As the first recruitment company to use an ATS in Australia, Peoplebank has always been ahead of the technology curve. We spoke to their Head of IT, Gerard Hughes, (who has been at Peoplebank for more than 20 years) to hear more about their strategy in the Australian market, the region’s view on contractor roles, and emerging technology trends.
RIX: You’re approaching nearly 20 years with Peoplebank. Reflecting on that time, what technology change “arrived” and most quickly impacted your strategy?
Gerard Hughes: Yes, I’ve been here awhile, and I’ve witnessed a few generations of technological change…so what has had the quickest impact?
My initial response would be the Internet itself…but maybe that is going back too far! When I started at Peoplebank, job ads were placed primarily in newspapers, CVs were submitted on floppy disks, and timesheets were received by fax. The Internet changed all that…but that was a long time ago.
More recently, the arrival of cloud computing had a quick impact on our strategy. Once we had cut through the hype, we could see that there were major benefits in moving our services to the cloud. We were the first recruitment company in Australia to move to a SaaS-based applicant tracking system (ATS), which was Bullhorn. Suddenly we had a centralised database, accessible from anywhere, from any device, plus we had offloaded the overhead of maintaining onsite hardware and software. And the added benefit of mobility has had a big impact. The ability to contact candidates anytime, anywhere is a big change from the old days of waiting to call after 6:30 pm when candidates got home from work.
In terms of recruitment strategy, the rise of social media has had a significant impact. Social media has fundamentally changed the way in which people connect and interact, on both a personal and business level. Consequently, the way in which people find jobs and the way in which employers source candidates has shifted to the online world. Social media has created a meeting place for job seekers and employers and, in effect, a public database of candidates. As a result, Peoplebank has had to reassess how we connect with candidates, how we interact with contractors and clients, and how we retain unique information to maintain our value in the marketplace.
RIX: How do you think the Australian recruitment market differs from the rest of APAC? From the rest of the globe?
GH: The Australian recruitment market is probably more mature than the recruitment market in the rest of APAC. In particular, contracting has developed more in Australia, where there is a different engagement model. In Australia, contracting has long been accepted as a lucrative alternative to permanent employment. The mindset of an Australian contractor is to be a consultant and specialist, working on a project-by-project basis, on short-term assignments. They are paid more highly than permanent employees, but do not have the same benefits and leave entitlements. In Asia, the cultural preference is to be a permanent employee. Contractors are mostly engaged where permanent employment is not possible, and contractors are treated more like permanent employees being paid monthly, with holidays and benefits included. So Australia is more of a contract-driven market, where Asia still has a preference towards longer-term permanent-style recruitment. The APAC recruitment market is still developing, whereas the Australian recruitment market is quite mature and competitive, with margins generally lower than in other APAC countries.
Compared to the rest of the world, Australia is a relatively small market, and is very competitive. A minority of large employers provide a majority of the jobs, and the market has matured to a point where it has become very regulated by procurement agreements. You need to be on the preferred supplier list, otherwise you have very limited opportunities for business. This has resulted in the client having tighter control over the supply chain, and a less open market. In turn, margin pressure has increased, and contracting margins have eroded to typically less than 10%, lower generally than in other countries. Likewise, permanent recruitment margins have been driven below 15%, which has impacted profitability.
Also, the advent of tenure discounts has made it even more difficult to maintain profitability in a contracting business. Contracts can no longer be relied on as long-term sources of profit, with diminishing returns over time. This is a result of the maturing of the market in Australia. As with other countries, the emergence of internal recruitment and the tendency for agency recruiters to be handed the more hard-to-fill roles has further contributed to the competitiveness of the Australian market. Overall, what this means for Australian recruitment businesses is that there has been a lot of pressure to drive down operational costs. Operational efficiency is essential to survive in the Australian market.
Another difference is that Australia is geographically large, but with a relatively small population, concentrated in six or so major centres of labour. Australian recruitment tends to be quite regionalised, with sourcing from local markets and little movement of labour between states or cities. Also, the toughening of immigration laws has made it more difficult to source from overseas, so sourcing talent is a challenge compared to overseas markets which can draw on a much larger, more mobile population.
RIX: What do you find to be the single biggest challenge and opportunity for the Australian recruitment right now?
GH: The biggest challenge for recruitment in Australia is how to stay relevant and profitable in a field that is increasingly influenced by automation and artificial intelligence (AI) and challenged by social media, in-house recruitment, decreasing margins, and talent shortages.
The talent shortage is predicted to increase in Australia, with fewer tech graduates, foreign tech graduates returning to their country of origin after graduation, and tighter immigration laws. At the same time, there will be an increase in demand for specialised skills.The challenge is to use technology to track and capture talent using non-traditional methods and tools, and to be able to support and supply talent in niche spaces. We believe that clients will pay a premium for the right skills and the right people.
We also need to engage with new technologies to enable our people to be as productive as possible, and help them concentrate on doing the things that people do best: building relationships. We have to concentrate on the areas where we can add value to the process: to add value to our clients’ businesses and to add value to our candidates’ careers. We need to be true consultants and advisers to our clients and candidates. By adopting technology to automate easy, repeatable processes, our businesses can become more efficient. Our people need to spend more time doing what humans are good at and what machines cannot do. Recruitment involves emotion and empathy; machines cannot replace this. Technology can help us locate the correct people, but it cannot replace the value of human connections.
The opportunity lies in how we manage human relationships and create the best customer experience with the aid of new technologies available.
RIX: After attending several recruitment technology conferences across the globe in 2017 thus far, what innovations are you most excited about?
GH: I think that the emergence of artificial intelligence (AI) technology in the recruitment space is very exciting! Improvements in natural language processing and the development of chatbots have the potential to transform the sourcing process. AI tools can remove much of the administrative burden of time-consuming tasks such as screening candidates and scheduling appointments. And as Art Papas stated in his Engage 2017 keynote, 65% of Millennials actually prefer interacting with chatbots over humans, so the potential for such tools to succeed is promising.
Also, I think that the evolution and automation of search and match technology is very interesting. New AI technologies together with predictive analytics are enabling the discovery of a better quality of candidate, from a broader pool, in a shorter period of time. Candidates can be matched to roles at the literal click of a button. A senior executive at LinkedIn recently told me that he believes that “search and match is done!” So now that the technology already exists, it will be interesting to see how it is adopted by the recruitment industry and corporate recruiters, and how it will affect recruiters’ role.
It was great to see that Bullhorn announced innovations in these areas at the recent Engage conference. The new Bullhorn “Novo Experience” includes Bullhorn Bots, AI, and machine learning built into the recruitment processes, and signals the development of Bullhorn’s own natural language processing agent “Cleo.” These are all exciting developments for customers and the industry.
Finally, I think it is also important to keep an eye on what the big guys are doing. Google, Microsoft/LinkedIn, and Facebook are all making innovative moves in the recruitment field. It will be interesting to see in which direction they head, and what impact they will have on the recruitment industry in the long run.
Overall, I think that there are some great new technologies and tools being developed; even after 18 years, it is still an exciting journey of discovery. In the end, it is all about bringing people together. Finding the correct balance of technology and the human touch is what keeps recruitment challenging.