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RNA Episode 128 - Is the impact of AI applications good for the recruitment industry?
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RNA Episode 128
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Transcript
Introduction and Global Staffing News
00:00:07
Speaker
Welcome to Recruitment News Australia. This is the news for the 16th of September 2025. I'm Ross Klenit. And I'm Adele Last. I believe we've got some global staffing results to start with, Ross.
00:00:20
Speaker
Yes, we've got some research from staffing industry analysts. Global staffing revenue. So the headline result is SIA estimates that global revenue generated by the staffing industry fell 5% in the 2024 calendar year.
00:00:41
Speaker
We had all the big staffing firms reporting declines in revenue. So Ranset's the number one, Adeco two, Manpower three, Allegis, and then Recruit.
00:00:55
Speaker
However, There was a part of the market that at the moment is bucking that trend and bucking it fairly significantly. It's the search part of the market. Corn Ferry last week released the most recent quarterly fee revenue results and the revenue is growing, growing at 6%.
The Growth of Executive Search
00:01:20
Speaker
Adjusted EBITDA up by 8%. And Hydric and Struggles the month before reported quarterly revenue had grown nearly 14%. team sent And in fact, Europe had gone up 24% executive search.
00:01:39
Speaker
Okay, so this is interesting. So what this trend remind you of, Adele? As you're saying that, Ross, I was thinking the exact same thing. ah Greg Savage predicted this at the APSCO Emerge event, he talked about executive search being the recruitment model that would actually thrive and grow and and we're seeing this now in real life.
00:02:03
Speaker
We are. And clearly those larger white collar businesses, and even though they weren't mentioned in the results, a's Robert Walters, Michael Page have all reported um poor results in the most recent quarter.
00:02:18
Speaker
And that's just a continuity of poor results or underwhelming results from the previous couple of years. So it's pretty clear what's happening. that the mid-market, particularly in the white-collar space, is being hammered.
00:02:31
Speaker
Volume hiring is down because clearly a lot of those businesses are under pressure to save money, save headcount and increase the use of AI, whereas the search part of the market is in fact growing.
00:02:44
Speaker
It seems to be growing at a very healthy clip. So that's ah fascinating. And frankly, I expect that the results in the next few quarters will simply reinforce this trend.
AI's Role in Hiring: Boon or Bane?
00:02:57
Speaker
The next news piece we want to talk about is an article from the Australian Financial Review about ai Tell us about this one, Ross. On Friday, Adele, the Australian Financial Review had a very significant article talking about ah ai the tinder of hiring and effectively the whole automation of the hiring process. It was a very lengthy article.
00:03:24
Speaker
Summarised really just with a few points, hiring is slowing and that's certainly supported by the recent ABS data. Applications per job are rising. In fact, ah Seeker saying last month was an all-time high, 42% more than the same time last year. Robert Walters reporting 57% of candidates are applying for 20 roles at a time or minimum of 20 roles at a time.
00:03:51
Speaker
ah ghosting is increasing. So ghosting of candidates with employers and the other way around, a dramatic and increase in the use of AI in applications by candidates. And of course, a significant increase in AI that employers are using for screening, interviewing, and referencing.
00:04:11
Speaker
So it's basically saying, humans are kind of disappearing from the top of the funnel when it comes to hiring and only reappearing at the ah the bottom.
00:04:22
Speaker
So this is significant, you're saying, because it was in the financial review, mainstream media here, and it was a significant article, as you said. The results there, you summarise, no surprise to the recruitment industry with job applications rising and people using more AI in that frontline screening process. But Is this just a cause and effect sort of situation? Is it a ah spiral we can get out of?
00:04:48
Speaker
ah No, I don't think so. And the fact that the AFR have focused on it is normalising it. It's bringing it to everybody's attention because, of course, we're deeply immersed in the recruitment industry. We're paying attention to these things. We've known about this for months, um if not the last year or two. But If people are out there not applying for jobs and just going about their normal work and if they're not hiring, then this is not something that's on their radar.
00:05:14
Speaker
Whereas now, i I suspect increasingly that it is likely to be on their radar and you're going to have people who haven't been the job market for a while who are going to be shocked by how little human interaction there is when they're applying and how frustrating it is when they're applying for jobs they think they're well suited to and they're getting nothing back other than an automated thanks for applying and unless you hear back from us you haven't made the short list and all the best for the future.
00:05:42
Speaker
Okay, so this could be good for the recruitment industry.
The Power of Databases in Recruitment
00:05:46
Speaker
I reckon it is good for the recruitment industry, except you have to be the part of the recruitment industry that doesn't rely on running ads to generate candidates.
00:05:55
Speaker
And this is something I've been banging on about for years and years and years about the importance of having a curated database of ensuring that when a job is registered, the first thing you do is go to your database because you can rely on it. You've got quality people, quality people who will respond to your outreach.
00:06:13
Speaker
and be willing to have a conversation with you about opportunities. Because if you're an agency that relies on running ads every week to generate new candidates, then frankly, you're just going to experience what employers are experiencing, a flood of applications and taking a lot longer to actually find any potential really good candidates amongst that flood.
00:06:34
Speaker
And our final news article is about a very important piece of research from the Harvard Business Review.
The Value of Foundational Skills
00:06:41
Speaker
about where what they're calling soft skills that are now mattering more than ever, kind of in contrast to what we talking about ah with AI in the recruitment process. But this is once you've been hired in the job. Tell us about this one.
00:06:54
Speaker
Yeah, this is a very significant piece of research published in the Harvard Business Review late last month. The researchers analysed large-scale US data on over 1,000 occupations occupations across all industries between 2005 and 2019, including 70 million job transitions, capturing hundreds of skills. And the researchers organized skills into foundational skills. So examples, reading comprehension, basic maths, ability to work well in teams, and more specialized advanced skills.
00:07:32
Speaker
An example would be competence with blockchain and they looked at how people's skills changed and developed over that time across the course of their careers. Yeah, we've got some summary results. Adele, I believe you've got a summary here.
00:07:46
Speaker
Yeah, this is a summary of those of that research. Foundational skills like reading, comprehension, teamwork and basic maths are strong predictors of long-term career success, including higher wages, faster acquisition of specialised skills and resilience to industry shifts.
00:08:04
Speaker
Workers with broad foundational skills are more adaptable to rapidly changing job markets where technical skills become outdated more quickly more quickly than but ever before. And foundational skills determine not just job entry but career progression, enabling workers to move into advanced roles and stay relevant despite shifting technologies.
00:08:23
Speaker
And social skills are especially critical for reaching the highest levels of professional success. as modern work relies heavily on collaboration, communication and navigating complexity.
00:08:34
Speaker
but The article to me, just in summary, is emphasising those core skills from school and those core skills in those initial jobs when you're a teenager, as important as they have been, they're going to be even more important for the future.
00:08:58
Speaker
Yeah, I think you're right. Seeing certainly my own children trying to apply for jobs and it being completely automated and, you know, them not having much impact with somebody through the recruitment process, never mind perhaps once they start in a role.
00:09:13
Speaker
I think having those lower level entry jobs is where they're going to have the opportunity to develop those skills. they're really important. I mean, not my my children, my three children have all progressed through those foundational jobs, whether it's McDonald's, working in a bar or working in some other hospital environment where they learn to deal with friction.
00:09:34
Speaker
Like my 18-year-old son at Zombreros, he's learning to deal with people who are going to argue about the way their burrito is made and to make accusations about his competence that aren't really supported by the evidence and That's something that's important for him to learn. Yes, you'd think, oh, come on, you know, adults having a go at kids behind the counter. But that's the reality ah of of life. And they're the things that help you develop good social skills that will be a critical foundation of your future success. And I mean, I look at my seven years working at a Mitre 10.
00:10:13
Speaker
and how important that was in customer service, dealing with adults, being able to problem solve as very important part of what helped me be a very successful recruiter.
00:10:24
Speaker
Yeah, you think about those early roles. Mine was working in a bingo hall serving cups of teas to granny and grannies and, you know, it was about time management. It was about thinking on your feet. It was about problem solving, exactly like you said, but it was face-to-face, very different to online.
00:10:41
Speaker
It's taken a massive study to effectively confirm what we know that those critical foundational skills pay off over decades.
00:10:54
Speaker
Those foundational skills help us adapt in the long term. And when we're an adaptable employee or an adaptable worker, we're that that increases the likelihood that we'll progress inside organisations, build our skills and build our earnings.
00:11:12
Speaker
And that's your news for the 16th of September 2025.
Navigating High Application Volumes with AI
00:11:16
Speaker
Stay tuned now for Question of the Week.
00:11:21
Speaker
um
00:11:26
Speaker
Question of the Week. Is the AI impact on job applications good for recruitment agencies? Well, I believe we're talking about volume of applications here and I've got a really good example of this recently.
00:11:41
Speaker
So I've been working with Roy AI and Chris South, the owner of Roy has recently advertised a position for a customer success person, a part-time role, and he posted on LinkedIn the result of that job posting and application process And it was quite staggering. He advertised the job and within a matter of days, I believe it was a maximum of about a week, he had 321 applications for one role. more Over 300 applications? Over 300 applications for this part-time role.
00:12:17
Speaker
And he subsequently reposted. So he's posted the job ad. He's then taken the job ad and reposted it on his personal network. And within his personal network, there was somebody that he knew from his involvement in the vendor market she reached out to him direct had his direct phone number called him and said I'm coming back from maternity leave you might not know that but I'm keen on your job let's have a chat he spoke to her hired her on the spot and unfortunately you know all of those applications were then you know not required by him so that's a huge result and into and and that's not uncommon from what I'm hearing in the industry like of jobs
00:12:54
Speaker
lots of jobs at all different levels are getting a large volume of applications and AI's got to have something to do with that. Oh, well, I mean, what I hear in that is that Chris has saved himself a lot of time.
00:13:08
Speaker
And also, I'm sure he's got a much higher level of confidence that this is the right person because he knows that person from working with the person previously? They were colleagues sort of in an industry in the industry. Right, okay. So an
The Rising Importance of Networking Over Applications
00:13:23
Speaker
industry peer. So there's some um sense of confidence about the person's capability. Well, I've got a story at the other end of the market.
00:13:31
Speaker
which is the entry level. So a friend of mine owns a 45 person IT outsource business. So they call them a managed service provider. And he regularly recruits level ones, which is an entry level role. Typically, you've got someone applying who's got some sort of IT t qualification. It could be a degree, it could be TAFE level, and they you know typically sort of 20, 21, 22.
00:13:58
Speaker
So you know how many applications he gets typically when he puts up a level one trainee role in Melbourne or Sydney, Adele? Do you want to guess? Well, 300 to me is eye-watering. So if it's more than that. Over 1,000 applications he gets. 1,000? 1,000 for entry level.
00:14:16
Speaker
And recently, well, recently, it was last year, he had a vacancy in Melbourne. And one of his existing employees said, ah hey, this guy that I was in my IT course with,
00:14:27
Speaker
is really frustrated because he's trying to crack into IT because he'd moved. I can't remember what his background was, but he was sort of mid 20s rather than early 20s. And he changed careers and was trying to get into IT and he wasn't even getting an interview.
00:14:41
Speaker
And so my friend, Robert's his name, said, well, you know, what's this guy like? And his employees said, oh, yeah, no, I think he's like, he's smart. I mean, only know through the course, but just what I picked up, I think he'd work well in this environment.
00:14:55
Speaker
And so Rob says, sure, okay, send me his resume. He looked at the resume and nothing particularly stood out, but he interviewed him based on his employee's recommendation and hired him.
00:15:06
Speaker
Now, eight, nine, or maybe he's been 10 or 11 months into the job, and Robert says he's a rising star, a significant technical ah leader in his Melbourne business.
00:15:19
Speaker
And most enlightening, he said, if I'd just received that application amongst the thousand, there was nothing that had him stand out. Like, it wasn't bad, but when you're getting a thousand, you're just looking for a few key things to decide who you're going to at least ring and phone screen.
00:15:36
Speaker
And he said, I doubt I would have called this guy and phone screened him. But because of the recommendation, I did. i interviewed him and I hired him. This is really interesting in this time, I think, in the market, because we've had the ebb and flow, the cyclical nature of job applications and and candidate flow. You know, it's been candidate heavy before. You and I have both experienced that multiple times in our careers. But I think it's really different this time because with with that AI factor, you've got people who can mass apply. They're mass applying for jobs literally at the click of a button. And I've got another example of that. I've got a daughter who's 18 who's looking for a part-time job around her uni studies and she has registered on SEEK and SEEK is sending her about 10 jobs a day in which she spends less than 10 minutes applying for.
00:16:24
Speaker
She literally scans through them quickly, checks the location because she wants something that's reasonably close to home or uni and she just hits apply, apply, apply and you know, she's applying for hundreds of jobs really quickly and easily. That's what's going on in this market.
00:16:39
Speaker
So is this the back to the future, Adele, of that old adage that we've all heard, it's not what you know, it's who you know? Right.
00:16:50
Speaker
I think you could be right there, ah Ross, with this one. I think that people are going to get this fatigue of the volume, like you said with your friend. Why would you bother to look through ah thousand applications? Why, you know, Did Chris needt need to go through his 300 applications when you can be recommended to someone or someone comes and approaches you through your network and you can fill the job quick and easily, no further time wasted? You know, I can see people starting to not advertise jobs and this is where your networks are going to be really valuable.
00:17:21
Speaker
And you know what this means to the recruitment industry, don't you?
The Future of Recruitment Agencies
00:17:24
Speaker
Those people who don't have to run ads. Yeah. to fill jobs that their clients have registered with them will will be the winners.
00:17:32
Speaker
It's the depth of your database, not the breadth. And it's the quality relationship you have with the highest caliber candidates. So when you contact them about a potential opportunity, they will respond quickly and be interested in what you have to say. You're not just another recruiter.
00:17:54
Speaker
You're the trusted recruiter that they're definitely going to prioritize ahead of any other recruiter when it comes to potential opportunities. I totally agree and I think it's really critical what you're saying there about your database as the network rather than just generally networks because I think that's a misconception as well.
LinkedIn's Shifting Role in Professional Networking
00:18:14
Speaker
I think people would be listening and saying, okay, well, yeah, I've got to build my network by what they're saying. I've got to build this network of contacts that I can tap into should a job come in so I'm not having to advertise. But I tell people to be careful of the thin veil of kind of the LinkedIn network because,
00:18:31
Speaker
It's superficial. You know, you might be posting regularly on LinkedIn. You might be making connections. You might have amassed a large volume of connections. But we're seeing time and again, there are examples of people who've got a really large network on LinkedIn who are not able to convert that into business or sales or contacts or connections. So i think that's really critical as well.
00:18:53
Speaker
And the problem with LinkedIn, as we've discussed before, is that it's becoming more like Facebook. And therefore, the temptation to just avoid it is great because, oh there's a lot of ads and then there's a lot of people posting about their daughter's 18th birthday and they've come back from holidays and blah, bla blah bla blah, blah, blah.
00:19:12
Speaker
And it's this ah superficiality of what you see which is unfortunately a long way from what LinkedIn was about five or six years ago, where you really would say it's a you know substantial and credible professional network. And I think it's unfortunately ah losing that mantle pretty quickly.
00:19:34
Speaker
I feel like this could be another whole segment for our podcast about... The LinkedIn sin bin where we can call out people who are posting things that really belong on Facebook or somewhere else. Yes, I think you're right, Adele.
00:19:48
Speaker
There are serial offenders and it's like they've done some LinkedIn course where they're all told they've got to post a photo or a selfie in the video and it's just all a bit tiresome. It's just clogging up my LinkedIn feed.
00:20:03
Speaker
Totally agree with you. So let's come back to our question. Is the AI impact and job applications good for recruitment agencies? It's good for recruitment agencies that are on top of their database and have a culture where you can not just identify the highest caliber people, but you have clear frameworks and process for staying in contact with those people and really building deep relationships with them. If you're that sort of recruitment agency, I feel very optimistic about your future. If you're not that sort of recruitment agency and you're still relying on running ads and generating response, then I'm much more pessimistic about your future prospects. What about you?
00:20:45
Speaker
Yeah, we'll ah see those recruiters under a big pile of job applications, sorting and screening and wasting a lot of time. using potentially their AI to talk to the AI applications and you know not really creating any value for their client in between all of that. It's just going to slow everything down and not produce a better result. And that's just going to hit their bottom line. And I think those agencies potentially are going to be doing a lot of work and not making much money.