Hays bets big on new strategy to restore growth and profitability
On 1 September 2023 Dirk Hahn ascended to the global CEO role at Hays, having joined the company in the late 1990s.
The 2025 Hays Annual Report, released earlier this week, is a stark reminder of the challenges Hahn faces as he attempts to turn around the world’s sixth largest staffing business.
The company’s share price, trading at near historical lows, is a confronting everyday reminder for Hahn and the rest of the Hays plc board, that the investment community remains very bearish about the likelihood of significant progress being made any time soon.
Hahn’s ascension to the top job was a reward for his leadership in Hays Germany, which has grown to be the jewel in the Hays crown.
In the 2007 financial year, Hays Germany generated £40 million in net fees (6.3% of the group’s total net fees) from 160 consultants (3.2% of the group’s consultants) across six offices (1.6% of the group’s offices).
In the 2025 financial year, Hays Germany generated £309 million in net fees (31.7% of the group’s total net fees) from 1624 consultants (26.7% of the group’s consultants) across 26 offices (12.6% of the group’s offices).
In FY 2025, Hays Germany produced 114% of the group’s operating profit, as the remaining 68.3% of the company’s net fees from the three other divisions (ANZ, UK&I, and RoW) produced a combined operating loss of £6.5 million.
In FY 2008, the specialisms of IT and engineering, respectively, generated 14% and 4% of global net fee for Hays. In FY 2025, the corresponding figures were 25% and 11%.
Accounting, the specialism that launched Hays (when it was known as Accountancy Personnel), has halved its contribution to net fees in the same 17-year period, dropping from 30% to 15%.
Hahn has outlined the company’s five levers of growth as follows:
Using the company’s competitive advantages described as
Whose effectiveness is measured by the following KPIs
The highest expectations for significant contributions to future growth in net fees and operating profit are from countries identified as ‘Key, (Germany, Australia and the UK); and ‘Focus’ (Austria, France, Italy, Japan, Poland, Spain, Switzerland and the USA). An early win in a Focus country (Austria) in executing Hahn’s strategy is documented in the annual report.
The explicit financial goal is to “…enable the Group to achieve its long-term objective of returning to, and then exceeding, our previous peak operating profit of £250 million. We expect all business lines to be able to deliver a conversion rate of at least 25% (pre-central costs) in normal market conditions, with an overall Group conversion rate of 22-25%.”
The conversion rate is operating profit expressed as a percentage of net fees.
The conversion rate in FY 2025 was 4.7%, half the FY 2025 result and a huge drop from the 15.2% and 17.7% recorded in FY 2023 and FY 2022, respectively, indicating that as rapidly as net fee income has dropped, costs have failed to drop at the same, or faster rate.
The drive to reduce the cost base has been relentless with 29 offices either closed or merged including 16 closed offices in the UK&I alone. Non-consultant headcount was reduced by 15% during the year. The Statement of Works business in the UK&I was shut. Chile and Colombia were exited offices in Rio de Janeiro and Campinas were closed. The overall impact of the drive to lower costs is a structural lowering of costs by c.£65 million per annum since July 2023. Exceptional restructuring charges of £30.7 million in FY2025 and £80.0 million in FY2024 have been incurred in the past two years.
The scale of the mountain Hahn is aiming to climb in a historical context, which I outlined in a previous blog.
In the three financial years 2006, 2007, and 2008, Hays…… (reported) a conversion rate…..of 34.1%, 34.1%, and 32.1% respectively.
In the 2009 financial year, which included the initial impact of the GFC, the conversion rate dropped to 23.6% and has never risen above that figure in the thirteen subsequent financial years. The conversion rate’s peak since 2010 was 22.7% in 2018 and the median conversion rate across those thirteen years is 17.7%.
A declining staff engagement score (below) is an almost inevitable result of headcount reductions, tight performance management and smaller commission payments; however, a further drop in the next engagement survey would be a bad omen for the long-term success of Hahn’s vision – if he doesn’t turn the staff’s confidence around, then every other goal is significantly more challenging.
Hahn’s senior leadership team (of 12) includes a newly-hired Chief People Officer, a newly-promoted Finance Director, and a newly-hired CEO for the UK&I division, so it’s a big year ahead for not just Hahn but a number of his key executives who all have a lot to deliver in a challenging and unpredictable global economy.
Dirk Hahn has expressed confidence in the strategy and people, believing Hays is “well positioned to drive material net fee and profit growth when key markets recover”. The market, however, will be waiting for tangible evidence that these green shoots translate into sustained financial performance before shedding its current bearish disposition.
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