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Find out how your agency compares, plus learn the 3 key factors impacting recruitment agency profit

Every recruitment agency aims to make a profit – and the overwhelming majority in Australia and New Zealand achieved this in 2018. According to Nigel Harse of Staffing Industry Metrics, who analysed data from 102 A/NZ recruitment agencies, 95% of recruitment agencies made a profit in 2018. That leaves only 5% of recruitment agencies who traded at a loss – the best result since 2011.

 

APOS blog staff anz

 

Profitable recruitment agencies improve on 2017 performance

Data from 2018 shows the recruitment industry had an exceptional year –  and many agencies have continued their upward trajectory from 2017.

Of the 95% of recruitment agencies who made a profit in 2018, the majority (51%) increased their profit compared to 2017. A further 14% achieved similar results compared to 2017. The remaining 30% reported a decline in profit compared to 2017.

 

2018 profit infographic

 

Overall, the average profit improvement was a healthy 24%. However, the top performing recruitment agencies increased their profit by 58% in 2018. That’s more than double the industry average – and a truly impressive result.

The 3 key factors impacting recruitment agency profit

3 main factors 1

Despite finishing the year in the black, not all recruitment agencies went from strength to strength in 2018. The 30% who made a profit, but fell short of their 2017 figures, were impacted by 3 main factors:

1. Staff churn – Staff churn continues to plague A/NZ recruitment agencies, particularly with the rising millennial workforce. However, agencies with staff churn of <40% in 2018 felt the biggest impacts to their bottom line.

2. Decline in perm revenue – 2018 was a record breaking year for permanent sales. The recruitment agencies who didn’t ride the wave failed to capitalise on peak conditions – and the chance to increase profit.

3. Management and staff costs – Some A/NZ recruitment agencies blew out their budgets with management and staff costs <65% of gross profit. Even with healthy sales, these costs made a significant impact to overall results.

Funnily enough, these were the factors that top performing recruitment agencies nailed.

Want to improve your profit and performance in 2019?

Focus on the factors above. Our previous posts on how to increase sales growth and how to increase staff retention are great places to start.

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