SI Review: September 2010


Executives' Worst Mistakes in Staffing, SI Review September 2010

By Julie McCoy

Staffing executives opened up and shared with SI Review some of the worst mistakes that they personally made or that their companies made. For many, the mistakes were a learning opportunity, and executives say they do things differently now as a result.

Catherine Candland, CEO, The Nelson Family of Companies
Catherine Candland calls it one of the biggest mistakes she's made in the 25 years she's been in the staffing industry. Before becoming CEO of The Nelson Family of Companies this past spring, Candland ran a global staffing and workforce management services company that she sold to a Japanese company without recognizing the full extent to which the change in ownership would affect the company's culture and the people who worked for and with the company.

"Ownership makes a big difference," she points out. "Even with careful planning and a lot of careful consideration, it's hard to figure the impact a new owner can have not only on a company's culture, but its clients, candidates and internal staff."

It turned out that the company she ran ended up being sold a few different times. "It was quite a ride," admits Candland, who remained CEO the entire time.

Each time her company had a new owner, its culture changed and staff were affected. "Those shifts really changed the culture of the company," she says. "All of that really impacted the people of the company and the culture of the company."

So now, if she ever had to sell a company again, she wouldn't underestimate all of the changes that can arise. "Those changes are cultural, relationship-based," she says. "The priorities shift. The measurement of success shifts."

Pay Attention to Succession Planning
The Nelson Family of Companies' Candland says another mistake she made was that last year, when she decided she wanted to leave the company she was with, she hadn't done enough succession planning. "Always pay attention to good succession planning at all levels of business," she says. "To not pay attention to succession planning is a mistake."

Many consultants have told us that the day you begin your staffing business, you should begin succession planning.

Gene Waddy, CEO, Diversant
When Times Are Tough, Don't Wait to Cut Costs
Gene Waddy, the CEO of Diversant, a New York-based technology staffing firm, learned a valuable lesson last year during his first recession as an entrepreneur: When times are tough, you can't wait to cut costs. You've got to do it right away.

Waddy admits he waited way too long before cutting back on spending on such things as special projects, travel and conventions.

"We didn't take a cold hard look and say, 'We've got to cut,'" he says. "I wish we could have cut costs quickly and more proactively. ...You've got to trim the fat to stay lean and mean. We only trimmed when our back was up against the wall. That was a mistake we hope not to repeat."

Waddy says that when the next recession hits, he will be more aggressive about making cuts. " We will accept that as part of the normal business cycle," he says. "It's business. You have to do it. If your clients are cutting costs -- they're not spending money with you -- then you have to be able to do the same."

Don't Overpay for Talent or Hire the Wrong Talent
Another mistake Waddy says he's made is overpaying for talent and hiring the wrong talent. "We paid a premium for people who are excellent farmers but not hunters," he says. "We wasted a lot of money. We would hold on to people too long hoping they would catch fire, that they would be able to do for us what they did for their former employer. Our hiring profile was not right. We paid for it in the long run because we wasted opportunity. Clients want strong, competent recruiting. We learned our lesson."

Now the majority of the company's investment goes to recruiting, Waddy says. "Bringing in less experienced salespeople, training them and partnering them with successful salespeople -- that is what is paying dividends for us," Waddy says.

Don Palmer, VP, MATRIX Resources
Hire People Who Are the Right Fit
Don Palmer, VP of Atlanta-based MATRIX Resources, says throughout his career he's hired people who aren't a right fit. In some cases, the people haven't been the right fit for the company's culture, and in other cases, they haven't possessed the right skills or aptitude. "We're constantly trying to get better at it," Palmer says. "But you never bat 1000." When you hire the wrong person, it is " costly to the business and to the individual," Palmer points out.

Palmer says what he's learned from the experience is that it's important to be very clear when talking to potential new hires about the expectations of the job and the company's culture.

In the late 1990s, MATRIX began using an online hiring profile tool, now called Talent Quest, which is another way of assessing whether someone is a right fit. Talent Quest assesses a candidate's personality and problem-solving skills and then provides a score. The score is then compared to the scores of long-term, successful people at MATRIX who also took the profile.

"It's one more data point," says Palmer. "It's just another data point to see how this person compares. You get a score on how well you match the company profile. "Palmer admits, though, that Talent Quest isn't perfect. He took the test himself, and it said he was a 50% match.

Patti Penny, CEO, Penmac
Spend the Extra Money to Get the Right People
Patti Penny, CEO of Springfield MO-based Penmac, says that in an effort to save money, she ended up hiring mediocre people when she should have just gone ahead and spent the money on people who were more qualified. "I felt I couldn't afford them," she explains. "That cost me some big dollars in the end because they [the people hired] didn't have the skills I needed."

Says Penny: "I didn't hire a CFO or someone that had really high-level accounting skills. I should have paid more attention and spent the money to hire people [who] really had the skills set I needed rather than trying to go cheap. That really cost me. In the end, they didn't have enough knowledge of the subject."

Now, Penny explains: "We're being a lot more careful about hiring." What she learned was that: " If you've got the right person, spend the money. It's just not worth the agony. It ends up being more expensive."

Amar Panchal, CEO, Akraya
When Hiring, Don't Compromise on Quality
Amar Panchal, CEO of Akraya, a Sunnyvale CA-based information technology staffing and services firm, says that five years ago he lowered the bar on the quality of recruiters his company hired.

Back in 2005, so many companies were hiring contract recruiters that it was difficult for Akraya to retain its own recruiters, Panchal explains. Akraya ended up hiring three or four "average" recruiters to replace the ones who had left, and therefore wasn't able to provide the same quality of service to its clients that it had in the past. Now, when Akraya hires recruiters, it makes sure that no matter what, the quality is there, Panchal says.

Tom Gimbel, CEO, LaSalle Network
Have a Plan in Place That Will Sustain People Leaving
Tom Gimbel, founder and CEO of Chicago-based LaSalle Network, says he made the mistake of not having a plan in place that would sustain people leaving. "You begin to mold yourself around individual producers rather than work on an efficient model that is going to be able to sustain whether you have those people or not," he says. "It's really the difference between running a company and having a bunch of producers. You want to build your company as if your best producer was going to leave you."

When Gimbel hired his first salesperson, he thought, " Now that I've got that salesperson I'm going to focus on other things." He still did some sales himself, but not aggressively. Looking back, he wishes he had continued to sell aggressively along with the salesperson. As it turned out, the salesperson didn't work out and after nine months Gimbel had to let the individual go, which left him without a salesperson.

David Alexander, CEO, Soliant Health
Hire Ahead of Growth

David Alexander, CEO of Soliant Health, an Atlanta-based healthcare staffing firm, says that in the past his company has held off on hiring any new people during a recession. Now Alexander realizes what he needs to do is to go ahead and hire people in a recession so that his company is prepared for when the economy turns around.

"We missed a really nice nursing rebound in the 1980s because we just didn't do a good job hiring in front of it," he explains. "Nothing has cost the business as much as failing to intersect the right people at the right time."

It's all about thinking ahead and planning ahead, Alexander points out. "If I think the market is going to rebound in mid-2011, now is the time I've got to be thinking about putting people on board," he says.

And that's exactly what he's doing. Soliant -- which currently has about 200 internal staff -- hopes to add about 15 people this year in preparation for what is expected to be an improved economy in 2011. " If we don't have most of the people hired by January, it's because something weird happened and we've double-dipped," Alexander says.

Liz DeFazio, COO, Instant Technology
To Grow, You Need a Formal Sales Process in Place

Liz DeFazio, COO of Chicago-based Instant Technology, says one lesson she and company CEO Rona Borre learned is that in order to grow, you need to have a formal sales process in place.

"We didn't have a fully developed business development process in place," DeFazio explains. "We've been formulating that over the last three to six months. People really like it. The number one lesson was, really be on top of the business."Part of the formal process entails selling at levels in the company. "You kind of have to sell at every level," DeFazio says. "We call it team selling. We're hoping it's just going to continue the growth."

Frank Mastalski, COO, Link Staffing
Don't Put Off the Difficult Decisions
When Frank Mastalski, COO of Link Staffing, was a sales manager for a pharmaceutical company, he learned not to put off the hard things -- like personnel, tactical and strategic issues -- and now he applies that lesson to his present-day staffing career. "The more you put off these issues, the more it brings you down," he says.

Mastalski recalls during his days at the pharmaceutical company managing someone who wasn't getting the job done. This person was a "four-cylinder person and we needed an eight-cylinder person," he explains. As opposed to thinking about the organization, Mastalski was thinking about the individual, and it took awhile before he got up the courage to let that person go. "Once I made that difficult decision, everything was so much easier to do," he says.

Ted Long, president of Houston-based ChaseSource, says early on in his career, he also made the mistake of not terminating someone soon enough. "I knew that people were not going to be successful and hung onto them longer than I should have," he admits. "It wasn't good for the company, and it wasn't good for them."

Now Long puts those he feels are underperforming on a performance improvement plan. He started using performance improvement plans about five years into his staffing career and has found it works well. "It's easy for both of us to look at it and say we're performing or we're not," he says. "It's still not a pleasant experience, but at least everyone knows where they stand."

Dan McNulty, SVP and COO, QPS Employment Group
Communication Is Key
Prior to the 2009 recession, Brookfield WI-based QPS Employment Group didn't communicate with internal staff as well as it could have, explains Dan McNulty, executive VP and COO. So QPS used the recession as an opportunity to strengthen communication with employees. Specifically, QPS made an effort to go out and visit offices every 60 days. "People actually looked forward to them [the visits]," says McNulty. "It kept everybody on the same page."

Now, the idea is that even though the economy is getting better to keep that communication strong, says McNulty. "You can't just communicate during the bad times," he points out.

Don Stallard, CEO, The Reserves Network
Don't Expand Without Planning Properly

Don Stallard, CEO of The Reserves Network, says his biggest faux pas was expanding his company without planning properly. In the late 1990s, TRN got into the training business. It opened three computer training centers with 18 computers each and began providing everything from corporate training to government-sponsored training. In the end, the company was faced with rising costs, which wasn't a good thing, especially when the 2001 recession hit and less money was coming in.

TRN had to close two of three computer learning centers, Stallard says. "We had to do some retreating from all these extra business ventures," he explains. Stallard learned a couple of valuable lessons: Don't try to do everything because in the end you aren't effective with any of it. Also, don't get away from your core business at the wrong time.

Dave Sanford, EVP, business development, Winter, Wyman Companies
Be Prepared: Things Could Go from Boom to Bust
One mistake Winter, Wyman Companies made was that it went full speed ahead in 2000 -- the height of the boom -- without foreseeing the bust that came the following year, explains Dave Sanford, executive VP of business development.

The boom was the "perfect storm for our business" and "we jumped into the tsunami" by hiring a lot of new people and opening new offices, Sanford explains. But then in 2001, the tech bubble burst and 9/11 hit, leaving Winter, Wyman with a large staff and no business. "9/11 hit and we were struggling anyway, and that took us right down to the basement," says Sanford.

Winter, Wyman had to eliminate offices, and many of the new people the company hired left because there wasn't any business.

So in the latest recession, Winter, Wyman decided to invest in current staff rather than add staff and open new offices. Specifically, Winter, Wyman invested in training, marketing and infrastructure to make its current staff more productive. "We made them smarter. We made them better salespeople. We gave them more tools. It was a great strategy and it's proven itself," Sanford says.

Bob Dickey, CEO, Sapphire Technologies
Don't Be Slow to Respond to Trends
When MSP accounts came on the scene six to eight years ago, Sapphire Technologies was slow to build a service model or strategy to embrace the new hiring trend, according to CEO Bob Dickey. " It took us a long time to understand that model was here to stay as well as [to create] a response to it," Dickey admits.

In 2008, Sapphire created an internal group called corporate accounts to focus on these accounts, which it hadn't been doing a good job of serving. "If I could do one thing over it would be a quicker response to that dynamic in the market," says Dickey.

Vince Virga, CEO, SkillStorm
Value the Opinions of Staff More Than What Analysts Think

Vince Virga, CEO of SkillStorm, says that relatively early on in his career he became more concerned with what analysts thought than getting feedback from employees who had been with the company for a while.

"That, overall, wasn't good for the company," Virga admits. "That was a byproduct of not having a core set of values we could rely upon. At the end of the day, you've got to have those core values to answer those questions for you."

Today, SkillStorm has six key values: people, customers, team members, work & play, tenacity and winning. "Everything begins and ends with [those] core values," explains Virga.

Virga says what he learned from the experience is: "You've got to trust the people you have."

Larry Kidd, President and CEO, Reliable Staffing
Make Sure Your Client Provides a Safe Work Environment
Larry Kidd, president and CEO of Jackson OH-based Reliable Staffing, says he learned the hard way how important it is to make sure a client's work environment is safe before sending anyone there.

A few months after Reliable opened, it sent someone to a client without doing a safety check. The worker was injured and had to be airlifted to a hospital two hours away. Reliable's workers compensation costs shot up dramatically. Now someone from the company visits all industrial clients to make sure the work environment is safe before sending anyone there, Kidd explains.

Staffing company executives are human. Just like everyone else, they make mistakes. The good news, though, is that those mistakes have helped them grow and develop personally and professionally and made them a little wiser. And they've made changes to assure the same mistakes don't happen again.

Lessons Learned
  • If you're going to sell your company, don't underestimate the impact the new ownership can have on the culture and internal staff.
  • Pay attention to succession planning.
  • When times are tough, don't wait to cut costs.
  • Don't overpay for talent or hire the wrong talent.
  • Spend the extra money to get the right people, but don't overpay or hire the wrong talent.
  • When hiring, don't compromise on quality.
  • Have a plan in place that will sustain people leaving.
  • Hire ahead of growth.
  • In order to grow, you need to have a formal sales process in place.
  • Don't put off the difficult decisions.
  • Communication is key.
  • Don't expand without planning properly.
  • Don't try to do everything.
  • Don't get away from your core business at the wrong time.
  • Be prepared for the possibility that things could go from good to bad, from boom to bust.
  • Don't be slow to respond to trends.
  • Value the opinions of staff more than what analysts think.
  • Make sure your client provides a safe work environment.

When you think of a strong leader, what comes to mind?
SI Review asked staffing executives and consultants to share what qualities an effective leader should have, and they came up with the following traits:
  • demonstrates character
  • remains strong even in difficult times
  • realizes that failures lead to growth
  • recognizes that the company's people matter -- it's not just about revenue
  • is articulate
  • is an effective communicator
  • is good at many different forms of communication, including speaking, writing and presenting
  • communicates with everyone, not just select people
  • is goal-oriented
  • gets ordinary people to achieve extraordinary results
  • is passionate about other people's success
  • is inspirational and inspires other people
  • shows respect for other people
  • is decisive
  • makes timely and good decisions
  • can make tough decisions
  • hires good people and gives them clear expectations
  • is flexible, adaptable
  • is good at team building
  • develops members of the team
  • is positive
  • is honest
  • is genuine/sincere
  • gives credit when credit is due
  • has an open-door policy
  • can multitask
  • builds relationships with other people to collaborate with them
  • is passionate
  • is committed
  • is a good problem-solver
  • has a strong work ethic
  • pays it forward
  • is well-rounded with strong technology capabilities
  • is a change agent
  • identifies new ways to tackle everyday problems
  • is enthusiastic about challenges
  • is able to calm chaotic situations
  • is a good listener, possesses good listening skills
  • is willing to listen to and learn from other people
  • listens and asks great questions, then reflects
  • provides other people with challenges that inspire a higher level of performance
  • seeks feedback on his or her own performance (internally, with 360 degree reviews, as well as externally, with a trusted advisor)
  • never stops learning
  • makes people feel valued
  • understands where other people are coming from
  • sets the vision or course for the company
  • is able to articulate that vision with others and translate it into actual activity
  • tailors his or her approach to other people
  • is good at getting other people focused and motivated
  • is followed by others because they want to, not because they have to
  • is involved in professional organizations
  • doesn't ask others to do something he or she wouldn't do
  • is a mentor to other employees
  • grows employees so they can be a mentor themselves
  • learns from his or her mistakes
  • is credible in terms of actions
  • asks good, thought-provoking questions
  • demonstrates integrity
  • is willing to take risks
  • is transparent, open, shares everything/doesn't hide anything
  • follows up
  • is open-minded
  • knows himself/herself, his or her strengths and weaknesses
  • always looks for more opportunities and responsibility
  • always seeks ways to improve the company
  • trusts people
  • is customer-focused
  • is able to deal with ambiguity and uncertainty
  • is forward-thinking, thinks not just about today but tomorrow
  • is constantly thinking about what needs to be done next
  • is consistent
  • is predictable
  • is empathetic
  • doesn't let people get comfortable
  • sees comfort as a sign it's time to get out of the comfort zone again
  • is a velvet hammer -- drives for results in a way that is not off-putting
  • never stops the pressure to get good performance
  • is open to criticism
  • gives people permission to disagree


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