Recession strategy - what happens when a market dives by 30%+?

Hays Group plc is a great case study example to use with students if you want to look at a recession strategy where market demand falls significantly. We’ve put some numbers together which will help you use Hays as a lesson resource.

We wrote about Hays Group recently in the business studies blog. Well worth reading that blog entry and the Management Today interview with Hays Groups’ CEO.

Hays Group Preliminary Statement for 2009 contains some useful insights into the scale of the challenge faced by the Group:

“The recruitment markets in the past year have been the most challenging on record. However, Hays has performed creditably due to our scale, the strength of our market positions, our early action to address the cost base and our ability to redirect resources to more resilient sectors”

The strategic responses to the sharp downturn included:

- Advantage taken of opportunities in resilient markets particularly in the public sector and Germany
- 24% reduction in cost base in June 2009 versus June 2008 following early and continued action taken to protect profits
- Selective development of the International business, now representing 51% of Group net fees
- Investing for the long term including key IT efficiency projects and corporate account development

Some great insights there for BUSS4 students which help answer all of the BUSS4 research bullet tasks. E.g. taking advantage of opportunities; early action to prepare for the recession; long-term planning

We’ve summarised the UK results of Hays Group operations in a spreadsheet for the last six years (2009-2004) which would be a useful stimulus resource for a lesson looking at Hays Group during the recession. Students could do some simple calculations to look at revenue and cost growth, operating profit margins etc. Here is the link:

Hays_plc_UK_Financials.xls

Students might also benefit from looking at this video interview with the CFO of Hays on CNBC back in January 2009 - at the time when the sheer scale of the downturn in the recruitment market was clear:
Video interview with Hays Group CFO January 2009