The year ahead for the recruitment industry

Jan 09 2003 by Brian Amble Print This Article

The kind of year that recruitment agencies will have in 2003 will be defined by how successful a strategy they chose, according to financial analysts Plimsoll Publishing.

In the 2003 edition of their UK Employment Agencies Industry Analysis -, Plimsoll identifies four types of companies and suggests strategies that would best suit them individually in the year ahead.

1. Survivors

For 143 (16 per cent) companies, success will be mere survival:

Recent years have seen these companies deteriorate. Levels of debt are

dangerously high at 11.9 per cent of sales. They are also suffering from declining

sales with a fall of 10 per cent last year.

2003 success strategy for survival: Consolidate to reduce debts by cutting costs and people. It is essential to return to profitability. The only other option is to consider being acquired by a stronger company.

2. Sales growing but woeful margins

2. For 101 (11.3 per cent) companies, success will be to improve margins

These companies are exceptional in their ability to take large market share

increasing sales by 34.8 per cent on average last year. Yet woeful margins and high

debts have left these companies with very little to show for their success.

2003 success strategy for improving margins: These companies must slow down on sales growth to allow margins to improve from a current average of 0.3 per cent to at least a 2.7 per cent margin in 2003. These

companies will need to consider costs more carefully to stay competitive.

3. Growth too slow

For 420 (47.1 per cent) companies success will be to get back into the market

Market performance in recent years for these companies has been poor, sales

rising only 1 per cent last year. Although focused on profits, these companies need

to get back in the game for long-term staying power.

2003 success strategy for gaining market: : These companies need to stop playing it safe. To compete these companies need to attain to at least the industry growth average. This may mean spending some of their 2.7 per cent average margins now to expand in the future.

4. High-performance winners

For 227 (25.5 per cent) companies success will be to maintain high performance

These companies are every business owner's dream. Leading the industry,

these companies are winning on all fronts with a strong balance sheet, 29.3 per cent

average sales growth and 5.5 per cent average margins.

2003 Success strategy for maintaining high performance: : Perhaps the most challenging strategy of them all is to try to stay in a

winning position. Try going on the acquisition trail while you have the cash

to spend. It is essential these companies do not get complacent and allow

the industry to catch up.

Plimsollís UK Employment Agencies Industry Analysis 2003 contains an analysis of 1000 companies and is the ultimate benchmarking product for the UK. To order the Employment Agencies Plimsoll Portfolio Analysis - First Edition 2003 for £305, including a free "Success Strategy Pack 2003", please telephone (01642) 626400 or go to.

Management-issues readers will receive a 5 per cent discount if they mention this article when ordering.