Monday, 2 February 2009

SThree – survival of the fittest

(By Anthony Miller). Unashamedly admitting their remuneration policy is “Darwinian ... a survival of the fittest ethos applies”, SThree CEO Russell Clements confirmed the gist of his December trading update (see Weak final quarter fails to dampen SThree’s year) in today’s rather pleasing FY results (to 30th November ’08 - see here).

Harsh, may be, but eminently sensible. SThree has traditionally ‘grown their own’ recruitment consultants, hiring young and training them up. The most successful get a chance to buy in to SThree’s Minority Interest scheme where they could end up running one of the company’s multiple brands (another ‘signature’ strategy for SThree). With high variable compensation, the no-hopers are quickly starved out, so natural attrition does most of the work in a downturn. Conversely, SThree can rebuild recruitment teams pretty quickly from the ground up once market conditions improve. No one ever said life was cushy in the recruitment trade, at least not for the past decade.

Clements expects more difficult trading conditions in 2009 – the toughest they have seen in some years. But I think SThree’s multi-brand, multi-line, multi-country strategy is just the ticket both for good times and bad. Some may see recruitment firms as the ‘amoebae’ of the IT services evolutionary ladder. Well, those single-celled organisms have proven to be among the most resilient of all species. I guess that makes SThree ‘king of the amoebae’!

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