The Madison Curse: Part 1
Quote:
Originally Posted by
Snoopy
Divisional Net Profit Margin |
FY2014 |
FY2015 |
FY2016 |
FY2017 |
Madison Net Margin |
1.788% |
3.673% |
3.040% |
0.913% |
It is an open secret that net margin crashed at Madison over FY2017. Simon Bennett's speech revealed what happened. All the 'hot shot' sales people in Auckland were run off their feet. So Madison decided to ramp up growth by putting a new person alongside every successful one and told them to go out and get new business while under the watching eye of a successful mentor. Business did not increase as expected and many of the underling 'growth staff' had to be laid off. Madison have 'learned their lesson' apparently.
Further on in the speech, Bennett outlined the very different business dynamics in the different business units. AWF is almost 100% a temping business. Madison is almost 50/50 temporary and permanent worker placement. Permanent employee placement means 'make a placement', 'get a fee' and then you have to start again. There is much more continuity, from an AWF Madison perspective, from running temp workers. The Madison business unit will therefore always be more volatile than the AWF business unit from an earnings perspective. The second half of the year FY2018 covered the period of the general election, and the coming to power of the Labour lead government. Traditionally the coming of a Labour government is unsettling to big private employers. Hiring decisions will be put on hold. So I am expecting a relatively poor performance from Madison again over FY2018 for new placements. As Simon Bennett so aptly put it:
"You live and die on those deals."
But on the temping side, I expect Madison to have a boost in the second half, because of the one off Census contract. Statistics NZ were hoping for 50% of us filling in the forms on line. Any less than that and AWF Madison should do consummately better than expected. More people will need to be hired on the ground to follow up! It will all be a one off though.
SNOOPY