PROFIT DRAMATICALLY INCREASED IN THE RECRUITMENT SECTOR??
It has been interesting to observe a consistent trend throughout results season. So many companies who focus on provision of recruitment and other human resource services to Australian business partners have been announcing a return to strong profitability in the 2021 financial year.
Stand back and take a bow senior management! It has been a great effort, as this is against a backdrop that has often been explained as being a difficult time for organisations.
Significant cuts have been made to staff levels as a result of an overall drop in revenue and margin.
The assumption is that less people are producing more revenue, unless there has been a tangible uplift in fee levels, which does not appear to be the case. So, are recruiters being paid more given this increased productivity? It seems they are not. A recent survey indicated that the average amount paid to recruitment consultants was 24.6% of the net margin they produced. A disproportionate number of those who have been retained in these business models are non-fee producing managers who are now competing with the consultants who are left for available assignments. Alternatively, they are trying to create the impression to senior management and shareholders that they are driving significant revenue from within their depleted teams – essentially trying to justify their position.
Many companies have indicated that there has been a great opportunity to redesign workplaces to better cope with todays needs. Again, unless leases have expired and new office space was immediately available in the new post COVID friendly format, then further cost would have been incurred as a result of these ‘innovative initiatives’.
So, lets summarise – revenue down, some operational costs increased, less staff and profit up.
In summary, less revenue producers are producing more profit, which will logically result in an increase in bonuses to loyal staff. This would no doubt be very welcome on the back of increased responsibility, hardship in the work place environment (often working from home), reduced hours and salaries ‘enjoyed’ during 2020/21. Having been in discussion with many recruiters in recent months this is apparently not happening!
In many cases the improvement in productivity has has hardly been recognised, management by numbers or activity has returned, more consultants are being employed to take advantage of the uptick in demand; more is being expected of those who have remained loyal to the company. The next phase will involve many folks becoming part of “The Great Resignation”, yes it is now a real phenomenon, people have had enough, they will be on the move… Retention will become a bigger issue than Recruitment.
The reason we are speaking with many in the space is that the post COVID move has started and the Tanner Menzies Licensee model offers a lot of what professional recruiters are seeking. Some of the boxes we tick are a trusted brand, high returns, equity, autonomy with support, specialisation, flexibility, balance, technology, marketing and more.
Don’t do it again for someone else, do it for you!
Call Peter Gleeson 0419367569, Ian Stacy 0417478229 or Peter Tanner 0419826637 to hear more or visit tannermenzies.net.au.
Written by Peter Gleeson.