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RECRUITER HOT 100 COMPANIES 2017

The recruitment companies in this year’s HOT 100, compiled by Agile Intelligence on behalf of Recruiter, can proudly claim to earn the most profit per head in the UK

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RECRUITER HOT 100 COMPANIES 2017

ince last year's HOT 100 the uncertainty that was already dominating the political-economic landscape has not stabilised. If anything, it has heightened even further as fresh geo-political concerns have also developed in tandem with a new US administration, continued tensions and conflict in the Middle East and other regions, and a rise in the popularity of non-mainstream politics. While all these factors affect the global outlook, in the UK there are the added ingredients of a minority government following the unexpected June General Election, and the very pressing need to negotiate for Brexit. This all serves to deter investors to some extent, and affects both business and consumer confidence. While recent data suggests a slowdown or even slight reversal in employment levels, overall jobs growth of one type or another has continued through most of the 20 RECRUITER

p20-27 Hot 100 2017.indd 20

past year. However, there have still been challenging conditions for the recruitment industry through subdued activity, employer costs, individual sector difficulties and the diverse range of technological change. Throughout this, the industry strives to meet the needs of employers and candidates through ever-sophisticated ways of matching skills with organisations. But more than ever before, they do this by ‘simply’ attending to the basics and deploying their own people to ‘do a good job’. Over the years the HOT 100 analysis has enabled an understanding of past trends, while mapping likely future ones. This single key performance indicator (KPI) of gross profit per head/ employee (GPH) encompasses so much about how a company operates – measuring its ability to extract, sustainably, the optimum performance from its own people. We have again singled out the top 20 percentage gainers in productivity, giving an insight into new entrants and those with improving efficiency measures, providing an alternative perspective on the HOT 100 group of companies, which does not rely unduly upon a high value specialisation to maintain their ranking (see News, p5). Since its inception in 2006, as the HOT 100 has evolved, so too have the constituent companies. Business models have changed, often substantially, since those relatively simple, mainly branch-driven sales models of early years. It is increasingly obvious that separately operated sister companies are now benefitting from shared cost centres – anything from finance to marketing and much in between. A few of these unconsolidated companies are commanding elevated positions in the HOT 100, as their ‘parent’ or a sister organisation takes the brunt of some support service costs, reducing support

staff numbers and thus increasing productivity. Likewise, others are simply outsourcing support functions, again boosting top line productivity. It does not quite make for a level playing field but all companies can choose to outsource if they wish, thereby suppressing their in-house staff numbers. However, to exclude major sector specialists on this basis would weaken the core dataset and ignore so many of our best industry operators. So the HOT 100 continues to thrive and GPH remains one of the best all-round measures to compare companies across regions and sectors. For the second consecutive year the gap between top and bottom has widened as the bar for entry or ‘cut’ has fallen. The entry threshold for this particular HOT 100 stood at £85,283, which is 1.9% lower and more than £1.6k below last year’s group of HOT 100 companies. Aggregated average productivity growth of this HOT 100, like for like, rose 6.7% as gross profit (GP) gained 9%, while employee numbers expanded by just 2.1%. Companies have spent the year capitalising on the headcount expansion of the previous year, while displaying a more cautious approach to any further internal hires. This is in line with previous cycles of people numbers and productivity, with an expected lag before any payback on the investment. Some of the largest recruiters have remained – SThree, Hays and Robert Walters are all ranked in the lowest quartile of the HOT 100. Together with higher-placed PageGroup and Harvey Nash, these companies, by nature of their size, do have an influence on the aggregate average GPH. But the large scale and reach of the HOT 100 ensures an extremely diverse list of recruiters, spanning a wide range of sectors and delivery models and with individual productivity growth ranging from +54% to -22%.

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RECRUITER HOT 100 COMPANIES 2017

There have still been challenging conditions for the recruitment industry through subdued activity, employer costs and technological change engineering and construction subsectors became more subdued, to achieve a 2.1% growth in GPH. Public Sector, however, lost many of the gains of the previous year, driven down more by frontline services but with shortfalls across most suppliers including executive level, and could only stand still on GPH, given an equivalent decrease in its headcount. On aggregate the 2017 HOT 100 saw individual growth in net fees posted by 60 companies. The average size of the 2016 HOT 100 member rose a little higher than the previous year to 344 employees, with many of the same largest players included through their group accounts. Similarly, 60% of constituents also oversaw some net organic expansion of their internal workforce. Gross margin was held overall within the HOT 100, at a level above and also slightly outperforming the wider industry as estimated from further analysis.

9% gain in gross profit in this HOT 100

2.1% Rise in HOT 100 companies’ in-house headcount

Calendar 2016 was again a year of very modest growth on average across the whole UK recruitment industry with its sales value rising by just 3.2%, according to the Office of National Statistics (ONS). Excluding payroll inflation (especially with National Minimum Wage rises), additional employer costs etc. would indicate that the industry experienced zero growth in 2016. Comprising mainly calendar 2016 results, the 2017 HOT 100 list grew its sales at 9.3% but individual company sales growth ranged from +81% to -45%. Overall growth came from a mixture of domestic growth at close to twice the national average and an even greater rate of growth from overseas operations (with increased fees derived from both UK-based sales to overseas customers and also from overseas branches), including some benefit on translation from the sharp depreciation of Sterling. Among the specialisation HOT 10s, there was something of a change around from last year. Both the HOT 10 IT and Professional sector recruiters each posted GP growth of 6.2%, albeit lower growth than the previous year, and GPH gains of 6.5% and 3.4% respectively. Professionals was the only one of these four HOT 10 sectors to expand headcount. By contrast Public Sector and Technical each suffered a sharp decline of 9.2% in GP. The HOT 10 Technical recruiters did cut back heavily on headcount, as the oil & gas downturn persisted during 2016 and other

As mentioned gross margin, aggregated across the whole of the HOT 100, was unchanged. With some permanent growth estimated overall among HOT 100 members, at least in the first half of the year, this implies further loss, probably very modest, in temporary/contract margin. Around one third of the HOT 100 still reported an actual rise in gross margin, believed mainly to be driven by improved permanent fees. Nevertheless, there remained 29 (versus 27 last year) of the 2017 HOT 100 earning gross margin below 15%, indicating predominantly temporary activities for these companies with little scope for compensatory gains through the permanent market. This all relates to the 2016 accounting years. Market indications since then suggest a turnaround in 2017, with temporary business outperforming the permanent market. The dream growth combination of both employees and productivity remained historically low, achieved by only 27% (29% last year) of constituents. This indicates the caution of recruiters, perhaps reflecting the wider mood, expanding only when absolutely necessary and succeeding at squeezing more productivity from existing staff, while building the return on the investment in newly employed staff. Which companies derive most

Agile Intelligence Agile Intelligence has compiled the HOT 100 report on behalf of Recruiter to determine which companies are best at leveraging their intellectual assets. By rigorously measuring the gross profit (net fees) per head/employee this indicates how effectively

an organisation uses the skills of all its own people to generate a profitable return for stakeholders. All in-house employees (excludes temp workers or contractors) are included in the calculation – not just feeearners; this is a standard senior management key performance indicator

(KPI). Notwithstanding wild cards, companies emerging strongly from this analysis, especially if featuring regularly, are primarily those that operate the most productive organisation, balancing the need for good, well-trained, directed and motivated staff against the need to minimise costs. WWW.RECRUITER.CO.UK 21

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RECRUITER HOT 100 COMPANIES 2017

‘added value’ from their own employees (before allocating overheads) yet still nurture the right atmosphere over the long term to encourage a profitable and sustainable sales approach? Take a look at the 2017 HOT 100 list of companies (pp23-24).

HOT 100 group sales turnover rose 9.3%, almost three times faster than the wider recruitment industry

KE Y FIN D I N G S

60% of HOT 100 firms expanded their workforce either organically or by acquisition

27% achieved a simultanious growth in productivity and internal headcount

of HOT 100 companies rose by 6.7% over the year to an aggregated average £102,592 to stand 4.1% above last year’s HOT 100 group average. However, a simple average of each of the GPH figures, negating the lower quartile high-weighted skew of those large employers across both years, stood at £111,753 and 1.5% ahead of the 2016 HOT 100. ● HOT 100 average gross margin was unchanged for this group of companies at 20.6%, with a small shift in the business mix towards permanent offset by temporary margin pressure. ● This HOT 100 group in their past financial year added £290m in net fees with an additional 706 staff at an incremental gross margin of 19.9%, making an incremental £410,764 additional GPH. This incremental margin was balanced by a permanent fees presence and an incremental GPH reflecting the

strong focus on productivity. ● Entry level GPH (ranked 100) to the 2017 HOT 100 was £85,283, standing £1,627 below the prior year threshold for the ‘cut’, which was at £86,910. Extending beyond the HOT 100, the average GPH only begins to fall away, below £80k, at 116th, illustrating the closeness of the ‘following pack’. ● Just 27% of HOT 100 companies achieved the dream combination of expanding productivity simultaneously with increasing their internal headcount. This compares with a similar 29% last year but just two years ago it was 49%. There was also a strong bias towards larger companies. Company trends: productivity (GPH) growth less certain as recent years’ expansion policy not yet paid off As mentioned, the bar for HOT 100 success this year dropped again to

2017 HOT 100 group sales turnover rose 9.3%, almost three times faster than the wider recruitment industry sales turnover growth of just 3.2% reported for calendar 2016 by the ONS. Like for like, comparing this group against their own figures for the previous year, overall headcount rose just 2.1% but a much greater 9% rise in GP was achieved as productivity pushed upwards to post GPH rising by 6.7%. Gross margin was unchanged at 20.6%. Like for like: ● The 2017 HOT 100 companies collectively reported an increase from their previous year in latest available sales of 9.3% to around £17.1bn. ● HOT 100 combined GP exceeded £3.5bn, a gain of 9% versus their prior year. ● HOT 100 companies’ in-house headcount rose 2.1% to total 34,398 employees. ● Productivity (GPH) for this group

Methodology The data has been rigorously filtered by turnover, gross profit and employee numbers. The companies featured in this edition employ over 34,000 in-house staff and generate £17.1bn of industry sales revenue; very many more were evaluated as part of the overall analysis. Latest available accounts have been used — dated 2016 or 2017 for all companies – a few companies are excluded due to filing timings. Companies filing abbreviated accounts 22 RECRUITER

p20-27 Hot 100 2017.indd 22

and not providing their full figures separately are excluded. Increasingly, with the internationalisation of many UK recruitment firms, group accounts are now used for UK corporations where these prove more up to date — examples would be Hays, Harvey Nash, Robert Walters, Page Group and several IT recruiters. Companies operating primarily overseas have been excluded, although UK engineering specialists placing talent

worldwide are included. Overseas-based groups eg. Adecco, Randstad or Hudson may be included, using their UK operating companies or group disclosed divisions. Two prominent exclusions from the analysis are Manpower and Reed due to accounting differences, which invalidate comparisons. Furthermore companies combining temporary employees in their employee count are not included as

this grossly underestimates their performance. The most specialist of search or ‘headhunters’ are omitted for a variety of reasons – incomplete disclosure, overseas business, incompatibility and a shortage of data for peer group comparison. Disclaimer: while every effort has been made to ensure accurate reporting and analysis no guarantees are made regarding the information portrayed in this document.

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Company/ trading n ame

193,227

173,375

Falcon Green Personnel

2

181,142

190,858

SSQ

3

177,415

156,375

4

168,421

182,813

5

166,716

6

7

8

152,908

144,341

Rullion IT Plus

9

151,586

132,415

Odgers Intermediate

10

151,091

152,598

WA Consultants

11

N

148,183

119,182

Marlin Green

12

145,090

109,041

Modis International

13

N

143,865

132,186

RIG Locums

3.2

3.8

Anaesthetic & physio, junior docs, medicine, rapid response, A&E, paediatrics

14

137,288

147,007

Morgan Law

8.2

9.0

Healthcare, central & local govt, charities/NFP, education, Housing Associations

15

137,193

134,484

Red Commerce

19.2

16.7

IT

16

135,048

137,778

NES Global Talent

74.7

84.6

Technical/engineering into oil & gas, infrastructure, chemical, life sciences, rail

17

130,396

131,681

Resource Solutions Group

IT, business change, corporate services and government sectors

18

129,743

145,344

Workforce People Solutions

19

128,605

152,518

SystemsAccountants

20

125,731

116,026

Investigo

20.6

18.9

Accountancy/finance, change management, property, procurement

21

123,864

113,584

People Source Consulting

5.5

5.6

IT/Technology

22

123,711

116,762

Cognitive Group

2.5

2.3

IT

23

123,191

130,375

The SR Group

36.5

32.1

Legal, compliance, HR, marketing, digital, tax, Treasury & executive search

24

122,862

131,615

Penta Consulting

11.5

12.2

IT & telecoms, software engineering and consultancy

25

121,481

129,327

Walker Hamill

6.3

6.7

Accountancy/finance, debt & structured finance, private equity and M&A

26

117,794

88,640

Ajilon (UK)

8.0

12.1

IT plus office/admin, HR, non-clinical healthcare, supply chain & logistics

27

115,627

102,509

PPF

10.2

9.3

Drivers, logistics

28

113,573

92,518

Cornwallis Elt

3.9

3.1

Technology, operations & change roles within banking, insurance, digital & media

29

113,475

108,414

Caritas Recruitment

30

113,322

125,704

GatenbySanderson

31

112,543

110,523

Shorterm Group

32

111,618

124,219

Randstad Technologies

33

N

111,227

87,365

34

110,847

35

110,774

36

110,741

37

110,440

101,821

Oakleaf Partnership

5.9

5.3

Human resources

38

109,647

140,235

Interact Medical

7.6

7.3

Locum doctors including niche technical skills

39

108,927

105,050

William Alexander Recruitment

2.6

2.7

IT and business change

40

108,559

103,499

Goodman Masson

15.5

14.3

Financial services, commerce, compliance, public sector audit

41

107,968

95,437

RIG Medical Recruit

6.4

6.9

Reporting, diagnostics, radiography, pharmacy, ultrasound, physio, SLT

42

107,639

101,674

First Call Contract Services

7.0

5.7

Industrial

43

107,353

100,667

Parity Professionals

7.3

6.0

IT – digital, data, info security; public sector, health, education, financial services

44

N

107,160

69,738

Montreal Associates (Systems)

4.5

3.3

ERP, SAP, CRM, BI & Big Data, development, infrastructure, cyber security

45

107,149

105,684

McGinley Support Services (Infrastructure)

12.4

13.3

Track labour, protection + warning, trades + labour

46

107,089

74,618

Harvey Nash Group

Technology,CIO, digital, finance/banking, HR, exec search, interims

47

106,589

102,210

Resourcing Group

48

106,520

114,719

49

105,466

50

104,451

Key:

Up

Parent gro (where d up if name) ferent

Gross pro head/em fit per previous ployee year (£)

Rank 1

Change

Gross pro head/em fit per latest ye ployee ar (£)

Gross pro latest ye fit ar (£m) Gross pro previous fit year (£m) Sector coverage

RECRUITER HOT 100 COMPANIES 2017

4.1

3.5

Construction

22.6

21.6

Legal

Mayday Healthcare

18.1

24.9

Healthcare

Green Park Interim & Executive

6.4

5.9

Public sector/charities/social enterprise, retail, HR, financial services

162,312

LA International Computer Consultants

18.3

16.6

IT

157,597

132,009

The Bridge (IT Recruitment)

3.8

3.2

IT

153,595

174,537

Sheffield Haworth

19.2

22.7

Financial services: executive search, interims

11.2

10.8

IT

72.3

70.4

Executive search, interims

3.5

3.7

IT/Technology

Down

p20-27 Hot 100 2017.indd 23

prev. Shilton Sharpe Quarry

Rullion

Adecco SA

prev. Euroforce People Solutions

Adecco SA

nGAGE Specialist Recruitment

3.7

2.1

IT – SAP, business intelligence, Big Data

9.7

10.7

IT – dev, SAP, infrastructure, BI, aerospace, defence/engineering, digital

28.9

28.4

3.1

3.3

Skilled staffing into furniture, textile & automotive manufacturing and transport

5.4

5.5

Finance systems, finance transformation, EPM, BI, ERP

6.9

7.6

Social care into public, voluntary & private sectors

12.9

13.3

Executives in health, education, government, NFP

14.3

12.3

Engineering – aerospace, automotive, aviation, construction, rail, electronics

3.8

4.0

IT & telecoms

SEC Recruitment

6.6

5.0

Pharma/life sciences; IT/Technology & analytics within SAP, ERP, BI and JDE

97,543

Phaidon Holdings

32.7

25.7

Banking/financial services, engineering, life sciences, procurement, technology

107,143

Airswift

75.2

90.0

Oil & gas/energy

110,855

Randstad Education

17.9

18.4

Education

Randstad Holding NV

Randstad Holding NV

Parity Group

97.9

90.3

10.1

10.2

Built environment, public sector

Henderson Scott

4.4

4.4

IT, sales & marketing, financial technology

101,899

Orion Electrotech

5.9

5.3

Technical

99,971

Venturi

4.0

2.9

IT: business intelligence, development, infrastructure, quantitative analytics

– Unchanged

N New

nGAGE Specialist Recruitment

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Gross pro latest ye fit ar (£m) Gross pro previous fit year (£m) Sector coverage 4.0

Engineering

5.0

4.2

Technology & change, risk, financial services, energy, digital & commerce

8.1

7.9

Engineering and infrastructure

PageGroup

621.0

556.1

Finance/accountancy, legal, IT, retail, sales & marketing, oil & gas, HR, construction

79,859

Fawkes & Reece

5.2

6.1

Construction, built environment, civil engineering, residential

96,959

PSD Group

23.4

23.4

Executive, finance, engineering, HR, technology, supply chain, retail, hospitality

103,556

92,917

The Oyster Partnership

4.8

4.0

Building consultancy, construction, General Practice, quantity surveying

103,145

111,303

Minstrell Recruitment

3.1

2.4

Eng, construction, trades & labour, rail, FM, FMCG & manufacturing automation

102,979

119,020

Options Resourcing

4.1

4.6

Construction, building services, maintenance, office, sales, business support

60

102,328

99,032

Prime People

13.1

12.3

Real estate, built environment, energy, environmental, insight, analytics

61

102,210

94,384

Petroplan Holdings

9.7

10.6

Oil & gas, energy

62

101,544

101,653

Interim Partners

4.1

3.7

Interim executives

63

101,488

103,359

La Fosse Associates

12.7

9.1

IT and digital

64

101,423

104,890

Randstad CPE

30.4

29.6

Construction, property, engineering

65

101,123

119,137

Redrock Consulting

5.7

5.0

IT & telecoms

66

100,941

106,165

Next Ventures

7.9

7.8

SAP, digital, data, business apps, development & Integration

67

100,896

92,494

Eden Brown

14.5

15.5

Built environment, public sector

68

100,064

109,663

Coyle Personnel

15.8

15.9

Tech, constr, medical, rail, highways, energy, pub sector, commercial, industrial

69

100,022

126,115

NRL

8.2

9.8

Engineering, construction, oil & gas, nuclear, petroleum energy, technical

70

100,015

94,941

Experis

39.4

40.0

IT, finance and engineering professionals

71

99,866

106,635

Advantage Resourcing UK

21.2

22.4

Engineering, banking/financial services, professional services, technology

72

99,578

96,924

Morson Group

68.5

64.9

Engineering/technical, IT, scientific

73

99,025

87,572

Hays

954.6

810.3

Finance, construction, healthcare, pharma, educ, IT, legal, oil & gas, professionals

74

98,238

93,363

Tangent International Group

7.1

6.3

IT & telecoms, technology, engineering

75

N

97,471

99,262

Randstad Public Services

8.5

8.3

Social care, nursing, allied health professionals

76

96,622

103,913

Eames Consulting Group

11.9

11.4

Actuarial, audit, broking & underwriting, change, compliance, risk, technology

77

96,553

98,264

Hallam Medical

6.3

5.3

Primary care & community nursing

78

94,678

96,847

Angela Mortimer

10.7

10.7

Executive and office support

79

N

94,503

86,665

Forrest Recruitment

5.4

5.4

Office, accounts & commercial staff

80

N

93,436

83,509

Futureheads Recruitment

3.2

2.7

Digital media

81

N

92,677

69,926

Opus Professional Services Group

18.4

11.7

IT & telecoms, financial services, public sector, energy

82

92,211

89,390

Contract Scotland

3.8

3.4

Technical professionals into construction & engineering

83

N

92,071

84,601

Robert Walters

278.3

234.4 Financial services, legal, HR, IT, sales & marketing, supply chain, tax, Treasury

84

91,908

104,327

Badenoch & Clark

25.9

32.9

Finance, accountancy, banking, legal, IT, HR, marketing

85

91,388

93,459

CD Sales Recruitment

4.1

3.9

Technology and sales staff

86

91,252

89,502

IDPP Holdings

2.5

2.6

IT & telecoms, executive, technical sales, project management

87

91,181

86,123

SThree Group

258.7

235.7

ICT, banking & finance, energy, engineering and life sciences

88

91,178

99,322

Oliver James Associates Group

24.3

21.1

Financial servicescommerce & industry, actuarial, ARC, change management

89

N

90,935

84,327

Eximius Group

5.4

6.2

Energy, financial, legal

90

N

90,833

80,634

Day Webster

16.0

11.6

Healthcare

91

90,774

102,830

G2V Recruitment Group

13.2

12.9

IT, engineering, construction, pharma, rail, town planning, oil & gas

92

89,265

102,240

Oil Consultants

2.6

5.1

Oil & gas

93

N

86,554

93,921

Impact Recruitment

2.1

2.2

Temp & perm placements in logistics, manufacturing, commercial

94

N

86,463

85,449

Teacheractive

10.4

7.4

Education

95

N

86,443

86,856

Extrastaff

6.1

5.5

Driving & industrial – supply of temporary drivers and industrial workers

96

86,289

86,910

Office Angels

Adecco SA

29.0

30.1

Secretarial, admin & office staff

97

85,749

93,752

GCS Recruitment Specialists

nGAGE Specialist Recruitment

6.9

7.4

STEM

98

N

85,553

68,095

ITHR Group

4.0

4.3

IT, communications

99

N

85,543

74,537

Gemini People

3.9

4.0

Advertising, digital, NGOs, fashion & media

100

85,283

98,643

Gattaca

74.7

73.0

Engineering, technology, IT & telecoms, professional, education

Gross pro head/em fit per latest yeployee ar (£) Gross pro head/emplfit per previous oyee year (£) Company/ trading n ame

2.9

Change

Adecco SA

Rank

Parent g (where droup if ferent name)

RECRUITER HOT 100 COMPANIES 2017

51

N

104,429

119,818

Roevin Management Services

52

N

104,294

108,569

Twenty Recruitment

53

103,901

92,490

Rullion Engineering

54

103,782

97,323

55

N

103,611

56

103,575

57

N

58

59

24 RECRUITER

p20-27 Hot 100 2017.indd 24

JANUARY 2018

Rullion

Randstad Holding NV

nGAGE Specialist Recruitment

Manpower

Randstad Holding NV

Adecco SA

Key:

Up

Down

– Unchanged

N New

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RECRUITER HOT 100 COMPANIES 2017

£85,283 GPH, as previous expansion failed to deliver quite sufficient return before further headcount increases were undertaken during the 2016 reporting period. Across the HOT 100 companies 60% expanded their workforce either organically or by acquisition, compared to 76% previously, signalling greater caution. A fairly similar figure of 57% increased GPH, an improvement on last year’s low point of 47%. However, that elusive dream combination of expanding workforce and rising productivity was achieved by just 27% of the 2017 HOT 100, versus 29% last year and 49% the previous year. Of these 27 companies, 21 employed over 50 people, as these larger recruiters punched above their weight, while there were just six of the 30 firms employing below 50 employees. A breakdown of these 27 companies shows Technical/Engineering/Science gained relative ground against the other key sector groups, with Public Sector much reduced and Technology also losing ground. The numbers this year compared to last year are: Professional 9 (8), Technical 7 (5), Public Sector 2 (5) and Technology 8 (10), with the remaining company being an Industrial (blue collar) specialist, First Call Contract Services. Among the leaders, the HOT 10 sees just two companies achieve productivity growth while at the same time expanding headcount – top ranked Falcon Green and 5th ranked

That elusive dream combination of expanding workforce and rising productivity was achieved by just 27% of the 2017 HOT 100 LA International. This is far fewer than previous years and indicates the caution displayed even by the best performers in the industry. Among five companies included in both the top 20 of the HOT 100 and the productivity growth top 20 table, Marlin Green is the stand-out performer, with over 24% productivity growth while simultaneously expanding its sales, GP and headcount. The only other company making both lists without making substantial cuts to headcount is The Bridge (IT), which held headcount and expanded both sales and GP.

9.3% Rise in 2017 HOT 100 group sales turnover

Sector profile ● In the top 20, there were five Professionals listed, unchanged from last year, three of which are in the HOT 10. Eight IT staffing companies are listed in the top 20, and four also make it into the HOT 10, while the top 20 balance comprises four Public Sector firms (two executive and two healthcare providers) and just two Technical recruiters and one blue collar skills.

Calculations ‘temp’ employment costs. The mix of business between temporary and permanent placements influences the level of gross margin as does the trend in temporary pricing and employment related costs. With larger contract

business notoriously competitive compared with SME or ad hoc placements, the type of business and delivery model/cost structure play a crucial part both in determining temporary margin and also bottom line profitability.

Job type profile ● The HOT 10 profile still retains a good mix of permanent and temporary recruiters without any of the major multi-sector or generalists. SSQ, Sheffield Haworth and Odgers are the three recruiters heavily biased towards perm placement (all estimated at over 80% of net fees). Falcon Green, LA International, Rullion IT and

Gross margin is the gross profit (or net fees) as a percentage of sales turnover. Gross profit is a combination of permanent fees (at virtually 100% margin) plus the profit on temporary supply after subtracting payroll and other

● The HOT 10 by sector comprises a varied mix of specialised recruiters. Employing just 21 staff, Falcon Green (construction), being a strong contender in Recruiter’s FAST 50, has shot to the top pushing last year’s winner, legal recruiter SSQ, into second place. Mayday Healthcare at 3rd is the top frontline public sector provider, albeit present due to substantial headcount reduction. Also with a strong public sector/not-for-profit presence, Green Park eased to 4th. LA International remained stable as the top-placed Technology recruiter completing the top five places. Falcon Green and Green Park are small companies relative to the other three but even the largest, SSQ, employs only 125. The Bridge (IT), Rullion IT and Odgers Intermediate all moved into the HOT 10 alongside regulars WA Consultants and Sheffield Haworth, the latter dropping to 7th. Odgers, employing 477, is by far the largest constituent of the HOT 10 but like Mayday has significantly reduced headcount thus boosting productivity.

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WA Consultants are all biased towards the temporary/contractor market with the others offering a greater mix of both permanent and temporary business. Size profile ● Among the large corporate groups in the HOT 100, where it makes sense to separate out the UK subsidiaries these have again been listed individually – Adecco

and Randstad have five and four respectively. The nGAGE (formerly HCIG) ‘stable’ now has four companies in this year’s HOT 100. Manpower’s Experis also retains its presence. Overall, 20% of HOT 100 companies employ more than 200 staff just shy of last year’s level, while those employing from 100 to 199 staff stood unchanged at 21% of constituents. A slight drop was seen in the very smallest firms with 12%

(13% last year) employing between 20 and 30 staff. The 30–49 band remained at 18% and the employee band 50 to 100 rose slightly to 29% from 27%. Overall this implies little change in the employee size profile of the HOT 100 this year. Office/Industrial/Trades/General Staffing This ‘sector’ has held onto last year’s revival, again helped by a lower

Gross margin breakdown Margin distribution of 2017 HOT 100 versus previous issues has a different feel this year. While there is still movement across the middle ranging margins, from 15% to 40% margin, there was also a sharp drop in the near purely permanent recruiters. In the 15% to 20% range there was a complete reversal of last year’s gains. At the same time a strong rise in both the 20% to 30% and 30% to 40% margin bands was seen. The long-term

trend on the chart shows overall growth in constituents in the lower margin bands (up to 30%) with mainly a mix of both temporary and permanent market presence. Higher margin (>40%) is driven mostly by perm and has now universally lost ground. Twenty-eight agencies in the HOT 100 now achieve gross margin below 15%, with still 10 of these below 10%. Most represented group (28

companies) has moved back up a band to those companies with margin between 20% and 30%, ie. temporary biased but with a strong permanent fees presence. This band also saw most gains: from 23 to 28 companies. Biggest losers: the over 50% margin band shed more companies in the HOT 100 – from 14 down to just nine constituents; historically this represents a sudden shift

downwards. Four of the nine are almost exclusively permanent recruiters/permanent specialists, while the remaining five companies exhibit a highly predominant permanent mix. Permanent market in 2016 once again believed in recovery as it posted more growth in the first half of the year, but then a slowdown especially in the more senior permanent markets appeared to follow the EU Referendum result.

H O T 1 0 0 C O M P A N I E S B Y G R O S S M A R G I N B A N D (in accounting year)

30 2007 2008

25

2009 2010 20

2011 2012

15

2013 2014 2015

10

Source: Company accounts

2016 5

0 less than 10%

10% to 15%

15% to 20%

20% to 30%

30% to 40%

40% to 50%

more than 50%

Gross market band range 26 RECRUITER

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entry threshold. There was a definite migration into and up the HOT 100 rankings, with eight companies in the main HOT 100 albeit only one left in the next 10 up to 110th. At 18th sits Workforce People Solutions (previously named Euroforce), specialising in sourcing tradespeople mainly from across Europe into furniture, textile, automotive & transport sectors in the UK. Drivers specialist PPF shoots up to 27th from 51st, First Call Contract Services (packaging, processing, logistics, print & mail) advanced to 42nd (last year 56th) and office specialist Angela Mortimer was close to prior year at 78th. Forrest Recruitment enters at 79th, Impact Recruitment comes in at 93rd alongside Extrastaff at 95th and Office Angels at 98th. Champion Employment sits at 106th close by in that following pack of 10. The reasons for inclusion were varied. Most posted similar overall productivity to last year but with slightly fewer people and in some cases lower GP, although newcomer Impact expanded actively on both counts. First Call made notable advances in productivity as it expanded headcount but achieved even greater GP growth. PPF reported strong GP growth from a fairly stable workforce. Workforce People meanwhile slid down the scale as GPH dropped by over 10% due to a small decline in GP contrasted by a slight headcount expansion. The first of the major national recruiters, Pertemps, stood at 116th closely followed by Impellam – these companies both have a varied mix of ‘generalist’ recruitment and professional sector specialisations. Given the financial reality of the office and industrial markets, companies in this ‘sector’, perhaps above all others, needed to adapt and evolve to survive and prosper. Those that have stayed in or are now reentering the HOT 100 have done very well indeed in this respect.

Conclusion and outlook Last year we suggested that the recruitment industry might slow its expansion further and look to improve the productivity of previous hires. This has indeed occurred on the evidence of this HOT 100 analysis. The HOT 100 profile has also changed a little this year, with notably fewer dedicated permanent recruiters but a definite rise in those recruiters cutting their cloth in both directions – perm and temp. Meanwhile, on aggregate it has out-performed the wider market with gross margin held firm but there is a hint of further slow erosion of the temporary margin as evidence suggests that perm business on aggregate looked to be slightly stronger in 2016, driven by a first half recovery ahead of the EU Referendum. Other findings show incremental growth to be particularly strong – with additional headcount ‘on paper’ bringing in substantial productivity, which may well relate in part to technological advancements. It suggests that in future fewer new heads are needed to expand business levels and this will be cemented by further improvements in staff training and professional development. Sector fortunes also changed with net fees growth in the HOT 10 sector specialisations at both Technology and Professionals but a sharp decline for each of Engineering/Technical/ Science (ETS) and Public Sector. Only Professionals increased their headcount and productivity. Cuts in staffing still ensured increases or, at worst, unchanged productivity from ETS and

the Public Sector categories, while Technology excelled with careful management of headcount to ensure full translation of fee gains into GPH. Nevertheless, there remain challenges beyond the control of this industry… The rapid response from the Bank of England last year to counter recessionary pressures post the EU Referendum may have helped to sustain economic growth, albeit somewhat lower than pre-Referendum forecasts. More recently, the Bank’s rise in its base rate perhaps implies that the threat of inflation now

low sales growth trend has persisted through 2017, all despite the benefit of sharp increases in some elements of the NMW. If it were possible to put aside the Brexit issue – both its economic and mobility of labour impact – and consider other influences on recruitment, demographics and technology loom large. Each offers opportunities and risks. Demographics is still tied up with EU mobility – the ability to tap into the wider pool of talent has muted the effects of an ageing workforce in the UK but this will be affected by recovering EU economies retaining more of their own talent and by any agreement on migration. Technology is a many tentacled creature – AI, automation and disruption will all play a part in the future of the global economy and the world of work, and recruitment companies need to adapt their strategy both to lead and innovate where possible and best fit elsewhere. The trends outlined in this report formed the baseline for the recruitment industry as it entered 2017 and now attempts to seek visibility going forward. The economic and political backdrop remains challenging, particularly in the UK, and industry constituents will need to bring all their strategic skills to bear if they are to achieve continuing growth. With these well documented obstacles combining with the structural changes in society, technology and mobility it is hard to imagine few companies better than many of those in the HOT 100 capable of meeting the challenge.

Nevertheless, there remain challenges beyond the control of this industry outweighs the threat of recession. That may be seen as one better signal amidst a mixed digest of economic indicators. So much of the future economic and workforce landscape remains hinged upon the outcome of the Brexit negotiations and those talks are themselves dependent upon a politically weakened government and how receptive are the EU 27. It does not make for an ideal backdrop for the recruitment industry, so dependent upon confidence, and it is unsurprising that the temporary market now appears to have outperformed the permanent recruitment market during the second half of 2016 and thus far in calendar 2017. The lowly 3% growth in official industry sales turnover from 2015 was repeated in 2016 and this

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RULLIO NOT RESTING ON ITS LAURELS James Saoulli insists he hasn’t quite made it yet because he’s too busy planning the next 100 years for multi-sector specialist recruiter Rullion. Colin Cottell went to meet him ad UK recruitment bosses been in Rullion CEO James Saoulli’s shoes last year they would have been reluctant to step out of what was a very comfortable zone. Why would they? If it ain’t broke, don’t fix it. Not Saoulli though: he can’t stand still. The multisector specialist recruiter posted record profits in successive years between 2013 and 2015 and its CEO is looking to push on. Beginning in 1978, as a traditionally structured company made up of six separate legal entities, each with their own MD and overseen by a company chairman, Rullion grew to become one of the UK’s largest privatelyowned recruitment companies. A consistently high performer in Recruiter’s HOT 100 – the definitive ranking of the UK’s most profitable and efficient recruitment companies – Rullion’s IT business is ranked 8th and its engineering business is 53rd in this year’s HOT 100 rankings. While many recruiters in such a situation

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would have settled for the status quo, it is clear from the very start of this interview at Rullion’s office in the bustling City of London that Saoulli is not that person. After all, what other CEO of a £460m turnover recruitment company would deny they had ‘made it’ in their career, wouldn’t consider the company a recruitment company at all and would be planning ahead 100 years to 2117? Oh, and in an almost throwaway remark, would express annoyance he hadn’t created LinkedIn? It is clear that Saoulli, who took on the position of CEO at the family-owned business at the start of 2017, taking over as boss from Rullion’s founder, company chairman and his father Themis, is very much his own man, exhibiting an independent streak, as well as a desire to leave his own legacy. Asked later for the secret of his own success, he responds: “I don’t want to answer that question. The journey is just beginning. I remember someone saying to me ‘oh, you are CEO, you have arrived’, and I remember thinking ‘I have barely begun’. The day you think you are successful that’s the day you need to retire.” That day looks a long way off, as Saoulli embarks on a five-minute explanation of why despite its powerful market presence and strong financial numbers Rullion can’t afford to stay still. While he acknowledges that the original vision and strategy initiated by his father nearly four decades ago based on separate companies focused on separate markets worked “very well”, he contends that for the scale of expansion he has in mind for Rullion, that old business model and way of working it is no longer fit for purpose. “The numbers were good,” he says, but in his view “they were being derived from past glories”. “The question that any organisation needs

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to consistently ask itself is ‘how do we remain relevant to our customers?’. That is the question we at Rullion always pose ourselves.” It is a question that Saoulli, a graduate of the London School of Economics and INSEAD Business School, who prior to joining the family firm worked for General Electric, has been grappling with since becoming a board director five years ago. “Around 2013 it became obvious that unless Rullion changed its ways it would stop being relevant to its customers, because what they needed was different from the past,” he explains. Saoulli says the first plank in this ongoing quest to remain relevant was completed earlier in 2017 when Rullion was restructured from “a chairman-led model with six independent companies each with its own MD, to a CEO model, of one consolidated group working more collaboratively”. “The world of recruitment has changed in my estimation. If you want a 10, 15, 100-strong organisation, even up to a 500 headcount, the model of an all-powerful MD who runs the organisation with an iron fist can work,” he explains. However, beyond that size of organisation this model falls down. “I am not interested in being a recruitment company with a 500 headcount. I am interested in being a recruitment company with 10,000 across the globe, and that requires a completely different approach,” says Saoulli. He later goes on to qualify this by saying this is “a statement of intent rather than a concrete goal”. He explains that by having an executive team that meets every week, made up of experts in process design, technology and branding, Rullion now has the capability to scale up the business in a way that just wasn’t possible before. But this is by no means the only change that Saoulli is driving through. “Within our managed solutions, it is not enough to fill the roles, it is about recognising that we must be perceived as partners of choice for the journey they need to go on. And that is a big change for them [staff ].” Similarly, changes to the company’s commission schemes so they are based on customer satisfaction “has had a big impact on our people”. Another major shift has been to a more candidate-led approach focusing on niche markets, such as cyber security, driven by a specialist team based in Manchester. WWW.RECRUITER.CO.UK 29

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Saoulli acknowledges that pushing through internal change is hard. He admits staff attrition “is higher than we would like it”, and the company has “had to part company with staff who can’t make the adjustment or are not up for it”. However, at the company’s highest levels, the new vision has struck a chord. “In the old world we had six MDs,” he continues, “so think about the conversation telling them ‘you are no longer an MD’.” Yet he says all six former MDs are still with the firm. Saoulli acknowledges that as Rullion continues on “this very exciting and ambitious journey” constant change is a necessity, but at the same time he says, “a balance needs to be struck”. “We don’t want to lose what makes Rullion a very special place to work” – what he describes as ‘the soul’ of the company. “I think we are pretty good at thinking analytically about where we need to position ourselves. But that is only 20% – 80% is winning hearts and minds,” he continues. Faced with this battle to win hearts and minds, Saoulli says his favourite pitch internally is what he calls “the theatre pitch” in which he likens Rullion “to being a really good regional theatre company that occasionally has gone to the West End and put on a really good performance”. However, “to go to the West End and perform six nights in a row is something else and requires a huge commitment, passion and skill set”. It is clearly a pitch that Saoulli will need to call on in again, as there are no signs that he has any intention of slowing down or downsizing his ambitions for Rullion. “I want to emphasise something,” he says with some force. “What I really have my mind on is transforming our industry and making sure Rullion is at the forefront of that transformation by creating products and services of the future. That is where my ambition lies.” Saoulli continues: “What I always tell people who join is, I am trying to create a company that is here in 100 years’ time. Our mindset must be about making long-term investments and looking at the long term. “It’s all about having a disruptor mindset. If we don’t disrupt and cannibalise our market and think about remaining in the forefront, someone else will,” he explains. LinkedIn – “a great idea, but a very simple idea” – is a 30 RECRUITER

Philosophy of life: “When you wake up in the morning you need to be able to look at yourself in the mirror and be proud of what you see” James Saoulli prime example, he says, and one he is annoyed (although he uses a ruder term) “we didn’t create”. Saoulli then rushes through some of things that Rullion has embarked on, adding “we have been working on them for several years”. They include machine learning, as well as projects to provide real-time management information on everything the company does. Rullion’s business improvement team is focusing on how good organisational design can give large employers such as Rullion a competitive advantage. At the heart of much of this – indeed “a prerequisite” – is technology. While using an external provider, with the best tools on the market, has its place, he says the alternative “is that technology can give you competitive advantage, and therefore you want to be doing it yourself”. In a hint to how he sees the Rullion of the future, Saoulli says he envisages a world “where we will create many different products and services – what they are yet I don’t know – we’re experimenting with a number of different ideas”. Indeed, he continues: “I don’t see Rullion as a recruitment business, I see us as an organisation that operates within the market of getting things done. That’s how I see it, and one of our product lines is recruitment.” In the same vein, he doesn’t define himself as a recruiter either, because “as soon as you define yourself as something, you are in trouble ... I see Rullion as an intermediary and that gives us much more flexibility in terms of how we look at designing solutions. As soon as you define yourself very narrowly that is a recipe for disaster”. With the independently minded and forward-thinking Saoulli at the helm that doesn’t look at all likely. ●

C O M PA N Y

1978 Rullion founded by Themis Saoulli 1981 enters engineering 1988 enters IT 1992 goes into construction 2010 myRecruiter SaaS recruitment software launched 2010 £228m turnover 2016 Year-end Dec 2016 Turnover £460m GP/Net fee Income £27.9m Staff numbers 320

JAMES SAOULLI Jan 2107- present CEO, Rullion 2015- present Director, Rullion 2010-14 Director, Rullion Solutions 2008-10 Director, Rullion Management Services 2007-08 Pricing leader, General Electric

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Recruiter Hot 100 2017 (January 2018)  
Recruiter Hot 100 2017 (January 2018)