14 Agency Recruitment Metrics to run your business (Part 2)

In the last blog on this topic, I shared the first four of the fourteen critical metrics you need to run your recruitment agency effectively.

You need these ratios and benchmarks to help you drive excellence and to make sure you don’t drive your business into the ground.

With brilliant data from my friend Nigel Harse at Staffing Industry Metrics, I can provide you with updated metrics with bits of extra market information!

•  2020 ‘Average’ Across Australian Recruitment Companies
• ‘Best Practice’ for Australian recruitment Companies
• The ‘Danger’ level for each metric

So, here is the full list, plus the up-to-date data for the first seven metrics, with explanatory notes for the latest three

The rest will come over the next coming weeks until you have the whole set.

Management and Staff Cost / all Gross Profit (Quarter): Starting get a bit wordy now, but don’t be put off! This metric works nicely if examined quarterly. You take all your salaries and oncosts (Superannuation, direct salary taxes), and you divide that by your total Gross Profit for that quarter. (GP is Net Fee income, or if you like, permanent placement fees plus net temporary/contractor margin). Lower is better! If it starts to climb, you need to act.

Temp/Contract Gross Profit / Total Gross Profit: A sustainable, robust business will have more than 50% of its GP from temporary operations. However, we don’t want that number rising because our permanent GP is shrinking! We love Perm. It is profitable and chunky, but it’s very unfaithful, and it evaporates in a downturn, as we can see here where the 2020 average was 80% Temp/ Contract GP. I take a slightly different view from the 90% ‘Best Practice ‘ figure stated here. I like a 70/30 split. With both growing!

Temp/Contract Gross Profit / Total Operating Cost: This is a nirvana type scenario. Your GP from Temp/Contract operations covers all your expenses. So every Permanent placement is.. PROFIT! Just make sure you have a healthy, vibrant Perm business, and you will be throwing off money like a US Billionaire rapper in a nightclub.

So there it is. You have seven of the fourteen metrics unpacked—seven more to come.

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Look at last week metrics explained.

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