Quarter four of the 2019/2020 financial year was unlike any we’d experienced before. For most industries, the three months ending June 30 was a race to brace against COVID-19’s destructive influence on almost all areas of business.
For those in the job hunt however, the situation isn’t all doom and gloom. While forced closures and reduced sales have sent some industries into a tailspin – retail, hospitality and tourism, for example – others, such as health, ITC and finance have experienced marked growth.
Rod Sherwood explains how the company has fared through the COVID-19 pandemic to date, and uses data from CVCheck’s order flow to illustrate which industries are struggling and which are thriving.
How concerned was CVCheck about COVID-19’s impact on the business?
Our biggest concerns prior to the virus crossing into Australian and New Zealand were how to protect our workforce and what will happen to our business when order flow naturally drops. Would there be a shock to economic sentiment? Would organisations be hiring less and at the same time, will they see people move roles less frequently? So we dealt first with workplace safety initiatives and planned for a dip in revenue, knowing that we would still have a continued payment flow that was quite high for a couple of months.
What was the reality for CVCheck when the virus did reach Australia and New Zealand?
COVID-19 had started to affect our friends and associates overseas, but the virus didn’t really cross into our borders until mid-March. At that stage – on the 23rd of March – the governments in both Australia and New Zealand elected to shut down the economies and close borders. So we had about three months of being able to see what was coming.
As the borders were shutting, we were closing out a great quarter. Our revenues had grown, and our year-on-year performance was pretty good. And don’t forget, this came off the back of a challenging nine months where Australia was suffering through droughts, then the bushfires, then floods, and finally, after all those natural disasters, came the pandemic.
Yet despite these fairly challenging circumstances we’d grown our revenue, and our team. When the pandemic hit, we had cash in the bank of nearly $5 million, so we entered into COVID-19 in a strong position but with some reticence.
What did CVCheck do to brace itself against the pandemic?
To prepare, we set about a process of reducing our creditors, lessening our debtor book, and getting our balance sheet into as strong a position as we could.
Before the borders officially shut in Australia and New Zealand, CVCheck enacted our own travel ban on March 15. We didn’t allow our people to fly interstate or overseas, and we made preparations for remote working.
The following week, we shifted fully to remote working, which took three days start to finish, and began reducing costs.
Unfortunately we had to cut our weekend team in New Zealand, retrenched three permanent staff on the business development side, and paused all casual hours.
At the beginning of April, the executive board and some of our key personnel took a 50% cut in paid hours. We used this as a precursor for a cost reduction drive, but also to lead by example to be able to engage with our workforce as they agreed to take a voluntary 20% cut in paid hours. We then entered into a very high cadence of communication where we had weekly meetings at board level, minimum weekly communications with all staff, and also engaged with our major shareholders on the stock market.
According to CVCheck data, which industries saw increased demand once COVID-19 hit?
In April, when the effects of COVID-19 were really starting to be felt across the county, CVCheck saw 25% lower revenues compared to the same period the prior year. Interestingly, we also saw significant changes in our order flow composition.
Care – health care and aged care specifically – surged as the Australian and New Zealand Governments prepared for a potential wave of impact into the sector. In fact, care surged to 11% of our order flow during April.
The other area where we saw a surge was construction (11% of all orders). Similar to China, hospitals and wards had been built and extended in preparation for COVID-19’s impact. So there was essentially a six-week period of new build and refitting of premises in preparation for the influx of people who may need specialised COVID-19 treatment.
There was also a lot of activity in ICT (11% of all orders), because companies essentially had to move to remote working, and that needed a lot of tech skills. The finance, banking, and wealth management sectors (13% of all orders) saw a surge in enquiries from their customers, who were dealing with uncertainty around their jobs.
These spikes in hiring needs led to a lot of outsourcing to the recruitment industry (which accounted for 14% of all CVCheck orders).
As we moved into May, did you notice changes to the composition of industries that were hiring, and those that weren’t?
The first three weeks of May were very, very challenging. What we saw was massively increased volatility in order flow and the composition of it. We would have days where we would be at 40% order flow, and other days where we’d be at 120% of normal flow, but overall we saw a near 35% drop in order flow.
During this time, demand from finance remained heavy (12% of orders) and ICT continued to surge (12% of orders), but recruitment dropped markedly (down to 8% of orders) as did the care sector (down to 7%). As the month progressed and it became evident that people weren’t needing as much care as the government feared, hiring activity from within the care sectors backed off.
Education in Australia and New Zealand is a large export industry sector – we have a lot of international students coming to our universities but during May, the education sector saw an extreme drop. We saw its volumes drop by two thirds (and accounted for just 2% of orders). Retail and hospitality also dropped to almost nothing. Industries such as mining, professional services and utilities all stayed at about the same proportion of our order flow.
As we ended the 2019/2020 financial year, which industries had the greatest hiring needs?
June proved to be a bit of a surprise package as a month. Essentially what had happened through the evolution of the pandemic was that, with the closing of borders in both Australia and New Zealand, and also the closing of state borders within Australia, we saw infection rates go to almost zero in some states, and we were able to prevent most community transmission of the pandemic. Because of this, things were gradually getting back to normal for industries across the country. During June CVCheck experienced trading flows that were about 7% down on the same month the previous year.
Industries that showed the greatest hiring needs during the month of June included the government and finance sectors. ICT, construction and recruitment all saw a drop in hiring needs relative to April and May but were still strong.
The easing of restrictions across Australia has meant we have now seen community spread of COVID-19 in Victoria and perhaps New South Wales.
In your opinion, which industries will experience workforce growth for the remainder of the year?
The care sectors and ICT need to continue hiring – more contingency is necessary insurance against a pandemic hit into the health sector, however with the trend of digitisation accelerated by the pandemic we will see pockets where other sectors continue to grow.
Off the back of the impact of COVID-19, what do you think all businesses should be prioritising for the remainder of the year?
Survival! There are many twists and turns to come yet.
How well is CVCheck poised to continue weathering the COVID-19 storm?
I believe we’ve managed this first phase really well. At the end of the final quarter of the 2019/2020 financial year we emerged with a balance sheet just as strong as when we entered it. We’re receiving more money from customers up front and are in a strong cash position.
We’re able to deal with a long downturn, are in a stronger technology position and, throughout, we’ve been winning new clients based on our high service standards.
The key issue is, what’s going to happen next? We’ve survived and consolidated which is great, but the challenge now is how to thrive while managing any future volatility, and continue to elevate engagement with teams, customers and stakeholders during a period of serious economic uncertainty. Interesting times!