As my business is to back, set up, and support recruiters who want to build their own companies, it’s natural I speak with a lot of recruiters who want to set up on their own, with many motivated to take this step because they don’t like their current employer and how they run their company. Unfortunately, I regularly hear horror stories of independent recruitment business owners who morphed over time into believing they are some sort of legendary entrepreneur with immortality in the business world. Sadly, success can have the side effect of recruitment egos growing out of control.
I’ve found independent business owners tend to lean one of two ways when the business takes off and they start making good money. Some appreciate the success; recognise the essential part the staff played and share the results of the high profit business with the people they employ. They show gratitude to their staff, and share the wealth with good commission structures, paying for team nights our and trips away and generally showing they appreciate those who helped get them to where they are. And above all, they give their team respect, ensure they feel wanted and stay humble. However, some go the opposite way. Success and money changes what was a decent person into one that has grown to only see their staff as money machines, not people. They also can suffer from what I call the ‘greed syndrome’ where they feel people are out to take their newfound wealth and can even become a tad paranoid.
I sadly worked for someone like the latter. He was initially a friend but turned into a bully and even became jealous of my success as the business’s biggest biller, which was crazy. I was making him a pile of money, but he almost seemed to resent my success at times. This is one of the reasons I left and set up my first business, taking a colleague with me. We were the most successful people in the business, so when we walked out of the door, a big chunk of profit came with us. Our departure also led to a number of the business’s best recruiters leaving too and setting up on their own after seeing our success, creating an even bigger staff problem than just losing two top billers.
Mine is in no way a unique story. Two of the businesses I helped set up through Davidson Gray saw their previous companies go bump not that long after they left. The businesses were a lot more reliant on these staff than the business owners realised, until it was too late.
I have seen first-hand local, independent recruitment businesses go from high profit, well-known companies to falling apart in months. Aside from the core issue of the boss who got lost somewhere in success, recruitment staff are transient, and the average tenure of recruiters with one company often isn’t more than a few years. It seems you only have to be able to spell recruitment and a rec-to-rec can get you plenty of recruitment businesses interested in talking to you. So, when one or two of the company’s more successful staff leave because they’re fed up with not being valued, this can be the catalyst to others following. And it’s almost always the company’s bigger billers that leave first because they get approached the most and tempted by better paid, more attractive roles. What can follow is, that as even more leave, the office gets nervy. The business owners get rattled by staff leaving and make it worse by putting pressure on those left. The atmosphere gets even worse and more leave, and before you know it, the business can go under.
I apologise for this gloomy tale. If you’ve read any of my other blogs or listened to any of my podcasts, you’ll know I am a very positive and enthusiastic individual. However, I decided to write this blog as a cautionary tale to business owners getting drunk on success and throwing good businesses away. Also, for those reading this feeling that they are in a business that’s being run badly and turning caustic, believe it or not, it can actually be a great training ground for you to set up and build a successful recruitment business. Pain is a better teacher than pleasure, so experiencing the pain of working in a badly run company can help show you how not to run a business and give you time to form your ethos on business leadership and the aspects you’d do differently, which in turn does unconsciously help you build a business plan.
My previous employer did a lot of good things, it was my first recruitment job, and they did train me well, but one of the biggest things I took away from there was not to believe your own hype and stay humble. I joined the business 12 months after it had been set up and for the first few years it was great, we had a brilliant team environment, it wasn’t hierarchical, and we all worked and played hard together. But sadly, as soon as it started making good money, things started to change, and the once-good employer let money change him for the worse.
The businesses I went on to build had flat management structures, had a lot of genuine staff engagement and were places where the staff looked forward to coming to work. One of the aspects of the business I wanted to stay true to was good communication with my staff on the business direction. We had monthly team meetings which included me delivering all the company numbers, communicating new plans, initiatives and encouraging a Q&A on anything the team wanted to ask me. I also encouraged the team to see this as a time to suggest new ideas on how we could do things better as a business. This helped not only make the team feel part of the environment but also helped develop numerous ideas and strategies that took the business forward. As a business leader, you’ll never know everything about how your business can improve, but by encouraging your team to contribute ideas you will get more of a 360-degree view of what the business can do better.
We had a representative from the old Investors in People visit the business to assess how we could improve the work environment. After interviewing most of the staff, the lady conducting the audit called me in to discuss the feedback and she said she’d never come across a business where people felt so valued, were so proud of the company their worked in and felt leaving for any other recruitment business would be a step down. I can genuinely say I was a bit taken aback. I knew we had built a good environment but not that good. So, I invested the time in really understanding in detail what actions and strategies had contributed to the success. If you are successful but don’t know exactly why, you must try and find out. If your success slows or stops, how will you be able to fix it?!
I’ve always encouraged business owners to do as I have always done and if something isn’t working or goes wrong in the business, to look at yourself first to see what you could have done better so you learn from it and improve. But it’s also a great trait if, when you have success, you understand what made that success happen. If you aren’t completely sure you know how it happened, look for the detail on how and why. If you can’t teach or show someone else how this happened and how to do it, you are ‘unconsciously competent.’ So, to improve and be able to pass on your skills and experience, you need to become ‘consciously competent’. This is immensely helpful when scaling your business to enable others to do what you can do and can help with succession planning and your eventual exit from the business.
I’ve seen a lot of the business owners I’ve helped set up use their own bad experiences to do things differently to their previous bosses and profit from this negative education.
With all the business owners I back , I always check their views on team leadership to confirm they share my views and values when it comes to looking after staff. I, of course, coach and mentor how to make this happen in practice, but if this ethos is not in place with the business owner from the start, then it’s not a business I would want to be involved with. I only want to help grow businesses with strong values. This is partly because of my own values, but also because a business with strong values has a strong foundation. A strong value-based foundation means less staff attrition, which gives longstanding employees more time to develop into good managers. In turn, this continuity allows others in the business to see a career path right where they are, further improving staff attrition. Better still, these managers can become the owner’s succession plan for when they eventually want to spend less time in the company, exit, or sell.
If you have read some of my other blogs or listened to my podcasts, you’ll know I do still coach and encourage the business owners we work with to develop very strong brands with excellent marketing and use the latest tech to help the recruiters. Having this in your business not only helps increase profits and averaging billings per head, but also makes it less reliant on the staff and the business helps make money for them rather than purely them making money for it. That’s just business common sense. Having a strong brand, great time saving tech and excellent marketing helps accelerate growth, helps the business scale, helps those in the business bill more and those high billing staff then won’t want to leave as it’s such an easy place to make money. But I do still encourage the owners to stay true to their initial business cultural strategy of valuing the staff and never forgetting, that unlike the brand, the tech and marketing, their staff can still walk out of the door whenever they like, so it’s critical to never lose sight of how important your people are to your business.
Written by Rhys Jones Managing Director – Davidson Gray