News broke late last week about Tempest Consulting, long-time temporary staffing provider to Australasia’s biggest account PSAcorp, cheating in their tender proposal presentations in order to successfully retain the account in the face of mounting competition from other temp recruitment firms. The account, up for grabs on an annual basis, had been won and retained by Tempest Consulting for the past few years. With a mixture of low temp margins and some of the best recruiters in the business, the firm from Melbourne have managed to fend off increasingly fierce bids from more illustrious rivals in NSW and QLD, as well as a New Zealand firm who always display great guts and spirit but consistently fall short of what is required (one year having to resort to an overhead projector when the PowerPoint presentation failed to load).
However, scandal erupted last week when it emerged that Tempest Consulting have in fact been charging two sets of margins on every temp working within the PSAcorp account. This extra profit has been ploughed into huge recruiter salaries, creating a team of consultants impossible to dislodge from the contestable account. The RCSA have stepped into the fray and imposed severe sanctions on Tempest Consulting for breaching their ethics and guidelines. In a strange decision, they have allowed Tempest to continue providing temporary staffing services to PSAcorp, but at a zero margin on every temp placed, no matter how good the quality of the candidate. This move has infuriated Tempest’s competition who still have to battle hard each year to win the account from a team of superb consultants providing their service essentially free of charge.
In comments made by Tempest Consulting during the week, it became increasingly apparent that they have adopted a bizarre ‘victim mentality’ in response to these allegations of charging double margins. The team of elite consultants have claimed that it was not their decision to charge double margins, that the decision had been made “higher up”, and that all they were doing was filling the vacancies as they arose (and pocketing substantial commission cheques each month as a result). In a further twist, rumours are building that Tempest’s top consultant Big-Biller Slater, has been offered an even larger salary package to swap disciplines and move across to Perm recruitment with another Melbourne firm.
Asked to comment on the events of the past week, an RCSA spokesperson has said:
“We are surprised that Tempest have the gall to adopt a ‘them versus us’ stance on all of this, when they have clearly experienced significant growth through cheating. To be honest, we are just looking forward to the Storm blowing over.”
Asked whether they felt the New Zealand firm might now have a chance to win the business of PSAcorp, the Australian spokesperson chuckled, “No, not likely”.
The number of staff in recruitment companies is growing for the first time since November 2008. The RCSA conducted research with 163 member companies (most of whom are Aussie based) and showed that average annualised staff growth was 3.8% during the three months to April. The GFC of 2009 does seem to be a fading memory but I can still clearly remember stories of large recruitment firms axing all non-revenue generating staff (candidate managers and administrators) as well as a number of mid-level managers, so this is welcome news.
The same report also shows that staff turnover in the sector has gone from a record high of 61% in July 2009, to nearing a record low at 26% in the current quarter. From my point of view I can certainly see that the amount of recruitment talent coming on to the market has dramatically slowed down and we will very soon be right back in a situation of skills shortage within the recruitment sector. The last time I had a candidate come through to me following a redundancy was back in February, and I am not expecting to see many more of these for quite some time now. Having said that, I am hearing more and more from good recruiters who have worked their behinds off to help their firm through the recession, and coming out the other side they are not feeling the love, or receiving the rewards that they feel their efforts might deserve. Retaining top talent will be the key for recruitment leaders in the years ahead.
Demand for temps is up according to Manpower, particularly in the blue collar and support sectors. Usually Perm business will follow suit a little further down the line, but the article suggests there is still a lot of caution from clients on the Perm side. I know first-hand of recruiters who are back to billing $50k+ months on perm desks. Whilst this isn’t yet the rule, it is clear that recruiters with enough drive and tenacity are going to be able to get the perm market moving again.
This was an interesting article about identical twins going for the same jobs in Banking. As a recruiter I feel that giving good, honest feedback to a candidate is one of the most important things we can do. How would you manage it with one of these guys? Give them both a job, I say. The banks could certainly afford them both.
In the wake of the financial meltdown of 08/09 there has been a lot of blame laid at the feet of the banking and finance industries. Certainly in New Zealand there are a huge number of so-called “mum-and-dad” investors who saw large chunks of savings swallowed up into doomed investments and dodgy property deals. I do have some sympathy for these people, but then again there was always an element of risk involved to get a higher rate of return. If they had wanted a guaranteed return then a normal bank account could have given them that. However, it looks like from 2012 Australian financial advisors will not be able to earn commission from products they sell and advice they give, to try and head off the same people sending us back into another GFC, with calls for the same to be rolled out in New Zealand. This got me thinking about commission in recruitment and whether it might one day be removed from our industry as well? There seems to be an overriding sentiment in the wider business community that recruiters are somehow pushy and only interested in making the sale and earning the commission – well this would certainly put a stop to that. Personally, I would be dead against that. I think consultancy recruitment is first and foremost a sales job with the recruiter as the supplier and the client as the vendor (and the candidate? The product, of course). I don’t think this has to mean that there should not also be a huge amount of integrity and professionalism throughout the process. The candidate should be treated with respect and the client should be handled with transparency and honesty. But I would hate to see commissions leaving our industry as this really is what makes us tick. It is what makes us do that phone interview to a candidate on the other side of the world well past dinner time. It is what makes us do a reference check at the weekend to get the offer out first thing Monday morning. And frankly it is what gets us back in the saddle after the inevitable knock-backs and rejections that are part and parcel of everyday life in recruitment.
Perhaps this is worth exploring further in another blog at a later date, but long may commission live in the recruitment industry.
I have it on good authority that a big power shift in IT recruitment is soon to be underway between the Auckland offices of two large multi-national recruitment firms. A certain IT recruitment manager has been poached by the larger of the two firms, and said manager will be bringing most of the team with them.
No doubt the official line will soon come out through the usual channels, but there will be blood on the dance floor over this one, I’m sure.
In a timely move by HRINZ, they have a presentation next Wednesday at Minter Ellison Rudd Watts about restraints of trade and protecting your assets and intellectual property. I will be there from 5pm enjoying a glass of HRINZ’s fabulous chardonnay, so perhaps I will see some of you readers there too.
Have a great week next week and enjoy the weekend.