PART 1: New profitability results – does your small recruitment team stack up?
APositive insights powered by RIBreport reveals the latest trends for one of the most important metrics effecting recruitment agencies – profit per person.
If you’re at the head of a small recruitment agency with a team size of 10 or less staff, chances are you spent the end of the financial year looking back over your team’s profitability results.
But, did you explore the correlation between how many staff you employ and how much profit your agency produced? Or compare how your agency’s results stacked up against those achieved by industry peers?
Knowing these metrics is a sure-fire way to improve efficiency and grow your agency with greater confidence in the year ahead.
So, to help see how your profits compare, we’ve detailed the profit per person results achieved by 105 agencies across Australia.
In this blog post we investigate industry trends for recruitment agencies with team sizes of one to 10. Next week we will share the results of teams with 11 to 21 staffing professionals.
FY17 recruitment agency snap shot
FY17 results show a low majority of 56 per cent of all participants recorded an improvement in profitability.
The metric calculation is profit before tax or EBIT (FY17) divided by the average FTE headcount (FY17). So, for example, $250K profit with an average headcount of five, produces the metric of $50K profit per person.
Is $50K a good result?
The chart below reviews the FY17 – and three year average – results for small recruitment agencies.
In FY17, the median result was $36.9K profit per person, which is a six per cent improvement on FY16 and in line with the three-year average of $36.7K.
The mean result lifted by 22 per cent on the prior year to $56.8K, but sits just shy of the three-year average of $57.2K profit per person.
So, if you had profit per person in the range of $36K to $57K for the last financial year you are tracking at the industry average for your recruitment agency size.
What are the higher achievers producing?
The top 25 per cent (75th percentile) lifted profit per person by one per cent to $66.9K last financial year. Meanwhile, the top 10 per cent (90th percentile) softened by three per cent, but still produced $123K per person with a three-year average of $143.3K.
Don’t miss Part 2 of the investigation into the profit per person results for recruitment agencies with team sizes of 11 to 20 staff.