With the digitisation of hiring and shift to remote working, the war for talent has drastically increased. Candidate shortages, driven by the aftershock of the pandemic, are causing wage inflation and quicker hiring times. Organisations are now scrambling for the most qualified candidates and, with the pace higher than ever, the recruitment industry must embrace the change if they are to be on the front foot of the demand.
Kelvin Stagg, CFO of PageGroup – the global recruitment giant – knows all about this transformation. Over the years, PageGroup has evolved from a company kept together by traditional, transactional processes to an agile, data and technology-driven business. Now, as the majority of the world settles into a new normal, Kelvin reflects on some of the key decisions that protected PageGroup during a time that crippled the recruitment industry.
What were the challenges?
The financial impact of the pandemic was huge for the recruitment industry and one that we’ve not faced since the recession of 2008-2009. And the immediate priority as a CFO when your business goes into a sharp revenue decline on a global scale is cash: how much have we got and how much are we going to have moving forward?
For PageGroup, we went into the pandemic with £95m net cash and lost 60% of our gross profit in April 2020. This financial impact offered up additional challenges and forced us to rejuggle our priorities, particularly around our people. We closed our global offices in accordance with various lockdowns and by extension, we needed to ensure our people were both safe and set up to do their role effectively from home.
This meant equipping people with what they needed. Fortunately for us, we decided to transition people to remote working earlier than most other businesses which gave us the valuable time to work through any issues or hiccups. And although communicating via video wasn’t entirely new to us – particularly in our US office – we did have to monitor the challenges in other markets such as Europe where a lot of the work is more relationship-driven and dependent on human interaction.
As a company that receives an average of 1.5m CVs globally per month, we also needed to ensure our tech setup could handle the volume remotely. Because our focus has been on transitioning from data centres to the cloud over the last four years, our people were prepared and familiar with our technology solutions. Instead, our key focus was how to effectively leverage those solutions – such as Salesforce and Netsuite – to do a lot of the heavy lifting while also supporting our people to use the systems effectively from home.
Now in 2021 we are facing new challenges. We have seen a significant increase in the pace of recruitment, with candidate shortages across the globe. We’ve needed to adapt our way of working to be on the front foot of this demand. As such, we’ve accelerated our technology further, using tools to offer our customers the data they need to make informed decisions on future candidates, quickly and efficiently.
How did you respond?
When the pandemic first hit we tried to make sure we had liquidity. Despite making a £14m profit in Q1 in 2020, we lost 50% of our gross profit in Q2 which prompted us to pull some emergency strings to ensure the safety of the business.
We had a £30m banking facility with BBVA so the first thing we did was organise a covenant holiday for 18 months so, if we needed it, we wouldn’t break the covenant and they wouldn’t want the funding back. We also secured a £300m facility under the CCFF (Covid Corporate Finance Facility) which, due to the pandemic, was easy to secure.
With those safety nets in place, we could then make some key decisions around our people. We asked the top 450 people to take a 20% pay cut in Q2 and placed some of the other people on furlough. Only the UK and North America had full furlough schemes. Europe had a partial furlough so many people worked 4 days a week and got paid accordingly. We also made the tough decision to let go of around 1200 staff who were new (in their first year) and largely hadn’t made a fee yet.
We started to see everything recover at around 10% a month from April 2020. By the time we got to June 2020 there was a cash balance of around £160m, largely due to temp working capital unwinding. By the end of July, we restored everyone to full-pay and topped up everyone who was on furlough. We broke even in Q3 and made a profit of £14m in Q4 2020.
Now in 2021 we are in a much more secure financial position. As a result, we made the decision to repay all £3.4m furlough money back earlier this year and have also recently paid our shareholders £100m in dividends.
This recovery also meant that we were in a position to begin hiring people again. We added 400 experienced hires in the second half of 2020 and another 400 in the first half of 2021. As a result, we have only experienced an 8 percent reduction in headcount since the pandemic began.
In terms of our position with technology, we were in a solid place last year and still are today. Following a restructure of our finance team globally a couple of years ago, where we went from four regional directors with their own shared service centres to a global standardised finance system, we launched our one global finance strategy and began working as a global team, aligning our finance data globally so we have reporting in the same place.
This restructure and transition to working together set us up nicely to meet the demand of recruitment in 2021, with our transition to the cloud also playing a pivotal role in our successful response. We have also leveraged solutions such as Page Insights, our BI tool which generates intelligence and insight to our customers, to enable us to bring everything we need to our customers so they can make quick and informed decisions on the best candidates for their organisation.
What was the outcome?
Recruitment is making a big comeback and we’ve had a really strong 2021 with two record months under our belt so far (June 2021 being up 11 percent from June 2019). And as the world begins to settle into a new version of work, we’re starting to gain more visibility of what the future looks like. It’s important that we’re in a position to react quickly – as we did last year – so we feel prepared to succeed in what is still an uncertain, volatile economy.
The pace of recruitment has accelerated greatly this year. As many people are now comfortable communicating through platforms such as Zoom, candidates can now have multiple interviews in one day, all from the same desk. On the flip side, organisations are now also considering candidates from a much wider area due to remote working, so I think there’s an element of change that we’re now starting to see in the wider recruitment industry that we’ll need to adapt to.
Technology has supported us well so far, pre-pandemic and during the last 18 months. And although we’ll continue to have a heavy focus on improving and innovating our technology, we will also start to see it play more of a role as we build out our teams further. For finance, this doesn’t mean a greater headcount, but instead we want to leverage the abilities of AI to complete routine, admin tasks which in turn free up more time for our employees. Our finance people have moved away from traditional finance and have become much more about helping our operational people make fast, sensible, data-driven decisions – with a lot of smaller, time-intensive tasks covered by intelligent technology, our finance people are free to partner with other areas of the business.
Key learnings and moving forward
A key learning to take from the last 18 months and beyond is certainly our people-first approach. Flexibility is now crucial to the retention of talent and we must recognise that not everyone has the same working environment. We talked a lot about health last year and it’s important to keep this close to a lot of our decisions. And as the market becomes faster and more competitive, we must continue to put our people first if we want to be in a position to hire the best talent for longer periods of time.
We also learned the importance of communication as a company. Teams and Zoom now serve to connect us immediately to anywhere in the world, which has driven a lot of the uptick in pace in the recruitment space. Candidates can now work and live in different countries and entire teams can be spread geographically around the globe. For us that means we have a wider pool of candidates and customers, so we must adapt and ensure we have visibility over the broader scope.
A third key learning was the importance of making decisions faster. Since the pandemic began, we’ve had to make decisions very quickly, from cutting costs to investing in the business and hiring externally. Pre-pandemic you could make a decision in three months whereas now you have a couple of days before the landscape changes again. PageGroup has always been an agile business but it has certainly been accelerated with the pandemic and it’s something we’ll continue to improve.
Our sights are now set on the future and we have a number of focus areas moving forward. We are heavily invested in sustainability and supporting a societal agenda that makes the world better. We have launched our ‘Sustainability@Page’, outlining our targets over the next five years, including becoming carbon positive by 2026, changing one million lives by placing them in careers by 2030 and to increase our gender diversity in senior management to 50/50 by 2030.
We have spent a lot of time ensuring that we uphold our values in areas such as D&I, gender equality and sustainability. Over the last three years we have tried to improve the number of senior females we have in the business. We have launched a female executive mentoring programme which offers senior management 1:1 mentoring and we now have about 70 percent of the management team in transactional finance who are female.
Our global initiative, Hidden Talent, also launched in 2020 with the aim to reduce barriers between people with disabilities and opportunities in the workplace. Following a skiing accident in 2019, our CEO Steve Ingham was left paralysed from the waist down, so is in a unique position to understand and contribute to how disabled candidates can be better brought into roles. This will be a continual focus for us moving forward and I’m excited to see the improvement in the space.
Overall our business is changing rapidly for the better, and with the right talent and technology, we are well equipped to deal with the changes that the future will inevitably bring.
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