Recruitment agencies adjust to declining demand
After years of spectacular growth, the recruitment sector saw a significant slowdown in demand for human resources services in 1999. With the slowdown came a soul-searching shift of focus for many firms as they reevaluated their approach to the market and their methods of finding the right employees for the right job.
In 1999, an average human resources firm placed 165 employees, 11% more than in the previous year, according to the Management Institute (Instytut Zarzadzania), an organization that reports on companies involved in recruiting and managing all levels of staff, from rank and file employees to executives. That figure pales in comparison with the approximate 30% growth seen two years ago.
As sales declined, companies consolidated their positions on the market instead of expanding into new areas, said Tomasz Staskiewicz, project manager at the Management Institute.
A slowdown in the Polish economy last year and the knock-on effects of the economic crisis in Russia meant budget cutbacks for many firms. Foreign-owned companies such as the Neumann Management Institute, SMG/KRC Poland Human Resources and Ernst & Young, which are well known and provide the most expensive services, were the first to suffer, Staskiewicz said.
Neumann shut down due to poor financial results and allegations that its president was embezzling funds, said a source who wished to remain anonymous. The source also said that in 1999, SMG/KRC cut the number of its employees by one-third, while Ernst & Young shut down one of its three human resources consulting divisions following a merger with Cap Gemini.
The landscape of the market has also changed as client demand shifted from recruitment to training and human resources consulting, said Krzysztof Kwiecien, partner at Deloitte & Touche and president of the Association of Human Resource Advisors. Because many companies have slowed their pace of recruitment and focused on utilizing existing staff, advisory services involving motivating methods or systems of evaluation have become increasingly popular, Kwiecien said, giving "full service" human resources firms an advantage. These companies find employees, provide advice on how to evaluate and motivate them, and supply training. "The companies prepared to offer a wide range of services feel most comfortable (in the present market)," Kwiecien said.
The DK Group established by Dorota Kolecka is an example of a company that has been widening the scope of its activities, Staskiewicz said. After establishing a management recruitment arm in 1997, the group grew to include search and selection as well as human resources consulting units.
At the opposite end of the service spectrum is Aces, which has followed the specialization trend and now focuses on recruitment for the financial sector, Staskiewicz said. Another is Russel Reynolds Associates, an executive search firm dealing largely with IT and financial companies. Marek Ambroziak, a consultant with Russel Reynolds, has seen accelerated growth in the Polish IT and telecoms market over the past six months. "Such companies need good employees as quickly as possible," he said. Currently, 12% of employees sought by human resource companies are for IT and financial services, and another 10% for the telecom sector, according to the Management Institute.
Like every other business, human resources consulting has been affected by the growing ubiquity of research over the internet. The internet is now being used by 85% of companies, according to the Management Institute, as compared to the 88% that place recruitment ads in the Monday supplement to Gazeta Wyborcza where the majority of people look for job opportunities.
The major tool for recruitment ads on the web is specialized internet portals, Staskiewicz said. Although Take It Doradztwo Personalne or Bigram place such ads on their own web pages, Staskiewicz said, using an existing portal is cheaper, as it eliminates the need for a company to pay to promote its own page.
Despite all the positive changes, the presence of a number of companies that have neither know-how nor qualified employees is lowering industry standards, Staskiewicz said. These firms compete by lowering their prices, a strategy that is disastrous for the quality of the industry, representatives of major human resources companies said.
