Strategy

The achievement of these targets would result in an overall Group operating margin (after corporate expenses) in the range of 4.6% to 5.6%. However, it is important to recognise that our industry is economically sensitive and favourable conditions in each market do not necessarily occur simultaneously.


An attractive industry

Compared to many industries, recruitment has healthy long-term growth prospects. Industry observers estimate that professional/executive recruitment will grow faster than traditional recruitment (blue and white collar). There are a number of important drivers which support these forecasts from both the demand and the supply side of our business.

Firstly, the continuing growth of the global service sector will mean that employers will increasingly focus on better managing and controlling personnel cost which, for companies operating in this sector, is their single largest cost item. It is anticipated that, as a non-core discipline, the responsibilities of the human resource department will increasingly be outsourced and that businesses will seek to gain competitive advantage through the tactical use of flexible labour management strategies. Secondly, demographic changes will lead to a global skills shortage and higher demand for more flexible working arrangements.

The profile of the workforce in developed economies is undergoing a profound shift with a dramatic decline in the working age population especially in continental Europe. While it may seem that skills shortages would act as a growth inhibitor for the recruitment industry, in fact the opposite is the case. When vacancies become harder to fill, employers become increasingly reliant on our expertise and global sourcing network, and are also more willing to pay a fair price for what are scarce resources. Also, employees are more willing to consider changing jobs.

As a result of changing demographics, we can also expect to see increasing female participation in the workforce as well as more elderly workers. These two categories of workers traditionally prefer more flexible work patterns as are provided through temporary working.

Thirdly, flexible working is increasingly perceived as a more attractive option for professionals as a means of gaining wider experience, improving their skills and, thereby, maximising their earnings potential. Many newly qualified graduates now opt for short term temporary work assignments as a way of exploring options prior to making a career commitment. Employers also recognise that employing staff on a temporary basis is an excellent way of assessing aptitude and fit before committing to the offer of a full-time position.

A fourth important growth driver is positive legislative trends. While, from time to time, we do see retrograde legislative steps in some local markets, the broad trend is for increasing liberalisation of labour markets in order to support economic growth. Over recent years, highly regulated labour markets in continental Europe such as Germany, Italy and Spain have become more liberal, as has the Japanese market. Legislation which obliges recruitment companies to provide temporary workers with equivalent pay and benefits to permanent staff has helped improve the status and attractiveness of temporary working in a number of these newer markets. Further liberalisation is likely if the European Union is to achieve its stated aims of improving labour mobility and flexibility.

Vedior operates in a relatively young industry and the proportion of people working on a temporary or contract basis through recruitment companies is less than 2% globally of the working population. The current penetration of professional/executive recruitment in particular is still very low in a number of important economies such as France, Germany, Italy and Spain. With demand and supply drivers providing a positive environment to stimulate increased global penetration rates in the recruitment industry, we are fortunate to operate in a market which provides us with numerous opportunities for long-term growth.