Outsourced Management, Not a Recession, Is What Kills Staffing Firms
As our industry faces an inevitable downturn after another economic bubble burst, I cannot help but be reminded of what happen the last time. Some experts estimated that one third of all staffing & recruitment firms vanished after the Internet bubble burst in 2000. Can that happen again this time? The simple answer is yes. If the recession is as bad as some are predicting, stating that it will rival the recession of the early eighties, then we could loose far more than just a third of our brethren. As someone who made the unfortunate entrance into our industry during that horrible recession of the late seventies, I can say first hand that an economic downturn doesn’t need to equate to profit loss. Actually, it is quite the contrary. While many firms did close their doors during the recessions of the early eighties and early two thousand’s, many other firms grew exponentially. Management, not the economy, is what fuels success in our industry. Unfortunately, during peak economic times there is so much business that inferior or misguided management can often be hidden. It is when the economy goes south and business becomes more competitive, that firms with solid management thrive.

According to Jack Welch, the former Chairman and CEO of GE, the purpose of management is to “develop talent.” Ronald Regan once said the key to effective management is to hire the best talent, give them the tools to succeed, and then try not to interfere. The key component in both of these statements is the role of management. The invention of the Internet has brought with it the magic of information at our fingertips. Today’s workers are more productive and informed then ever before. To feed this hunger a whole new batch of “experts” have emerged in our industry providing their teachings through audio and videotapes, teleconferences, webcast, books, and website Q and A applications. Even my own firm is in on the act, offering desk level training via live virtual based instruction and leveraging instant messenger technology. As a whole this new brand of training has its merits. However, over the past few years I have begun witnessing a disturbing trend in management behavior regarding these tools. Each week I speak with nearly a hundred different owners and managers about their businesses, and at an alarming rate these owners are relying solely on training purveyors to educate and develop the skills of their staff. They pay for teleconferences, sit them in front of videos, encourage them to view streaming video on their computers, and ship them off to “performance retreats.” Just as sitting a child in front of the television to watch the Wiggles isn’t parenting, having your staff watch a video on recruitment tips is not management. I call this approach, “outsourced management.” Just in case you are wondering, it doesn’t work.

What is even more concerning is the fact that most managers do not have any predetermined plans for ongoing reinforcement of the information gained, thus making the entire exercise and expense futile. According to the non-profit, bi-partisan, educators organization ASCD, “More than 90% of the new thoughts, information, concepts, and abilities that each student generates and processes during a class period will no longer be stored in the brain 23 hours after the period ends. Hence, students – in fact all people, regardless of age, gender, or level of expertise or whether they are in class, watching TV, reading a book, having an interesting conversation, or taking part in a workshop discussion group – will learn very little because so little of what they take in will remain in theirs brain’s ‘long-term store’ without an on-going curriculum that makes them rethink and reuse the things they’ve been exposed to or constructed.” Try this exercise. Recall the last four or five speeches or seminars you have attended. Now can you name one significant point that was learned during those events that you have effectively put into use? The odds are against it. As a manager, you should not look at training as a moment in time, but rather an on-going daily event that is designed to build on itself with every new day. Before you waste another dollar on the next video, or sign up for that next teleconference, make sure you have an action plan to reinforce the information being taught. To effectively uphold your manager responsibility to ‘development talent’, follow these 3 simple rules:

1. Approach training like conditioning an athlete – to develop a marathon runner, you don’t just give them sneakers and tell them to run 26 miles. Instead you develop an on-going daily build up of terrain and distance, intermixed with timed exercises. Development of our search consultants needs to be similar. Construct a training program in the mindset of quarter-length focused education within a yearlong curriculum, versus a mixture of unrelated individual events, haphazardly placed throughout the year.
2. Don’t buy any training that you have not previously experienced yourself, or at the very least are capable of attending yourself. In 25 plus years of experience, I have witnessed some really bad training, as well as some training that may be valid, but was in contradiction to my own beliefs. Therefore, before you spend money and potential waste your staffs time, make sure you know what they are going to learn and that it is in alignment with your beliefs, operational behaviors, and goals.
3. Intermix personal development with professional education. The recruitment and staffing industry is a people business, therefore development of individuals has got to be a priority. Through the years I have witnessed many top billers, some who average over two million annually, and to a person every top performer is a well-rounded individual with enhanced social skills. As you teach the art of selling, you cannot forget to develop the softer skills of personal interaction.

As we enter this new period of uncertainty in our industry, there will be winners and losers. It won’t be hard to notice who is who, as the losers will shut their doors and the winners will continue to grow. As Peter Drucker said, “What managers decide to stop doing is often more important than what they decide to do.”