If 1992 was Queen Elizabeth II’s annus horribilis then 2016 was surely PageGroup Australia’s equivalent.
The genesis of PageGroup’s (PG, although still best known as ‘Michael Page’) year from hell occurred in September 2015 when long-time PG employee, Simon Meyer signed off as PG Managing Director for Australia and New Zealand, four years after taking on responsibility for the Australian operation and two years after taking on the dual role. Meyer’s departure came one month after the announcement of a 13 per cent local net profit decline for the 2015 half-year, coming off the back of a 2014 full-year gross profit and net profit, decline.
Two months later, PG’s Australian Director for Sales, marketing, retail and digital, Richard Wynn left the company. Then, in April 2016, Wynn and Meyer announced the launch of their new agency; FutureYou. Industry news service ShortList reported (subscriber access):
FutureYou’s launching with about 12 business leaders and 25–30 consultants confirmed in Sydney, where it has taken a floor of the MLC Centre in Martin Place.
Meyer hopes to grow the company to 100 staff across Sydney and Melbourne by the end of what he is calling its “start-up year”, while admitting the growth plans are “actually quite ambitious”.
Four other co-founders were subsequently announced, with three of the four having significant previous tenure at PageGroup.
In the six months subsequent to the April launch, ShortList announced another nine PG employees were leaving, bound for FutureYou.
A few days after Meyer’s departure from PageGroup, Matthew Gribble was announced as the new regional MD for PageGroup Australia and New Zealand, heading the Page Personnel, Michael Page and Page Executive brands.
Fast forward ten months from Gribble’s elevation and two months on from the FutureYou launch, PageGroup scored a massive own goal in form of their now infamous ski trip.
As a reminder, all the major news websites around Australia published an account of an (unofficial) “Michael Page” staff weekend at Mt Buller in the Victorian snowfields, best summarised in Business Insider as “Michael Page employees allegedly trashed a Victorian ski lodge with ‘the biggest party of the season.” Allegation of threatened violence and intimating behaviour by PG employees (male) against ski lodge employee (female) were reported in many media outlets, accompanied by (easily identifiable) photos of the alleged perpetrators.
Subsequently no PG executive was publicly held to account for this drunken and aggressive behavior (not denied by the company) displayed by an unknown number of the 22 PG employees who were attending the trip.
Four weeks after the reporting of the event I blogged my dismay at the lack of leadership shown by those PG executives responsible for the PG Australian operation. PG declined all media requests for further comment or details, stating ‘Michael Page will be making no further comment’.
They decided that their PR strategy would be to close ranks and hope the issue would blow over quickly.
PG took the ‘small target’ approach, one I opined was risky. PG gambled that doing nothing would be the best bet in the long term.
Has it worked?
Let’s have a look at the recent PageGroup (Australia) full-year results (January – December) in context:
|AUD millions||2013||2014||2015||2016||2017||H1 2018#|
# H1 2018 Covers the January – June 2018 for both Australia and NZ
The data reveals that the upward momentum stalled then dropped in 2015. Subsequently declining again in 2016 (the ski trip happened in July 2016, mid way through the PG 2016 financial year).
Last year was a very strong year for the local recruitment industry but PG’s sales and gross profit flat-lined and their pre-tax profit dropped.
If the first half of this year is any indication it looks like PG is headed for another disappointing full year result in 2018. Compared to the same period in 2017, PG’s revenue is down 2 per cent, gross profit is up 2 per cent and pre-tax profit declined a worrisome 43 per cent.
These results re against a backdrop of competitors, like Hays (gross profit up 15% and pre-tax profit up 23% across the two years 2015 – 2017) and Robert Walters (Jan- June 2018 results reported gross profit up 15% and pre-tax profit up 28%, compared to Jan – June 2017).
It’s impossible to apportion the impact of each event separately but it’s uncontroversial to assert that the morale at PageGroup, already dented by the FutureYou launch and subsequent recruitment announcements, would not have improved as the ugly fallout of the Mount Buller ski trip played out in public.
Sharp & Carter, co-founded by ex-Michael Page senior manager, Stephen Carter in 2009 is one example of an agency who appear to have benefited from the turmoil at PageGroup. Although many of the long-term S&C team have PageGroup backgrounds another 12 ex-PageGroup employees have joined S&C subsequent to the infamous ski trip.
Interestingly three (all Sydney-based) of these 12 S&C employees first joined FutureYou before subsequently departing for Sharp & Carter.
In August 2016, according to LinkedIn data, Sharp & Carter had 67 employees and in the past 24 months that number has jumped to 105.
Starting as single office in suburban Melbourne, S&C celebrated the commencement of operations in Brisbane earlier this year, bringing their total number of offices to five, with two offices in both Melbourne and Sydney. This growth in geographical reach has coincided with an aggressive push into new markets covering legal, sales & marketing, and property & construction, all traditional areas of strength for PageGroup.
Although clearly Sharp & Carter were doing plenty right prior to the PageGroup annus horribilis (you don’t organically get to 50 consultants in less than 7 years, unless you’ve got something pretty good going on inside your agency) they were perfectly positioned to take advantage of PageGroup’s self-inflicted wounds.
Last week I wrote about an agency MD making the very hard call to fire one of his highest billing employees because the employee (also a director) wasn’t playing the team game. In part, I asserted:
It’s not uncommon for agency owners to compromise their company’s values in order to keep a high billing consultant whose behavior has been at odds, sometimes dramatically, with the collaborative nature of their team or company. Its expedient decisions like these that often mark the beginning of a terminal decline in the fortunes of a once-excellent company.
Two years’ ago PageGroup executives made the decision to not cut loose the (very senior) leaders and major perpetrators responsible for the worst behavior of that infamous July 2016 ski trip. It was a very public repudiation of the first value listed on the Michael Page Core Values page: Take pride: We’re proud of what we do, of the company we work for and of our colleagues.
Although the company’s recent results are certainly not an indicator of PageGroup’s terminal decline in Australia (and I am not predicting such a decline) I suspect, given how little PageGroup have clearly been able to take financial advantage of the local employment market’s bull run in the past two years, there’s a case to be made that the ‘doing nothing’ response in mid-2016 has, at the very least, cost PageGroup shareholders a few million dollars in net profit.
And at the very worst, well………… who knows?