Recruitment Market Trends Summer 2010 Accounting & Finance Recruitment Australia

Introduction
2009 proved to be a challenging year for employers, employees and recruiters alike, with local economic conditions being defined by a global financial crisis and a large degree of caution about the future. The employment market, always the first to be hit by economic downturns, took some real blows in the first six months of the year, with companies battening down the hatches for what many commentators believed was going to be a stormy year ahead. As 2009 draws to a close however, there are a number of signs that the worst of the storm clouds may have passed us by. The financial markets are bouncing back with unrestrained enthusiasm, business confidence is booming and the unemployment rate continues to decline – all positive indicators for employment market prospects in 2010. For employees, this is undoubtedly good news. For those currently looking for work, the expanding economy represents an opportunity to re-enter the workforce under favourable terms. For those already working, an increasing number of positions will allow employees to turn their attention from job security, back to career development (not to mention the opportunities for improved remuneration). Whilst employers welcome the improving market conditions, they will also need to be prepared for the recruitment and retention challenges ahead. Companies who react slowly to the change in conditions are in danger of losing key personnel, and those who intend to win the war for talent that is currently brewing will need to analyse all aspects of their recruitment strategies to ensure they are capable of competing in an increasingly aggressive marketplace. In such an environment, the value of working with a trusted recruitment adviser has never been more apparent. Changes in market conditions will bring both challenges to face, and opportunities to explore. At Ambition, we’re looking forward to meeting them both. Gavin Houchell Managing Director, Ambition Finance

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Contents
Introduction ....................................................................................................................... 2 Economic Overview .......................................................................................................... 4 Ambition Accounting Jobs Index ................................................................................. 5 Demand Factors - What’s Happening Now?.............................................................. 6 Ch-Ch-Changes .......................................................................................................... 6 Still an Employers Market - for now ................................................................... 6 A Focus on Internal Skilling ................................................................................... 6 Opportunities for External Up-Grades ............................................................... 7 A Surprisingly Active CFO Market ........................................................................ 7 Strong Demand for Management Accountants - and others ..................... 8 Temporary and Contract Roles on the Up ......................................................... 8 Sector Notes ................................................................................................................ 8 Supply Factors – What’s Happening Now? ............................................................. 10 Still Plenty of Accountants Looking for Work ...............................................10 Aspirational Fluidity ...............................................................................................10 Lowered Salary Levels = Increase Risk of Flight ............................................10 Bonuses, STI’s and LTI’s ..........................................................................................11 An Attractive Employment Destination ...........................................................11 Future Trends .................................................................................................................. 12 The Oncoming Challenge of Retention ............................................................12 The Need to Refresh the Employer Brand .......................................................12 Speed Will Kill...........................................................................................................12 More Information .......................................................................................................... 13 About Ambition.............................................................................................................. 13

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Economic Overview
Whilst there can be little doubt that the Global Financial Crisis had a strong negative impact throughout the last twelve months, early indicators suggest that Australia may have come through the worst of the crisis in comparatively good shape. The resiliency of the Chinese economy and their demand for Australian resources, along with aggressive fiscal and monetary policy by the Federal Government combined to limit the damage witnessed in other parts of the world, as the global economy constricted rapidly in response to deflating financial markets. That’s not to say Australia has come through the crisis unscathed, with many sectors of the employment market feeling the brunt of declining business optimism, plummeting company profits and in many cases, a negative flow on effect from overseas head offices that were suddenly hemorrhaging cash. February 2009 saw historically low levels of confidence in the Australian business community, as the effects of a global recession began to hit home. March saw record lows at the ASX, with the value of shares being slashed some 3000 points from the previous year – reducing the value of Australian companies across the board. With share prices in free fall, and business confidence in decline, companies began the hard work of reducing their business expenses, leading to significant increases in the jobless rate. Unemployment hit a high of 5.8% in September 2009, an increase of 1.7% on the previous year, and currently sits at 5.7%. This rate was at one point tipped to reach as high as 9% by some commentators and the Federal Government’s Budget forecast suggested that rates around 8.5% were probably to be expected. But over the last few months the Australian economy has bounced back, as international policy initiatives have begun to take hold and the global recession comes to an end. Whilst there probably can’t be any real confidence about a recovery until US housing prices level out, many international organisations are revising their global growth forecasts up – particularly in the emerging Asian economies. This, combined with the strength of the Aussie Dollar and our comparative advantage in the export of primary products has left Australia in a relatively strong global position - and as the service sector returns to the business of profit and growth behind increasing corporate confidence, there are encouraging signs for a return to a progressive and expanding employment market over the next twelve months.

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Ambition Accounting Jobs Index
As evidenced in Ambition’s Accounting Jobs Index, 2009 has been a difficult period for the Accounting employment market, with year on year growth down across the board, and a steady decline throughout the first six months of the year (the index began at 100 in May 2003). Obviously this reduction reflects the economic conditions both locally and across the globe, with demand in most sectors declining, and business confidence slumping. Over the last few months though, we can see the first few, tentative signs that conditions have changed. The declining rate experienced in the first two quarters has halted, and appears to be heading back in the right direction, moving from a low of 164 in August, with positive monthly results over the last three surveys - an excellent sign that after a year of turmoil and setbacks, the market is finally turning the corner.

450 400 350 300 250 200 150 100 50 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 233 215 197 338 389 388 396 375 381 378 348 354 312 292 251 186 184 163 171 164 185 172 173 2008 2009

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Demand Factors - What’s Happening Now?
Ch-Ch-Changes…
The last nine months have seen a sustained period of corporate re-shaping, as companies worried by declining financial conditions have acted to ensure their businesses were as lean and efficient as they can be. Whilst there have been some cases of wholesale redundancies, the process has generally been conducted on a much smaller scale. Employers have tended to focus on specific headcount redundancies, refining their teams in strategic areas with a trend toward eliminating non-core business roles. Companies who may have been in a position where a number of staff had negotiated inflated salaries during the previous period of employee scarcity also used this opportunity to balance the books, achieving the twin aims of market correction and payroll minimisation with the one move.

Still an Employers Market…for now
The “flight to quality” continues at the end of 2009, with demand for accountants still being out-stripped by supply, and employers continuing to enjoy favourable market conditions. Whilst we are beginning to see signs of that dynamic shifting, right now employers remain selective in their demands for high quality staff, with an “exact fit” approach. This is a complete reversal from 12-18 months ago, when demand for accountants substantially exceeded supply, and employers were often forced to be flexible in their wish list for a prospective candidate. As the market picks up however, the employer’s relative position of strength over the employee will begin to dissipate. Already we are witnessing shifts in employment strategies, as companies begin to consider not only how they are going to secure the best possible candidates, but how they are going to retain those candidates over an extended period of time. After all, what is the point of attracting top level employees if you are unable to retain them when the market turns around?

A Focus on Internal Skilling
With hiring freezes and limited resources, companies have been faced with limited options in order to achieve their business goals with a constricted workforce. One option however, has been to focus on up-skilling or cross-skilling current employees – and plenty of companies have done just that. Where as previously accountants may have had one main area of expertise or they became more ‘specialist’, many found themselves working across a number of different fields. Necessity is the mother of creativity, and with limited resources a number of employers got inventive with job descriptions. Working in a number of areas (or doing the work of a number of people – depending on who you ask) creates different dynamics; the risk of lowering employee morale or increasing the burnout rate in the short term, but on the Ambition Market Trends Summer 2010 | 6

flipside, the opportunity to develop new skills and gain a deeper business acumen. As the market turns around, many employers may discover that this will be a double edge sword - and that by broadening their employees’ range of skills they have created a problem for themselves. Employees, buoyed by their ability to handle several roles in challenging economic conditions look to gauge the value of their new found skills on the open market or the prospect of returning to roles post economic downturn.

Opportunities for External Up-Grades
Many employers have taken advantage of the favourable employment market conditions to upgrade the quality of their finance team at a much reduced price. With salary reductions of up to 10-20% being quite common, and reductions of up to 30% not being unheard of, some employers were able to inject their teams with substantial skills and significant experience at a cost that would have been impossible just twelve months before. In the long term of course, the question will be whether or not these employees will stay with a business at their reduced rate once the market turns around. In the short term however, the advantages for employers who are enjoying top level talent and bargain basement prices are clear.

A Surprisingly Active CFO Market
The senior finance recruitment market has had a degree over activity, partly driven by the fact that boards and CEO’s have had to turn to their CFO to steer them through a very challenging twelve months – which has resulted in a fair degree of changing of the guard. Accordingly, opportunities have arisen for replacing, upgrading or downgrading (in situations where companies were looking for cheaper solutions) CFO’s - with a mandate to guide companies through substantive financial turmoil. In many of these cases the market turned to a voice of experience, and a degree of maturity and finance operational experience has been sought after. There’s no substitute for experience, as they say, and throughout the last six months the market has generally tended to agree. Having said that, the market sentiment today has increased dramatically from the previous six months, and organisations are now beginning to talk seriously about succession planning, as well as talent attraction and retention. Candidates in this space who possess great technical, communication and leadership talents, specifically with appropriate operational skills within a given sector have the opportunity to flourish as the market rebounds.

Strong Demand for Management Accountants…and others
In recent years demand has been strong for technical accountants – particularly those with a love of standards. In these less buoyant economic times however, we have seen a drive toward Management Accountants – including analysts and performance reporting professionals, as companies look at ways to reduce their cost and improve their revenue streams. Ambition Market Trends Summer 2010 | 7

In many situations, these new hires came with a mandate to reduce staffing levels, so Management Accountants with sound communication and people leadership skills, who were able to make structural changes without causing undue panic and hostility within the workplace have been at a premium. Risk professionals have remained in great demand – no longer seen merely as advocates for better corporate governance, they have become important strategic resources to many businesses as they seek to proactively prepare against worst case scenario situations. As the globe focuses on compliance and regulation frameworks and prepares to introduce new standards, the demand for these professionals will continue in the upcoming years. At the lower levels plenty of opportunities have existed for high quality accounts, credit control and payroll staff, a direct reflection of the skills shortage that market sector has experienced in recent years. In recent months we’ve also seen a slight increase in project accounting roles, an indication that perhaps the focus has started to shift from cash management and cost control, into growth related opportunities.

Temporary and Contract Roles on the Up
Whilst not yet at the levels that would illustrate a definitive trend, over the last few months we have witnessed an increase in the number of temporary assignments going to market, as companies take the first tentative steps toward re-stocking their depleted staffing levels with new talent. Similarly, there has been an increase in fixed term contract offerings – arrangements that not only reduce a candidate’s flight risk in the short term, but also provide a company with a way to get around full time employment headcount freezes that have been applied at a national or international level. With temporary and contract roles considered to be lead indicators of employment market trends, both the increase in temporary assignments, and a gradual trend toward temp-to-perm offerings can be considered very positive signs.

Sector Notes
Retail Banking Strength The Australian retail banking market has shown genuine robustness in difficult economic conditions, outperforming a number of international competitors who struggled to remain buoyant throughout the global economic crisis. Comparatively strong profits and well developed retail bases make this sector one of the best candidates to experience real growth over the next twelve months, as well positioned banks take advantage of their strong capitalization to acquire new income streams in service delivery and wealth management fields. This expected period of consolidation should in turn provide plenty of opportunities for savvy financial and management accountants, as well as analysts with skills and experience in both corporate acquisition, banking process and of course business integration.

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Mining and Commodities Activity Underpinned by the relative strength of the Chinese economy, and the subsequent ongoing demand for resources, the mining and commodities sector has been another shining light throughout the recent tough economic times. Accordingly, demand for accountants at all levels of the market has remained strong, with many senior management and financial accountants moving across from other industries to enjoy the comparative job security this sector has to offer. Other Areas of Interest Sectors with relatively stable demand, such as FMCG companies involved in staple goods (pharmaceuticals, food and beverages), along with utilities, health, education and certain government sectors all remained comparatively buoyant over the last twelve months, with deteriorating economic conditions doing little to alter their basic business model. Other areas, such as the retail sector, property and the media and leisure industries suffered significant setbacks, particularly the SMEs or highly leveraged businesses. A number of investment banks also took a hit during this period, particularly those with international parent companies that were exposed to worse conditions than those experienced by their local counterparts. Similarly, funds management companies have typically contracted – a direct response to declining profit margins and disappointing returns.

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Supply Factors – What’s Happening Now?
Still Plenty of Accountants looking for work
Despite improving market conditions, there remains a large number of accounting professionals still actively looking for work. As we discussed in our last Market Trends Report, there appears to be two classes of job seekers out there: those looking because they “have to” and those looking because they “want to”. For those who “have to” be looking for work, it remains a difficult period, with employers retaining a fair degree of caution and questioning the reasoning behind their current circumstances. Many employers may still want to know reasons behind redundancies, and those without strong explanations behind extended periods of unemployment may face difficulties returning to the workforce. With a strong degree of competition existing in the marketplace, particularly amongst the $65-$100k space, where candidates with only a few years of post qualified experience haven’t created enough marketability in their profile, the need for a well devised employment strategy is critical. Knowing your weaknesses, marketing your strengths and providing employers with a compelling personal case could make all the difference in your job search. In relation to those who “want to” be looking for work, we are beginning to see what could be some changes in the passive recruitment market. Previously risk averse job seekers are finally growing comfortable with entering the job market and are likely to experience counter offers or numerous offers once momentum returns.

Aspirational Fluidity
Over the last twelve months employers have enjoyed a relative position of strength in the ongoing battle to retain talent. With market conditions generally poor, and a fair degree of insecurity about the economy itself, many employees have decided it would be wiser to remain safe in their current roles than it would be test their employment prospects on the open market. That may be about to change. With generally improving conditions and growing confidence about the direction of the economy, many employees are beginning to once again gauge the market for job opportunities. The aspirational fluidity that traditionally drives a significant portion of the recruitment market has disappeared in these current market conditions, but over the last few months we have noticed a significant increase in the amount of passive job seekers – a clear sign of growing confidence in the employment market.

Lowered Salary Levels = Increase Risk of Flight
Similarly, with confidence in the market growing, we are receiving a lot of anecdotal evidence that widespread dissatisfaction with current salary levels may not be too far around the corner.

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During the height of the financial crisis, a number of employers experienced growing confidence that they would be able to get their chosen candidate at the right price. With job security at a premium, candidates were happy to take significant reductions in salary – declines of 10% would have been experienced pretty much across the board, but in certain market segments we have seen candidates taking salary decreases as high as 30%. Whilst employers have reaped the rewards of this situation, there is a real risk in many quarters that employees will proactively look to improve their financial situation – either internally or externally. Some employers are taking steps now to ensure they don’t have to look too hard.

Bonuses, STI’s and LTI’s
The drive by many organisations to rein in costs in recent months has seen some constrictive limitations placed on bonus payments to employees, but there have also been some opportunities to maximize value for those who received a component of their bonus in share based incentives. The lowered value of share prices across the board, along with the expected share price bounce back (much of which we have already seen) has made shares given to staff during the last year particularly valuable. Staff who were lucky enough to be awarded shares at deflated prices throughout the year are in many cases already reaping the rewards. One area that has been a hot topic of debate in recent times has been the reworking of Long Term Incentive programs for Executive teams. In many companies we have seen employers seeking to more effectively structure their LTI schemes, so that the rewards not only reflect appreciation for the previous year’s performance, but also serve as a retention mechanism in the upcoming business year. By tying bonus payments to continued service within a company, employers are able to decrease the risk of flight for key personnel.

An Attractive Employment Destination
The relative strength of the Australian economy, combined with an impressively robust Aussie dollar has combined to make Australia an attractive employment destination for overseas travellers. As for Australians looking to return home, we have seen a steady increase in the number of returnees over the last twelve months, however not the quite the stampede that many commentators predicted. The decline in international conditions seemed to encourage some expats to return, however the strong Aussie dollar seemed to hold the masses back, as they waited either for international conditions to pick up, or to get more bang for their buck when sending their money home. In addition to that, the aforementioned economic stability and strong Aussie dollar (not to mention some pretty significant environmental and lifestyle factors) continue to make Australia an attractive destination for young, skilled, newly qualified accountants – particularly from the UK. With many companies turning toward the contracting market to cover existing shortfalls in their staffing levels, opportunities for overseas accountants in this space look set to continue over the next six months.

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Future Trends
The Oncoming Challenge of Retention
With the prospect of increased activity in the Accounting market, and a possible return to the war for talent that ensued prior to the onset of the global financial crisis, many companies are starting to move away from damage control and into planning for potential growth. Key amongst this agenda is identification and retention of key employees – whether that is for the purposes of ongoing business efficiency, or to develop a workable succession plan for the future. Accordingly, staff retention promises to be a key challenge for businesses during the coming year. Savvy companies are already taking steps to ensure that their best talent is retained within the business unit, dealing proactively with staff dissatisfaction issues in an attempt to ensure that the current trickle of employees seeking new positions does not turn into a flood.

The Need to Refresh the Employer Brand
Whilst some organisations are less concerned about their employment brand in this candidate rich market, they face the real danger of tarnishing their brand now through poor recruitment practice, which will inhibit their ability to attract talent when the market recovers. We are experiencing adverse feedback from many candidates that they are not being managed very well through the recruitment process by companies either through on site career portals or overworked line or human resource managers. It is in this area that the benefits of working with a trusted adviser, like a professional recruitment agency begin to emerge. Strong lines of communication between HR professionals, proactive recruitment agents and the candidates themselves can do much to minimise the damage caused to an employer brand through what can be sometimes necessarily difficult recruitment processes.

Speed Will Kill
During periods of economic difficulty, companies tend to adopt a more conservative approach toward their recruitment processes. More time is spent weighing the genuine need for new staff. More people become involved in the sign off process. More time is spent analysing a candidate’s suitability, and comparing that suitability with a large number of other potential employees. Accordingly, more time is taken to hire new staff, and the recruitment cycle becomes that much slower. Assignments that used to be done in one to two weeks can now take four to six weeks, as employers become more hesitant in their hiring decisions. Already we are seeing examples of companies who have been unable to adjust the speed of their recruitment processes being outmanoeuvred by competitors who have adapted more quickly to the changing market conditions. As the demand for accountants begins to increase, the need for recruitment processes to be flexible and efficient will also become important.

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