The need to adopt a broader perspective

Written by: Steve Smith Director, Sirius People and APSCo Australia Chair

This quarter has been all about conferences for me. I've attended the Bullhorn conference in Sydney, the Talent X conference in Melbourne, and just last week, (saving the best to last) our own APSCo conference. Each event featured different speakers aimed at different audiences, but a common theme emerged: we're in the thick of the cycle where the economic challenges are felt. The response at all three conferences was a shift in focus toward business development and training.

One interesting point that stood out at all three events was the sense of recruitment companies grappling with the current economic climate. Presentations highlighted how job flow and gross margins whether contract margins or permanent fees have dropped to their lowest levels according to the data presented.

What I found particularly compelling is the need to adopt a broader perspective. Many of the presentations focused on short-term figures, often over three-year spans However, we need to consider the recent two-year bubble following the COVID-19 boom. Many recruitment firms treated this period as the new normal, expecting business to continue at that heightened level. But if we smooth out these numbers and adopt a five-year view, it becomes clear that the anxiety surrounding the recent drop in business flow should be managed in the context of economic cycles coming off huge (artificial) highs.

The post-2021/2022 boom period was an anomaly, an artificial spike that isn't sustainable. Comparing current job flows to those seen during the boom is unrealistic. My advice to everyone is to go back to basics: maintain a simple sales process, treat your clients and candidates well, and provide a level of service that was perhaps neglected during the boom years. Recognize that the state of the market during the boom was temporary, and a healthy dose of realism will show that long-term market trends are definitely at the lower side but are relatively stable and for many beginning to trend up again.

I think we need to look to the new financial year through the lens of a more stable environment than the one we experienced moving into the 2024 financial year. Manage our business sensibly, don’t overhire just in the hope of winning more business. Instead, focus on systems, sales and marketing, processes, learning and development, and improving management capabilities. These should be the core metrics we run our businesses by.

Wishing everyone a strong finish to the year and looking forward to catching up soon.