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Hays has decided to exit from servicing the largest employing sector in the country with the formal notification by the new global chief executive, Dirk Hahn, that healthcare and social assistance (HSA) was gone as a local specialism.

It appears the Hays leadership team has decided the specialism does not offer sufficient potential to meet the stated target levels of profitability.

In the Hays Annual Report & Accounts 2024 Hahn notes (on page 6), “We have conducted detailed analysis of our operations on a business-line basis. In FY24, this has led to a number of businesses being closed, including……our Healthcare and Social Care businesses in ANZ and UK&I, which were sub-scale.”

Appointed in late August 2023 Hahn announced the company’s focused strategy in February this year.

This is based on five strategic levers:

  1. grow our leading positions in the most in-demand future job categories
  2. increase our focus on higher skilled, higher paid roles
  3. greater focus on resilient and growing industries and markets
  4. build stronger relationships with our clients and candidates; and
  5. drive an increased proportion of non-Perm fees across our businesses.

These levers underpin the big decisions in service of the stated goal of “…all business lines to be able to deliver a conversion rate (the percentage of net fees converting to operating profit) of at least 25% (pre-central costs), and the Group’s overall conversion rate target is 22-25%.”

Heathcare and social assistance is easily the largest employing sector in Australia (2.26 million workers) accounting for 15.6% of the total workforce. Construction, is the next largest sector, employing 1.33 million workers (9.3% of the national workforce), and it’s also the largest specialism for Hays ANZ.

HSA covers occupations in hospitals, general and specialist medical services, pathology and diagnostic imaging services, dental and allied health care, ambulance services, child care, and aged/residential care. None of the medical and related occupations that dominate this sector are ones Hays possesses or has ever possessed, market dominance in.

Many of the occupations common throughout the HSA sector rely on migrant workers and have high compliance obligations, both factors that can increase costs and lengthen time-to-fill. Neither of these factors will change in the foreseeable future making it a difficult specialism to achieve a 25% conversion rate.

The local Hays website still lists heathcare as a specialism and 26 jobs remain listed under Hays healthcare jobs although 15 are in regional Queensland.

Adopting the ‘go hard or go home’ mantra of the new global CEO, Hays locally, under the leadership of new APAC CEO, Matthew Dickason, has decided it’s a sector they are happy to leave to their competitors. Focusing attention on their traditional strengths of construction, engineering, IT, and other corporate support roles within accounting, HR, marketing and administration is a much better bet.

Hahn must like what the earlier indicators from this side of the world are telling him as in the annual report (page 7) he notes “…..we have been decisive and there are some early signs of success, particularly in Australia where the changes our MD Matthew Dickason and team have made are starting to bear fruit”.

Hahn states his ‘Golden Rule’ (page 12) is that operating profit growth must be greater than fee growth, which in turn must be greater than headcount growth through the cycle, suggesting other underperforming specialisms are under the microscope and may suffer the same fate as healthcare has done in Australia and the UK & Ireland.

Most pleasing for Hahn would be 2024 global like-for-like net fees per consultant per annum, which rose slightly compared to last year and is only 2.75% off the 2022 high of £145,400 (AUD $286,000), indicating consultant headcount reduction across Hays globally has been very effectively managed.

Yesterday in London, Hays shares were trading 54% below their post-COVID high and 26% below their price when Dirk Hahn took the global reins of Hays from Alistair Cox 14 months ago.

Even in the last four months, the share price has dropped 19%, indicating investors are very bearish about Hays’s future prospects for profitable growth.

Dirk Hahn has a tough road ahead of him.

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A curious run of global executive departures at Hays

Hays back to 2019 levels with IT surging as construction/property sags

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