What’s the best free resource available for learning about scaling recruitment agency success?
The Hays plc Annual Report would be a very strong contender.
As I read through the recently released 2018 edition (yet another fascinating and insightful read) I was reminded of a presentation from the recent RCSA Conference in Noosa.
President of Staffing Industry Analysts (the most authoritative specialist staffing metrics company in the world), Barry Asin presented Breaking Through: Leadership Disciplines from Top Performing Staffing Firms, on the conference’s final afternoon. The presentation was an overview of the book of the same name that Asin recently co-authored.
The book articulates the five leadership disciplines that underpin the success of the small number of staffing firms that make it through the first three stages of growth (owner/operator dependent, independent operation, organic scale) to reach the fourth stage of growth (strategic expansion).
1) Commitment: The willingness to sacrifice and take on financial, personal and professional risk
2) Direction: Developing an effective market strategy supported by the necessary resources combined with the discipline to consistently review the critical measures and make changes as necessary.
3) Culture: Who you hire, fire and promote underpinned by the values, rituals, incentives and a common story.
4) Talent Development: Represented by hiring, evaluation, and training & development.
5) Execution: Competitive practises that are scalable and consistent, reinforced by policies, processes and tools
The Hays Annual Report, and the evolution of Hays more generally, provides insights into the importance each of these disciplines as drivers of the Hays strategic expansion.
Commitment: Originally a diversified group. Hays completed, in 2004, a plan to dispose of all non-core business and demerge its mail business, to become a pure-play specialist recruitment business. Fifteen years ago Hays directors took a calculated risk in rejecting the conventional wisdom don’t-have-all-your-eggs-in-one-basket to make a big bet in the recruitment industry. And it has paid off, in spades.
Direction: “We have deliberately built a balanced business exposed to mature, cyclical markets and structurally emerging markets. In FY18, 54% of our net fees were generated in immature markets, with 46% in more mature markets. This compares to 17% and 83% respectively 10 years ago.” (Hays plc Annual Report 2018, page 5)
“We see our non-Perm business as a repeatable and high-value source of earnings, more resilient to the (economic) cycle. (page 8)
“We also tailor our services to meet specific company needs, adapting to new business practices and client requirements such as centralised procurement. We have developed hub-like delivery models that match our clients’ needs for efficient recruitment processes at scale, in the most effective and appropriate way.” (page 10)
Culture: “Some of the awards received in FY18 include France being ranked third in the top 500 workplaces nationally, and Germany gaining an Employers Institute ‘Top Employer’ award for a tenth consecutive year. Glassdoor UK placed us in the top 50 of all companies for the fourth year running. And at the Recruitment International awards, Australia won ‘Best Large Recruiter To Work For’. (page 18)
“…our annual employee engagement survey measures satisfaction, sense of belonging and personal motivations. This achieved a record high level of participation of 86% globally, and a high engagement score of 82%. Key strengths identified from the feedback included supportive line management, high levels of recognition, commitment to development and clear career paths. That suggests to me that we are doing many things right. (page 18)
Talent Development: “This year we launched the Hays ‘International Leadership and Management Programme’. I’m delighted with the initial results, and 90 of our senior leaders will attend in its first two years. (page 18)
Last year we delivered 4,185 training days and I’m proud to say that 3,370 colleagues were promoted. A further 68 transferred internationally, reinforcing our culture while giving them exciting new opportunities globally. “(page 18)
Execution: “Our revenue model is relatively simple: we earn a percentage fee, usually on a contingent basis, when we successfully place a candidate in a role with a client. Our delivery model is based on deep industry expertise across Temp, Contracting and Perm recruitment markets. Our consultants are long-term, trusted partners to both clients and candidates. They are equipped with the best technology, tools and data analytics in the industry.” (page 2)
“We focus on net fees rather than turnover, most of which is simply the ‘pass through’ of Temp salary. Our ability to convert net fees into operating profit (our ‘conversion rate’) is our key profit metric. At 22.7%, we have one of the highest conversion rates in the industry. Group net fees drive our operational leverage, given high levels of incremental profit ‘drop-through’. Our business is also highly cash-generative, with relatively low capital requirements.” (page 2)
“The guiding principles of our technology strategy are: 1) Maximise internal efficiency by developing new consultant tools, and partner with best-in-class software; 2) Test new client and candidate engagement channels; 3) Invest selectively in best-in-class HR Tech software; 4) Investigate new tech-enabled delivery models. This approach is summarised in three broad prisms: Approachability, Connectivity and Efficiency.” (page 12)
“We built on our collaborations with some of the world’s best organisations, designed to bring their cutting-edge technologies and innovations to bear for the benefit of our clients and candidates. Our partnership with Xing in Germany reached its one-year anniversary in August 2018, and continues to go very well. Together with our ground-breaking collaborations with Seek in Australia and LinkedIn globally, and more recently with Google as they launch Google Jobs, we are continually looking for ways to get the most accurate and up-to-date data in the industry, and use it to ‘Find & Engage’ with great candidates quicker and better than anyone else.” (page 16)
Hays have set the pace globally in scaling a recruitment business while maintaining industry-leading profit margins.
It’s no secret what’s at the heart of their global success – leadership.
Note: special thanks to Barry Asin and Staffing Industry Analysts for permission to use their material. You can find out more about SIA’s industry-specific research here and you can buy Barry Asin’s book Breaking Through: Leadership Disciplines from Top Performing Staffing Firms here