One simple method to gauge the health of the economy is to watch the performance of talent service providers. Simply, when the economy is growing it means that companies in general are doing well. And growing companies in turn increases their headcount. This leads to an increase in demand for the services provided by the talent industry. And finally, leads to an upswing in the share price of listed players. The economic cycle goes hand in hand with the performance of the talent service industry.

Lately, the performance of listed talent service providers in Australia seems to reflect a struggling economy and a volatile share market. The share price of the industry stalwart,  SEEK Ltd, currently stands at $5.02 , a far cry from its 54 weeks apex of $9.48.  Still, SEEK is in a much better position than most of the other talent service providers listed on the ASX (see table below).

While share prices may not be too rosy for some of the players, the increasing number of home-grown listed companies highlights the vibrancy and increasing maturity of the Australian talent market (Perth based Interstaff is the surprise newcomer with a market cap of $9.22 million). As the country face acute skills shortage in most sectors, the importance of talent service provider will continue to grow. It is likely that more players will be listed on the stock market in the near future.

Current share price performance on 27/07/08 (Source: Google Finance)

Baird produce a comprehensive monthly report where you can trace the performance of listed overseas talent service providers who have offices or operations in Australia. Most of the global talent service providers have a presence in Australia.

Received the below in my inbox this morning.

A job posting cost $600, this probably means Six Figures is the most expensive job board in Australia. The site is also offering job seekers a chance to win a free lunch.  Worth giving it a try while the free offer is on.

Alternatives includes SEEK Executive and The Big Chair.

Spare a thought for the recruitment team at Yahoo, faced with the nightmarish task of having to rebuild its  talent pool overnight. Even global marquee brands, an Internet stalwart in this case, aren’t immune to the scourge of attrition.

In Australia the national attrition rate is around 18.5% (40.3% in the accommodation and food service sector.), and a study by AHRI estimated the cost to organisations to be around $20 Billion annually.

Now, that’s a lot of money which ought to be put to better use.  Maybe it’s time to call the Chief Happiness Officer.

Another nugget from Seth:

“ Your sales force and your customers may scream that you need to lower your price. It’s not true. You need to increase your value. If people don’t want to pay, it’s because you’re not delivering enough value for the money you’re charging.  You’re not selling a commodity unless you want to.”

From job boards to recruitment agencies, pricing is a theme central to all talent service providers.  The current thinking is exemplified by recruitment industry guru, John Sumser who believes ‘low price means low quality’ and attracts the wrong type of customers.

Still, business models evolves quickly and one of the most thought provoking piece this year, from Chris Anderson, is the new business of  ‘FREE’‘. Increasingly, companies are offering their service or product for free or at ridiculously low price, but are making money elsewhere.

There are reasons to believe that the talent service industry will start to embrace new pricing models. Nowhiring.com.au allows free job postings , instead charging for associated services like screening and CV database access, is one example.  We have seen new pricing models in the recruitment industry, and perhaps it can be argued trends like RPOs and in-house recruitment are new pricing methods as much as they are a new way of delivering service or an attempts at ensuring process efficiency.

Be prepared, to see a range of new pricing models in the talent service/products space.

So, here are a few questions - is your current price reflective of the value you provide? Is pricing a good mechanism to differentiate yourself? If the service/product you are selling is perceived to be a commodity, how would you stand out?

A range of recent news touching on the subject of ‘talent’ shortage.

• 28 weeks parental leave sought, as a way to address skills shortage , by the Association of Professional Engineers, Scientists and Managers Australia (APESMA).
• Acerbated by the twin problem of high staff turnover (29% in Victoria)  and limited supply of new graduates (2641 university-educated early childhood teachers required by 2012), skills shortage crisis hits the Childcare industry.
• 40% of workers in the rail industry to be replaced in the next five years. Acute skills shortage to follow, says Australasian Railway Association (ARA)
• Young Australian women flock to work in farms, as a result of men leaving for more lucrative mining jobs, reports BBC.
• Pilot training standardised to address skills shortage in the aviation industry.
• Tourism industry worried about the impending skills shortage.
• $30 billion might head overseas if skills shortage not tackled in South Australia
• Sutherland Shire Council council turns to VIDEO to attract U-tube generation and tackle the skills shortage.
• Michael Page reports on the hiring intentions for the next 12 months. Bullish on white-collar employment. But, overall job growth tipped to slow down by the Melbourne Institute.
• McKinsey latest economic and Hiring outlook (registration required) looks at the latest economic pulse around the globe. Hiring intentions not as buoyant compared to six months ago.

While demand for talent fluctuates in the short-term, the overriding long-term issue for companies, and the country, is ’skills shortage’. Few industries seems to be immune.

It is heartening to read an employment success story, especially when it concerns the indigenous community.

As the country battles chronic skills shortage, employers and the government resorted to the age old practice of looking overseas. Yet, a large undeveloped and untapped human capital resides in our own backyard.

It is good to see partnership between companies like Aboriginal Employment Strategy (AES) and progressive employers are starting to harness the potential of the indigenous communities in Australia. Explaining the immense benefits and potential of such partnership, CEO of AES, Danny Lester, said:

“The strength of our partnerships, particularly those with financial institutions and local government, is fuelling much of this growth, and has resulted in the expansion of our own business. This service will provide a home grown solution to Australia’s skills shortage.”

When success stories like this comes around it’s good for the Aboriginal community, good for corporate Australia, good for the economy and ultimately good for the country as a whole. It’s a win win scenario all around. Of course, the numbers of employed Aborigines in the private sector can vastly improve, but little success stories like this are a step in the right direction. Kudos to companies like ANZ, Commonwealth Bank, NAB and Westpac for setting the trend. It is a surprise that more companies are not taking notice, given the overall benefits and the support offered by the government.

The skills shortage compels organisations to be a lot more creative in their search for talent, and the development of human capital. And this will increasingly mean tapping the immense potential offered by the first Australians.

Other links

• Aboriginal Employment Strategy
• Indigenous Employment Program
• Business urged to help plight of Indigenous people
• Country Energy’s Indigenous employment program