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234 Plays8 months ago
Join Ross & Adele with another great episode of Recruitment News Australia and a very interesting question of the week for agency owners.
"How long is too long for a founder to stay in charge of their own agency?"
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Transcript
Weekly News Introduction
00:00:08
Speaker
If this is the news for we commencing the 11th of March 2024, I'm Adele Last.
Gender Bias and Workplace Barriers
00:00:14
Speaker
Some of the biggest barriers to women's inclusion in the workplace are gender bias, discrimination and inflexible work arrangements, according to a survey by Hayes released to coincide with International Women's Day last Friday. The survey polled 4,500 individuals to identify workplace inclusivity.
00:00:33
Speaker
Of those surveyed, 38% identified gender bias and discrimination as the most significant barrier. Inflexible work arrangements were cited by 26%, while 24% pointed to unequal pay. Additionally, 13% noted a lack of mentoring sponsorship for women at work.
Australia's Gender Pay Gap
00:00:51
Speaker
Also released to coincide with International Women's Day was research from Talent International on Australia's IT contractor pay gap.
00:00:59
Speaker
In mixed results, the gender pay gap improved to 17% in the year ended 30th of June, 2023, with a 4 percentage point improvement from the previous year. However, data from the first eight months of the current financial year shows the gap having blown out to 24%. In the 2023 financial year, the transport industry saw the biggest pay gap at 35%, followed by the tech sector at 26% and healthcare at 24%. The lowest pay gap was seen in government at 5%,
00:01:29
Speaker
with education and hospitality the next two lowest pay gap sectors. According to the survey by region, Victoria at 22% and New South Wales at 21% reported the highest pay gaps, while South Australia reported the lowest pay gap at 5%.
Economic Challenges in Staffing and Recruitment
00:01:45
Speaker
Talent Community Platform Live High reported total revenue fell 11% to $3.5 million during the six months into 31 December 2023.
00:01:57
Speaker
A 52% drop in direct sourcing revenue drove the decline in overall revenue. Net loss after tax for the first half of the current financial year was $4.6M down from $7.2M in the corresponding period last year. According to a New Zealand publicly listed staffing provider announced a market update last week
00:02:19
Speaker
for the March 2024 financial year. Revenue was down 9% year to date with net profit predicted to be materially lower than the $2 million reported for the prior year. On an individual brand basis, Jackson Stone and Partners reported revenues from public sector contracting and permanent placements were down 15% against prior year to date. Madison's revenue was 20% down.
00:02:43
Speaker
Absolute IT's revenue was 15% lower, AWF grew revenue 5%, and recent acquisition Hobson-Levy was meeting expectations. The company's current market capitalization is $29 million.
00:03:02
Speaker
Industry News Service shortlist reported Drake International Australia dropped their sales by 8.5% to $156 million in their financial year ended 30 September 2023 compared to the prior year. Gross profit dropped 1% to $26.9 million and operating profit climbed 76% to $6.4 million. Headcount in Drake Australia was 143 at the end of September last year a decline.
00:03:32
Speaker
6%. Company founder 95-year-old Bill Pollack announced his retirement from the board after 73 years as a director. London publicly listed global recruiter Page Group reported full-year profit before tax for the 2023 year of ยฃ117.4 million, representing a 40% year-on-year decline
00:03:56
Speaker
with more than 1,000 fee earners losing their jobs in 2023, a 15.7% reduction. Page Group Australia reported a 10% drop in gross profit for the 2023 year. Rival Robert Walters reported his 2023 profit before tax for the year fell 63% to 20.8 million pounds after net fee income was down 18% year on year.
00:04:24
Speaker
The company reduced its workforce by more than 350 across the year. Robert Walters Australia reported a 19% gross profit drop in 2023.
Legal and Labor Disputes
00:04:37
Speaker
Industry News Service shortlist reported last week that Hayes has offered up to $1.3 million to settle the long-running class action brought against it by a group of on-hire coal miners. The Federal Court will hear an application later this month for a proposed final settlement in the case.
00:04:54
Speaker
which has been in mediation for some months. On Friday, Federal Court Justice Bernard Murphy ordered a derero law which brought the action on behalf of the miners to prepare a draft notice for registered members of the class informing them of the likely final settlement. The miners principal claim is that they should have been engaged as permanent staff rather than casuals and they are entitled to annual leave payments for the time they were engaged by Hayes under the terms of the Black Coal Mining Industry Award.
00:05:24
Speaker
The amount offered by Hayes is a fraction of the original sums being claimed prior to the High Court's risotto ruling and changes to employment law by the former Liberal federal government. Nigerian nurses are protesting new rules that prevent them from working abroad for two years after completing their training. Hundreds of nurses picketed the health regulators offices in two Nigerian cities last month, demanding the withdrawal of the policy, which is due to take effect this month.
00:05:53
Speaker
Governments across Africa are trying to tackle the problem of losing nurses and doctors who leave for jobs overseas that may pay as much as 50 times more. It takes at least three years to complete nursing training in Nigeria. Under the new rules, newly qualified nurses must work in Nigeria for two years before they can apply for their licenses to be verified for use abroad. The verification process, which typically lasted two weeks, will now take a minimum of six months.
00:06:22
Speaker
It also requires a character reference letter from employers, which nurses say could unduly empower superiors. Data from Britain's Nursing Council regulatory body shows a nearly quadrupling of the number of Nigeria educated nurses in the United Kingdom in the five years between 2018 and 2023. Entry level nurses in the UK's National Health Service earn the equivalent of 55,000 Australian dollars annual salary by contrast
00:06:50
Speaker
a well-paying nursing job in Nigeria only pays the equivalent of 1800 Australian dollars per annum.
Work Stress and Mental Health
00:06:59
Speaker
A survey by the Workforce Institute at UKG surveyed 3400 people across 10 countries and discovered managers impact employees' mental health more than doctors or therapists and even the same as a spouse or partner. Other results were more than 80% of employees
00:07:18
Speaker
would rather have good mental health than a high-paying job. Two-thirds of employees would take a pay cut for a job that better supports their mental wellness, and 70% of managers would too. Work stress negatively impacts employees' home life and said 71% of respondents, 64% said it impacts wellbeing, and 62% said their relationships were impacted. 40% of the C-suite say they will likely quit within the year because of work-related stress.
00:07:47
Speaker
While 9 in 10 HR and C suite leaders believe working for their company has a positive impact on employees' mental health, only half of the employees agree. In fact, 1 in 3 say managers fail to recognise the impact they have on their team's mental wellbeing, and 7 in 10 would like their company and manager to do more to support mental health.
US Job Market Trends
00:08:08
Speaker
US employment again beat expectations in February, with 275,000 non-farm jogs added.
00:08:15
Speaker
although January's monthly gain was revised down by 124,000. Job gains in February occurred in healthcare, government and hospitality. The Bureau of Labor Statistics reported the US gained an average of 230,000 jobs per month over the prior 12 months. The national unemployment rate in the United States rose to 3.9% in February.
MI6 Recruitment and Diversity
00:08:39
Speaker
Unusually for the British Intelligence Services, a director of MI6 has been interviewed for the organisation's current recruitment drive. The officer named as Kwame said that during his career, he has seen things way more than what you would see in the spy movies. Kwame, the first black spy to give a broadcast interview, was speaking to BBC Radio One Extra from the agency's London headquarters as part of a drive to recruit more people from black and Asian backgrounds.
00:09:08
Speaker
It's more exciting than James Bond, Kawami said of his workplace. Kawami described himself as the director of organizational development and said part of the aim of the recruitment drive was to tell people that anyone can work for MI6, whatever their ethnicity or background. The issue is if you talk about James Bond, it gives you a different connotation, he said. I'm afraid it makes you think that everyone who works here is a white middle class male who is driving an Aston Martin who likes women and all of that, but it's not true.
00:09:37
Speaker
You can see that it's not necessarily true about me. We want to reach out to all the brothers and sisters out there and say, actually, SIS, Secret Intelligence Service, MI6, is a place for you. Kwame said that the real-life Q, the agency's head of technology, is a woman as is her deputy. We've got a whole line of Qs doing really cool stuff in the tech space who are women, he said.
Weekly News Highlights
00:10:01
Speaker
And that's the news for the week beginning the 11th of March, 2024. I'm Ross Clannett.
Leadership in Business
00:10:13
Speaker
Question of the week this week is prompted by a news article again from our news report around the story of Bill Pollock retiring from Drake. And our question is, how long is too long for a founder to stay in charge of their own agency? We just reported that he's retiring after 73 years. So Ross, what do you think? How long is too long? 73 years is a very long time.
00:10:43
Speaker
Warren Buffett's still in charge of Berkshire Hathaway and that's a business that's doing extremely well. So I'm sure the shareholders there hope that Mr Buffett stays around for a long time yet. But let's look at the recruitment industry. So Bill Pollack, he is well known in Australia or certainly in the recruitment
00:11:07
Speaker
industry, even though he's not been an active industry player, he's been very active within Drake Australia. Drake Australia set up in 1963 and Drake and John Plummer's business, CENTCOM, were the two most significant
00:11:29
Speaker
volume recruiters in the 1970s and 1980s and I would have thought 30 years ago 1994 Drake would have been a top five business in terms of sales and number of consultants in Australia.
00:11:45
Speaker
Now, as we heard from the new service, 143 consultants, so, sorry, 143 employees. So not insignificant and their sales are around 150 million. So again, not insignificant, but I suspect that might put them in the top 20 or top 25, maybe not even. So from a market share point of view, Drake have gone significantly backwards.
00:12:14
Speaker
Now, a contrast, Richard Earl at Talent International. So Richard established that business in the mid 1990s, and he was the managing director until he passed over to Mark Nielsen in 2016. So just over 20 years later, he let go of Australia. And then Mark, who was managing director for APAC, became the global CEO just before COVID hit.
00:12:43
Speaker
So Richard was no longer the global CEO. He was the executive chair until the following year. So Richard now is a non-executive chair of talent. He has a global CEO and he has a chair. And if you look at the results of Talent International over the last seven or eight years, continue to grow their sales was the number one performing recruiter over the COVID period.
00:13:11
Speaker
and continue to grow its profit. So I would argue Richard Earl is the poster child for knowing when and how to let go. Okay. So it seems like it is a difficult decision for founders to make, you know, sometimes they're not the best person to sort of make that decision. And, and I see some of that as issues out in the marketplace around their ability to hand over control
00:13:40
Speaker
to someone else, you know, they struggle to lack that foresight into when they've stopped being relevant to their own business or the skills have started to wane or the motivation started to wane. And then there is that issue around handing over to somebody else, maybe even finding someone else that's trustworthy enough to hand over to. I get that that's a really difficult thing. And then being able to actually let go and allow that person free reign to spread their wings and not second guess themselves
00:14:10
Speaker
and really put their own mark on the business. I also see a lot of founders, particularly of small agencies, trying to build up the business to something that is saleable. They're really fixated on the idea that they have to keep building the business to make it profitable, make it a great asset for sale because that's their retirement nest egg. They have to make that big dollar sale at the end to go and sale off into the sunset.
00:14:40
Speaker
And, you know, sometimes, you know, they have to really, I think, look at their own business and understand whether that is going to be viable or not, or whether maybe they are critical to the success of the business and taking themselves out may have too great an impact or maybe they've stayed too long and need to go out, you know, much sooner. Well, I think on that point, Adele,
00:15:07
Speaker
The critical thing is, are you able to groom a person or people up through the business to bring someone in from the outside as let's say the GM or the COO with a view to that person becoming the MD or CEO after a designated period of time? It's tough. Like it's really tough. That doesn't work very often.
00:15:37
Speaker
And if you look at, well, Richard Earl, good example, Mark Nielsen was the CFO. If you look at, well, people to people, so a good example when Mark Smith is still the group CEO, but he's got managing directors in each of the States, very capable people. And I suspect one of those people will be ready
00:16:05
Speaker
to be the group managing director when Mark decides he's had enough. But Mark is more the exception.
00:16:16
Speaker
I think six degrees executive is probably another very good example. Susie McInerney is the CEO. Susie came up through the business, started as a consultant, and then I think she was the GM for Victoria. And then when Paul and Nick and David decided the time was right, Susie was promoted to
00:16:41
Speaker
the managing director's job. So a very good example of making it work. But I'm struggling to think of a CEO that's been hired in at that very senior level that's managed to stick. Actually, probably Peter Acheson, when he was originally hired by Rod Butters to take charge of Amber, Peter came in at that level and Peter had never
00:17:07
Speaker
worked in recruitment, had not come up through the business and certainly he was very, very successful, ultimately becoming the CEO of the combined Ambit People Bank business. And then when People Bank was purchased by Recruit Group, Peter became the CEO of the whole Recruit
00:17:27
Speaker
Australian operation, which include Chan included and still includes Chandler McLeod. But they're very much the exception. There's certainly plenty of people that have been hired in at a senior level that have not lasted long. So in your experience, I know you've seen a little bit of that Adele. What?
00:17:45
Speaker
What has that new recruit not last? What are the top two or three things that finish up either have that person leave or the CEO moves them on very quickly because it's not working? Yeah, I think like you said, it's more of the exception to the rule to be able to bring someone in from outside and maybe home-growing is an easier pathway for a lot of owners because
00:18:11
Speaker
It really is about trust. It's just about building that level of trust between those two parties and understanding how each other works. And it is good if they can work together for a period, I think. So they get that appreciation and the understanding before the founder moves away. But the biggest issue I see is the founders just taking too long to do that, I think, making it too difficult. And it's really, really hard. I totally understand that.
00:18:41
Speaker
to create something and create your baby and then pass it over to somebody else. It must be an incredibly difficult thing to do, but I think they really have to ask themselves about their commitment and as I said, and motivation and relevancy of skills in the current market. You know, some of these owners founded these businesses, started the businesses, 2030, you know, in Bill Pollack's case, you know, 70 years ago. How relevant are you now in today's market? So I think,
00:19:08
Speaker
a good founder should think about the new role being to make sure the success can be handed over to someone else. Their role should be about how do they make someone else successful in running their business, not the way they did it, not the old way, not because that's how I've done it, but more so how do I make sure I can extend this into somebody else's skill set and then somebody else, you know, flies with this is, you know, some of my own experience.
00:19:39
Speaker
Well, absolutely in theory, that's right. But what I see, Adele, is that the owner may think they're ready to let go, but they are also the person, as they well know, that have driven the business's success to its current day. And they probably don't discover how
00:20:03
Speaker
immovable they are about certain things until someone new comes in and wants to make changes to dress code, working hours, working in the office versus working remotely. All of those things are likely to provoke
00:20:24
Speaker
the owner to be like, oh, well, I'm flexible, but you can't touch that. You can't move that. And then the person who's been brought in is going, well, hang on. You've effectively tied my hands behind my back because they're some of the major things that I want to address and they're probably going to get pretty frustrated pretty quickly. So maybe our final point around this question, how long is too long for a founder to stay in charge? If you're asking that question,
00:20:53
Speaker
Maybe it's already too late. Get in early. Start thinking about your succession planning well before you need it.
00:21:01
Speaker
Well, I think the moment you are approaching two decades, that to me, no matter what age you were when you started the business, I think you need to be thinking very seriously about who in the business is capable of taking on the role of CEO or MD. And if there isn't someone, then how do I ensure that I bring a person or people
00:21:25
Speaker
into the business to go down that path because you're not going to be able to sell a business for anything like the owner's desired amount if the owner is still very much the day-to-day leader of that business. Good motivation there. That's for sure money, the biggest motivator to hand over and move on.
00:21:52
Speaker
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