Recruitment Extra April Edition

April 2013 720502080

recruitmentextra.com.au

Recruitment Process Outsourcing

AROUND THE WORLD

The leading magazine for recruitment professionals in Australia and New Zealand

The 2013 categories are: • The Deloitte Recruitment Excellence Award • The IMS People Best Business Innovation Award • The astutepayroll.com Excellence in the Application of New Technologies • Best Start-Up • Best Boutique Agency • Best National Agency • Best Candidate Care Program • Best Learning and Development plan • Best use of Print Advertising • Best use of Digital Media • Best Graduate Campaign • Best Employer Brand • Best Work Health & Safety Program

Nominations now open at www.recruitmentextra.com.au

News

RMArecruit launches Two of Australia’s IT recruitments specialists have integrated to become RMArecruit. RMA IT Recruitment acquired Finrecruit in mid 2012, and now have combined and relaunched under a new name and identity – RMArecruit.

Russell MacDonald, Managing Director of RMArecruit, said the new business would continue to provide enhanced market reach for clients, candidates and staff.

“For our RMA clients it means on the ground presence and support whether they are operating in Sydney or the Asia Pacific region, while our Finrecruit clients will benefit from a broader contractor management and administration services and our strong presence to the Melbourne market. At the same time, for our candidates and contractors it means access to more roles around the region,” said MacDonald.

He was also positive about the outlook for the business and the year ahead.

“Although the economy has been unpredictable, if not patchy, we still recorded a 50% growth in financial year 2012, and are looking to further significant gains in financial year 2013. We expect to see a growth in roles around security, data storage as well as Agile framework experts.

“Our clients are responding to an increasing demand for services online and through mobile platforms that is consequently driving demand for IT specialists – especially those in project management, business analysis and application development.

Likewise, ongoing financial services industry regulation means a growing compliance burden for our clients which is also creating a need for IT and project resources,” said MacDonald.

Hiring intentions steady in Australia Despite some prevailing challenges in the domestic market, the majority of employers remain confident about local business conditions, according to findings in the H1 2013 Michael Page Australia Employment Index.

While half of the survey respondents consider current business conditions in Australia to be satisfactory, 39% describe current business conditions as weak. However, this sentiment is expected to improve among the majority of employers over coming months. Some 65% of survey respondents say they believe that the domestic business environment will remain stable in the first half of the year and a further 19% expect business conditions will improve.

“Our survey findings suggest that employers in Australia remain relatively optimistic about the local market, which is encouraging,” says Phillip Guest, Regional Managing Director for Michael Page Australia, New Zealand and Japan. “This outlook is also reflected in some positive hiring intentions; with 24% of the employers we surveyed indicating they plan to increase headcount during the first half of the year and a further 54% expecting their staff numbers to remain largely stable.”

The survey findings also report mixed reactions to the effect of the high Australian dollar on domestic businesses with 54% of respondents reporting no impact and the remaining 46% believing that the high currency rate is affecting business activity levels.

This primarily applies to export-led businesses, such as manufacturing.

“For those employers we surveyed whose businesses are being impacted by the high Australian dollar, 54% said it was affecting their hiring intentions and activity, such as through headcount freezes, replacement hiring only or hiring for revenue-generation roles. This issue is further compounded in some sectors such as retail, which is experiencing structural change at the same time as dealing with the high dollar,” Guest adds.

Another challenge some companies are facing is being able to deliver on their business goals and growth objectives while remaining within their budgets. Secondary business concerns include the global economic outlook (18%) and people management and engagement (13%).

Steady jobs growth is expected to continue across professional markets in Australia during the first half of 2013. While 24% of the employers surveyed indicate they will be increasing staff numbers during this period, 54% said they will be focusing their recruitment on replacement staff only. Most of these employers (39%) anticipate they will start increasing headcount again in the next 12 to 18 months. Of these 40% are looking to increase headcount by 5%, although a further 35% expect to increase headcount by up to 10%. The majority of employers (65%) will be looking to recruit mid level professionals with executives being the least sought after (1%).

To attract quality candidates respondents plan to use a variety of strategies such as promoting their companies reputation (30%), offering competitive salaries (28%) and providing career development opportunities (26%).

Australia’s best recruiter competition A competition launched by Stellar Recruitment to find Australia’s best recruiter was won by Peter Murphy from Davidson Recruitment in Brisbane. The judging panel consisted of Phillip DiBella the Founder and Managing Director of DiBella Coffee, Greg Savage, Michael Gavin, Principal Advisor Human Resources,

Rio Tinto Coal and Shaun McCambridge, Managing Director, Stellar Recruitment.

Runners up were Simone Moore, Director, RecruitR, Anthea O'Loughlin, Manager Group Recruitment, Hastings Deering and Kelly Arnett, Oil & Gas Manager, Progressive Global Energy & Natural Resources.

recruitment extra 2013 April 3

General editor Lesley Horsburgh Tel +61 2 8587 7920 lesley.horsburgh@thomsonreuters.com Production editor Imogen Tear Tel +61 2 8587 7258 imogen.tear@thomsonreuters.com Submissions imogen.tear@thomsonreuters.com Advertising Australia & New Zealand Helen Sykes Tel +61 2 8587 7462 helen.sykes@thomsonreuters.com Enquiries Emily Ings Tel +61 2 8587 7051 emily.ings@thomsonreuters.com Graphic design Michelle D’Souza Printing Ligare http://sites www.thomsonreuters.com.au/recruitment-extra/ www.thomsonreuters.com.au www.recruitmentextra.com.au Customer service and subscription inquiries Tel 1300 304 195 Fax 1300 304 196 Email LTA.Service@thomsonreuters.com Publisher Thomson Reuters (Professional) Australia Limited ABN 64 058 914 668 Head office 100 Harris Street Pyrmont NSW 2009 Tel +61 2 8587 7000 Fax +61 2 8587 7100 © Thomson Reuters (Professional) Australia Limited 2010 ISSN 1835-1395 All information in recruitment extra is copyright.

Material is not to be used or reproduced without written permission.

No responsibility is taken for unsolicited material. Articles reflect the opinion of the author and not necessarily that of the publisher.

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4 April 2013 recruitment extra

from the editor As more and more businesses focus on driving efficiency, improving costs and enhancing the highly spruked notion of value add for clients, RPO continues to receive more attention.

This issue we look at how the RPO model has evolved to far more than simply outsourcing elements of the recruitment process and how it is utilised around the globe.

Don’t forget our nominations for the Recruitment Excellence Awards are now open, visit www.recruitmentextra. com.au to see more information on this year’s categories and criteria.

We’re also running a survey over the coming weeks to find out more about how you like to read recruitment extra and what other content we can deliver to improve your read. Find out more on our website.

News

Temporary work an attractive option More than half of Australians are now open to working on a temporary basis given the current global economic environment, according to a survey by Hays.

Of the 772 Australians who took part in a Hays online survey, 52% said they saw temporary assignments as a more attractive option in recent years; however a further 29% remained sceptical and said temporary assignments were now less attractive, while 19% reported no change in their attitude towards temporary work.

Nick Deligiannis, Managing Director of Hays in Australia says contrary to popular belief temporary contracts are not limited to entry-level office support roles.

“Professionals at all levels and various sectors are working on a temporary basis. For example there is big demand for Project and Change managers within the Information technology sector on a contract basis, as well as project-based

Developers,” he said. “We are also seeing employers engage temporary workers as a long-term solution to their staffing needs and candidates are making the most of this trend as there are many advantages for them.”

Hays says the benefits to candidates who choose temporary roles is the opportunity to advance their skills and career on their terms by choosing the employer and assignments they take on. They can also vary their tasks and workloads. In terms of work/life balance temporary assignments can offer greater flexibility in working arrangements which is attractive to specific candidate pool.

Additionally some professionals, particularly in the white collar end of the construction industry, choose to work on a temporary basis because they have more earning potential and employers are able to pay these workers elevated rates

because they can save on other permanent staff benefits.

From the employers perspective using temporary workers is a valuable resource during periods of high activity to provide support for a business’ permanent workforce. It is also true, for employers and employees, that a temporary role allows both sides to try out a job and find if it is a right fit for both parties.

However debate continues throughout the industry over the use of temporary workers and if in fact workers are being exploited or whether the drive towards temporary contracts comes from a willing sector of employees themselves. The debate has been further intensified by the recent crackdown announced by the government on companies’ rorting the 457 visa system amidst claims that businesses are employing workers on temporary contracts in order to undercut local staff.

contingent the flexible workforce

For most organisations, contingent workers make up approximately 20 per cent of their total headcount and fill critical skills gaps, yet managing these workers remains adhoc. Often there are no centralised processes in place, exposing the organisation to risks such as failing to pay adequate payroll tax, leave entitlements or ensuring mandated inductions are undertaken. This is a chance to clean up those loopholes.

Following the resounding success of last year’s conference, this event is dedicated to organisations that recruit and manage a contingent workforce, including contractors, temps or statement-of-work type staff, and those that wish to improve the quality and efficiency of their contingent recruitment model. Whether you’re a recruitment manager, a workforce planning professional or you work in procurement measuring supply chain effectiveness, this one’s for you!

To find out more or to register, go to atcevent.com Act now! Seats are strictly limited.

Sydney 27 - 28 AuguSt, 2013

recruitment extra 2013 April 5

Contents Inside April

Features

20

20

Recruitment Process Outsourcing

22

The future of RPO

24

Emerging trends in RPO

26

Managing growth in the fast lane

Regulars

20 25

29

28 30

3

News

15

What’s on

16

Online recruitment

18

HR report

25

Legal eye

27

Social recruiting

28

The panel

30

Tax focus

31

Leadership

32

Head to head

34

State review: Queensland

36

32 6 April 2013 recruitment extra

38

The latest news, events and announcements

On the move

Movers and shakers in the industry

Directory

Advertising directory

S T R

E S D A S Y T O D A

INVO I C I N G

YA D M I N

CASH FLOW

Work, Health & Safety Laws

UES CE ISS PLIAN

COM S E TS SHEE SSU I TIME TAX

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News

Security out, money in: JobFlex Aussies are looking for Online launches better pay New research from Randstad shows Australians are more focused this year on receiving better pay and benefits from their employer, rather than feeling secure in their jobs.

The research findings are an about turn on last year’s figures, where people placed long-term job security and an employer’s financial health as the two most important factors when selecting a place to work.

This year, receiving a competitive salary and benefits is now the most important factor, according to one in five (20%) Australians – up from only 11% in 2012.

The number of Australians valuing longterm job security has fallen nine points, from 26% down to 17%.

A good work-life balance is the third most important factor, with almost three times more Australians (11%) now viewing it as the most significant factor, compared to just 12 months ago.

“Working through challenging economic conditions, people have had to deal with smaller budgets, less resources, increased workloads, higher performance expectations and limited or no employee benefits.

"Management need to tread carefully to ensure they recognise, reward and retain top talent by carefully managing expectations in terms of future performance and compensation to keep people happy, engaged and loyal,” says Loveridge.

“As we move further into 2013, workers increasingly want to be rewarded for their loyalty and hard work over the last two years. For many businesses in Australia, 2013 will need to be the time to repay the faith of their employees.”

Deb Loveridge says Australians are starting to evaluate what’s important to them within a work context, and then placing these issues at the top of their list of requirements when looking for a job. This is good news for businesses, and highlights while salary is important, employees will be

8 April 2013 recruitment extra

“Management need to tread carefully to ensure they recognise, reward and retain top talent by carefully managing expectations in terms of future performance and compensation to keep people happy, engaged and loyal.”

Deb Loveridge, Randstad open to other benefits if a pay rise is still not a possibility in the short term.

“To ensure employees are satisfied and engaged, businesses need to be open to thinking outside the box when rewarding employees. Listen to the factors which are most important to your workers, and focus on satisfying these requests. Organisations who don’t could find themselves losing talent and along with that, their intellectual property and relationships with customers which can set your business back six months or more.”

According to Deb Loveridge, employees may be unlikely to wait around if they feel there is a better offer elsewhere, or if their loyalty and hard work is not being adequately rewarded. This can lead to more movement in the market, and businesses may have to work harder to retain top talent.

“Organisations which invest in their people, in their business’ unique selling points and invest regularly in improving their employer brand are usually the most attractive in an open labour market. It’s these businesses which will most likely benefit from any shift toward offering workplace benefits when a pay rise is not an option,” says Loveridge.

JobFlex Online, a job board designed specifically for the contract, part time, casual and temporary job market, launched in March.

With around 35% of all Australian jobs falling into the contract, part time, casual and temporary categories and the number of people seeking more ‘flexible’ styles of employment Managing Director of JobFlex Online, Don Robertson, says there is a strong demand for a dedicated online forum that purely caters to both employers and employees looking to engage on a contract/part time or casual basis.

“The Australian workforce is dynamic and constantly evolving. Now, more than ever, ‘flexible’ work options are being sought by both job seekers and employers. This employee sector is the fastest growing in Australia. I think this segment deserves a quality, dedicated and informed online hub where employers can reach relevant job seekers at a cost efficient price,” said Robertson.

“Now, more than ever, ‘flexible’ work options are being sought by both job seekers and employers.

This employee sector is the fastest growing in Australia.”

Don Robertson, Managing Director, JobFlex Online “The Australian online job board industry has been dominated in the past decade by Seek, MyCareer and CareerOne. These ‘big 3’ ultimately control listing prices where a single ad costs around $200+. This is prohibitive, especially for smaller business of which there are over two million in Australia.

As such this has reduced the accessibility these businesses have to the best ‘flexible’ employee talent in the market. Our aim is to address this by specifically focusing on the ‘flexible’ employee categories and building a conduit for employers to reach this audience,” he added.

News

Four million... and rising LinkedIn has announced that its membership base in Australia has surpassed four million, a 300% growth since 2010. LinkedIn now houses over 80% of the country’s professional population.

It has also expanded its local presence with over 100 staff across three offices in Sydney, Melbourne and Perth.

“Apart from using LinkedIn to build their professional identity, we are seeing a strong uptake from our Australian members leveraging LinkedIn as a professional content platform to discover and share insights.” said Clifford Rosenberg, Managing Director for LinkedIn Australia, New Zealand and Southeast Asia. “Companies have taken notice of the increasingly massive data set LinkedIn provides and are using it to transform the way they hire talent, market their brand and sell more effectively by utilising the power of their networks,” he added.

Data also released by LinkedIn regarding its Australian members found: The top four search keywords were: 1. Marketing 2. Sales 3. Recruitment 4. Project Manager The top four industries were: 1. Information Technology and Services 2. Financial services 3. Construction 4. Accounting And the top four job titles were: 1. Owner 2. Director 3. Manager 4. Managing Director

Leave of absence for Poole Bluestone Global has announced that Andrew Poole has requested leave of absence from his duties as a non-executive Director for the duration of the current public inquiry of the NSW Independent Commission Against Corruption (ICAC).

Bluestone Chairman Baljit Singh said Poole’s request had been approved by the Board. Singh also confirmed Bluestone has no association with companies referred to during the current ICAC public inquiry.

Bluestone has stated that ICAC’s investigation refers to events concerning ResCo Services Pty Ltd prior to Bluestone’s acquisition and do not relate to those operations it acquired.

recruitment extra 2013 April 9

News

How employers can avoid

becoming an Adverse Action statistic Adverse action claims have been rising since the introduction of the Fair Work Act in 2009, and despite a slight drop in recent months Holding Redlich partner Alistair Salmon says there is no trend of claims in this space slowing down.

According to the Fair Work Commission in the fourth quarter of 2012 there were 687 adverse action claims, a slight decrease from the highest per quarter record of 710 cases in the second quarter of 2012, but still a significant number. Overall general protection and adverse action claims have increased by 12.6 percent between the 2010/2011 financial year and the 2011/12 financial year.

According to an academic study released late last year, both the number of claims and the success rate of employees have dramatically increased under the current industrial relations system. One example of this is the case of Marshall v Commonwealth of Australia, in which the Federal Magistrates Court found the Bureau of Meteorology (BOM) − a Commonwealth Government department − had taken adverse action against an employee, Mr Marshall, and ordered BOM to reinstate the dismissed employee as well as paying them compensation for the lost earnings they suffered.

The Fair Work Act precludes an employer from taking "adverse action" against an employee because the employee has a "workplace right", elects to exercise or not exercise a workplace right, or to prevent that person exercising a workplace right. Unlike unfair dismissals, contravention of the adverse action provisions are civil remedy provisions making liable an employer (and its managers) to a penalty (now a maximum of A$51,000 for a body corporate, previously A$33,000, and A$10,200 for an individual, previously A$6,600) per contravention. A person can be in breach of the Fair Work Act even if the adverse action as not actually carried out and are only threatened or arrangements are made in preparation of the adverse action.

“Adverse action claims occur when an employer has or is about

10 April 2013 recruitment extra

to take action against an employee or employees that involves either their termination, altering of their position to the employee’s prejudice or discrimination against an employee as against other employees and the reason for it, in part or whole, was motivated on an unlawful ground. Adverse action of itself is not unlawful, it is unlawful when taken because of an unlawful ground,” said Salmon.

Top tips for employers to avoid an adverse action claim: 1. Obtain all of the relevant facts before taking adverse action, articulate the exact reason for taking the adverse action; commit those reasons and the adverse action to writing to the employee whilst ensuring relevant company procedures are followed.

2. Employers should also consider who is to be the decision maker. It may be the case that the appropriate person to decide the adverse action is not that employee’s direct manager or supervisor. Employers need to make sure that the ultimate decision maker is not burdened by any prejudice or ulterior motive in regard to the employee concerned.

3. Always seek advice before acting. The adverse action provisions of the Fair Work Act are civil remedy provisions and employers should act cautiously. The new increased penalties are significant.

4. When communicating the adverse action to be taken against the employee, reiterate why it is being taken and follow that up in writing. Employers often get stuck at this point, because they cannot clearly evidence the reason for taking the adverse action.

5. Be prepared for conciliation conferences: who should attend, what should be said, what are parameters for settlement.

Also ensure that settlement terms are carefully recorded in a settlement deed providing for the cassation of the claim and preventing any further action.

News

ICT job market remains mixed Australia’s ICT job market has climbed in the first quarter of 2013 with overall demand for ICT skills now at ‘reasonably sound’ levels, according to data released

by Peoplebank.

Peter Acheson, Peoplebank’s CEO, said that while overall demand reflected the national forecast of modest growth, closer examination reveals significant variation with solid demand in the larger markets and patchy conditions in smaller cities.

“There has been a solid ICT jobs market in NSW, VIC and WA over the past three months. However, hiring in the ACT has been constrained by a perfect storm of end-of-financial year budget constraints to be followed by a Federal election. In SA, the market has been impacted by slower investment and State Government spending constraints; while QLD continues to experience difficult conditions in the ICT sector and broader economy,” Acheson said.

Remuneration levels remain largely unchanged in NSW, VIC and QLD, while WA has seen spot increases, SA has seen both increases and decreases (reflecting local demand) and QLD has seen salary decreases in the order of 5%. Other features of the market include: • NSW – hiring continues at a strong level, mostly for ‘business-as-usual’ projects and, in the banking sector, projects associated with regulatory change • VIC – solid demand from the utilities sector lifts an otherwise subdued market; employers redeploying existing staff rather than hiring contractors; employees actively seeking to improve female ratios in their ICT and management units, • WA – hiring is strong as the WA economy continues to grow faster than the rest of Australia. Increased demand leads to pay rises for specialist

Architects and Business Analysts • ACT – an estimated drop of 30% in demand for ICT skills, due to endof-financial year and election period financial constraints • SA – steady but subdued economic conditions reflecting constrained State Government and private investment.

However, some pay rises achieved • QLD – demand for ICT skills is light, as the State’s growth decelerates.

Acheson concluded: “There can be no doubt in 2013’s headwinds – continued global uncertainties and a Federal election ahead – this won’t be a year of easy gains for ICT professionals. However, there are numbers of pivotal ICT projects in the pipeline, in both the public and private sectors. I’m confident that, on the back of these, there will be solid opportunities for people within industry to advance their careers in the months ahead.”

recruitment extra 2013 April 11

News

ABC voted Australia’s

most attractive employer The Australian Broadcasting Corporation (ABC) has been voted Australia’s most attractive employer at the third annual Randstad Award, edging out perennial favourite Virgin Australia and consistent top 10 performer BAE Systems.

ABC’s win cements its position as Australia’s most attractive employer, following its second place finish at last year’s Awards.

The Randstad Awards which were presented at the Museum of Contemporary Art in Sydney, recognised the organisations which Australians perceive as the most attractive employers in the country.

Deb Loveridge, Managing Director Asia Pacific, Randstad, says being recognised as the nation’s most attractive employer is an impressive achievement, and management and employees of the ABC should be extremely proud.

“Winning the Randstad Award this year, following a strong result last year, means the ABC can confidently lay claim to being Australia’s most attractive employer.”

In terms of attractiveness amongst the Australian population, the ABC is particularly attractive to women, the older generation (60-64 years of age), and ranked extremely favourably across all key criteria including interesting job content, good learning and development opportunities, long term job security, career progression opportunities, strong workplace culture and their ability to offer a good work-life balance.

While the ABC took out the overall Randstad Award, according to Australians, the most attractive industry to work for in 2013 is Aviation, with Virgin Australia winning this industry sector award. Mining & resources is perceived as the second most attractive sector in Australia with last year’s Randstad Award winner Newcrest Mining, securing first position; and fast moving consumer goods took out third most attractive industry, with Coca-Cola being awarded most attractive company in FMCG in Australia.

The media sector increased in attractiveness for Aussies in 2013, with Channel 7 appearing for the first time in the list of top 20 most attractive employers in the country, coming in fourth position.

For the first time this year, Federal Government departments were included

Randstad Award Top 20 most attractive organisations in Australia for 2013 are: 1. ABC

11. Department of Defence

2. Virgin Australia

12. Australia Post

3. BAE Systems

13. Rio Tinto

4. Channel Seven

14. Wesfarmers

5. Qantas

15. WorleyParsons

6. Department of Immigration and Citizenship

16. BHP

7. Department of Health & Ageing

17. Nestle

8. Newcrest Mining

18. Lion

9. Coca-Cola Amatil

19. Westfield

10. GHD

20. Computershare

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12 April 2013 recruitment extra

with multiple entries featuring in the top 20 including the Department of Immigration and Citizenship (6th), Department of Health and Ageing (7th), Department of Defence (11th) and Australia Post (12th).

Summing up the results Loveridge said: “Ongoing investment in your workforce takes a strong commitment from senior management, and the ABC, along with other top performing employers in this year’s Randstad Award, should be commended for understanding the benefits which will be realised by placing the needs of their people at the forefront of their business.

“Keeping your finger on the pulse of what workers want is the best way to maintain a strong employer brand and remain attractive to workers looking to change jobs.”

News

small businesses give tick of approval to social media

T

he release of data from the biannual Bibby Barometer reveals 78% of small businesses in Australia are planning to spend more time on social media in the coming 12 months. Of those businesses surveyed, as many as 65% report that social media has helped their business grow over the past 12 months.

Almost half said they used social media to raise brand awareness and source new customers, whilst 40% used it to generate new sales and 44% to provide networking opportunities.

Gary Green, National Sales Director, Bibby Financial Services Australia said: “Social media is increasingly being used as an extra communication channel to raise small business’ profiles and reach new and existing clients. A third of the businesses surveyed said that social media has helped them improve customer service and stay ahead of competition and as many as 22% have used social media to recruit new staff.”

According to the Yellow Pages Social Media Report, June 2012, 83% of Australian small businesses were using Facebook, 27% Twitter, 20% were on LinkedIn and approximately 12% were using Google Plus or YouTube. Overall, it stated that on average businesses are spending over $3,000 a year on their social media presence.

The Bibby Barometer found that the current business climate has encouraged 38% of business decision makers to want to take more risks in the coming 12 months.

“With optimism on the rise and confidence in sales growth at levels not seen since July 2011, it is not surprising that businesses are using social media to generate new business and raise their profile. We believe small businesses are more willing to think outside the box

"83% of Australian small businesses were using Facebook, 27% Twitter, 20% were on LinkedIn and approximately 12% were using Google Plus or YouTube."

Yellow Pages Social Media Report, June 2012

in terms of promoting themselves and embark on new marketing strategies,” Green said.

The survey found that those most likely to use social media were young entrepreneurs aged between 18-39 years (66%) compared to older entrepreneurs aged 40-64 years (39%).

In terms of generational differences the survey found that Generation X were highly regarded as efficient workers and the most innovative contributors, and that Baby Boomers were considered to be the most customer service orientated but also the most likely to be sceptical of digital media.

Generation Y were viewed less positively with only 10% considering them to be the most efficient workers, 12% as good managers and 15% as the most customer service oriented. While 18% of respondents rated Gen Y the most innovative contributors, even on this measure they still trailed Baby Boomers (24%) and Gen X (36%).

From those surveyed, business leaders favoured employees of the same age, rating staff of their own generation higher than those of a different generation.

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News

Yahoo’s flexible work ban Whilst the marketplace in recent years seemed to have moved towards a growing acceptance of workplace flexibility the news that Yahoo’s CEO Marissa Mayer had decided to end the work-from-home policy caused quite a stir.

The theory behind the controversial decision is that physical proximity encourages employees to collaborate and generate ideas which, in turn, increases productivity. Whilst some business leaders have supported the decision, notably Google with CFO Patrick Pichette expressing an opposition to working from home and Best Buy who have instituted a similar ban, others such as Richard Branson say the move undermines trust.

In a blog on the Virgin website he wrote, “This seems a backwards step in an age when remote working is easier and more effective than ever. If you provide the right technology to keep in touch, maintain regular communication and get the right balance between remote and office working, people will be motivated to work responsibly, quickly and with high quality.”

Whilst many would agree that physical proximity does indeed boost collaboration it does not translate to a need to be in the office all day every day and, as businesses become more global, collaboration between remote workers will become more necessary. In fact an understanding of how to communicate effectively when not in the same room is a skill that is likely to become increasingly important.

The announcement inherently suggests that workers are not being productive enough at home, an assumption that contradicts numerous studies, but whether bringing everyone on site will boost productivity remains to be seen. It looks likely that some employees will resign in the face of the announcement and this may trim what has been suggested is a bloated workforce. The memo sent from Yahoo HR head Jackie Reses said the change was being instituted in order to make Yahoo an “absolute best place to work”, but only time will tell whether this decision will ultimately translate into such an aspiration.

Industrial disputes close to two-year low New figures from the ABS show Australia has recorded its lowest level of industrial disputation in almost two years, according to Minister for Employment and Workplace Relations, Bill Shorten.

“This is equal to 2.5 working days lost per 1,000 employees, which is the lowest industrial dispute rate since the March quarter of 2011,” Shorten said.

“The dispute rate is also relatively low by recent historical standards, with an average of 6.1 working days lost per 1,000 employees over the past decade,” he added.

The number of working days lost was a significant fall from the previous quarter, where there were 10.8 days lost per 1,000 employees.

The Opposition however disputed the government’s reading of the statistics which was based on quarter

14 April 2013 recruitment extra

by quarter comparisons with Opposition IR spokesman Eric Abetz saying annual comparisons showed a significant increase.

“During the year ended December 2012, there were 273,200 working days lost compared with 241,500 in the year ended December 2011, a significant increase of 31,700 working days lost,” he said.

Abetz added that Labor ''was hopelessly compromised'' by its link to unions and criticised recent proposed changes to right of entry laws.

"Many disputes over the last year have been illegal yet Labor has refused to step in and condemn the activities of some militant union bosses,'' he said.

"It's time for Labor to stop acting in the union boss interest and start acting in the national interest.''

Kelly services consolidates Australian and NZ businesses Kelly Services has consolidated its Australia and New Zealand businesses into one operation.

Former Australian Vice President and Managing Director Karen Colfer will take on the merged business operations as Vice President and Managing Director, Kelly Services A/NZ. Colfer said while members of the Kelly Australia and Kelly New Zealand teams have been working quite closely for some time, the official merging of the two businesses delivers a win/ win situation and was a positive decision for those clients and candidates who operate across the A/NZ region.

Vice President and APAC Operations Officer, Chi Sieng Tiong said the decision to streamline operations would better position Kelly’s business to meet the market needs and achieve the company’s strategic goals.

Career Group in voluntary liquidation A statement released by Career Group Limited said that the company trading as jobs.co.nz had been put into voluntary liquidation by its Board and shareholders “due to historic and ongoing company challenges”.

While the future for the brand remains unclear, arrangements were underway with all stakeholders “to complete all commercial relationships in the most equitable way.”

News

Wait and see sentiment permeates Australian market The latest Manpower Employment Outlook Survey results show hiring sentiment for the second quarter of 2013 will remain subdued, as local economic and political uncertainties continue to affect employers. The survey found Australian employers' hiring intentions fell five percentage points to a Net Employment Outlook of +4%.

In addition the survey found that 13% plan to decrease hiring in the next quarter, 21% plan to increase hiring and 65% will make no changes to their hiring plans. The seasonally adjusted NEO of +4%, compared to +12% at the same time last year, reflects an ongoing downward trend.

“We've seen a number of conflicting economic indicators recently.

Consumer and business sentiment recovered slightly in January, while retail sales during December were weak and building approvals were also subdued,” said Lincoln Crawley, Managing Director of ManpowerGroup Australia and New Zealand.

“These conflicting indicators, coupled with the uncertainty an election year brings, are creating caution in the job market, as employers take a wait and see attitude to hiring. Against this backdrop we are helping organisations increase their focus on improving workforce productivity, through employee development, training and up-skilling, as a way to build on the talent they already have,” he said.

Across the country, employers in Queensland showed the most optimism, buoyed by Oil and Gas projects in the state, reporting a six percentage point increase to an NEO of +11%. Employers in New South Wales increased their hiring outlook by three percentage points to an NEO of +9% and in Tasmania employers increased their hiring outlook by five percentage points to an outlook of +1%, taking the state out of negative hiring sentiment.

Employers in Victoria reported an NEO of +11% and in the ACT an NEO of +8%, both results remaining steady from last quarter. In a quarter-overquarter comparison, employers in South Australia report the biggest drop in hiring intentions, with the NEO falling six percentage points to -1%.

Employers in Western Australia and the Northern Territory also expect a drop in hiring, reporting outlooks of +10%, down four percentage points, and +13%, down one percentage point, respectively.

“This is the first time we have seen Western Australia's employment outlook fall behind the other regions since 2010, suggesting the recent rally in commodities and positive activity in China is yet to flow through to jobs in resources. Projects like Roy Hill have predicted that they will no longer need the 1700 foreign workers applied for under the EMA scheme, as there are now enough local workers in the market to fill roles,” Crawley said.

Among the sectors, Mining and Construction rose two percentage points to +2% and the Public Administration and Education sector rose five percentage points to +1%. Transport and Utilities reported the largest fall, down four percentage points to +11%, and the Wholesale and Retail Trade sector fell two percentage points to an outlook of +4%. The outlook in Finance, Insurance and Real Estate fell three percentage points to +16%, and Services and Manufacturing both fell one percentage point to +14% and +2% respectively.

“There is a move towards role flexibility with employees increasingly wearing two or three ‘hats’ to improve workforce efficiency, so job seekers that show they can be dynamic will become vital to organisations,” said Crawley.

“The softening in areas such as the resources sector has meant the urgency of skills shortages has declined. However, with many market indicators on the increase signifying a slow but steady recovery in the economy, it is critical for employers to look ahead at the talent they will need in the next year and build a workforce strategy that aligns with their business strategy.”

What’s on training & events calendar 2013

january • february • march • april • may • june • july • august • september • october • november • december

ATC2013 – 7th Annual Australasian Talent Conference (ATC)

may

Agile Talent Management – Optimise, Insource, Outsource, Offshore, Redeploy When: 28-30 May 2013 Where: Sofitel Sydney Wentworth The ATC is one of the most highly anticipated events on the recruitment industry calendar.

Over 300 recruitment managers and talent management professionals from across Australia and New Zealand attend the event each year and hear from world-class international and local industry experts.

The 7th Annual ATC promises a jam-packed program, designed by recruiters for recruiters; an impressive speaker line-up; plenty of networking opportunities; and topics that push the envelope.

With constant pressure to deliver better candidates, faster, and more cost effectively, it’s in these testing times that organisations are looking for innovative ways to succeed and do things differently. This event will help recruiters create an agile and productive workforce and will cover: • Emerging talent management and recruitment models • In-source, RPO or Offshore – what’s best?

• Boosting productivity in your organisation • A world beyond humans – recruitment robots • Agile Workforce Planning • Reducing redundancies, increasing redeployment • Emerging recruitment technology • Workforce 2014 and beyond Hear from leading brands including Nike, Suncorp, Minerals & Metals Group (MMG), IBM, Oracle and many more.

Price: $2,500 (standard rate). Discounts apply for group registrations. Reference ‘REXTRA13’ for a further 10% discount.

To register: Visit www.atcevent.com or call +61 3 8621 6688. Seats are limited.

recruitment extra 2013 March 15

Online recruitment

Year-on-Year market share for Business and Finance Employment and Training, in All Categories Based on market share of visits to the industry. Monthly rankings for the month of February 2013 This category features online job databases, employment classified websites, employment agencies and human resource management services. It also includes any websites related to job seeking, vocational training and career development.

Rank

Website

Domain

Visits

1

Seek Australia

www.seek.com.au

27.85%

2

Linkedin

www.linkedin.com

14.44%

3

indeed Australia

www.indeed.com.au

5.19%

4

CareerOne

www.careerone.com.au

4.97%

5

MyCareer

www.mycareer.com.au

4.89%

6

jobrapido Australia

au.jobrapido.com

3.52%

7

Australian JobSearch

www.jobsearch.gov.au

3.05%

8

SimplyHired Australia

www.simplyhired.com.au

1.88%

9

Job Seeker

www.jobseeker.com.au

1.85%

10

Woolworths - Careers

www.wowcareers.com.au

1.00%

11

Hays Personnel Services

www.hays.com.au

0.76%

12

WebJobz

www.webjobz.com

0.69%

13

Fair Work Online

www.fairwork.gov.au

0.64%

14

Jobs.com.au

www.jobs.com.au

0.62%

15

Star Now Australia

www.starnow.com.au

0.59%

16

jobsearch.com.au

www.jobsearch.com.au

0.57%

17

Coles Group Careers

www.careers.colesgroup.com.au

0.53%

18

ninemsn Seek

ninemsn.seek.com.au

0.53%

19

About.com - Job Searching

jobsearch.about.com

0.50%

20

Coles Careers

www.colescareers.com.au

0.47%

Date

Market Share

Date

Market Share

Feb-12

0.83%

Sep-12

0.78%

Mar-12

0.80%

Oct-12

0.84%

Apr-12

0.76%

Nov-12

0.84%

May-12

0.82%

Dec-12

0.69%

Jun-12

0.77%

Jan-13

0.94%

Jul-12

0.78%

Feb-13

0.99%

Aug-12

0.78%

16 April 2013 recruitment extra

To App Or Not To App... ...that is the question April 2013 720502080

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HR Report

HR REPORT recruitment extra's monthly update on the latest news, reports and opinions on what’s happening in HR nationally, trends from overseas and briefs on the activities of equal opportunity organisations, employers, EO tribunals and agencies and governments.

Reporter: Jane Dillon

Brisbane HR salaries tipped to fall Brisbane-based HR professionals can expect a salary drop, according to figures released by recruitment agent Robert Walters.

Its latest Global Salary Survey showed while HR salaries in Melbourne and Sydney looked flat for 2013, Brisbane professionals should lower their expectations. The figures showed in 2012 salaries for Brisbane-based senior HR staff started at around $220,000, however 2013 projections put those salaries starting at $200,000. Hourly rates for specialist positions including industrial relations managers and change managers are expected to drop 20% to 25%.

While OH&S roles have previously attracted a premium in the resources rich state, the projected salary for permanent OHS managers in Brisbane has dropped $30k. A spokesperson for Robert Walters told HRR “2012 was a tough year for mining and

resources recruitment, as most hiring plans were dependent on commodity prices”.

She said there were predictions “a lot more projects [would] come online in the 2nd half of the year, but there wasn’t enough certainty to keep the rates at their high pre-commodity price drop rates”.

According to the data, salaries in Melbourne and Sydney will remain stable. The report said Sydney-based candidates “consistently sought organisations with strong career progression opportunities, a respected HR leadership team and flexibility in the work place” to compensate for the flat salary growth.

She said project delays and redundancies in Qld meant the “market became candidate rich” and that would carry through into 2013.

Research says HR measures are ‘confused’ Confusion in what staff surveys actually measure is creating uncertainty for HR, according to research conducted by King’s College London.

The 2012 State of HR survey identified employee engagement as the key priority facing HR practitioners for 2012. However, the research also found 75% of respondents measured employee engagement by assessing levels of job satisfaction, organisational commitment and identification with values, which were “not new ideas”. Two-thirds of respondents did not measure discretionary effort or organisational “citizenship” to measure how engaged employees were with the macro organisation.

This meant “many organisations may be measuring something different to what they believe is being measured,” it said. It found organisations were not consistent in what they measured, as there was no accepted definition of what to measure. “Overall, organisations are unsure about whether they need to be making employees satisfied, committed or highly energized to achieve the kind of performance they desire. Each may require different HR practices and approaches and may contribute to performance in different ways.”

The King’s College report said despite respondents identifying employee engagement as their key priority “there has been a potentially worrying fall in the level of HR related activities designed to enhance or maintain engagement”. It said it was “not clear” why engagement activities had fallen away and questioned

18 April 2013 recruitment extra

if “HR interventions are perceived to have little additional value”.

The survey also questioned if HR had a “good sense of what is happening among the workforces for which [HR] are responsible”. HR practitioners significantly under estimated the number of grievances and bullying and harassment actions brought by employees compared to the actual number brought.

“46% of organisations expected grievances based on relations between staff and management and 30% of organisations relating to bullying and harassment, but 62% of organisations actually reported grievances on the former and 50% on the latter,” the report said. It said the strategies HR was using to reduce incidences may not have worked. It said HR projections for grievances relating to manager/staff relations, pay and conditions and stress “look to be of serious concern” for the future. Only 12% of HR respondents were said discrimination or diversity complaints were an issue of concern, despite 30% of respondents reporting they had had a complaint of that nature in 2011. It found that HR had the ability to “transform their value within an organisation, through the delivery of credible and valuable management information” which needed clear HR metrics and strategies. It said some organisations collected data but did not use it to refine strategy. “The gathering and use of data and evidence around HR and people management is seen to be a positive step and one that should drive better strategy and more informed management decisions.”

HR Report

Apprentice wage rise ‘killer blow’

Flexibility worth more than cash

Calls from the Aust Council of Trade Unions (ACTU) to lift apprentice wages to a living wage will cripple an already ailing construction industry, research commissioned by the Housing Industry Association (HIA) and Master Builders Association (MBA) has said.

The ACTU launched a case in the Fair Work Commission on March 4 to lift pay rates for apprentices. ACTU secretary Dave Oliver said the needs and circumstances of apprentices had changed since apprenticeship wage structures were first established decades ago, and action was required to meet those changes. He said the low pay rates were contributing factors in the low completion rate of apprentices.

The application seeks to vary modern awards to: • increase the minimum rate of pay of all first year or stage 1 apprentices to $423.66 per week or $11.15 per hour. This equates to 60% of the C10 or equivalent trades rates in modern awards (currently $706.10 per week); and • ensure that all adult apprentices are paid no less than the adult minimum wage in their industry, as determined by the relevant modern award.

National Council for Vocational Education Research (NCVER) data showed apprenticeship completion figures at September 2012 were down 2.3% on the previous quarter, but up 4.6% on the previous year. However, commencements to September 2012 were down 37.5%, to 47 900.

The HIA and MBA commissioned study estimated a loss of between 5,850 and 12,000 apprentice positions in the building and construction sector if the wages claim was successful.

“Were the union claim to be accepted there would quite simply be very little incentive for an employer to take on an apprentice,” HIA’s David Humphrey said.

“Current wages reflect the training nature of the employment relationship and that in their early years apprentices need high levels of supervision and are not very productive,” he said.

Australian Industry Group CEO Innes Willox said the increased wages and conditions being pursued by the ACTU would “be a killer blow for apprenticeships in the current uncertain economic climate”.

“Making the cost of engaging an apprentice much higher will simply result in less (sic) apprentices being employed and more skill shortages for industry,” Willox said.

He said the union’s application was “costly and unacceptable”.

IT professionals are more interested in discount gym memberships and additional annual leave than promotion and salary increases, Ambition Technology (AT) research has found.

AT MD Andrew Cross said a survey of 900 IT professionals “showed workers would like to be able to work from home, bring their own devices, purchase additional annual leave and get discounts on gym membership and insurance”.

Yet the data showed almost half of workplaces surveyed don’t offer benefits at all.

“There is a growing assumption among staff that a good employer will invest in their wellbeing. However, flexible working arrangements are often only agreed upon verbally and remain just that – words,” Cross said.

“In order to attract and retain great staff, businesses need to be more transparent and have policies in place that set out the parameters of employee flexibility,” he said.

To retain top talent, Cross recommended organisations improve the implementation of such arrangements by being upfront and making it official. He said organisations with “limited opportunity for promotion and salary increases [should use] additional benefits and more flexibility as an alternative”.

Women miners focus on e-mentoring An e-mentoring program has been introduced in an effort to better support women in the mining and resources sector.

The Australian Women in Resources Alliance (AWRA) is a national project developed by the federal government and employer group the Australian Mines and Metals Association (AMMA). It is part of a strategy to increase female participation in the resources sector to 25% by 2020.

One hundred and five mentors and mentees from around the country will be part of the first intake.

Auditors in demand Auditors are the winners in the global financial crisis, according to job demand figures recently released by the Clarius Group.

The Clarius Skills Index for the December quarter for accountants, auditors and company secretaries reports a shortfall of more than 2,300 people in this sector. Clarius Group’s Paul Barbaro said the economic “turmoil” meant “organisations are paying close attention to the performance and any fluctuations to their bottom line” creating increased demands for the specialist skills of auditors.

Barbaro said a 15% increase over the last year in insolvencies amongst small to medium sized businesses was placing further pressure on an already “stretched market”.

However, he said government indecision and the long lead federal election was making the sector ‘nervous’ about future job opportunity.

“Accountancy and auditing is highly exposed to the vagaries of government as it relies on regulation, government programs to be funded and changes to legislation. So if governments lose momentum, job opportunity is also impacted,” he said.

He said the “significant trend” for specialist finance professionals was an “increasing demand for multi skilling”.

“It’s hard for a management accountant to be a fund accountant or to be a tax accountant but that’s exactly what they’re being asked to do – to diversify their accounting expertise across multiple disciplines for the sole purpose of reducing head count,” he said.

HR Report is an independent fortnightly new service published by Thomson Reuters. The service is available in paper and email format. For further details visit: www.thomsonreuters.com.au/hr-report-email.

recruitment extra 2013 April 19

Feature

The misnomer of RPO: why outsourcing is really insourcing With over 17 years’ experience in the industry Paula Baskus, Director Managed Solutions at Harrier Human Capital, has been instrumental in changing the perception of how RPO is considered in the Australian market. recruitment extra’s Imogen Tear spoke to Paula, about the history of RPO and where it fits into the business world.

A

ccording to Baskus the history of RPO can be traced back to the late 80s when a general dissatisfaction with the results being obtained under the preferred service agreements (PSAs) that characterised the era became apparent.

With business so buoyant in the mid 80s and early 90s there was huge competition for talent and it was this that drove organisations to focus on HR and talent acquisition as part of their core business. The recession of the early 90s saw businesses shift this focus to achieving improved performance and differentation through their people. At this time many organisations had highly de-centralised recruitment and were not only losing control of their processes but enduring significant costs and impact on quality.

“RPO evolved out of a response to organisations needing to drive more value out of their spend and get better outcomes around their recruitment and talent management,” says Baskus. “RPO gave organisations the opportunity to leverage their volume post-PSA by using one strategic RPO partner.” As businesses begun to realise the value of working with an external partner that had scale and could leverage that scale to produce greater cost savings and quality results for them, so RPO was born.

Baskus says two streams of RPO developed in this period that still exist to this day. In the US RPO had always taken a much more modular and transactional approach whereas in

20 April 2013 recruitment extra

“RPO evolved out of a response to organisations needing to drive more value out of their spend and get better outcomes around their recruitment and talent management.”

Europe and Asia Pacific it became “more about driving the value proposition to give quality and strategic outcomes.”

It was also the growing awareness, she continues, of savvy organisations that one of the problems with PSAs was brand control, or the lack of, that drove the RPO model. An organisation that hired many suppliers who, in turn, went to market on the organisation’s behalf were actually diluting the client’s brand. For organisations with a strong brand, that was fatal. It was the realisation that in the “war for talent” creating a strong brand identity was critical that helped drive the RPO movement. Additional drivers, says Baskus, were cost, brand, scale and the need for an organisation to focus on its core business.

Baskus cites Johnson and Johnson Medical as one of the first businesses to commit to an RPO model back in 1995, a partnership that still exists today. “As a company they were very much in the war for talent in this period and were paying agencies to go to market for them,” she says. “But they were losing their brand identity as a result.” Baskus, who led

the relationship, says the company soon realised that leveraging their own brand to attract employees was what would drive a deal. “Organisations use RPO to improve their brand recognition,” says Baskus. “It’s a very direct message about how serious they are about talent and employees.”

Partnering with an RPO provider that takes ownership of the entire recruitment process whilst developing the brand in the marketplace gives a business the opportunity to leverage scale without losing brand control. It also frees up the company’s own HR department to concentrate on their core activities.

What has evolved in Australia is an end to end methodology that allows control, consistency and return on investment says Baskus. “Rather than outsourcing small components, typically a client outsources the entire end to end process and in many cases it is more than just the recruitment process. It’s other talent components such as branding, strategic sourcing, talent mapping, workforce planning, management information and reporting.”

Contrary to what the name suggests Baskus argues that RPO is not outsourcing and suggests ‘insourcing’ or ‘talent acquisition management’ is actually more accurate because whilst the model involves the transfer of all, or part, of the recruitment activity to an outside provider this provider is then based in-house and operates as an internal function in every way. “It’s such a core, critical function and everything is done and delivered in-house,” says Baskus. “It is still seen as outsourcing and is measured as

Feature

an outsourced function but in every way it operates as an internal function; it is based at the heart of the business and nothing ever leaves the business.”

RPO can be based in-house for years and there are many long term deals running in the marketplace. Naturally the relationship between the company and the provider is extremely important and the growth of relationships can be traced in generations. “The fundamentals are the same – people, processes, change management and transformation, additional services delivery and technology but what is changing is the strategic partnership and the level of integration between provider and organisation at both a business model level and a cultural level,” says Baskus. “A sophisticated provider will actually be more of a strategic partner that helps guide an organisation to define what high performance looks like.

It can help a B-grade organisation become an A-grade organisation by helping them attract and retain top talent.”

It is this that is crucial. An RPO needs to be able to go beyond traditional recruitment and provide functions and strategies for a range of key platforms across their clients business and then drive it all back round the cycle again. An RPO has to deliver more value to the client than a traditional recruiter.

How you measure the success of RPO is changing says Baskus. Where it used to be time to fill, cost to hire and quality of hire, now it is measured as workforce engagement, productivity, growth and development of high potential employees, achievement of specific project outcomes and in some cases improving the profitability of the recruitment function. As the understanding of what RPO can offer has evolved so have the expectations and there has been a big shift in what a client would expect from their RPO partner and consequently what an RPO can offer.

There is also a misconception that RPO puts recruiters out of business, comments Baskus, but she believes this is not the case. “[RPO] is about building an entire function,” she says. “And recruiters, specifically specialist recruiters, have a role because RPO will need to deliver a chunk of recruitment as part of this function.” The difference between a recruiter and an RPO rests on the fact that an RPO manages the full cycle. It is measured on its ability

Paula Baskus, Harrier Human Capital

“Organisations use RPO to improve their brand recognition. It’s a very direct message about how serious they are about talent and employees.” to deliver specific outcomes and value for a client, not just on its ability to deliver a quota of staff.

Baskus believes medium sized businesses stand to benefit the most from outsourcing because as a medium size organisation grows it needs to compete for top talent and may have to reach out for expertise. If a business is growing rapidly having the internal resources to harness this growth and translate that into successful recruitment strategies is difficult and is an area that can be successfully outsourced to a provider.

RPO is suitable for those that hire more than 100 people a year, she says, but it is typically organisations that hire 300+ that stand to gain the most benefit and a higher return on investment.

Whilst some organisations may worry about putting all their eggs in one basket by employing the services of an RPO provider, Baskus is convinced that the right RPO partnership can bring huge advancements for businesses, particularly fast-growing, mid-size organisations. RPO in Australia has given these organisations a capability that they otherwise couldn’t afford she says. “RPO keeps strategic management at the core of the business and allows the RPO partner to bring years of IP to the table.” Not only do the best RPOs deliver an end to end offering that covers branding, attraction, sourcing, selection, assessment, onboarding and engagement but a good strategic relationship can be transformative for a growing business she concludes.

Paula will be speaking at the ATC’s Agile Talent Management conference in Sydney on 28-30 May. For more information please see page 15 of this issue or visit www.atcevent.com.

recruitment extra 2013 April 21

Feature

THE FUTURE

OF Recruitment Process Outsourcing

By Nicholas Beames, CEO and Founder of Astute Payroll

A

In the constant quest for value in the enterprise, outsourcing has been a key tool in driving out inefficiencies in business operations. The basic philosophy being that a company should concentrate on what they do best – the core competencies that are key to attracting and retaining customers. Everything else – from the accounts to the cleaners – is a non-core competency, and should be procured for the best value, whether that means employing someone in house, or engaging a third-party vendor who can supply the service for less There’s nothing particularly new in outsourcing but in recent years the number of business functions seems to have multiplied. From off-shoring callcentres, to business process outsourcing, it seems these days the default position is to outsource.

Ownership of the process The first thing to be said in any discussion of RPO is that it is not just a question of employing a recruitment agency or headhunter to assemble a short-list of candidates for you. RPO goes way beyond this – the key concept being the RPO provider assumes ownership of the entire process for the business.

RPO can include everything from resource management, putting together the whole employment value proposition, the sourcing strategy – basically every element of recruitment. And the job doesn’t stop once the hire is made.

The typical RPO provider will then be

22 April 2013 recruitment extra

"A key area of benefit is cost. The RPO provider by definition should be a specialist that is solely focused on recruitment processes. Ideally working with a number of clients, the economies of scale that can be bought to bear by the RPO partner mean that its operations should be cheaper to run than the inhouse equivalent. More so it should be quicker, which in turn saves money." responsible for onboarding right through until the point potentially an employer exits the organisation. Typically, the RPO provider will also manage the exit process and even outplacement or redeployment.

At first glance, handing over this level of responsibility for recruitment sounds like a big step. After all if people are a company’s number one asset, then it might follow that getting the right people is by definition a core competency. For many companies though the benefits of the RPO route mean that this is not so much of a problem.

A key area of benefit is cost. The RPO provider by definition should be a specialist that is solely focused on recruitment processes. Ideally working with a number of clients, the economies of scale that can be bought to bear by the RPO partner mean that its operations should be cheaper to run than the in-house equivalent. More so it should be quicker, which in turn saves money.

The combination of these factors means that by going down the RPO route, a reasonably sized business should be able to reduce its cost per hire, sometimes significantly.

The other benefit is the potential to fundamentally change the recruitment cost structure. For example, if hiring patterns are seasonable or cyclical, the fixed cost of maintaining a recruitment function in-house during the quiet times, so that it is ready to go when needed, essentially becomes a sunk cost. By establishing a variable cost structure with the provider, RPO gives the opportunity to establish better value for money.

Business benefits However, that said, it seems that cost imperatives are not necessarily the driving factor – the non-cost related benefits of RPO can be pretty attractive in themselves.

The specialism in recruitment that an RPO provider brings should mean that the recruitment process is quicker, the pool of candidates is smaller, better quality, and well suited to the company, and the recruitment process means less administrative burden on the HR department, leaving the business free to concentrate on what’s important –

Feature

deciding who to hire. And if it’s true that the quality of your talent can make or break your business, then employing a specialist to ensure you get the best recruits may give you an important competitive advantage.

Getting partnerships right However, like in any other area of business, outsourcing the recruitment function is unlikely to be a ‘magic bullet’, and indeed there are several pitfalls that can be encountered along the way.

The first issue is the quality of your RPO partner. Since this sector started gaining traction in the late nineties, the industry has mushroomed, with more and more vendors competing in the space.

But it is still a relatively new industry, and obviously not all vendors are created equal. Many observers are expecting to see merger activity among vendors, with the weaker vendors falling by the wayside.

This risk is compounded by the fact that RPO partnerships by their nature

suit long-term relationships. Ideally you want your recruitment partner to get to know your business culture in order to best match candidates to your needs. A poor organisational fit between you and your vendor is likely to produce poor results.

When entering into any relationship due diligence is vitally important. The time an HR department devotes to establishing the RPO relationship upfront is critical to the success of the relationship.

Recruitment is a function that is perhaps on the edge of the debate around what constitutes a ‘core-competency’ for an enterprise. If getting the best talent is so important to a business’ success, then should this be something that you rely on a third party to do for you?

the value they can bring themselves to the process. It seems sure though that RPO is here to stay in the HR manager’s playbook. The key selling point for most vendors in this space is expertise. And as the oft-predicted talent shortage begins to bite, any company that doesn’t have sufficient expertise in-house is likely to look to a third party for answers.

Only time will tell.  Nicholas Beames is the CEO and Founder of Astute Payroll. In 2006 Nicholas founded Astute Payroll and, with his business partner Marcus Webb, has grown the company into the largest online Temp & Contractor management application provider in Australia.

Nicholas has completed post graduate studies in Commerce, Accounting and Business with Sydney University and is completing an MBA with Southern Cross University. He is a Fellow of the AHRI, a Fellow of the RCSA, and a Member of the AICD.

The future of RPO Ultimately there is no correct answer as to whether RPO is right for a business, the answer depends on particular business circumstances, and the attitude of individual HR departments towards

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recruitment extra 2013 April 23

Feature

Emerging trends in Recruitment Process Outsourcing

By Chris Riley, General Manager, Sales & Marketing, ManpowerGroup Australia & New Zealand and General Manager, Manpower Australia

A

s organisations around the world look to streamline workloads and focus on core business activities, many are transferring ownership of one or more recruiting functions to an expert recruiter to achieve efficiencies. As a result, recruitment process outsourcing (RPO) is becoming an increasingly important service offering for the recruitment industry.

The Everest Group’s RPO Annual Report 2013 found that there was a surge in RPO activity in the Asia Pacific region in 2012, with the current global RPO market estimated to be worth $1.5 billion. This is expected to grow by 12% in 2013, and 17% in the next four years.

In the coming years we expect there will be a shift in both the industry and job families that adopt RPO solutions.

Multi-country RPO arrangements will gain popularity, especially in the Asia Pacific region, and we will see more mid-size companies using RPO. Currently, the top three sectors for RPO are manufacturing (20%), financial services (19%) and IT (12%), and these sectors will continue to be adopters.

However, as in the employment market, changes to traditionally dominant sectors, such as manufacturing, are expected in the future. Energy and utilities, and healthcare and pharmaceuticals, which currently make up 13% of the market, are flagged as emerging areas for activity. Businesses services and high-skilled professionals will also be the focus for hires.

A strong global recruiting capability is already a must in the Asia Pacific region, as many organisations in the area have cross-border business, outsourcing and talent arrangements. As RPO grows in the region, multi-country RPO arrangements will gain popularity.

24 April 2013 recruitment extra

RPO has traditionally been seen as a large enterprise function; however, it is a scalable practice that can appeal to mid-size employers as well. No two RPO programs are alike, and can include endto-end, complete recruitment process support; project-based RPO, for seasonal or event-based work; or recruitment consulting. As more mid-size companies come to understand the range of scalable methods an RPO arrangement can offer, we expect to see a greater uptake by this section of the market. We also predict that there will be a gradual increase in blended RPO offerings, which encompass RPO and managed service provider (MSP) arrangements. While integrating both types of hiring can present challenges, it is possible to succeed by using analytics as a tool to help forecast, source and deploy talent.

The economic environment will play an important role in shaping the market, both in terms of new deal activity as well as hiring volume. However, there are also more inherent difficulties that our industry needs to address if we are going to build RPO activity in Australia: • Lack of knowledge: Limited understanding of the value offered

by RPO to organisations leads to the creation of an incomplete business case that focuses only on easily measureable benefits. Service providers need to take an active role in educating organisations and creating awareness around enhanced value proposition.

As well, providers must employ the right metrics and reporting in order to measure performance.

• Buyer-vendor mindset: An ‘us’ and ‘them’ approach to engagement will not help create the right outcomes in RPO. It is important to create a partnership approach which includes

the involvement of recruiters in an organisation’s business planning and workforce planning meetings, to make sure they understand the talent requirements and align workforce strategies with the organisations business strategies.

• Stakeholder management: There are multiple stakeholders in RPO – hiring managers, recruiters, HR, and procurement – who all have different priorities that can derail the program.

It’s important to bring everyone on-board to create a successful and effective program.

Given the cost, efficiency and performance benefits that RPO can deliver, this hiring approach will continue to gain ground in the local and regional market. To ensure it is successful RPO providers need to focus on the fundamentals of aligning the strategy to business objectives, and creating a tailored solution that meets the needs of each client. Ultimately one size fits one! 

Chris Riley is responsible for developing strategy and driving all critical elements of sales and marketing for ManpowerGroup ANZ. With almost two decades’ experience in the recruitment industry he has been well placed to observe changing industry trends both locally and internationally having worked across all areas of sales and operations and is experienced in all aspects of Human Resource Outsourcing including RPO, BPO and Vendor Management Solutions. Chris was formerly Managing Director of an ASX listed recruitment company and has held senior leadership roles with some of the largest recruitment firms in the world including working in Australia, New Zealand, Singapore and the UK.

Legal eye

When turning a blind eye can get you in trouble

By Joanna Oakey, Director, Aspect Legal

H

ave you ever been in a position where you suspected that a party you were dealing with could be breaching their agreement with someone else in order to use your services? Perhaps something as a simple as a candidate breaching their employment restraint obligations? Or maybe you had good reason to suspect that a candidate had clients that they intended to take over to a new employer, in breach of their current employment conditions?

It is well known that a party that breaches a contract may face liability for damages relating to that breach. But a lesser known fact is that where there is a third party who has induced that breach of contract, the third party could also liable.

A recent case in the Federal Court of LED Technologies v Roadvision1 has demonstrated that the courts are willing to hold parties to account when they turn a blind eye or are indifferent to wrongful conduct in the area of breach of contract. With the result that if you are seen to be inducing someone to breach their contract with another party, even perhaps unknowingly, you may be held liable for that breach.

The test for the liability of a third party revolves around whether that third party knew or should have known that their conduct would cause, or may cause,

“Don’t assume that simply because you aren’t a party to the contract, you won’t be caught up in the cross fire!” a breach of contract.

While the LED case related to the manufacture of goods, the approach of the courts in relation to this case are just as relevant to services industries like recruitment.

The case related to two competitors (LED and Roadvision) and their mutual supplier. The contract between the supplier and LED contained a clause that restricted the supplier from using LED’s intellectual property with anyone else.

Roadvision knew about the contract, and this clause.

Roadvision asked the supplier to supply a product similar to the product they supplied to LED. However, the products the supplier provided to Roadvision did in fact use LED’s intellectual property.

Subsequently LED brought an action against Roadvision, alleging that it was also liable for the contract breach by the supplier, on the basis that Roadvision had induced the supplier to breach the contract.

The court concluded that a third party could be liable in this instance if it either: - knew that its conduct would result in a breach of contract, or - was “wilfully blind or recklessly indifferent” to such a possibility.

Expanding on this point, the courts said that if a party knows that there is at least a substantial chance that there is going to be a breach of contract, this may be enough to find liability for the tort of inducing a breach of contract.

On the particular facts of this case, Roadvision was able to prove that it was not aware that the supplier had breached its contract in providing Roadvision with the products, but with a slightly different scenario there is a real possibility that in applying this test a court could find a third party like Roadvision liable.

So the upshot is a reminder to be cautious when you are aware (or should be aware) that a party you are dealing with is breaching an agreement with a third party.

Don’t assume that simply because you aren’t a party to the contract, you won’t be caught up in the cross fire!

1

LED Technologies Pty Ltd v Roadvision Pty Ltd [2012] FCAFC 3

Joanna Oakey is the director of Aspect Legal, and works with organisations ranging from SMEs through to corporates in the areas of commercial law, mergers and acquisitions, procurement, and branding. Aspect Legal provides a range of proactive and commercially driven services to assist recruitment businesses in all facets of legal business risk and growth.

recruitment extra 2013 April 25

Case study

Managing growth in the fast lane:

A case study from Oxford Funding

W

hen Larissa Robertson, CEO and Founding Director of SCO Recruitment, purchased the shell of a liquidated business in 2009, she had no idea that it would grow so quickly.

In that first year, SCO Recruitment’s annual turnover was $1 million. Now, four years later, Robertson’s two companies SCO and the not-for-profit Trim and Proper Property Services – have a combined turnover of $16 million.

Such growth is dramatic. It saw SCO win second place in the 2012 BRW Fast 100, which tracks Australia’s fastestgrowing small and medium enterprises.

It’s also the kind of growth that could potentially give a recruitment agency a severe financial headache if not properly managed.

Often, high growth firms consume cash faster than their business can generate it. While they might be able to generate increasing sales, this does not mean that cash will flow in the door at the same time.

Nor does it mean that it will be sufficient to provide the infrastructure which underpins the increasing levels of activity.

If not handled properly, a growth boon can quickly turn to bust.

The biggest challenge is wages. With the bulk of SCO Recruitment’s business coming from labour hire and temporary placements, the company finds itself with a heavy wages bill come payroll time. Last year it placed over 1,000 employees at 100 different sites across Australia. SCO also pays weekly wages, despite having an average collection time of 20 to 30 days.

With the risk of reputational damage and financial ruin, a recruitment agency cannot afford to fall behind in its payroll commitments. “In recruitment if you don’t

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meet the payroll, you’re going to end up out of business within a week,” Larissa Robertson says. “We have to make sure the cash flow is there and available on the day the payroll is required. No delays, no bank issues. It has to be there.”

Many businesses use traditional credit facilities such as loans and overdrafts to maintain healthy working capital and fund growth. But Robertson says the key to SCO Recruitment’s growth has been debtor finance: a tool that has put SCO in control of its cash flow.

be difficult to find an organisation that can properly sustain those needs. It’s a challenge that Robertson has faced before.

“I previously worked for a company that also did recruitment, and overall I’ve used three different cash flow providers, and one of them was a little more difficult to work with,” Robertson said. “They didn’t understand our business very well, so they weren’t able to provide the solutions we needed in time, or offer valuable strategic advice to help grow our business.”

“With the risk of reputational damage and financial ruin, a recruitment agency cannot afford to fall behind in its payroll commitments. “In recruitment if you don’t meet the payroll, you’re going to end up out of business within a week.”

- Larissa Robertson, CEO and Founding Director, SCO Recruitment

Using a business’s accounts receivables, debtor finance allows the financing of working capital without leveraging assets such as property. It typically works by making up to 80% of the face value of selected invoices available almost immediately as cash to a business.

The remaining 20% is transferred once the debtor pays, less the financier’s fee, which usually ranges between 0.3% and 2%, depending on the business turnover.

Without debtor finance, SCO Recruitment may never have existed. “To start a recruitment business you need to have $1 million to $2 million in the bank to be able to fund payroll from the initial start date, rather than just having a couple hundred thousand,” Robertson said.

It’s critical that a recruitment agency picks the right partner for cash flow.

While a recruitment agency’s needs from its partners are straightforward, it can

SCO Recruitment now partners with Bendigo Bank as their debtor financier.

As well as taking the time to understand SCO’s business, the other great benefit that they’ve brought to Robertson is a back-end system that saves her and her team many hours of work.

“With our previous supplier we had a few technical difficulties. We spent quite a lot of money getting our system to match their system and then it didn’t work for about eight months. So a lot of it was done manually and it would take a couple of hours daily to send the invoices. But with Bendigo Bank, it takes about 10 minutes now,” Robertson said.

For a rapidly growing recruitment agency, having peace of mind about cash flow is critical. Knowing that Bendigo Debtor Finance is focusing on this first and foremost allows SCO to be more aggressive in pursuing its business opportunities.

Social recruiting

The internet makes the best things better

By Richard Spencer, Director, TWOSocial

A

few short years ago, when social media was still called web 2.0, as a business, we tried to help organisations understand that engaging with people over the web wasn’t new. In reality the original concept behind the creation of the World Wide Web was just that and in the dot com rush to traffic and business models that were based on eyeballs not profit, all that was forgotten.

The re-discovery of web 2.0 principles wasn’t a moment of brilliance from Mark Zuckerberg (although not a bad effort to be fair), but a return to the original ideals of Tim Berners-Lee. These ideals, pioneered, in an ecommerce environment by well-established and successful brands like Amazon and eBay, created the phenomena that became social media.

It is interesting to reflect that two of the most enduring and successful web based business models are based on the guiding principles behind social media, which has to lead to the view that social media is not a new business model.

The business models which work best on the web do one of two things – they create realities we could not imagine, for example, near field communication, or more regularly, they improve on something we have been doing in the physical world for years.

Email is a much better way of writing letters; Amazon is a better way of buying books (and many other things now); eBay is better than attending an auction in person and created an entirely new

way of disposing of unwanted items for everyday Aussies; Seek does a better job of advertising vacancies than a newspaper; LinkedIn is a better way of working a room; and social networks generally, are a better way of staying in touch with friends, family and of course, unrelated random acquaintances you are never likely to meet.

And yet as organisations we typically resist the move to using social media largely because it is new and because of that it is scary and it is risky!

I am old enough (sadly) to remember when the fax machine was first introduced to the business world and people said that no candidate would ever fax a resume as it wasn’t as secure as the post. And when email became a feature, the same recruiters said that nobody would ever email a resume as it wasn’t as secure as a fax. When the job boards moved the applications online, we heard that candidates wouldn’t apply over the web and certainly wouldn’t post their resume to an online database, and I am sure you can all remember the same conversations we had more recently about social media.

Surely enough is enough?

Times change, people move on and both the recruitment industry and hiring managers at large have to accept that your presence as an individual and an organisation on social media is critical to the way you are likely to be perceived by candidates. Moreover, candidates will and do apply through social media, they will and do actively seek out networks and

connections that can help them develop their careers and that is not likely to change in the short term.

What we need to do as individuals and as organisations is determine how the web and contextually, social media, can improve the way we currently do things – because that’s what it does best.

Making the best use of social media channels either for business development or candidate attraction is largely about the strategic application of common sense.

Don’t look too hard for the best use of social media in your business, in many cases, look for what you do best and see how social media channels might further improve what you do. Sure, as a channel to market it can do more, but if nothing else, a first successful step will help your organisation over a fear of failure and into a new channel that will help position your business for the future.

Don’t forget, we said the same about the internet as a whole and that turned out alright! 

Richard Spencer is a Director of TWO Social, a specialist Social Media agency. As well as being a regular media commentator, Richard advises organisations on how to maximise their opportunities across Social channels. Prior to founding TWO Social, Richard was Senior Vice President, Global Marketing and Interactive with TMP Worldwide, Global Head of Marketing for Michael Page and has been working in digital communications since 1996.

recruitment extra 2013 April 27

The Panel

Rosemary Scott

Jackie Rees

Managing Director Scott Recruitment Services

Owner, Simply Recruitment

This is an interesting scenario and one that I have come across a number of times over the last 20 years. Some consultants think that after a certain period of time they should advance into a management role. If they do not get that opportunity in their current organisation then they start to look around.

Naturally I would initially ask the candidate if they have discussed this option with their current employer. I do this for a number of reasons, however mainly because I don’t want a situation to arise whereby, after having worked hard to obtain the person the management position they require, they find that when they go back to their current employer they are counter offered with a management role. To avoid this scenario I always suggest a candidate approaches their own employer first.

Secondly, I discuss with the candidate their reasons for wishing to change into a management role. Some may just want to get away from being a billing consultant but often a candidate believes moving into management is the only way to advance career wise and to gain a higher salary package.

Once I explain to them that a manager is normally still expected to bill, although it may be a reduced billing target according to the number of staff they manage, they sometimes withdraw their interest. The role of the Billing Manager in the recruitment industry is probably one of the most challenging because any potential candidate has to be able to adopt many different hats.

However, if they were still keen to pursue this career step I would, with their permission, check their past referees. If those referees had some concerns about their ability to manage, and if I had permission to feed their response back to my candidate, I would then approach the candidate with these concerns. At this point I would offer them an alternative career opportunity, perhaps to a more senior executive recruitment role, or a move into a different area of specialisation. I may also suggest a move to a larger company where there would be increased and different career opportunities down the track.

If they still wanted to pursue the management option I would suggest some training in management, either through their current employer or externally. However if the candidate had no interest in this, I would have to then advise them that I could not assist them at this stage. However I would keep in touch with them, hoping that they may take the training advice and become more flexible in the role they were seeking, perhaps suggesting a Team Leader’s role initially which may be a first step into management.

Rosemary, FRCSA (Life), has spent 40 years in the recruitment industry in Australia and run her own business for the majority of this time. Rosemary started Scott Recruitment Services in 1992, as the first recruitment to recruitment company in Australasia, and now has offices in Sydney, Brisbane, Perth and Melbourne. All the offices in Australia are now franchised.

Rosemary also buys and sells recruitment businesses.

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This scenario is not at all uncommon. Quite often a recruiter is looking for another role because they are disappointed that they are not getting the opportunity they believe they deserve with their current employer. It’s then our role to understand their motivations for wanting a particular role and to also ask why they are not being given that opportunity.

I think this scenario is extremely complicated and we need to consider several aspects: Why do they want to be a manager?

Often the answer is because they are looking for promotion. Many organisations are now working really hard to develop a career path for those that don’t want to go down the management route. Coaching around what other opportunities are available often brings out a very different conversation and can steer an unsuitable manager away.

Are they prepared to take a cut in OTE? Top billers tend to earn more than their managers and this often comes as a surprise. Whilst the base salary looks more appealing at management level, the OTE is often lower. This is a very relevant conversation to have to ensure motivation for management isn’t about a salary increase. That might come, but in the early management days it’s more than likely to be a financial step back.

Is this person really an exception to the rule?

Top performing consultants are an exceptional breed. Typically, they are highly motivated and extremely focused. They are clear about what makes them money and don’t waste time on activities that don’t. They like to compete and are driven by earning excellent commission and the recognition of being the best. To also have the attributes to be a good manager is extremely rare.

Can they demonstrate those additional skills?

Does their referee have an ulterior motive for giving them a bad reference?

Let’s face it; no one wants to lose a top performer. Maybe their current employer didn’t promote them because they were too valuable as a recruiter. Did they ever see them perform as a leader? I would be very specific in my questions to the referee to ensure we get a fair assessment.

If the conclusion is still that the recruiter is not ready to manage I would have this conversation with them and see if they are open to other options. If they’re not I would still represent them but be extremely transparent with prospective employers and seek out opportunities where they were properly supported or where the focus is, first and foremost, playing to their strengths.

Jackie has a recruitment background spanning over 20 years.

She joined the industry in 1989 after completing a BSc (Hons) degree in Psychology and worked her way up to Regional Business Manager and Regional Training Manager for a leading UK recruitment business. She relocated to Sydney in 1997 where she managed a boutique recruitment agency in Parramatta.

Jackie has since worked in Wellington, Melbourne, London, Sydney and Brisbane. She started in rec to rec in 2000 and established Simply Recruitment, a Sydney based recruitment to recruitment specialist in 2008.

The Panel

Mary Dowrick Founder Dowrick Recruitment & Coaching

You are approached by a top performing consultant who is eager to move towards management.

However your early assumptions regarding this individual’s suitability is reinforced by their referees who suggest management is not the right direction for this person. Outline your actions.

Over many years I have spoken with consultants looking to further their career with the obvious step up to leadership. Many have not considered if this is the ‘right’ step just assuming this is the only step. Too many consultants don’t get regular feedback on matters outside of sales and targets and without meaningful reviews the result is that many consultants are left without a clear focus and direction for their career.

Initially we take consultants through a fact finding exercise, we ask questions to gain an insight into what the consultant is really looking for in the next role, why leadership? Are there alternatives?

Is leadership really going to be the answer to their need and are they aware of the pitfalls? Most leaders in the business also recruit – do they still want to recruit? If so would stretching their skills and goals in recruitment be appealing? The key is to clarify what leadership really means to an individual.

Mostly recruiters are seeking development in their career. As an industry many organisations fail to give consultants real development and growth in their role. Some organisations fail to make the senior consultant feel valued for the skill of being a damn fine consultant and lack a clear plan for growth in the role of the consultant. Seldom is there a plan in place for development of the individual.

What can solve the issue is a stretch in their role and the expectation of their position within the company. Putting a program in place to further develop the consultant in a more specific sector or starting a new desk – to be seen as that industry specialist by both clients and candidates to be the ‘go to consultant’ might be all it takes. This obviously is not an overnight solution, it takes time, process and strategy but gives an individual very clear goals and tasks, and ultimately a fulfilling senior role within both the industry sector and company. The added bonus of course – it will also be very good for the business.

If the individual is a talented consultant there are many opportunities; establishing a learning and development program to become a good mentoring/coach within their team can be stimulating for the individual and rewarding for all. Or development of a program around negotiation and sales, or possibly being utilised as a trainer if this is where their skills lie.

Leadership skills and recruitment ability do not go hand in hand. Some of our strongest most talented recruiters struggle with leadership. Most individuals are aware of their strengths and weaknesses and when given alternatives, the majority are attracted to what will be their best fit.

As an industry we need to work at developing ways for the recruiter to feel valued for just that – recruitment.

Mary has a recruitment career that spans more than 25 years, consulting across many industry sectors and at all levels of the market in Australia and New Zealand. From her formative days managing teams at Paxus & Recruitment Solutions and founding the trade publication recruitment extra, to growing her namesake brand to have international scope and a multimillion dollar turnover.

recruitment extra 2013 April 29

Tax focus

Small business tax considerations when buying out your business partner

By Paul Masters, Tax Partner at Deloitte Sydney

M

any private recruitment agencies commence between two individuals that have previously worked together in the industry. Often these types of ‘partnerships’ are successful in the early stages but may encounter challenges over time. For a variety of reasons there can be differences of opinions between the owners that may lead to one owner wanting to buy-out the other.

When these differences cannot be resolved and one party wants to take control of the business, there are ways to structure the transaction so that the acquiring party is not required to seek external funding for the purchase. With the correct strategy, the continuing owner can use existing funds and/or future cash flow from the business to fund the transaction and at the same time, the party selling their interest can exit the business in a tax effective manner.

The above outcomes can be achieved via a number of restructure steps which make use of various tax provisions. In particular, the small business capital gains tax (CGT) concessions can be used to assist with achieving these objectives.

Available concessions In general terms the concessions available are: • 15 year exemption • 50% reduction • retirement exemption and • rollover concession

The tests For a capital gain to qualify for the concessions, two basic criteria must be met; 1. the net value of all non-personal and business assets of the taxpayer tested just before the CGT event must not exceed $6 million or, alternatively, grouped turnover of ordinary income must not exceed $2 million; and 2. the CGT asset must be an ‘active asset’ of the business. An asset is active where it is used in the carrying on of a business by the taxpayer.

30 April 2013 recruitment extra

It is important to note that, in addition to the above criteria, each concession itself contains certain requirements that need to be met in order for the concession to apply.

An example Tom, a 57 year old recruitment executive has been in business with John for 16 years continuously. Tom and John run Best Recruit Co, a thriving private recruitment company that has a market value of $5 million. As a result of on-going differences between Tom and John, John has offered to buy-out Tom’s share of the business for $2.5 million. Tom has agreed to sell his interest to John on the basis that he is looking to retire and no longer wants the pressure of owning the business.

John wants to continue on with the Best Recruit Co business as he believes he can continue to grow the business and expand internationally. Unfortunately for John, due to a large mortgage on his personal property and numerous personal debts, John is not personally in a position to externally fund the acquisition of Tom’s shares in the business. Any available cash is held within Best Recruit Co.

The seller who wishes to retire Given that Tom has continuously owned his shares in Best Recruit Co for more than 15 years; he qualifies for the 15 year exemption concession. As a result, Tom is entitled to a total exemption on the capital gain so long as the sale of the business is in connection with his retirement.

The seller who wishes to move onto something new Following on from the above example, had Tom held his shares in Best Recruit Co for only six years or if he was not looking to retire, he would not be eligible for the full capital gain exemption. However, there are still other concession options available to him. He is eligible to receive the • standard 50% discount as he has owned the asset for more than 12 months; and • an additional 50% reduction in his

gain for satisfying the small business requirements; • he has the option of acquiring a “replacement asset” to use in another business within two years of the CGT event happening; and • he also has the option of reducing his capital gain by up to $500,000 under the retirement exemption.

The buyer Where there is surplus cash sitting in the business this can be used to effectively buy Tom’s shares, however it is probable the business will not have sufficient cash. It is not unusual to use a combination of cash provided by the buyer (ie John), cash in the business and cash obtained by the business through financing. The financing can usually be secured by using the debtors as security.

It is likely that there will be insufficient cash to fund the entire sale price in the first year. As such, the buyer and seller will agree to a deferred payment plan (sometimes called an earn out) that will normally be paid over a period of two to three years. This will allow the seller to fund the sale consideration through the future profits of the business.

Regardless of how John acquires the shares, Tom is still eligible for the concessions listed above.

Conclusion It is worthwhile considering the restructuring options available when considering buying out your business partner. Given the appropriate circumstances, there are ways to achieve effective tax and commercial outcomes for both the outgoing and continuing parties.  Paul Masters is a tax partner at Deloitte Sydney. He ­specialises in ­providing taxation advice to recruitment companies, particularly in the areas of M&A, restructuring and tax planning. He is the tax adviser to four ASX listed recruitment companies and ­numerous private recruitment companies.

Leadership

Put your money where the hire is

By Mark Busine, General Manager NSW, DDI Australia

W

hen it comes to talent, a thoughtful and comprehensive selection process is necessary to ensure you have the right people in the right jobs. All the training and development in the world won’t make up for a bad hiring decision. That’s not to say that training and development aren’t important.

But it does acknowledge that there are critical elements to success that just can’t be trained.

This view is further supported by the Boston Consulting Group’s (BCG) 2012 research, Creating People Advantage 2012 that shows a strong link between the quality of an organisation’s recruitment processes and key business metrics such as revenue and profitability. In fact the report finds that out of all the people management areas, effective recruitment practices have the greatest impact on business performance.

Taking a closer look at organisations and their current recruitment practices, there remains significant opportunity for improvement. DDI’s 2012 Selection Forecast identified a number of key findings and mistakes.

• When staffing directors were asked what the top reasons were for hiring mistakes, nearly one-third blamed overreliance on hiring manager evaluations and 21% blamed candidates overselling their own skills. The shame of it all is that information about candidates goes undiscovered in the selection process. Hiring managers need to go further to really get to the truth about an employee’s fit for the job.

• The research reported that only half (48%) of all organisations rated the hiring process as highly effective.

• The research also revealed that only 51% of new hires were confident in their decision to accept the new job.

Adding to this uncertainty is the failure

of the hiring process to paint a realistic picture of the job. Organisations that gave candidates a realistic job preview, yielded hires that were more confident in their decision and highly engaged.

• Interviews remain the hardest working selection tool to predict new-hire performance and resulting business impact, according to the research. The only catch – they have to be done correctly. Only one in three staffing directors said their hiring managers were skilled at conducting high quality interviews.

Other common mistakes include: • Hiring managers did not follow selection process • Insufficient information on candidate • Ignored information provided • Interview guides are not based on an identified set of competencies These common mistakes show recruitment practices are missing opportunities to get a clear picture of the candidate early in the process, confidence is low in making actual hiring decisions and new hire decisions are made as quick wins rather than fitting the person to a role in alignment where an organisation needs to be.

But selection is not just about external recruitment. It also covers those critical internal promotions and appointments.

A 2012 DDI study, Be Better than Average, revealed the weary state of frontline leadership. Organisations were found lacking in the ability to effectively select, promote and develop their frontline leaders.

The study found that over 80% of frontline leadership promotion decisions were based on a manager recommendation. While a recommendation can be useful too much emphasis on this one method can lead to poor decision making as the recommendations tend to focus on past or current performance and technical skill and not the skills required for success at the next level.

How do we improve the quality of our selection and promotion decisions?

1. Define Success. Be clear on competencies, experience, knowledge and attributes. Determine what is trainable and what is not trainable.

2. Use the right tools. Match what you measure with the best and most efficient selection tools such as preemployment tests and behavioural interviewing. Focus on the things that are not trainable.

3. Organise tools for efficiency.

Which method will give you the best candidate for the lowest cost.

Integrate a good screening process.

4. Use analytics. Measure the impact of your system to help you predict future performance.

Jim Collins, the author of Built to Last and Good to Great once wrote, “The old adage people are your most important asset is wrong. People are not your most important asset. The right people are”.

While organisations should continue to balance their investment in selection and development, organisations that ensure their recruitment practices are focused and effective will go a long way to ensuring they have the best talent on board and in turn delivering the best return.  Mark Busine is General Manager NSW of DDI Australia. Mark consults with organisations to determine appropriate human resource and talent management strategies and implement large-scale succession management and talent development programs. Mark has extensive experience in organisational development and consulting in both an internal and external capacity. He has significant corporate HR and organisation development experience across banking, finance, and professional service organisations.

recruitment extra 2013 April 31

Head to head

Recruitment Process Outsourcing Around The World Rod Hore, HHMC talks to Amit Somaiya, founder and CEO of Interactive Manpower Solutions Pvt Ltd Rod: This month my head-to-head partner is Amit Somaiya, founder and CEO of IMS People in India.

Amit, we have the opportunity to discuss Recruitment Process Outsourcing.

You have seen this service offered in different countries and it means different things to different people.

Amit: It certainly does. We first encountered RPO when working in the UK where it has a growing portion of the overall recruitment business. As we began working in other countries we quickly found that the definition and use of the term is slightly different in different parts of the world.

In Australia the definition seems to be narrower and refers to the establishment of a contract where an agency provides onsite services for an organisation, usually for mid-to-senior level permanent recruitment.

We understand the use of RPO services is growing reasonably quickly in Australia, as it is in the USA where Staffing Industry Analysts (SIA) have reported 67% growth over the past five years.

Rod: Organisations in Australia, and elsewhere, have a lot of choice in how they undertake their recruitment. They can use agencies, pre-qualified panels of agencies, restricted panels of agencies, procurement led panel arrangements, bring the

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recruitment process in-house, establish an RPO contract, establish formal VMS/MSP arrangement, or even acquire unbundled services.

There are few rules and the boundaries between all these different approaches is often blurred.

How have you seen RPO used by organisations?

Amit: As mentioned RPO seems to be most often an arrangement used for permanent positions up to the senior level. From what we have seen it usually excludes senior executive recruitment and lower level contingent work. Most people think of RPO as a method of arranging perm recruitment, not temp and contract, but that is not an absolute rule.

We think there is growing maturity in the industry and organisations are realising RPO is not for everyone – the largest and the smallest organisations don’t usually gain significant benefits from formal RPO arrangements.

From the organisation’s perspective, you can appreciate their desire to enter into an RPO type arrangement.

The winning RPO agency tends to customise processes and procedures to the organisation’s needs; they have one agency to deal with for the bulk of recruitment requirements; they negotiate a fee structure that reflects an exclusive volume arrangement; they get on-site

service; and there is a contract to establish measurable performance criteria.

AGENCY CHOICE Rod: Agencies have to adjust to the continuing rise of RPO arrangements.

There are three choices – some agencies may want to consider providing RPO services themselves; some will find opportunities to work in an organisation that has an RPO service for some of its recruitment; and some will provide their services to the RPOs. These are three very different strategies for agencies to consider.

Agency owners should be under no illusion that providing an RPO service is a completely different business to “normal” agency recruitment. This is not a minor revision of existing agency practices; this is a new business. Those who go down this path will need to have a solid understanding of process development, technology development, and contract management and contract reporting requirements. It is not for everyone.

The second option, working in organisations that have an RPO contract for certain services, could be considered business-as-usual for many agencies.

Rather than make assumptions about contractual arrangements that are in place, an agency needs to identify the boundaries of the RPO contract and seek areas of opportunity. Many agencies will

Head to head

"Case studies from the USA show that those agencies that whole-heartedly go into the business of supporting the RPO (or VMS/MSP) environments can reap rewards in revenue and profit growth."

- Amit Somaiya, Founder and CEO, Interactive Manpower Solutions Pvt Ltd

choose to avoid organisations that utilise an RPO and seek relationships with organisations that want to work in a more traditional method.

Amit: Case studies from the USA shows that those agencies that whole-heartedly go into the business of supporting the RPO (or VMS/MSP) environments can reap rewards in revenue and profit growth.

In smaller RPO deals there may not be much leakage from the RPO provider.

Every time, the agencies that have made this transition will again state that it is a completely different business – there is usually a need to integrate into technology platforms and to customise processes to the specific circumstances.

SOME SUGGESTIONS FOR AGENCIES As IMS works with agencies in developed markets like the USA, UK and Australia we have identified four considerations for agencies considering the RPO environment.

The first is process definition. Agency owners and managers must not turn up with preconceived ideas about recruitment processes. This is not a standard 360 degree recruitment activity. The fee structures are different, the KPIs are different, and the processes required are set out in a contract. The agency needs to develop appropriate recruitment processes to meet the contractual requirements, not to meet a personal or professional view of what a “good” recruitment process requires.

Rod: You mentioned fee structures.

The second consideration is to carefully analyse what is required from the consultant and reward them appropriately.

Once the RPO contract is established by the agency the consultant may be working on filling job orders that have been delivered to them. There may or may not

be some account management involved.

The consultant is very unlikely to be selling to the organisation. As a result, traditional commission structures for consultants are not appropriate – and can’t be sustained within the contract fee structure. It may be more appropriate to set a bonus structure based on the achievement of certain contract KPIs. Amit: The fee structure and modified processes also leads to many organisations utilising Offshore Recruitment Services for the sourcing activities – providing available, motivated and verified candidates to the onsite agency consultants. US research shows this provides a 5-7% cost advantage in the overall RPO contract over agencies that do not use offshore services. Equally as important is the benefit of scalability and contract flexibility that you don’t get with in-agency staff on projects of this nature, as the offshore agency can be contracted to match the terms of the RPO. This type of work is growing rapidly for our organisation.

Rod: The fourth consideration that we have noticed is with technology. Agencies need to be adept with technology to build efficiencies in their internal process, manage contractual terms by providing great performance reporting, and interface to an organisation’s internal systems.

Technology is becoming a critical success factor for recruitment agencies globally – the choices made with technology are having a big bearing on future performance.

Amit: Recruitment Process Outsourcing is yet another area to test the strategy of local owners and managers. Those that are able to clearly set strategy for their business, choose the right opportunities for investment and execute efficiently will be reap the rewards.

Amit Somaiya, Founder and CEO, Interactive Manpower Solutions Pvt Ltd (IMS) Amit Somaiya is the founder and CEO of Interactive Manpower Solutions Pvt Ltd (IMS). For six years the company has been successfully delivering outsourced solutions to large recruitment brands in the UK, US and Australian markets. Amit founded IMS as a start-up venture with Empresaria Group Plc; a UK based listed staffing company and has successfully grown his business to a team size of over 180 consultants.

Rod Hore, Executive Director, HHMC Australia Rod was born and educated in Western Australia and works with organisations throughout Australia and New Zealand from his base in Sydney. Rod has 20 years, experience in the Information Technology industry undertaking a range of sales management and leadership roles. Since 1999 Rod has been the Executive Director of HHMC Australia Pty Ltd providing advisory and M&A services to global, locally listed and private organisations in Australia and New Zealand. Much of Rod’s work is with emerging private companies, providing advisory services to owners who are seeking to define and achieve their growth ambitions.

Rod is an enthusiastic supporter of the Recruitment Industry and is an accomplished presenter on topics related to small business.

recruitment extra 2013 April 33

QLD State Review

STATE OF THE STATES: QUEENSLAND

Manpower: The Queensland job market has been on a roller coaster ride over the past few years. Much of the employment market is linked to the resources sector, and so the recent uncertainty permeating the commodities is affecting demand for workers on the front line.

Our latest Employment Outlook Survey results show hiring in Queensland will increase in the second quarter of 2013. The survey found employers’ hiring intentions in the state will reach a Net Employment Outlook (NEO) of +11%, a six percentage point increase from last quarter. Although this is a sign that the employment market in Queensland is improving, +11% is still a muted result.

The survey, which measures over 2,200 Australian employers’ hiring intentions for the coming quarter, found among employers in Queensland, 25% plan to increase hiring, 14% plan to decrease and 59% plan on making no changes to hiring strategies.

Over the past few months, we’ve seen a number of conflicting economic indicators on a national level. Consumer and business sentiment recovered slightly in January, while retail sales during December were weak and building approvals were also subdued.

These conflicting indicators, coupled with the uncertainty an

election year brings, is creating caution across most of the country, however, in Queensland we are seeing employer confidence grow. There has been hiring activity in both the government and corporate sectors, with projects starting to kick off.

In the IT sector, we are looking for technical roles including developers, technical support, system administration, engineers, and SAP consultants. Demand for management roles, such as project managers, has slowed.

In resources, there has been movement in oil and gas projects across the state, however, most projects are still up for tender and many companies are waiting to see if they have won work before committing to hiring new employees. Once these projects have been awarded there will be a quick increase of workers in the field, especially for senior roles.

The softening in areas such as the resources sector has meant the urgency of skills shortages has declined. However, with many market indicators on the increase, signifying a slow but steady recovery in the economy, it is critical employers look ahead at the talent they will need in the next year and build a workforce strategy that aligns with their business strategy.

Australian Industry Group: Employment Labour market conditions have deteriorated recently after remaining relatively stable during the first half of the year. For example, the unemployment rate has risen 0.8 percentage points over the second half of the year to 6.2% in line with slowing employment growth (0.4% lower over the year to the month of December). During the year to November, Queensland lost the largest number of jobs in electricity, gas, water and water services, administrative and support services, public administration and safety, and agriculture, forestry and fishing. Employment growth looks likely to moderate further in the near-term with the job vacancy rate falling back over the past six months and newspaper and internet job advertisements 26% and 27% lower over the year to December respectively.

The Queensland Treasury and market economists generally expected employment to grow by around 0.4% in 2012/13 before

34 April 2013 recruitment extra

picking up to 2.0% in 2013/14. The Queensland Treasury has revised down its forecasts for employment since the 2012/13 Budget published in May 2012 and currently expects growth of 0.25% in 2012/13 and 2.25% in 2013/14. Deloitte Access Economics’ is currently forecasting slightly slower employment growth in 2012/13 and growth of around 1.9% in 2013/14. The unemployment rate is expected to remain around 6.0% in 2013/14.

The Department of Education, Employment and Workplace Relations produce detailed labour market forecasts by state which can be used to gauge the future growth areas of the Queensland labour market. On this basis, a large share of the jobs created in Queensland over the next five years will be in Health Care and Social Assistance, Construction, and Mining. Manufacturing on the other hand is forecast to lose close to 7,000 jobs over the next few years to 2016/17.

“The survey, which measures over 2,200 Australian employers’ hiring intentions for the coming quarter, found among employers in Queensland, 25% plan to increase hiring, 14% plan to decrease and 59% plan on making no changes to hiring strategies.”

NORTHERN TERRITORY QUEENSLAND WESTERN AUSTRALIA

SOUTH AUSTRALIA

NEW SOUTH WALES

VICTORIA

ACT

TASMANIA

- Manpower

Randstad’s Workmonitor Report: Stats and facts • 69% of employees expect the financial performance of their organisations to improve in 2013 compared to 2012 • 74% of employees expect to receive a pay rise this year (in line with national average – 75%) • 76% of employees said their workload increased from 2011 to 2012 • 75% of employees are looking for greater work/life balance this year (79% nationally; so QLD slightly lower) • Employee mobility in QLD decreased slightly in the last quarter of last year • 26% of employees changed jobs in the last six months of 2012; 55% citing ‘organisational circumstances’ as the key reason (23.4% nationally) • 93% of employees work 30 hours or more each week Comment from Mike Roddy, Strategic Account Director, Randstad 1. Employers are still cautious in their hiring but at least activity to bring on new people is evident.

2. QLD is experiencing a certain buoyancy in the marketplace, and a sense of optimism/confidence in the workforce. This has largely been seen in some parts of the Public Sector, where there has been an increase in terms of local and state government activity. The sentiment toward government organisations has also slightly shifted to become more positive, likely because there is a currently a large amount of public work projects in the state which simply need to be undertaken. The Public Sector has seen an increase in demand for temporary and contract jobs in the following segments:

a. Information Technology b. Business Support c. Finance 3. QLD has also seen an increased demand in the industrial sector for semi-skilled/trade labour employees. This is primarily due to a number of large organisations providing investment for much needed building works in the state.

4. The education/care sector in QLD remains relatively slow in terms of growth, and can be labelled as being in a stable position. We have not seen as much growth within this segment as in the public and industrial sectors. Candidate shortage for example in early childhood teaching continues to be influence any significant growth.

5. In QLD many organisations are trending toward restructuring, which not only provides opportunities to staff internally but also for those externally who can fill new positions. This move toward restructuring has especially been seen within the pharmaceutical industry.

6. The 2013 Randstad Award research has shown that employees nationally, including within QLD, are now looking for better pay and benefits over job security. An example of one of the more sought after benefits is the opportunity for training and development. Given the advances in technology, employees are looking for ways that they can up-skill in this area in particular.

While people are indeed starting to invest more in their own personal development, we need to an increase in this area – employees should be constantly seeking ways to develop and learn new skills to help them progress their careers.

7. In terms of recruitment strategies by organisations in QLD, the key focus will always remain the same – employers are fighting to retain top talent and maximise productivity, in order to safeguard their businesses into the future. 

recruitment extra 2013 April 35

On the move

ON THE 

New board structure at Ambition The Directors of Ambition Group announced the appointment of Eric Dodd as Non-Executive Chairman. Nick Waterworth, currently Chairman, will become Deputy Chairman in an executive capacity. All other Directors remain the same.

Dodd brings more than 30 years’ board level and financial services experience sector to Ambition.

He is currently Chairman of SFG Australia Limited, Firstfolio Limited (both ASX listed financial services businesses) and Australian Chairman of First American Title Insurance. Dodd is a Non-Executive Director of The Credit Corp Group Limited and Integrated Clinical Oncology Network.

During his executive career, Dodd joined MBF Australia Limited in 2002 as Managing Director and CEO. In his role, Dodd grew the company to $235 million profit in a five year period, culminating in its sale to the UK based BUPA group for $2.4 billion. Following the merger of MBF and BUPA Australia in 2008, Dodd became the Managing Director of the combined organisation.

In 1996, Dodd joined the NRMA group as Chief Financial Officer and, in 1998,

36 April 2013 recruitment extra

became the Managing Director of NRMA Insurance Limited and Chief Executive Officer of NRMA Limited. In 2000 he led the demutualisation and listing of NRMA Insurance Group Limited on the ASX. Prior to NRMA, Dodd was the Group Finance Director at NatWest Markets, Executive Director at Legal & General and a general manager at the Bank of New Zealand and Australian Bank.

Dodd is a former Chairman of Odyssey House and former Director of Healthscope and Clean Up Australia. Previously, Dodd was a member of the Australian Payments Council, the Business Council of Australia, the Australian Health Insurance Association and the Executive Committee of the Australian Bankers Association and past President of the Insurance Council of Australia.

Dodd has a Bachelor of Economics and is a Fellow of the Australian Institute of Company Directors and the Institute of Chartered Accountants.

Nick Waterworth, commented: “We are excited about the diversity of Eric’s experience that can be brought to bear in further growing Ambition – he will be a real asset to our Board.”

New hire and new office for astute payroll Astute Payroll has announced the appointment of Rowan Lalor as Business Development Manager to head up its new Sydney office. Lalor migrated from Ireland several years ago and previously worked with Job Capital before joining Astute Payroll.

The Sydney office is located in Pitt Street. “We opened the office, adding a second location after Melbourne, to help service our growing customer base in a more timely fashion,” said Astute Payroll’s CEO Nicholas Beames.

“With hundreds of recruitment firms now running their on-hire labour businesses on the Astute Payroll application and more and more wanting ‘face-time’ we felt a second office was a must.”

Further offices are scheduled to open this year in Perth and Brisbane.

On the move

MOVE



David Page announced as FastTrack CEO FastTrack has announced that HR Services executive David Page will lead the company as its new Chief Executive Officer. Page has an extensive background in Payroll Services and Software development. His executive career spans across both Australian and international markets.

Jeremy Steele, Senior Managing Director, Harbert Private Equity (HAPE) and Chairman of FastTrack stated: “We are delighted to welcome David to the FastTrack executive team. His leadership, experience and outstanding track record in leading business transformation and building customer centric organisations will ensure FastTrack gains further momentum as it successfully transitions through a period of growth and change.”

“I am really looking forward to being a part of the FastTrack team and I am genuinely excited about this opportunity in growing one of the

“I will be challenging the whole organisation to embrace the customer first approach; which will enable us to continue delivering unique and differentiated value in addition to providing outstanding customer service; which is what all recruitment businesses need from valued and strategic service partners.”

David Page, CEO, FastTrack

leading software providers within the recruitment industry. I will be challenging the whole organisation to embrace the customer first approach; which will enable us to continue delivering unique and differentiated value in addition to providing outstanding customer service; which is what all recruitment businesses need from valued and strategic service partners. ” Page responded.

Prior to this appointment, Page held several leadership positions including Managing Director & Vice President (2001-2013) for Neller (ANZ), a division of Northgate Arinso (NGA) where he led the organisation through more than a decade of significant growth.

He holds a Bachelor of Applied Science from the University of Melbourne.

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email imogen.tear@thomsonreuters.com recruitment extra 2013 April 37

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