Headcount at Robert Walters’ (RWA) dropped marginally during the fourth quarter of 2018, raising concerns about the group’s near-term growth prospects. Staff numbers ended the year at 4,132, which management attributed to lower activity levels in its resource solutions business. The group’s headcount may have been up over the year, but resource solutions has played a crucial role in the UK division’s resilient performance.
Updates from the UK’s three largest white-collar recruiters – PageGroup (PAGE), Hays (HAS) and Robert Walters – are viewed as indicative of the health of the wider economy. The announcements were broadly consistent with what has come to be expected in recent years: all three saw gross profit growth, largely driven by their overseas operations, with Brexit uncertainty causing the UK market to lag behind.
However, a drop in the rate of headcount growth has prompted concerns. Given the people-driven nature of the recruitment industry, growth in fee-earning staff is often viewed as the greatest indicator of future confidence. A company must hire people to boost revenue, so if it pulls back on spending it can indicate nervousness about future growth prospects.
PageGroup reached a record level for both total headcount and the ratio of fee earners to support staff, at 7,772 and 79:21, respectively. However, the rate of growth in the fourth quarter of 2018 dropped dramatically, adding just 58 people compared with 561 in the preceding three quarters and 220 in the same quarter in 2017. While this is concerning, management said it is continuing to invest in hiring, aiming to add roughly 500 people in 2019.
Hays’ headcount also slowed, increasing 2 per cent in the final quarter. Finance director Paul Venables said the group would be looking to grow its German business in particular, targeting headcount growth of 10 per cent assuming markets did not take a turn for the worse.
