.
00:11:49
Speaker
Yeah, and that's an interesting point that Rod is making in the article around value of the business. You know, where does somebody place value in a sale process or a merge process? What are they looking at?
00:12:01
Speaker
And he is suggesting that those elements aren't as important. They're not part of the decision-making factor for a business owner who might want to merge or buy another business.
00:12:15
Speaker
Well, certainly an owner... that is looking to sell, they've got their own criteria about what they think the value is of the business. But ah someone who's looking to purchase a business, it's pretty clear the value of a business is the predictability of future profits, like in simple terms. That's that's what it is. And Rod...
00:12:37
Speaker
has asserted that what delivers that, and I'll just repeat or read out from his article, that the business is repeatable, delivered efficiently, risk is managed, and there are loyal clients and candidates. They know their sector and geography, and they deliver results. I think that's ah buts a pretty good summary.
00:12:58
Speaker
That's a pretty good checklist. But let's talk about some actual case studies, Ross, the good and the bad of this. Yes. Well, I mean, I think the most well-known one in terms of um attractiveness, certainly for a period of time, was Collar Group, because you had the owner, Ephraim Stephenson, out there generating as much publicity as he could. he was ah Was he CEO of the year in one of those magazines or a startup CEO? I think it was something like that. and there was a lot of publicity being generated by that business. When Shortlist was around, they were ah publishing updates as to who who was joining that business. And there was a lot on the surface that looked to be going very well, but we know what was going on. We're sorry, we now know what was going on underneath the surface, don't we Adele? We do. So that's a really good example, as you said, of a business that looks attractive from the outside to everybody else watching. It was a great, good news story. You know, it was this fast growing, ah very exciting business that was, you know, making its mark in the industry, making its brand very well known. But the subsequent result was that obviously it wasn't sustainable It wasn't profitable and and ended up going after administration, completely closing doors.
00:14:20
Speaker
that's That's right, because ultimately it was never profitable, or if it was, it was momentarily profitable and ultimately was running um massive long-term losses. Now, similar but different is Hudson Australia.
00:14:36
Speaker
Now, they're in voluntary administration and there is a docker to be executed as of the time of speaking. But compared to COLA, Hudson, very, very different. They were... a business that started effectively as Morgan & Bank. So it goes back to the 1980s. But as Hudson Australia, they've still been around a couple of decades, employing many people, high profile in terms of on government panels, a very stable and relatively well-known long-term leadership team.
00:15:08
Speaker
So on the surface, looking strong, but there were some clues that things weren't so good. I mean, the Fair Work Ombudsman case where they where Hudson were had self-reported underpayments and they had to cough up nearly $5 million, dollars ah Flex Hive by Hudson, which was the outsourcing business that they closed down after three years, and clearly that lost a lot of money. So there were some clues that things weren't going well. And what we find out, can you remember how much they were in the hole when they went into VA, a Adele? I don't remember the exact number. $40 million? Is that right, Russ? It was nearly $50 million. It was
ANZ UK Education's Success and Market Presence
00:15:47
Speaker
$48 million. So clearly they had not produced significant profits for a very long time.
00:15:53
Speaker
um But on the flip side, there are some businesses that most people listening to this probably have never heard of that are do that do extremely well. Give me an example of one of those. Well, I mean, probably the favourite example of mine, and Rod knows this business very well, but um most people wouldn't, and that's ANZ UK Education. And they're in teacher recruitment, and they have operations in Australia. um the The owner, Daniel Mundy, is from Victoria originally. They've got operations in the UK and ah the US, And they've got turnover of hundreds of millions of dollars.
00:16:28
Speaker
And no one really outside that particular sector has probably heard of them because they don't enter awards and you don't see them in the business press. And they're one of those businesses that fly under the radar. Now, I don't have access to their financials, but knowing Daniel, I suspect that they're um a very profitable business because they've got a business model that is very sound.
00:16:55
Speaker
So this is an interesting thought around, I guess, business value. And why do we place so much value on things that are perhaps more superficial? That attractiveness element tends to to look at the wrong things. It's not looking at risk management. It's not looking at sustainable profits as much as it should. They should be the things in some ways that people are winning awards for, right?
Strategic Importance in Recruitment Businesses
00:17:19
Speaker
Well, I think it's the sugar the sugar hit of an owner looking at, oh, we've won this tender. We're on this panel. We've had this feature in this publication. i mean, all all of those things can give you ah a good feeling. But as my CEO used to say, you can't bank a good feeling. You can't bank percentages. You bank cash. You bank dollars. And... Ultimately, if you're serious about the long-term value of your business, it's looking at the bottom line. How predictable are your future profits?
00:17:59
Speaker
Well, let me ask the secondary question around looking at buyers. i mean, if you were buying a recruitment business today, ah would you pay more for a well-known brand with average profits or a relatively unknown agency with exceptional profits?
00:18:15
Speaker
I'd always go the exceptional profits because to push a few buttons, so to speak, to elevate brand awareness, I don't think is particularly difficult. I don't think it's particularly costly compared to the things that you would have to do to change the momentum of a business's profit. Like if you've got a business that's been in operation a decade or decade and a half, you and there's a predictability about their profits that's and not great, like it's okay, then clearly something significant is going to have to change. You're going to have to change your pricing. You're going to have to change, don't know, some of the people in your business, look at a different niche.
00:18:58
Speaker
um There's a lot there that's going to be hard to change to significantly ramp up the profits of that business. I think you might be underestimating this one though, Ross. I think the other side of the coin on this around a very well-known brand, even if it's got some average performance at present, can always leverage that. The value of the branding, the value of being able to go and open doors, win new business, even attract the right talent. I mean, that's really the core of what a good recruitment business is about. It's the people that you attract to the business their ability to go out into the market and grow the business perhaps in a different speciality, for example, you know, that's that's very valuable. I think that's much harder to do than you're giving credit for. ah Look,
00:19:48
Speaker
I don't know. The question I'd ask you, Adele, is do you know a business, that a recruitment business, that purchased a or started up a completely different service line and thought that their brand and whatever strengths they had could be leveraged into that business or service line and make it just as profitable and ultimately didn't work?
00:20:14
Speaker
Well, there's a lot of examples, I think, of that to some extent. There are brands that have that ego and think, well, I can become, you know, ABC IT and I can become ABC, you know, education and I can go into these markets and leverage the brand. And there ah there is mixed results, I agree. In some cases, there are businesses who've done that quite successfully. There are others that we we know, you know, they they pop up and then they disappear just as quickly I think my own experience around it having worked in businesses that did try to do this, I worked for a business called Horner and we did try to diversify into other areas and sectors, was always done well where we could find the individual that was able to bring in the knowledge and the talent and the expertise. And that was only able to be done by the bigger brand that was attractive to them.
00:21:06
Speaker
See, I think it it fails more often than it succeeds. Like I noticed, um ah it was probably earlier this year, or maybe late last year, precision sourcing, they're very well known in IT and seem to ah be very successful. They've gone into health recruitment.
00:21:22
Speaker
Now, I just think that's curious. Like health recruitment is high compliance. IT recruitment comparatively is low compliance. ah IT recruitment generally in contracting, long-term assignments. In health, um in contracting or locum is short-term assignments. it It just seems almost the opposite. And I have no idea how how they're going, but I just look at that decision and I think, wow, that's that's that's not leveraging your existing strengths as I know them. But, I mean, I don't know anything intimately about precision sourcing. But to me, on the surface, that that just seems like a very curious decision.
00:22:04
Speaker
Well, you've got to think about that that might be a longer-term strategy, right? They want to grow. They know that that's a growth sector. All of our stats and data tell us that healthcare care is a growth sector. I can see why a business that's, you know,
00:22:17
Speaker
probably sustainably profitable in one sector i goes, well, let's have a look over here and see how we can duplicate our model. And I think that's potentially the key to this, that you have to be very careful about looking at a new sector, utilising your brand, leveraging your brand to get into that sector, but looking at the model and what's needed for the new division. Maybe it's very different and that's maybe where there's a lot of risk.
00:22:42
Speaker
Oh, look, agree. Yeah. And I don't think owners generally who make these sorts of decisions think carefully enough about it. And one of the um great profit success stories of our industry is talent, Talent International.
00:23:00
Speaker
And what have talent consistently done? They've stuck to IT. And they even were in the UK and got out of the UK because they, well, I don't know specifically, but I can only assume that they did not see that there were sufficient profits in the future for them the way they were running. And they're concentrating on their other markets, the US and Australia. And I think they've resisted the temptation to go into accounting or healthcare or anything like that. And you look at their track record and you'd have to say, by and large, they've got it right.
00:23:36
Speaker
Yeah, I think this is a conversation or a thought process every leader needs to have with themselves, perhaps with a business advisor like someone like Rod around the strategy for the business and where they're heading, who are they making it attractive for, And for what period of time, sometimes it's a long game. And so they're playing a different game in the short term compared to what they'll play in the longer term. If they're looking at trying to sell their business or somebody wanting to buy it, maybe they've just set up a really nice lifestyle business and they're not in the mode of making it attractive to anyone else but themselves. You know, lots of different reasons people are in business. But I love this conversation. I think this is an excellent article. If you're not following Hoare, you need to do that on LinkedIn, but also subscribe to his sub stack content, which is highly valuable for any business owner.