SI Review: September 2011

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Expert's Corner

Breaking the ‘Glass Ceiling’

How to surpass that elusive revenue threshold

By Jon Olin

You’ve been in business five years and can’t seem to get beyond the $5 million mark.

Growing staffing companies often experience the “glass ceiling” — that revenue threshold that seems impossible to break through. In recruiting and staffing terms, it is natural to assume adding sales and recruiters to your staff will increase company revenue, but to do so might mean risking margins. Thus, to do so is not always the best option.

Ettain group has experienced a number of glass ceilings — at $3 million, $5 million, $10 million, $20 million and $40 million — that seemed to linger over our heads for longer than expected. We have found that there are several paths companies can take to break through these barriers. Some of them cost money, some of them just time — but a company must be willing to invest both.

Foundation

A company needs to be operationally prepared for breaking through the glass ceiling. Higher revenue numbers bring several management issues — increased head counts, enlarged payroll, back-office dilemmas, deeper client needs and more time constraints. You need to be willing to embrace these changes while weighing the impact on clients, contractors and internal employees.

It is also important to understand costs associated with breaking through the glass ceiling. Once you are committed to risking some profit margin for the sake of growth, you must then determine how and where the time and money will be spent. A leading performance indicator that can be beneficial to growing staffing companies is “cost per producer.” By adding up the total costs associated with your company and then dividing that number by the total number of producers, you gain insight into how much each producer must make in order to break even. Cost per producer also provides insight into how much “hiring” you can do to maintain margin goals — before and after breaking through the ceiling.

Hiring

When to boost staff? Before or after? That is the question. The correct answer is both — retain the “right people” before and after.

Equally important, but not as difficult, is making your current environment a place people want to come to work. Creating opportunity and gaining buy-in from existing employees will help attract and retain staff, simultaneously aligning them with company goals. Incenting, rewarding and recognizing your existing team in turn becomes a grass-roots marketing tactic to recruit new employees.

Ettain group developed a great internal referral program and hired individuals who would buy into our goals and expectations. Our commitment to our internal employees and to hiring great people is without question the No. 1 reason we continue to break through glass ceilings.

Clients

Recently, while fighting to break through one of our glass ceilings, we evaluated our clients based on several factors — our rates and term agreements, the volume the account provided, the ability to communicate and get timely feedback, and the “opportunity” each account provided. We determined what made a “great client,” a “good client” and a “bad client” based on the above criteria.

We eliminated “bad clients,” those that that lacked open communication, had poor rates and terms, and viewed staffing partners as a commodity, and focused our time on great clients and helping to make good clients become great.

The decision paid off as we smashed through our revenue ceiling. Further, our employees appreciated working with the remaining good and great clients. We also realized some unexpected sales benefits, such as better account planning and more client predictability, which led to improved candidate pipelining and a more targeted sales approach.

The next time your company is up against a glass ceiling, struggling to determine how much to risk to break through, we would recommend that you focus your energy on your “customers” — your clients, your contractors/candidates and your internal team. Accumulating additional employees and clients is not as important as acquiring and retaining the “right” ones, and without the proper foundation and culture, hiring more employees or adding the wrong clients could be harmful.

Above all, remember glass ceilings are just that — glass — and are meant to be broken.

Jon Olin is a partner with ettain group, a staffing and consulting company that focuses on technology | people | solutions. He can be reached at jolin@ettaingroup.com or (704) 731-8016. You can also learn more about him at www.ettaingroup.com.

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