SI Review: April 2011

Print

When Half Is More Than Full

The man behind a staffing empire

The way Max Messmer tells it, his success was easy. According to him, his achievement was to take a simple idea like temporary staffing, hire great people with integrity and passion, and work tirelessly. And if the result is Robert Half International (RHI), a $5 billion staffing firm, the kudos goes to his team, he says.

Longtime Messmer watchers will recognize the modest tones. Self promotion does not come easy to this soft-spoken 65-year-old CEO. “I was raised not to blow my horn,” he admits. “The company’s performance should speak for itself.” Recent numbers point to a good 2010 fourth quarter for Robert Half, headquartered in Menlo Park, Calif. Revenue was up 15 percent from the fourth quarter of 2009. The outlook is upbeat for the company as well as the temporary help market.

The view looks good for this private CEO, too. In March, Staffing Industry Analysts, the publisher of this magazine, crowned Messmer staffing innovator of the year at an awards ceremony at the Staffing Industry Analysts Executive Forum in Miami. He was the unanimous choice of a committee made up of SIA research and editorial staff. The Peter Yessne Staffing Innovator Award is given annually to an individual who has made a significant innovation for the industry.

Messmer made it glamorous for white-collar professionals to do temp work. Throw in savings that corporations realized by using these temps and one can see why professional staffing took off. The bulk of Robert Half’s business is in filling temporary jobs in accounting, finance, information technology and administration. Messmer’s tale is the familiar corporate one, where he broke rules, defied conventional wisdom and made his shareholders richer.

The Deed: When Messmer, with the help of an investment group, bought the Robert Half business in 1986, the company was an early pioneer of specialized accounting and finance staffing, with a primary focus in perm placement. Rumor has it the deal was made with Robert Half on an envelope in a coffee shop. Messmer took the business from $7 million in revenue to more than $3 billion today in a span of 25 years.

But that’s not the only reason why he’s applauded. Messmer created a company whose performance drew the respect of the mainstream business community. He gave the staffing industry a cachet it lacked. Temp staffing was seen as filling low-paid jobs for short periods. You hired a temp to fill in for your admin who was out sick for the day. Bringing in IT or legal contingents to do a project was not the norm.

Messmer took the concept of professional-level temporary staffing and successfully applied it to accounting. Half had paved the way; Messmer took it to the next level. Along the way, he helped quash the stigma of white-collar professionals doing temporary work. “We were able to take a fresh perspective to the staffing industry and do things a little differently,” says Bob Glass, executive vice president, corporate development. Glass has been with Messmer from the start of his journey at RHI.

So did no one else see it coming? “I think there were many others who thought about this,” says Messmer. “They just didn’t think it would work in any kind of significant scale.” He did, though, despite advice he received to the contrary. “I had to convince people I wasn’t crazy,” he laughs.

Organic Growth

 

A mergers and acquisitions attorney, Messmer walked away from a successful law career to be a businessman. People did question his judgment. At a time when franchising successful businesses was popular, he acquired the majority of the original Robert Half franchises and took them over, converting Robert Half to an entirely company-owned model.

Once it became company-owned, Messmer and his team made the decision to focus almost exclusively on organic growth. Although consolidation was the hot trend in the industry in the ‘90s, he turned down dozens of potential acquisition targets. Wall Street took him to task, but Messmer held firm. His approach was — and is — “Why buy when you can build your business?”

He stuck with that philosophy even in bad times. In 2002, post the dot-com bust, RHI’s earnings dropped 59 percent. Even with an unfavorable business climate and severe opposition, Messmer started an internal audit and risk consulting business. Protiviti began after he hired more than 700 former partners and employees of Arthur Anderson, then one of the largest accounting firms, after it collapsed following the Enron scandal. Messmer felt it would to be RHI’s advantage to tap these specialized workers.

His approach worked. Protiviti today contributes 12 percent of RHI’s total revenue. Though critics claim that Protiviti is not a runway success, it has held its own. Messmer’s ideas are the stuff of business textbooks. But he dismisses any praise that portrays him as brilliant.

“The best ideas are really simple,” he says. And temporary staffing is a simple business, helping clients fill in gaps either for a period of time or for a specific project, that doesn’t require a full-time person. “We can easily demonstrate to clients that we can do this on a much more cost-effective basis. The only challenge then is to prove we can do this on a quality basis.”

And RHI has. Through the last decade, despite the trials of the dot-com bust and the more recent recession, Robert Half has kept its specialized approach. Since 1990, the value of the company has increased substantially, from a market capitalization of roughly $150 million to $4.9 billion today. “Historically we have emerged from economic downturns stronger than before,” says Messmer.

What the recession has revealed is that businesses worldwide are relying on the flexible staffing model and benefiting from it. “Strategic staffing,” a concept introduced by Messmer, is becoming a reality. Here, companies incorporate the use of temporary employees into their yearly budgets. The idea: accommodate anticipated and unanticipated workload peaks and special projects. The idea was not well-received when he first launched it. No one’s laughing today. “His strengths include his intellectual capacity to assess the marketplace and opportunities,” Glass says.

Early Adopter

Take social media as an example. Using it as part of its engagement process is another innovative opportunity Messmer has embraced. However, he has always been an early adopter and made investments in technology. In early 1999, due to a tight labor market, revenue slowed down drastically. What did Messmer do? He increased technology spending. He felt that the more information available to employees and clients, the more productive they would be.

The stock took a beating — but it went back up in 2000 because of those improvements, analysts say. Currently, Facebook pages and Twitter feeds are available for all of the company’s seven brands. It also makes use of forums and sites like LinkedIn to keep in touch with candidates and clients.

But it’s not just about social media, fun and games. RHI’s hard-hitting work culture has gained notoriety in the staffing industry. “You are out on your ear if you don’t perform,” remarks a former staffer.

Dressing Up

But what may be surprising is the formality that exists in the company, with a corporate headquarters right in the middle of Silicon Valley. Take business attire, for starters. No jeans and T-shirt for Messmer, Instead, he is turned out immaculately, wearing a suit, tie and starched shirt (he even keeps the jacket on). Office decor is sober and dignified, heavy furniture and old paintings echoing a formal air.

“I hear all the jokes about my formality,” Messmer says. “But that’s just always the way I have been. This formality goes back to his childhood in the Deep South, where attending church meant wearing a coat and tie. And his law firm days involved dressing professionally for the client. “Those clients bought from you because they thought you were careful, professional and so forth,” he says. He brought that to RHI.

It helps to dress the part of a successful recruiter. “He would like our recruiters to reflect the industries we serve,” says Reesa Staten, senior vice president of corporate communications. Financial services companies are some of their biggest customers and some of the most conservative organizations. In fact, many of the recruiters are from the same backgrounds where they place people. By dressing appropriately, they send a message to the client that they understand the business.

Poised to Excel

Whatever Messmer does, he does well. His work ethic came from wanting to make his parents proud. It began with a scholarship to a Catholic school. Then, he was the first of his family to go to college and then law school, where he excelled.

“Start by taking your job seriously. What we do at RHI is important,” he says. Matching people with jobs and then placing them at businesses is a worthwhile cause. But it’s not without its challenges. He cautions the staffing industry to treat both its customers and talent well. “Be professional, there’s nothing like word of mouth to help grow your business,” he says.

Staffing Industry Analysts estimates that the staffing industry will grow to reach $123.4 billion by 2012. Given the slow recovery, it’s become clear to many companies that hiring experienced temps is more cost-efficient than overworking staff.

Messmer plans to capitalize on this growth. RHI managed to keep most of its offices here and abroad open during the recession. The infrastructure is available. His team is ready for expansion. The company’s sweet spot is targeting small and midsize firms. Smaller clients are less likely to seek discounts, and don’t mind paying a higher price for top-caliber personnel.

Big and small staffing firms can do the same. Messmer is clearly a brilliant marketer. And he might have a few more ideas up his sleeve. For now, the company has been prepped to grow. But it’s hard work, not just brilliance, that has paved the way for RHI. After all, it was not a five billion dollar company when it first started. Ask Max.

Subadhra R. Sriram is editorial director at Staffing Industry Analysts. She can be reached at ssriram@staffingindustry.com. You can also follow her on twitter.com/subadhra_cws.

Comments

Add New Comment

Post comment

NOTE: Links will not be clickable.
Security text:*