2018 has delivered record growth for recruitment agencies across Australia and NZ.
Which teams by size are doing the best and what can we learn from them?
Good news this month, with the first 5 months of 2018 showing the best market conditions we’ve seen in the last 10 years. Data from Staffing Industry Metrics shows the results of 117 recruitment agencies across Australia and New Zealand from January to May 2018 compared to the same period in 2017.
Across the board, results show that recruitment agencies in Australia and New Zealand are growing strongly. But which of the teams by size are doing the best – and what can we learn from them?
2018 growth for recruitment agencies results by team size
Unsurprisingly, agencies in the 21 to 40 staff segment have the lowest growth rate at 3% to 7%. We often refer to this segment as the dreaded ‘valley of death’ because it’s a precarious growth phase with a number of challenges. When you start to reach this number of staff, you’re tempted to venture into the higher volume and lower margin temp and contract opportunities – and therefore price becomes more of an issue.
Pitching your service and your price at the right level becomes a whole new learning curve, and we often see temp and contract margin erosion without too much uplift in sales volume. When everything is new and you are in unchartered territory it’s difficult to achieve efficiencies and get everything right all of the time – hence the need to be very selective as you expand your offerings and tackle new projects.
Smaller teams of 1 to 20 have reported strong double-digit growth and are doing so without sacrificing their temp and contract margins, which are often seen as a barrier to growth.
The larger size teams of 41 plus are where the action is really happening with an average 24% sales revenue growth. Teams of this size have started to find economies of scale and are used to dealing with high-volume, lower-margin deals. They’re built for volume and in these buoyant conditions they’re scooping up market share at competitive margin levels. After making it through the valley of death, these guys are enjoying life on top of the mountain!
For those still growing, it’s important to be selective. In buoyant times, everyone can be busy. The agencies who will be successful though are those who are clever enough to say ‘No’ sometimes – instead they have a laser focus on working only the orders where they know they can do a good job and there is a high probability to make a profit.