Seeking Clarity – how badly was NZ’s Recruitment Industry really hit during the GFC?

This week marks the one year anniversary of my first ever redundancy.  Today is also the 1^st birthday of my Son, Charlie Rice (happy birthday my boy), so all in all one year ago was a period of huge upheaval in the Rice household.  I must admit, it has been quite a week of reflection, on how things have changed so dramatically in the past year.  Late May 2009 is not a period that many will want to reflect on in too much detail.  We were deep in the mire of the Global Financial Crisis and the recruitment industry had ground to a virtual standstill.  Stories were flying around the industry of “swathes of redundancies” at ABC Recruitment, and “going out of business” at XYZ Recruitment.

These stories were so widespread and so rife that everyone just believed them.  They really believed that half of New Zealand’s recruitment industry had closed down and legions of average recruiters had lost their jobs and wandered off to pastures new.  There almost seemed to be a grim but gleeful mood amongst many recruitment owners, Directors and managers, a sense of concern at their own state of affairs accompanied by a chuckle of satisfaction that they were alright, they would get through, unlike their long-time competitor who was facing closure.  I heard of two competing recruitment managers in Wellington who accidentally found themselves running side by side on their lunchtime treadmills and, far from the usual strutting, chest-thumping boasting that would have served as conversation in previous years, they indulged themselves in a bit of sniping, each telling the other that they would be the last one standing, the firm best equipped to get through it, the team least likely to fail and close doors.

In fact neither company closed down, and both managers hold the same positions they did one year ago.  Both companies did undergo restructures (and went about it in very different ways – one following a fair and equitable redundancy process – the other imposing forceful performance management until underperformers felt pressured to resign), but essentially we in recruitment got a little carried away with ourselves.

The following companies are recruitment firms who, in my understanding, closed down in 2008/09 due to economic woes:

Agility:  Specialist IT recruitment firm based on Auckland’s North Shore who suffered a parting of the ways of the two Directors, with the remaining one unable to financially maintain the business alone.  Contractor book sold to Recruit IT.  A firm with a good name and good reputation, a sad day that was the precursor to the effects of the GFC on recruitment in NZ.

SOS Recruitment:         Another North Shore firm who specialized in Technical and Construction recruitment.

Berkley Consulting:       Boutique IT recruitment firm shut down following messy dispute between the two directors.  Funnily enough Fuse IT sprang up in the same location and with the same staff the next week.

Madden Partners:         Ponsonby based firm with a 10 year recruitment history.

Recruitment Solutions:   The brand that had been passed from private ownership, to Chandler Mcleod, and on to OCG in recent years.  They were the business support recruitment arm of OCG but the brand was swallowed into the OCG mother ship in 2009 and ceased operating as a stand alone business unit.

Vision Recruit:  Another boutique IT recruitment firm.

Now this is hardly an extensive list of recruitment company closures, but thinking back to a year ago, that was the general feeling and sentiment in the industry.

So I was greatly surprised when, during an enjoyable catch up earlier this week with one of my clients, the first thing he wanted to discuss was that, based upon the “huge number” of recruitment company closures last year, he thought there would be more recruitment talent still available on the market in NZ.  I asked him where he got the understanding from that there had been so many closures, and apparently Seek NZ have told this client that 30% of recruitment companies went bust and closed down in NZ during the recession.

So can someone tell me who all of these other recruitment companies are?

Or is it that Seek are basing their industry information on the fact that 30% of recruitment firms cancelled their subscriptions during the recession?  This would be an arrogant assumption indeed, particularly as Seek is fast becoming nothing more than a ‘branding exercise’ for recruitment firms, who do their real recruitment by working their contacts, networks, databases and social media talent pools.

Seek NZ also informed this client that there have been “no new recruitment firms” opening up in New Zealand since the recession (I for one could defeat that argument).  Following the same logic, they must be making this statement based upon the fact they have not signed up any new accounts.  My advice to Seek would be to stop being so arrogant and take a closer look at some of the sales and account management efforts from their competition.  Seek are still undisputedly number one in NZ and I have benefitted from their service, but it does make you laugh when you just so happen to receive the first piece of account management contact in 6 months (an intro e-mail from my new account manager – the same one I originally spoke to when opening the account 6 months ago) on the same day that I receive an e-mail asking me to complete their customer service satisfaction survey.

So are Seek right?  Have 30% of NZ recruitment firms gone bust?  If so, can anyone add any to the list above?

Or is it as I suspect – that 30% of recruiters were turned off using Seek last year because, no matter the level of results, it really sticks in the throat to be paying such high subscriptions for such complacent service levels?