04/07/2008
Build value by doing more with less
This article is adapted from an article that originally appeared in StaffDigest, April, 2008
The drumbeat from the media thunders about housing on the rocks, credit markets tightening, unemployment rising, and the stock market gyrating. All of which contributes to widespread anxiety. The truth is that your attitude, preparation and action will determine your ability to succeed.
While attitude arguably plays the most important role in your success, in this article we will focus on three areas you can take action on that are almost sure to help your business regardless of the economy. In our thirty-plus years of providing the staffing and recruiting industry with software tools, we have seen these axioms – consistently applied – lead to exceptional profitability.
ONE: Build Efficiency into Your Operations
When times are good it's easy to tolerate business practices and workflows that deliver only marginal profitability. But when orders slow, you must reduce or eliminate those practices.
Building efficiency into your organization is an ongoing process. A regular re-appraisal of your operations focused on how you might be able to tighten up your practices can help wring more profit out of every transaction.
You should make it a practice to get your team together on a recurring basis to review the steps of successful sales and order transactions.
Your sales process is probably the first place to look for inefficiencies. Dave Stein, CEO and Founder, ES Research Group, Inc., which specializes in sales training selection, says that his research indicates that many firms have as many sales methodologies in place as the number of sales people. If your staffing and recruiting firm has similar inefficiencies, figure out how to streamline the process in such a way that it is consistently followed. That means you will close more deals. (READ MORE>)
Another area where saving time equals profits is in your recruitment processes. For example, Tom Porter, CEO and Founder of Marquee Staffing was able to reduce the time it took his recruiters to qualify candidates by 75 percent by having every candidate apply through a Web portal integrated to their staffing software. The time saved goes to revenue generation, not data entry. (READ MORE>)
Similarly, a staffing-specific integrated payroll/billing system will reduce or eliminate back office workflow inefficiencies saving you both time and money. John Porrello, CEO of Priority Business Services, found such a system would; “…enable us to double our growth without having to hire a new back office employee.” (READ MORE>)
Finally, run your business “by the numbers.” Your key performance indicators for your operations and your staff members should be measurable and actionable. This is the difference between so-so and stellar performance. For Steve Sullivan, President of the Cambridge Group, having near real-time reporting through a business intelligence dashboard is vital to success, “Instead of seeing a report of the business metrics which are a week old due to a manual, time-intensive process, we see what is happening right now.” (READ MORE>)
TWO: Build Long-Term Value
Building a staffing or recruiting company is somewhat like building a well-performing stock portfolio for your retirement. Strategically, you don’t focus on next month; you focus on consistent performance over a long period. By making your portfolio choices based on that, odds are that you can rest easy in its long-term performance.
Likewise, your staffing and recruiting “portfolio” should focus on delivering similar long-term performance and value. Jim Childs, Partner of Childs Company, a 13-year veteran of the staffing industry as a CEO and investment banker, has five strategies for value building:
- Develop niche leadership. “Niche companies are always more valuable than generalist companies,” Childs says. Niche leadership means that your business is the “go-to” business in its service area or specialty.
- Focus on specialties and higher gross margins. Childs points out that, “The specialty players can have gross margins well over 30 percent due to their specialty focus and their mix of permanent placement revenue.”
- Avoid customer concentration. Childs notes that having a big account can be “a high-class problem to have. The trick is to create urgency in the organization to build around this anchor account.”
- Build a deep management team. Drive customer decisions as far down the chain-of-command as possible. Childs says, “It’s vital to build a deep management team that can drive the business so that it is not overly dependent on one or two people, including the owner.”
- Keep building real client relationships. Childs suggests that you avoid indirect business such as being a second-source supplier. “Over time, your model needs to have deep, long-term client relationships to really get a premium in the marketplace.”
THREE: Stick to Your Business and Invest in Your Staff
What, exactly, is your business? Nothing is more important than how you clearly define the very specific core competencies that are at the heart of why you are in business.
If you haven’t done so already, write down your business purpose – your mission. Analyze what it means and what it takes to support your mission successfully. Let’s say that your mission statement is “We find and place financially trained and skilled employees into temporary contract assignments and direct-hire placements with Fortune 1000-level businesses.”
You would then list everything you must do to support your mission. Things like recruiting financial talent through the best college and university accounting programs. Then make a second list that includes everything else you have to do that doesn’t really support the mission; like cleaning the office or doing data backups.
The point is that you must focus yourself and your team on your core competencies. That means that everything not central to the success of your business – that second list – are things that you should eliminate, streamline or outsource.
For example, you can outsource areas of your business operations such as your information technology infrastructure. This is gaining wide acceptance with Software as a Service subscription-based applications. Jena Satchell, Vice President and Partner, Resource One Staffing, remarked on her own SaaS software, saying, “The cost savings have been great – I don't have to worry about an IT staff while I continue to focus on growing my business.” (READ MORE>)
Similarly, you could also outsource operational activities such as payroll and W2 forms processing (READ MORE>). While not every such strategic initiative may be right for your business, it pays to look at the potential opportunities to reduce your operating costs while maintaining or improving service delivery.
Finally, recognize that your own staff members are looking to you for leadership and reasons to out-perform the competition.
According to surveys by the American Staffing Association, the average turnover of staffing firm staff personnel is nearly 50 percent. Yet reducing your own staff turnover and increasing their level of satisfaction can generate big returns.
In fact, a survey conducted by the Gallup organization found that organizations where employees have high satisfaction deliver 38% higher customer satisfaction scores, 22% higher productivity, and 27% higher profits.
What can you do to improve your own staff’s satisfaction-based performance?
First, develop a strong staff employee retention program around continuous training and other tactics that generate one response from your employees, “The pay ain’t bad, and they treat me great!”
In many surveys done over time, it was noted that employees value appreciation for their work and feeling that their work and role was important higher than real wages. Thus, the training and retention program you put into practice reveals the value you place on your own staff. Your investment in their careers and development creates a sense of appreciation, motivation, loyalty, and understanding of their importance to the success of the firm that delivers huge paybacks. (READ MORE>)
CONCLUSION
Continuous improvement at both the organizational and personal level is the key to efficient profitability. To building value by doing more with less.
W. Edwards Deming, the statistician credited for helping Japanese businesses become world leaders in quality, performance and profitability, once said, “Long-term commitment to new learning and new philosophy is required of any management that seeks transformation. The timid and the fainthearted, and the people that expect quick results, are doomed to disappointment.” (READ MORE>)
Perceptive staffing and recruiting business owners and managers will take those words to heart and reap the rewards.
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