The tight labour market means employers must get smarter with hiring talent, but they also need to be on their A game to keep their best workers on their books.

At the same time, the compliance bar is being raised in terms of occupational health and safety, certifications and employee verification.

The digital era spawned a plethora of ASX stocks focused on the hiring side, notably the $7.9 billion market cap (ASX:SEK).

Several others were acquired and privatised, including Chandler MacLeod and Skilled Group. A few small caps with some – er – interesting ideas about revolutionising recruitment simply fell by the wayside.

Two surviving small caps started out with products to verify the credentials of new sign-ons, such as checking their police record and alleged qualifications. Now they’ve evolved to the ‘hire-to-retire’ approach of assisting employers to retain staff and manage the arduous paperwork.

Formerly known as CV Check, Kinatico (ASX:KYP) aims to identify problems in real time, rather than during a compliance audit.

“We play in the monitoring and maintenance of workforce compliance, all the way from workplace screening and credential validation to ‘day-in-the-life’ type stuff,” says CEO Michael Ivanchenko.

The latter can include a formal assurance that a company vehicle has been serviced and doesn’t have dodgy tyres, or that Covid tests actually have been carried out.

“Compliance can be a box-ticking exercise, but with heightened ESG [environmental, social and governance] requirements it is something that needs to be demonstrated not only to boards, but to shareholders and customers,” Ivanchencko says.

Kinatico has about 10,000 customers in Australia and New Zealand, ranging from the top blue chips to the more classic SMEs with a handful of staff.

Meanwhile, Xref (ASX:XF1) claims to be the “number one” provider of reference checking globally, but as with Kinatico the company is expanding its wares.

“Employers need to move quickly to hire the best talent, so having the right processes in place to make confident hiring decisions has never been more important,” Xref founder and CEO Lee-Martin Seymour told last week’s AGM.

In November Xref acquired the employee engagement company Voice Project for $4 million – $2m in cash and $2m in deferred shares.

Voice Project facilitates workplace and customer satisfaction surveys, to customers including Hungry Jacks, healthcare provider HammondCare and 70 universities. The company is profitable and is expected to contribute $4 million of revenue to Xref.

Across its existing base of 15,000 users across 1300 organisations, Xref generated revenue of $18.6 million in the year to June 2022, 29 per cent higher. The $55 million market cap also managed operating cash flow of $4.6 million, with a $730,000 net profit.

Kinatico, meanwhile, posted revenue of $26.3 million in the year to June 2022, up 51 per cent, with a net loss of $1.5m.

September quarter revenue was $6.9 million, up 9 per cent, with positive cash flow of $233,000.

Valued at around $40 million, Kinatico has $11 million in the bank.

Ivanchenko says the company is generating enough money to fund its own growth – and the board has backed this confidence by launching a $2 million share buyback.

Meanwhile, Seek shares have lost 38 per cent of their value over the last year, despite the hiring boom that helped its 2021-’22 revenue surge 47 per cent (to $1.12 billion) and net profit increase by 81 per cent to $246 million.

At last month’s AGM, management confirmed current year guidance of revenue of $1.25-1.3 billion and net profit of $250-270 million. With near-record job ad volumes continuing to flow to Seek’s platform, some pundits reckon the company might do a shade better than that.

Good job!

This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.