Candle In The Bin

This week saw the official announcement that Candle ICT, one of the longest-standing IT Recruitment brands in the New Zealand market, would be closing the doors on its unprofitable NZ operations due to their local strategies over the past couple of years failing to pay off:

“A significant investment strategy was put in place during FY15 but failed to deliver the anticipated returns. The Group is not prepared to continue to sustain these losses being incurred and has decided that further investment would be better directed to markets where we are experiencing strong and sustainable growth”

What a shame.

Candle, until the last couple of years (post-Troy Hammond), were a good brand, able to attract and develop quality recruiters, and seemed on course to evolve apace, or even in front, of the rapid changes happening in our industry.  I was proud to call them a client and would happily refer good quality candidates their way.

I first encountered them in Auckland back in 2007, sitting in a huge boardroom in Number One Queen Street, with expansive views across the Waitemata Harbour and ferry terminals, waiting to meet Scott McKee.  I soon developed that relationship further, into the Wellington market, arriving to find their logo proudly brandished on the side of a Willeston Street office block, before meeting the endlessly cheerful and positive Rona Singer.

So where did it all go wrong?

They were hit hard in the recession, but so were most recruitment businesses.  The fact they specialised in the burgeoning IT market, had a strong presence in Government clients, and a few other key accounts, saw them come out stronger than ever, re-branded with a fresh new logo and website and large contractor offering.

The tipping point seems to have come around 2 years ago.  A new board and new CEO at Clarius Group, Candle’s ASX-listed parent company, appeared to jar with incumbent staff members.  Their dearth of recruitment industry experience and seemingly confused strategies for a New Zealand market they no longer seemed to understand was telling.  Troy Hammond left, followed by most of the talent he had assembled in his relatively short but impactful time there.

Then the IBM account, which brought in around $16 million per year in extra revenues, was lost to Finite, and it seemed to instigate the inevitable slide to where we are now.  Where Finite used this as a spring board into the NZ market and eventual acquisition of 920, Candle have meekly faded away and surrendered.

I’m not sure what the “number of strategies over a prolonged period” were, because I never saw or heard about them, but the overall feeling is that Clarius probably put New Zealand in the too-hard-basket, and are concentrating on the ACT and Asia instead, where their ideas about how to deliver recruitment services must clearly resonate with more strength and relevancy than here.

There’s some good lessons to other foreign-owned recruitment brands hoping to run a profitable NZ operation here:

1. Don’t treat New Zealand like another “State” of Australia.  Things do work differently here and your CEO, GM or whoever should spend as much time as feasible here meeting customers and clients and talking to local staff to understand what makes this place tick.
2. An over-reliance on large accounts to provide sustainable ongoing revenue is risky.  They can be more fickle here in NZ, and quicker to change recruitment strategy, so a broader base of smaller clients is also critical.
3. Be prepared to innovate and try out new things.  New Zealand has become used to, and good at, trying out new ways of doing things and is accustomed to being a test bed for new innovations due to our smaller population size.  Allow local staff to drive innovation and fresh thinking.
4. Appoint a credible and well-regarded leader to run your NZ operations.  Getting this wrong can have disastrous consequences on your ability to source and attract good quality local recruitment talent, which will make it impossible to grow and compete against the more agile and dynamic local operators.

Candle was a good brand in New Zealand, and helped produce some great recruiters. Goodbye and goodnight from Elton, you’ll be sadly missed…