• This week, we learned that agencies’ margins are getting tighter.
• We discovered that (surprise, surprise), if you went to the right school you’ll have an easier time getting into the best jobs.
• And we hear from one leading voice in UK recruitment who is striving to find work for former prison inmates.
And how is recruitment software assisting agencies when it comes to finding hidden value in the UK jobs market? Our recruitment news round-up explains it all.
UK recruitment firms see margins hit five-year low
Increasing competition for skills, and dwindling candidate numbers, are leading to fresh challenges for recruiter profitability. But agile agencies may see opportunities in market leaders’ difficulties.
Average earnings among Britain’s recruitment firms have hit a five-year low, according to new industry analysis.
The data, published this week by Plimsoll Publishing, found average agency profit margins had fallen to 1.5 per cent for the year to date. While the numbers suggest just a single a percentage point decline from last year (1.6 per cent for 2018), they represent a half a percentage decrease from the five-year highs of 2 per cent.
• READ MORE: Does the data tell a familiar story? Read the introductory section of our recruitment growth guide, free online. Then use the on-page form to stay up to date. The complete ebook will be available shortly, and contains a full walkthrough for discovering growth in today’s tight recruitment market.
But the Plimsoll industry analysis tells another story: one which may be good news for some UK agencies.
Why data may reveal tectonic shift in UK recruiting
Overall figures suggest a decline in profits. However, firms with lower turnover actually beat previous years’ performances. Agencies with sales below £3 million, and firms with turnover between £10 million and £30 million, actually saw an increase in profits.
Cast the net wider, and we learn even more about the industry.
Continental Europe showed a broad increase in recruiter profitability, with Italy leading the field. Even in outliers like France and Spain – which did see margins decline – the data is intriguing. In these shrinking markets margins nevertheless range from 6.6 to 7.2 per cent – considerably higher than UK figures.
There are several ways that one could interpret this data. The most direct conclusion would be to presume that the UK was losing business to continental rivals. While the insecurity of Brexit is ever-present, this makes for an unsatisfying conclusion. We know that location is a prime factor in recruitment success, and the UK remains a top destination for talent across Europe. And location also means that it is unrealistic to believe that overseas agencies are a direct competitor to firms on Britain’s High Streets.
But if we look internally at the UK industry, we may find evidence for a tectonic shift away from the industry whales that have dominated the market for years.
While overall margins have fallen smaller, more agile firms are posting better results. Similarly, when we looked at the continental data we see considerably higher margins. Larger firms, which dominate the market by operating on high volume, low margin churn have historically forced out smaller firms from competing. Much of the Plimsoll data would suggest that we are beginning to see a change in the fortunes – away from the market giants, in favour of agile agencies.
Why agile agencies hold the advantage for more effective recruitment
The industry as a whole is still getting to grips with heightened competition. But it is encouraging to look at the industry data and learn what it reveals. This information can be invaluable to setting goals and objectives. If we are experiencing a shift in market conditions away from high-volume, low-yield placements, how can agile recruiters learn to change this to our advantage?
With the right approach and supporting software, agencies can seek out top talent and deliver a winning candidate experience. Automation that is implemented simply to crank up the churn is increasingly outdated. At eBoss, we are looking at ways to deliver sophisticated placements that are augmented by automation, but not powered solely by algorithms.
In an industry that gives every appearance of moving towards a more boutique, candidate-orientated approach, it pays to have the necessary tools for the new way to recruit.
Does the Old School Tie still determine success in Britain?
Britain is still struggling with outdated issues on social mobility, one charity has claimed.
A social mobility charity has claimed Britain’s top professions are still unfairly dominated by privileged pupils, the BBC reports.
The Social Mobility Commission has assessed and reported on the educational backgrounds of 5,000 people in top jobs within the UK. Its findings, published in collaboration with the Sutton Trust, measured the degree of social mobility in Britain. That is: the potential for people from lower socio-economic backgrounds to occupy top professional positions later in life.
The study found that individuals from privileged backgrounds were five times more likely to occupy influential positions than state-educated pupils.
The Elitist Britain report focused on 5,000 high achievers in politics, business, sports and media, and determined their educational backgrounds.
Among the findings, it was learned that 65 per cent of senior judges attended fee-paying schools. Nearly half (44 per cent) of newspaper columnists attended private school, and a fifth of pop stars come from privileged backgrounds.
In contrast, 95 per cent of professional footballers attended state school, while only 57 per cent of cricketers were state-educated.
Sutton Trust chairman Sir Peter Lampl said that the data painted a picture of “an increasingly divided society”.
The report concludes that “power rests with a narrow section of the population – the 7% who attend private schools and the 1% who graduate from Oxford and Cambridge”.
Solving an equality crisis?
It poses the age-old question of what can be done to redress an imbalance in professional life. Of course, there is the argument that fee-paying schools are able to afford and attract the top teaching talent. This inevitably creates higher standards and, perhaps, helps to create the most able candidates. But just as pressing is the concern that some may use their backgrounds to purchase advantages.
This second point becomes more significant when considering Britain’s lawmakers. Just one per cent of the population attends either an Oxford or Cambridge University. But despite this, almost a quarter (24 per cent) of sitting MPs are former Oxbridge students. The divide becomes more pronounced among the influential select committees. A third (33 per cent) of select committee chairpersons are Oxbridge graduates.
It is a complex situation, with few easy solutions. But recruiters can play a part in improving equality in the way people of all backgrounds find work. Blind recruitment is one option – but one fraught with dangers, too. Despite this, fairness and equality in hiring could enjoy some of the greatest benefits from the fourth industrial revolution.
Want to learn more about social mobility in Britain’s top professions? You can read the full report here.
Top Recruiter tackles offender unemployment
Robert Walters plc pledges to assist government in finding jobs for ex-offenders.
Specialist recruitment consultants Robert Walters Plc have pledged to assist the UK government in tackling unemployment among ex-offenders.
Following the publication this week of the “Unlocking a Better Life” report by the Onward think-tank, the recruitment firm wrote to the government to offer its resources to provide recruitment training and advice within UK prisons. The aim is to equip current prisoners with skills and knowledge to exit prison with a job – or better prospects within the jobs market.
The report by Onward focused on the lack of training and skills developments within Britain’s prisons
In an increasingly thin skills market, recruiters are seeking to find requisite skills among a dwindling supply of economically-inactive individuals. Former offenders comprise a significant section of this demographic, but can prove difficult to place. It is hoped that adequate training facilities will make former offenders a viable option for employers in both the public and private sector.
Robert Walters CEO said that employment and training can contribute to a reduction in overall crime.
“There is no doubt that proper training and support for life outside prison will reduce the current re-offender rate of 47.9%, which costs the UK £15bn per year.”
Mr Walters said that a recent trip to Scandinavia taught him “the UK is lagging behind other countries in the rehabilitation of prisoners.”