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As we have said, Michael Page revealed its results this week and its share price promptly plunged.
Aside from the precipitous reduction in the value of the company, there were other things of note at the time of Michael Page’s revelations. Included in its results was some detailed stuff on how the business of recruitment actually works. This, we have summarized as follows:
1) Almost all the costs are staff costs
75% of Michael Page’s cost base ‘relates’ to its staff. This is considerably more than at an investment bank. The implication would appear to be that in a weak revenue environment, recruiters are even more at risk than bankers.
Michael Page admits as much, saying: “The main opportunity for reducing our own cost base is headcount.”
2) It takes a while before new recruiters are up to much
When revenues increase, Michael Page initially relies on its existing ‘infrastructure’ to grow and then hires new people. However, “it takes time to train staff before they become fully productive.” This inhibits its ability to grow revenues in any one quarter.
3) Recruiters like Michael Page only make money when they actually make a placement
As a contingency recruiter, Michael Page doesn’t make money when it sifts through CVs. It doesn’t make money when it provides banks with a short list. It doesn’t make money when it sends candidates for interview and debriefs them afterwards.
It only makes money when a bank actually hires one of its candidates. And if a client cancels an ‘assignment’ at any stage in the process, it won’t get paid.
Successful placements are a small minority of cases. For the first six months of 2011, Michael Page’s ‘conversion rate’ (the % of the jobs it started working on which it was actually paid for) was a mere 16.5%.
“detailed stuff on how the business of recruitment actually works”…..???
Um, are you serious? As an editor of a job site, how can you view this as a detailed insight? It is quite simply common knowledge, and hardly a revelation!
Why post this stuff…..?
THE KING laughs in the face of Michael Page. The lacklustre ‘team’ commison scheme is a sure fire guarantee that they will never be able to recruit and retain the biggest players in the market (i.e THE KING). THE KING commands a salary far in excess of his peers, imagine a number which begins with a 4 and ends with 5 O’s, and you will be pretty close. THE KING has spoken.
You say: “Included in its results was some detailed stuff on how the business of recruitment actually works”
Surely you mean ‘how their recruitment business works’ no? Narrow information on one recruitment firm.
The only revealing piece of info was the conversion rate over 6months which everybody can make their own judgement on… (insert thoughts on Michael Page here)
The King sounds like a tool
Agree fully with Bored.. this might be an “insight” for somebody who literally knows nothing, but then so is telling them they are wearing shoes.
to THE KING. you truely are a prize pratt!
Lol at this article, lol at Michael Paige who are clowns and lol at “The King” also a clown, or should I say court jester?
Recruiting business models are really simple to describe:
1: Get a flip chart.
2: Draw a pound sign on the right
3: Draw a piece of old rope on the left
4: Draw two arrows that indicates you are getting the ‘Pound’ for ‘Old Rope.
And yes …the King does sound like a tool.
I for one will be going LONG Michael Page, dead cert
KING – imagine a word that begins with a C and ends with a K, now look in the mirror…
Blatantly incorrect, Michael Page like a lot of recruitment firms pitch advertising, retainers and shortlist fees. The generalist “contingent model” they speak of merely exists because 90% of their clients will not contemplate money up front for middle mgmt. roles. All retainers are 100% non-refundable, so I am continuously told by their consultants.
As for this 16.5% figure, surely this must be picked out of the air, I cannot believe their conversion rates are this high. Is this based on candidates on their system in the 6 months or of candidates who achieved 1st round interview request? Talk about a misleading article
This article is the very definition of “lazy journalism” but hey ho …. The main points that THE KING disregards is regardless of his opinion Michael Page provides the best development opportunity for people seeking out a career in recruitment.
If they leave to pastures new then so be it, every industry has turnover due to competitors targeting the best people in the market. Why should Michael Page be immune to this? If anything it should be taken as a compliment and a sign of respect from the market that Michael Page hires nurtures and develops the best talent in the field.
It’s a credit to Michael Page that they wish people the best in their future careers and are always complimentary about former employees
@MD If you had spelt Michael Page correctly, your comment would have been more impactive
Sarah, I don’t even need to weigh in here. Again, not a single positive comment on the article above. Drivel. You should resign.
to all those fools out there who like to bash recruiters/headhunters gratuitously whenever possible, observe that this business is by no means easy – nor particularly fair on its workers, many of whom do a far more honest day’s work than their clients.
This is the wierdest of article I have come across.
The “conversion rate” here is defined wrongly.
The conversion rate of 16.5% present in the results of Michael Page is a ratio of “Operating Profit / Gross Profit ” and it has nothing to do with how many people have been converted/placed by Michael Page.
And you call yourself “eFINANCIALcareers” !!!
@Rahul – I asked Michael Page’s investor relations PR and an analyst covering recruitment firms what the conversion rate applied to and was assured in both instances that it was the % of mandates successfully completed. This is definitely the impression given by the results announcement, but I made doubly sure prior to printing this.
That’s still different though Sarah. % of mandates successfully completed is the % of positions they were given that they then filled. The article talks about % of candidates being placed. Different stats.
@Sarah – 16.5% Conversion rate in terms of Jobs given to Michael Page by clients. So this conversion rate in fact has nothing to do with registered candidates, do you nothing think this is completely misleading?
Moreover, the 16.5% is a complete anomaly based on the very definition and interpretation of a “job” by Michael Page.
Does a Temp/Contract position count towards this figure or is this based solely based on Permanent positions? Also what about a position where a client is looking to hire 5 people with the same Job Spec, does this go on their system as 1 or 5 mandates?
These are some basic questions I would have expected anyone to ask an Analyst. For the most part by the way, Analysts are very poorly informed about how recruitment works and essentially go on the information provided (by said firm) and the inevitable bottom line P&L. As for the PR, I presume this was you making a joke?
In BREAKING NEWS today the PR firm employed by Michael Page state “Michael Page are super duper, look at their amazing stats”
@Mark – I’ve altered the definition to clarify that the conversion rate is the percentage of roles MP starts working on which it’s paid for. I assume this includes all roles. The PR is not a joke.
@Sarah, I was being facetious re the PR because the concept seemed so absurdly ludicrous. The thought that you cite or rather infer that a PR company employed by Michael Page is a valid (reliable/neutral) source of information would surely rankle with any readers following this thread.
@Mark – I fully appreciate and totally embrace your sentiment that PRs are not neutral. But they are usually able to explain the meaning of a phrase in an investor release.
We could still do with a bit of a definition of “started working on”. There’s a big difference between having a quick half hour’s headhunt on a role you’ve heard might be coming up and committing significant time and resource to an exclusive role.
And this is not detailed in the slightest, as all have said.