We are market leaders in some of the most attractive, long-term growth recruitment markets globally and our focused strategy is designed to better position Hays to benefit from recovery and capitalise on our many long-term growth opportunities. We intend to build a structurally more profitable, resilient and growing business underpinned by our culture and digital innovation.
For strategic levers 1, 2 and 3 we are continuing to make better use of data to track growth in job categories and evaluate each business line’s performance and investment plans against local market opportunities. We are closely tracking our progress in areas like STEM recruitment, and the development of our pricing and average candidate salary.
For lever 4, we will assess the delivery models and drive productivity in our delivery teams. In Enterprise, we are gaining a better understanding of clients’ needs and structure, and have increased our network effect within them to win market share.
Temporary & Contracting is highly complementary to many of our future job categories and targeted resilient industries. For lever 5, we will closely manage our resources in-country, and better automate our end-to-end Temporary workflow, reducing compliance and administrative time, and cost.
We intend to maintain operational rigour, retain structural cost savings, and deliver a healthy drop-through of net fee growth to operating profit during an upturn, consistent with our Golden Rule.
Overall, we have implemented a ‘Golden Rule’ for all countries to execute our strategy. Operating profit growth must be greater than fee growth, which in turn must be greater than headcount growth through the cycle.
Profitable growth sits at the heart of our strategy. Each business line must have a credible plan to at least deliver our medium-term conversion rate target of 25% (before central costs).
Building a structurally more profitable Hays
Business line prioritisation, optimised resource allocation, and scaling our eight Focus countries will establish a broader base and enable the Group to achieve its long-term objective of returning to, and then exceeding, our previous peak operating profit of £250 million.
We expect all business lines to be able to deliver a conversion rate of at least 25% (pre-central costs) in normal market conditions, with an overall Group conversion rate of 22-25%.
In our view, delivering our strategy will eventually result in a structurally more profitable, resilient and growing business.
–Two of our Five Levers, a greater focus on higher skilled/higher paid roles and the most in-demand future job categories, have positive implications for consultant net fee productivity. In addition, we have reallocated consultants from low to high potential productivity areas and, under our Golden Rule, we will maintain a disciplined approach to headcount investment. These factors would increase net fees with a potentially high drop-through to operating profit.
–Operational and back-office restructuring undertaken across the business has better aligned us to market opportunities, improved efficiencies and secured c.£65 million structural cost savings to date.
–It is taking longer on average to secure a placement, although in terms of input activity, our teams are as busy as ever. This creates a material drag on the average number of placements per consultant, and our profitability. We don’t control the economic cycle but eventually client and candidate confidence will improve and activity will recover. When it does, we will benefit materially and will be firmly focused on delivering a