Presented to the Job Board Summit North America 2016 Biography of - PowerPoint PPT Presentation

The View of the Analyst June 24, 2016 Presented to the Job Board Summit North America 2016

Biography of the Speaker Randle G. Reece, CFA Vice President, Senior Analyst – Business Services Sector Research Avondale Partners, Nashville, Tennessee USA Career Highlights: • Two decades’ experience as a research analyst and investor in equities, with heavy emphasis on service-oriented companies. • Senior research analyst at Stephens Inc., Montgomery Securities / Banc of America, Avondale Partners • Buy-side stock picker for Mackenzie, Waddell & Reed, Hoover • One-year interlude as Investor Relations Officer of StaffMark, a publicly traded staffing company (now owned by Japan’s Recruit) • Preceded investment career with 11 years as a newspaper reporter, editor and columnist 2

Avondale Business Services Research Focus • Global staffing industry • Online recruiting / talent acquisition technology • Professional consulting … all about the business value of labor 3

Defining the Talent Acquisition Market 4

North America Market: Talent Acquisition 2015 MARKET SIZE Temporary and Contract Staffing $ 24 Contingent Search 9 • North American employers spent $83 Executive Search 5 billion to find and recruit labor Job Marketing 4 – $47 billion went to external vendors Employer Marketing 4 Applicant Tracking Systems 1 – Largest st categor gorie ies s of spend: nd: External Spend: $ 47 47 billion • Temporary / contract staffing • Internal recruiters Internal Recruiters $ 21 Referral Systems and Incentives 2 Other Expenses 13 • Job marketing – including help-wanted Internal Spend: $ 36 36 billion – was a $4 billion business, less than 10% of market Source ces: s: Temporary and contract staffing – Avondale Partners estimate based on American Staffing Association headcount statistics and projected gross margins Contingent and executive search – Avondale Partners estimates Job marketing – Avondale Partners estimates, based on proprietary industry sources Employer marketing – Avondale Partners estimates Applicant tracking systems – Bersin/Deloitte Internal recruiters – Avondale Partners estimate based on Occupational Employment Statistics, US Department of Labor Referral systems and incentives, and other – Avondale Partners estimates, Bersin/Deloitte, and sources of hires surveys from CEB, Jobvite, SilkRoad, and CareerXroads 5

North America Market: Talent Acquisition MARKET SEGMENTS Temporary and Contract Staffing: Markup on >$100 million of gross billings from staffing agencies to employers Contingent Search: $10,000 - $50,000 fee per successful mid-level search Executive Search: Retained search assignment, high-end jobs – fees $100,000 up All of these ese high-cos ost t segments gments are ripe e for disruption ruption 6

North America Market: Talent Acquisition MARKET SEGMENTS Job Marketing: Old – Help-wanted classified and display advertising Now – Cross-media candidate acquisition, search engines, sponsored ads, targeted campaigns, search retargeting, e- mail marketing, mobile apps, SMS, and … WHY DO RECRUITING INDUSTRY PEOPLE KEEP SAYING “POST AND PRAY?” Employer Marketing: Brand advertising – Employer brand equity-building campaigns Traffic acquisition for corporate career sites Career network-building 7

How the Labor Market Shapes Talent Acquisition

Major Changes in the Past 15+ Years • 2000: Growth rate of women’s labor force down in line with that of men • 2000: End of financial sector’s job growth leadership • 2000: Last year of job growth in publishing industry • 2001: Last year of job growth in communications sector • 2001: End of retail sector’s job growth leadership • 2007-10: Worst drop in construction jobs since World War II • 2009: Last material growth in government jobs • 2010-16: Slowest population growth rate since Great Depression • 2011-15: First annual increases in manufacturing jobs since 1998

Changes Over the Past Decade Hires es Per Rec ecruit iter er In the United States: 170 Hires per recruiter er decline ned 140 • Recruiting professionals increased at a 1.5% annual rate • Hiring volume in 2015 was 3% lower than it was in 2005 • Private-sector jobs: 7% higher Hires per job opening ning declined ined 2005 2015 • Job openings increased at an annual rate of 2.7% Hires es Per Job b Opening ing • Voluntary and involuntary attrition declined • Job openings per existing job - higher 1.3 Are emp mployer ers s making ng smar arter er hires? 1.0 Or is somethi thing ng else invol olved? ed? 2005 2015 10

Labor Market Conditions Determine Needs of Recruiters US Employment Metrics for Ages 25-54 Among prime Statistics for Men Statistics for Women career-age people: Participation Rate Employed / Population Participation Rate Employed / Population 100% 80% 70.9% Participation is in 95% 70% 92% 90% 90% secular decline for 90% 60% 88% men and women 85% 85% 50% 80% 40% Employment is Unemployment Rate Unemployment Rate within a year of 10.0% 10.0% approaching “full” 8.0% 8.0% 6.0% 6.0% 4.0% 3.9% Large differences 4.1% 4.0% 3.3% 2.0% 2.7% persist among 3.5% 3.1% 0.0% 2.0% occupations Sources: US Bureau of Labor Statistics microdata, Avondale Partners research 11

Are We in a Recession? Unemployment Insurance Claims Momentum Indicator: Not A Recession 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 Recessions Claims Momentum Sources: Avondale Partners calculations based on US Employment & Training Administration data; recessions as defined by the Bureau of Economic Analysis. 12

Why Are Job Losses Slower Than Ever? 2.0 Four ur-Week k Ini nitial Claims Hiring is slow, but t attrit ition ion is slower er for Regul ular Une nemploym yment nt sted djuste Bene nefits nally Adj 1.5 sona s, Seaso % of Eligible Workers, 1.0 Slowest st Employer’s view: 0.5 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 ever • High cost of attrition Sources: Avondale Partners calculations, based on data from Employment and Training Administration, US Department of Labor • Little excess labor on hand Short-Term rm Unemplo ployment Rates • More cross-company hires • Difficulty of hiring 5.0 abor Force 4.0 Monthly % of US Lab Recession 3.0 1-14 Weeks < 5 Weeks 2.0 1.0 13

Why Is Hiring Slower Than Ever? Mixed Messages from Hiring, Job Openings Monthly Priva vate-Sector Hiring, , % of Job Openings Hiring is slow, but t attrit ition ion is slower er 200% 175% 150% 125% Workers’ view: Iffy competition for talent • 100% Slowest st May-16, 93% • Increased switching risk 75% 2001 2003 2005 2007 2009 2011 2013 2015 ever • Clinging to benefits Y/Y Growth Rates: • Playing out the string… 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 Last 3 Mo Workers Hired 5.1% 3.9% 3.8% 8.3% 4.8% 1.2% Job Openings 18% 13% 7% 17% 17% 7% Age d demogra raphi phics cs are a k key Monthly Job Openings Near Recent High fa factor Hiring Remains Below Past Peak 6.0 5.0 4.0 Millions Job Openings 3.0 Hires 2.0 1.0 - 2001 2003 2005 2007 2009 2011 2013 2015 Sources: Data from Job Openings and Labor Turnover surveys, US Department of Labor. Avondale 14 Partners charts and calculations. May 2016 = Avondale Partners estimates.

Labor Market Conditions Determine Needs of Recruiters The population ages 18-24 will not grow US Male Popul ulation n by Age in size for the next TWENTY years 100% 10% 10% 13% 13% 17% 17% 19% 19% 18% 18% 75% 26% 26% The population ages 45-64 was the 24% 24% 23% 23% 65+ 45-64 33% 33% fastest-growing demographic for 25 50% 27% 27% 25-44 28% 28% 27% 27% years 18-24 11% 11% 10% 10% 9% 9% 25% 9% 9% 0-17 27% 27% 24% 24% 22% 22% 22% 22% Soon, n, it will begin in to shrink 0% 1990 2015 2025 2035 US Female Popul ulation n by y Age 100% 15% 15% 16% 16% 21% 21% 23% 23% 19% 19% 75% 26% 26% 65+ 24% 24% 23% 23% 45-64 32% 32% 50% 25-44 26% 26% 26% 26% 25% 25% 18-24 10% 10% 9% 9% 25% 9% 9% 8% 8% 0-17 24% 24% 22% 22% 21% 21% 20% 20% 0% 1990 2015 2025 2035 Sources: US Census Bureau projections, Avondale Partners research 15

Implications of Age Demographic Shift • Brutal competition for college freshmen • Greater reliance on older workers to fill entry-level jobs Lack of growth th • Lack of demand growth for products and services aimed at in 18 18-24 4 populati tion on young adults (apparel, games, devices, entertainment...) • Rate of new family formation – slower population growth = slower economic growth • Coming shortage of experienced leadership Decline ine in 45- • Lack of demand growth for products and services aimed at 64 population ulation middle-age adults (cars, upscale homes, apparel, investments, entertainment...) • Faster rate of change as businesses depend more on workers ages 25-44 16

Implications of Age Demographic Shift • Competition for mid- level “career” jobs will intensify Growth th of the 25 25-44 4 • Shortage of entry- to mid-level jobs populat ation ion • More older, part-time workers competing for entry-level jobs Growth th of the over-65 65 • Faster shift from consumption to service economy populati tion on 17

State of the Industry in 2016 18