Over the past 6 months I have spoken with many CEOs about their business growth strategies. And I have been overwhelmed by the range and scale of the online, digital and social media marketing plans they are developing.

And that’s exciting, but at the risk of being a party-pooper, all this strategy prompts me to offer the reminder that strategy is NOTHING without execution.

The question is, who is going to execute all these the strategies? Where will they come from?

In this short video we outline some current trends in hiring, particularly in the digital age, which you can build into your client conversations.

Your clients will thank you for the insights you offer on the need for fresh recruitment tactics, balancing tight financial management with the need to invest in talent acquisition, and the emergence of a talent churn, where lower performing people, slower to adapt to the new digital reality, are being managed out, and a new skills set being brought in.

The reality is that this hunt for talent is now really global, and as you would expect, retention now becomes critical for all employers.

To be a trusted advisor you will need to coach your clients that “just in time” recruitment will no longer work. They will need a pool of potential candidates that are engaged with long before your vacancy emerges.

In years to come, finding talented people to work for you is going to be much harder than it is to find new clients.

Ask your customers to consider that for a moment and then reflect on where their investment needs to go.

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Today’s Savage Truth post is a little different, in two ways.

Firstly, it is in fact a Vlog, rather than a blog, and I encourage you to watch the video, focusing more on the content than the plain visage of your faithful blogger!

Secondly instead of a recruitment tip, I am focusing today on the global job market. Is it improving?

I travel a lot. Japan, Singapore, Malaysia and the UK just in the last 5 weeks, for example. And that gives me the privilege of speaking to CEOs and top HR people all over the world.

Watch the “Firebrand Sparks!” vlog for up to the minute assessment of the global job market in marketing, digital, creative, media and design.

Perhaps the most common question I get asked these days is whether the dark days of the recession are truly behind us and specifically, are employers hiring again?

Well, I can certainly say that 2010 was better than 2009. But what of 2011?

As anyone in recruitment knows, the answer to that question is a moving target, hard to pin down at best, totally elusive at worst.

And of course it depends what sector we are talking about, what level of employee, and what country or even city.

To make an informed assessment of the coming 12 months, I have looked at our business activity in the countries and cities where Firebrand operates. I have also gone right to the coalface to get an opinion from people who are immersed in hiring and placing marketing, creative and digital professionals. I asked our senior management across the world the simple question …

Comparing 2011 to 2010, is client hiring demand in marketing, creative and digital going to be flat, get better, or get worse?

So, not scientific, but based on client feedback, our own WIP pipelines, and a bit of pure recruiter instinct, the chart below reflects our observations and informed predictions for permanent and search recruitment.

Europe is still largely flat. Certainly both the Paris and London offices of Firebrand saw much better demand in 2010 than we experienced in 2009, but our senior management there see no boom in the coming year. The good news is that hiring is taking place and some of our roles are growth driven rather than replacements, particularly in France. However, we anticipate that 2011 will be steady, rather than a boom.

On the other hand, we are more bullish on Hong Kong, Singapore and Kuala Lumpur. These economies are on a growth trajectory, and it is showing in terms of new orders and new clients flowing into Firebrand offices.

 Hong Kong’s outlook is solid because of China’s growth. The banking sector, retail, property, and stock market are growing strongly and this is driving fresh hires.
 One quirky aspect of the Hong Kong situation is the fact that China has property and stock market bubbles, which are highly risky and unstable. There is a suggestion that Mainland Chinese are hedging their bets by parking their assets in Hong Kong.

Singapore GDP growth in 2010 was 15%, bouncing back dramatically from a poor 2009. The Singapore government expects growth to normalise to 5-6%. Banking, property, entertainment/ hospitality, and healthcare sectors are very buoyant and the job market is starting to overheat.

Malaysia has been stable through the recovery after 2009. Malaysia is blessed with natural resources including commodities that are in strong demand in global markets. We anticipate hiring demand in 2011 to be better than 2010 and continuing to improve.

Japan, while much better than 2009, still has challenges to address, specifically a very sluggish economy. We are seeing positive signs in Tokyo and anticipate hiring growth to be small but steady. Osaka we believe will be flat.

The Australian economy has been a standout in terms of resilience during the financial crisis. However this did not protect the job market fully, particularly in marketing and creative, which went into a sustained slump. Signs are now far more positive and in both Sydney and Melbourne we are predicting very strong jobs growth, particularly in digital creative, during 2011.

So, a mixed bag across the world as you would expect. But overall it seems job creation is back and hiring is on the increase.

Here is a prediction. As the market recovers the first impact on our industry will be a revival of the temp and contract market.

Employers will see increased work volumes as the economy recovers, but will “dip their toes” into the labour market at first, hiring flexible solutions initially. But then, as momentum is gained and confidence returns, they will start to hire permanently. But the first place they will go for their permanent hires will be to transition tried and tested contractors onto their permanent payrolls.

And then it will happen! The dreaded “temp to perm” fee debate.

And this is one thing our industry has all wrong. We give away our temps at discount rates. Why, I have never understood. A temp on your payroll is a precious asset. In talent-short times (and they will return, trust me on that) I simply cannot fathom why anyone in our industry would give a substantial discount on the fee when a temporary employee goes permanent.

It’s just so illogical. A perm fee is a once-off hit which is nice when it happens, but we seem to forget that we have lost a tried, tested, and hard to replace revenue earning asset - our temp worker.

I have heard all the arguments on this from clients and they don’t wash. Let’s start with the classic “But you really should discount the permanent conversion fee because you have already earned so much margin on the temp”. What hogwash. The temp margin is for the temporary service rendered. The perm fee is for the acquisition of the permanent staff member. There is no leveraging one against the other. We need to be confident with the client, that far from a celebration for us when a temp goes perm, in fact the perm fee is scant compensation for the lost revenue that temp could have earned on future assignments.

Some clients will even try and use the ‘hire purchase’ argument. “But can’t you see” they say “ It’s like me renting a TV and then buying it. It’s always cheaper to buy a previously rented TV”.

Sounds neat, but its fallacious. A TV is a depreciating asset. A human being, in a contract assignment where they are getting trained, absorbing the company culture and learning the systems, is an appreciating asset.

The perm fee should be more, not less.

And one more thing…

Don’t pro-rata perm fees for long-term contact assignments. That’s dumb. We lose. Keep the distinction between temp and perm crisp and clear. (I know in some countries our hands are legally tied on this, but in many it’s just about negotiation.)

If it is a fixed-term assignment, it’s a contract role and therefore it’s a timesheet hourly rate with our margins on top, or it’s a fixed weekly or monthly rate. Don’t for a minute think “well it’s a six month role so we will take our perm fee and divide it by two because it’s half a year”.

Do the arithmetic!

A perm fee at 20% for 75,000 placement is $15,000

If a client wants to pay half the perm fee because it’s a six-month gig then you get $7,500

But the margin you will earn on a $75k level person on a temp basis for six months at a 55% markup is approximately $19,000

$7,500 vs $19,000

You can see why the client likes the idea!

Sure, if the client wants to pay a perm fee instead of margin for a six-month gig for example, that’s cool. But it’s the full perm fee. The client will still be paying less than the equivalent margin i.e. $15,000 vs. $19,000.

But you get a full fee and that’s fair and proper.

If you are not convinced, think about this. If you owned an investment property, and rented it for five years to a nice young couple, and then they wanted to buy it from you, would you give them a 25% discount off the sale price because of the rent they had previously paid? I don’t think so. So why do you give your temps away cheap?

Believe me on this. We have NOTHING else to sell, apart from our service and our talent skills.

Don’t give away the farm.

Perhaps the most common question I get asked these days is whether the dramatic decline in the staffing market has leveled off. My own staff, clients, candidates, even journalists want to know whether there really are any ‘green shoots’ in terms of employers venturing back into the labour market.

As anyone in recruitment knows, the answer to that question is a moving target, hard to pin down at best, totally elusive at worst.

And of course it depends what sector we are talking about, what level of employee, and what country or even city. What I can say is that in the Aquent space – Marketing and Design recruitment – it’s been a series of frustrating ‘false dawns’. We see a flurry of hiring activity for a week or two, suggesting we are on the cusp of bigger and better things. Then just as quickly, it dies out, leaving us with slow order-flow and patchy pipelines.

But the question keeps getting asked, so I am going to try and answer it as best I can. To make my assessment, I have looked at our business results in the countries we operate, but I have also gone right to the coalface to get opinion from people who are immersed in hiring and placing Design, Marketing and Communications professionals. I asked our senior management across the world the simple question …

“Has the staffing and recruitment market ‘bottomed’ yet”

In other words, has client demand, as measured by job orders, job offers, placements, Gross Profit generated, temps out working etc, continued to decline over the last month. Or has it plateaued in recent months? Or, is it actually on the incline – in other words improving.

The chart below reflects our observations for both temp and perm recruitment.

So this is what we reckon is happening. Remember, no science here. Just well informed opinion and a little but of “gut feel”.

Europe has not even really reached the bottom we believe. The economies there are in dire straights, and confidence has not returned to employers in any meaningful way. Lay-offs continue, and in England we feel the perm market is getting slightly worse if anything, while temp has bottomed and stabilised, albeit at far lower levels than this time last year. France, Netherlands and Germany are seriously depressed. Both temp and perm continue to decline, and my personal view is that we will bottom some time in the second half of 2009, looking for recovery in 2010.

Australia is still doing it very tough. The government tells us Australia is not in recession, but if you are in the staffing business, it feels very much like one. Both temp and perm have declined significantly for that last 9 months, and probably much longer. Recently, we sensed the bottom has been reached and we surmise we will bounce along at this pace for several more months, before any up-tick can be expected. The only bright spot from this part of the world is a small improvement in temp demand in New Zealand, but that may well be at the expense of perm hiring.

Asia is a mixed bag. Singapore has reached the bottom we think, but no serious signs of growth are in sight. Malaysia did not dip as much as its neighbours, and has recovered a little quicker. Our office there is recording similar numbers to last year, which can’t be said for many of the others! In Japan the temp market has stabilised in our view, but perm hiring is slowing and given the state of the Japanese economy, I expect that to continue to deteriorate.

India and China were the boom-time darlings prior to the meltdown, and they have been seriously affected in terms of employer hiring activity. However, both are bouncing back, particularly China. Apart from the strong results I see from our Shanghai and Beijing offices, I know this from personal experience having visited five clients in China myself only a few weeks ago. All were major companies, all were CEO level people I met, and all were currently hiring or planning to soon. I enjoyed my trip to China as you can imagine!

North America is the biggest revenue-earner in the Aquent network. We have 30 plus offices there, and dominate our space. Perm continues to decline in the US and Canada where the recession is vicious and where laying-off staff is inexpensive and accepted more readily by employers than, say, in Europe or Japan. My colleagues in the States do report however, that temp and contract in Design and Marketing is on the up, with digital and interactive specialists in particular demand.

So there we have a view from the trenches so to speak.

Are we there yet? No, I don’t quite think so. But if this recession were a marathon, I would think we are over the half way mark and the finish line is perhaps just edging into view.

Greg Savage

21st June 2009