This podcast episode is from the archives — recorded on January 8 of this year but previously unaired. While we’re living in a whole new world today, the episode is full of useful strategies from our guest, Tom Kosnik, strategic consultant to staffing firms and President of the Visus Group, that can help your firm through this unprecedented era.

In this episode, David Folwell, President of StaffingHub, interviews Tom about creating thought leadership communities in the staffing industry, compensation, M&A, and more.

David:

Hey Tom, it’s super great to have you on the podcast today. Here with me today is Tom Kosnik with Visus Group. Very excited to have a conversation with you about what’s next in staffing. So to start off, why don’t you tell me a little bit about yourself and your background in the staffing industry?

Tom:

Yeah sure. Thank you for the invitation to be on the webcast here. And yeah, my background, I’ve been servicing the staffing industry for just over 25 years. I got into the industry by setting up CEO/President roundtables. At one point I had over a 100 independently owned staffing businesses and eight different president roundtables. That program has continued to grow organically so we’ve got a CFO roundtable,  a Marketing roundtable, a COO roundtable and I also have retained a handful of president roundtable. And in addition to that, we do organizational development work –people that, like myself and some of my associates, we look at the organization as a whole and we try to increase the value of the asset. And so that may be helping out, shoring up the sales function and might be helping shore up the recruiting or the fulfillment function. It might be helping with some technology, either a technology assessment, or even helping choose an ATS and walking through implementation and what not.  There are a lot of people in the industry that do “executive coaching”and that’s like one on one. Organizational development typically is working with the organization as a whole. Groups of sales teams and groups of recruiters.

And the senior management team doing strategic planning and financial analysis and a comp plan redesign and really good stuff. Good foundational things that anybody needs to be doing if they’re owning and growing a staffing business.

David:

Fantastic. And when people attend the roundtables, what is the expectation or the result? What are people getting out of participating in your executive roundtables?

Tom:

Yeah, great question. Thank you for asking, David. The objective, these are small, so 10 to 12 executives that get together three times a year. And they set the agenda, we facilitate. Occasionally we’ll bring in subject matter experts. But imagine, you have specific challenges. I want to do an acquisition, I’ve got to change a comp plan, I need to move to a new ATS. Whatever it is. Now if I’m trying to physically, organically grow by opening up markets, on and on and on. The topics are endless. But each company gets an X amount of time in front of this group of other successful businessowners to present their ideas. I facilitate through a creative problem solving process and we unpack those topics. We ask a lot of questions:who, what, where, when and why. And then we take time to offer a real-life experience responses. So people that attend those meetings, they come to … we set the agenda ahead of time. They come to the roundtable with specific questions, challenges, topics that they want to do deep diving on. And then we facilitate through that. We take notes. We send the notes out to all the members afterwards. Everybody signs an NDA, so they get real-life responses to challenges and situations that they’re looking to overcome or move beyond.

And then additionally, they build an informal network of other business owners, all in a staffing industry, staffing industry expertise that they can pick up the phone and they can call in between the meetings. I mean we do have email distribution lists where people and some of our groups are more active than others, where they send out questions on those distribution list. So we have the email thing going on, where people can continue to unpack and talk about issues. But we get a lot of conversations that go back and forth, where people just build, their executives build their personal network of other people that are running staffing businesses that they know that they can trust. And you know how it is. Just talk through whatever. But yeah, in short, that’s what they’re expecting, that’s what they get. And shockingly, I’ve got a number of clients that have been with me for more than 20 years, in that roundtable program.

David:

Oh wow.

Tom:

We have a new website coming out. We’ve got a bunch of testimonials. I hired somebody to do interviewing and all that stuff. So we’re pretty excited about 2020 and the podcasts and being part of podcasts, that’s all part of the new website and what not.

David:

That’s all fantastic. It actually, it kind of reminds me of Vistage. I hear a lot of success stories from Vistage. The one area where I feel like you excel and are probably potentially a much more significant value added, that the focus and staffing and having people that have solved the exact problems that you’re trying to solve, versus kind of the business owner group as a whole. So it seems like a really great model.

Tom:

Yeah, thank you, thank you.

David:

If you have people that have stuck with you for 20 years, obviously it’s working, so that’s great.

Tom:

Yeah, yeah, yeah. And Vistage is a great organization. I have members that are members in Vistage and members in my roundtable program. And I had a client out of the Northeast, he gave me a  testimonial one time. He said, “You can know a lot about the staffing industry. You can’t know everything. But with the right group of associates, you can come pretty close to knowing just about everything you need to know to grow a business.”

David:

That’s great. That’s great.

Tom:

So wonderful, wonderful testimonials. So thank you.

David:

Yeah, that’s fantastic. So in one of the things you mentioned, that when people come to the roundtables, they’re bringing their current challenges, things they’re trying to solve. What do you see from these conversations that you’re having at your roundtables and just with your industry expertise, what are some of the biggest challenges that you see staffing firms facing currently?

Tom:

Yeah, sure. So when I look at the staffing industry, when I’m looking at these organizations, I see it in three camps. You have the owner/operator type businesses. And those are generally the staffing companies that will grow to 12, 15 million in revenue. And then you have the staffing companies that are 15 to 80 million in revenue. And then you get the middle market we would call those, and then you get the enterprise accounts that are 80 million to a billion or so. And they all have different challenges. So those companies that are the owner/operator type  businesses, they’re dealing with hiring people. They’re dealing with creating compelling compensation plans, managing people. Those small organizations, seven people, eight people, twelve people. If you’re somewhere near the staffing industry averages on turnover rates, you lose four people out of a staff of 10 or 12, you’re losing a third of your staff, that’s a big deal. So creating compelling cultures that employees want to stay with,trying to grow the business, competing against the more sophisticated middle market, competing against the big nationals, trying to deal with the VMSs. Those are a lot of the challenges that the owner/operator type businesses.

You have one person, or you’ve got a married couple at the top of the pyramid and everybody’s reporting to them and it’s on their shoulders to grow it. When you look at the enterprise accounts, those guys, they are going head to head with the nationals on just about everything. They’re trying to manage their costs as … they may have whatever. 85, 60 branches out there. So managing, getting all those branches profitable, operating well. You have training and development, learning management system, acquisitions.  A lot of those enterprise accounts are doing acquisitions. Well, how do you do acquisitions and where do you find them? And how do you integrate them once you buy them, how do you integrate them into the fold? Funny, I see some companies, I see these with the owner/operator businesses, you can see these different plateaus that they hit. Same thing happens with the enterprise accounts. A company can grow to 250 million in revenue and then they’ll get stuck at 250 million in revenue for four, five, six years. But those guys, those enterprise accounts, those guys are going head to head against the nationals, which are very sophisticated in their sales methodologies, or fulfillment methodologies, or technologies.

The nationals, they’ve got a lot of money to do market research and things like that. Well, even a 250 million dollar a year staffing business still might have a lot of people on staff that are not at the same sophistication level as some of these nationals. And then you’ve got the middle market. And these are the companies that are too big to be small, too small to be big. And they really have issues related to the whole financial model because they need to invest in infrastructure. So they need, if they’re 25, or 35, or 50 million in revenue, they really need to grow that to the top of the middle market cycle. And in order to do that, they have to invest in  infrastructure. Well infrastructure is some high powered people. A VP of sales, a VP of operations, an IT director. Well those guys don’t come cheap. There’s a high price tag with somebody that can help you. You know what they say, that the pundits will say. “Hey wow, you’re 25 million in revenue. You want to get to 50. Well go hire a VP of sales that’s been in an organization that’s 50 million in revenue.

Well somebody in that organization, what are they going to be making? 250, 300 thousand dollars. So I mean that’s a big ticket for some of those topics, some of those market companies. And then you’ve got the technology, right? I mean whatever their technology platform is, it kind of might be a focus group with a group of employees. It’s like they come to the table with half a dozen or eight different new technologies. Yeah, we really need this technology to recruit better. Well the guys that are paying the bills for that,  they have a financial model. They only have so much percentage of the gross margin that they can allocate towards those new technologies. So they’ve got to decide, hey which technologies are going to be the ones that are going to give me the biggest bang for the buck? The enterprise accounts, they deal with that as well. They have a little bit more girth to them so they can pilot a region with a technology for a while, to see if it’s really going to flesh out for them.

David:

I think that’s a great kind of overview of that. I like the way that you look at the different market segments as well. Because obviously the challenges change based on business size. That’s a great insight into some of the key challenges.

Tom:

Yeah, yeah. Thank you, thank you. Yeah so those are some of the key challenges that I see, that at least I hear about or my clients are being faced with in the industry.

David:

And one of the things you mentioned there at the end was the technology. And from my perspective, I’ve been seeing more technology players, more technology solutions. Whether it comes to alternate sourcing, automation. It seems like there’s a new player every day and a lot of companies that I feel are adopting technology faster than ever. How do you see technology playing a role? 

Tom:

Yeah, sure. Well David, you know Maurice Fuller and the staffing tech and all that stuff. He’s trying to come up with a top 100 list of technology companies that are supporting the staffing industry. And I was on the phone with him a few weeks back and I said, “Wow, 100 companies?” And he said, “Tom, we started with a list of over 400 technology companies that are now offering services to the staffing industry.” And so yes, it’s a totally innovative … Well here’s the thing, if I am … So think about, technology is definitely going to be the way of the future. I mean when you look at the mobile device, everybody’s got these mobile devices. The way that Millennials, the way that people that are coming out of college want to communicate and want to be communicated with, are to text messaging and mobile devices and things like that. So the on demand staffing tools, those aren’t going away. I was at the Staffing World and somebody asked me, “Hey, what do you think about …” We heard about Uber Works that just came out. “And what do you think about Uber Works? And is that a big concern?”

I said, “Oh my gosh, are you kidding me?” I mean that announcement of Uber Works is like the on demand staffing train has left the station. I mean Uber doesn’t invest millions, billions of dollars into some kind of platform if they have not done the research. And that this is the future of work and how work is going to get allocated and what not. So I mean technology wise, yes. Beyond the mind staffing. The way that we’re communicating with people. There are a number of products out there in terms of employee engagement, temp employee engagement. Temp redeployment. How many times do you walk into a staffing company and they’ve got as many people falling off the back end of the bus as they’re bringing on the front end of the bus? Why would you not do something to redeploy anything you can do? You’ve already initiated them. They’re already your employees. Hopefully they already like you or your company and what not. So why not retain those folks? Well that’s a whole different business model, right? We’re not thinking about billable hours. We’re not thinking about butts in seats. You’re thinking about building a marketplace. Building a marketplace of temporary workers that will stay with me for a certain amount of time.

Well so the technology, they’re supports, that different business model. The other thing is that, if I’m a day labor,  if I’m a light industrial, if I’m a clerical,if I’m an engineering staffing firm or what not. All those staffing models, they’re different business models. And those different business models, the technology … Here’s what I see. People walk around these conferences. The people that run staffing companies are walking around the conferences, looking at these technologies and the technologies are like, “Hey wow, let me show you this. And we’re going to help you do this. And we’re going to help your recruiters be more efficient by that. And we’re going to help your sales guys close more deals with this.” Well, I mean that’s like looking at the shiny nickel or the shiny dime, or whatever. But that’s not how you make a decision about one of those technologies. You’ve got to take a step back and look at your business model. How does your business make money? How do you fulfill? Are you a long term assignments? What’s your average length of assignment? How do you find people? What do you do with them once you get them in your system and what not?

So you’ve got to take a step back, look at your business model that you’re trying to implement, that you’re trying to grow in the marketplace, which by the way, should have some kind of value add to prospective buyers and what not and then you look for technologies that business model becomes the criteria, one of the criteria that you look for. You stand these technologies up against to  support that the execution of that business model in the marketplace. And so that’s like one thing that … I don’t think there’s a staffing company out there, an independently owned staffing business out there that could, “Hey wow. Boy, I need to take a step back. Really understand my business model and then evaluate these technology choices” versus by, “Wow, man that tool looks really cool. Let’s try that out for a while.” That is the wrong way to make that decision.

David:

I couldn’t agree more and I’ve actually seen a lot of staffing firms that jump at the shiny thing but don’t follow through with the alignment and onboarding of the tool.

Tom:

 I go in, I may sign a deal to go in and do an assessment. It just like breaks my heart. You look at these contracts and you see what kind of money these guys have spent on some new technology and it’s not aligned. It’s like, “Now why did you guys buy this? And help me with the vision. And who was involved?” Because it’s just a lot of money.

In the end, they’re not going to get the results. And what’s the result? I either got to increase my net income, I got to increase my average gross profit production for internal employee. I’ve got to leverage up my margins. I’ve got to increase the number of head count for internals. Whatever it is, whatever your metric, your KPI is, I mean that new investment should be taughtso there should be a lead and a lag indicator tied to that investment. And hundreds of thousands of dollars later and they’re still running at whatever, the same KPIs. No change. That’s not good.

David:

Yeah, I’ve seen it many times and  one thing we created at Staffing Hub that’s actually quite relevant to this conversation is that a software selection tool that kind of helps score software, based off of what the expected impact, the effort to launch. I had a call with Maurice recently and actually some of these ideas come directly from him. Which by the way, his conference staffings, I highly recommend going to if you’re in the staffing industry as well.

Tom:

If you’re an owner/operator, it’s probably one of the most important conferences for you to attend.

David:

Absolutely, it is.

Tom:

Because as you said earlier in our conversation, technology it’s only going to play a more and more and more critical role in a staffing company. It is.

David:

100% agree. 100% agree. And I’ll include the calculator that we have in these show notes. So anybody that’s listening, if you look in that notes of the show, you’ll be able to download that directly. So one other thing that got me switching gears a little bit here. But I know that consolidation in the industry has been ongoing. I don’t know if it’s fully accelerating but it’s that definitely consistent thing and it’s still a fairly fragmented market but I know a lot of the major players are always looking at who they can acquire next. What’s your take on kind of the lay of the land in regards to M&A and the staffing industry?

Tom:

Yeah, we help  out with a number of M&A deals throughout the year and these are either large clients of mine that are looking to acquire, so they may hire us to do the grunt work of sending letters, making phone calls, things like that. I would say 100% of my enterprise accounts are looking for acquisitions. 100%. The middle market, I would say more than 50% of those folks are looking for acquisitions. What do staffing industry analysts say? 93% of the industry is under seven million in revenue. So you’ve got a lot of these smaller owner/operator type businesses. Those are fairly easy acquisitions to do. But we’ve been on a nine year acquisition pace. There’s a lot of desire to continue to acquire businesses. And what are the drivers? Well one driver is, the candidate short market. I mean I get calls from IT companies. I would have never thought I would have heard this but, “We want to buy IT stacking companies for the resources.” Usually they’re looking for the client contracts. Wow, oh wow, they’re in this client, that client. We’re at a fully deployed workforce with  IT workers, engineer … So you’ve got companies that are buying IT staffing businesses for the 25, or the 50, or the 75 resources that they have on staff, so that they can redeploy those resources.

Tom:

M&A activity is going to remain pretty solid, pretty good. I mean there’s a lot of talk about, I know what we seem … I do some reading with the guys from ITR up in the Northeast. They’ve spoken at many of the staffing industry conferences. I kind of signed on to their monthly newsletter and they have a leading trends report that looks at 10 leading indicators in the United States economy and so they’ve been showing that the economy has been slowing down. But at the same time, gosh everyone got more open jobs and people applying for jobs, ee’ve got this candidate short market,we don’t have enough people going into engineering and ITand we don’t have enough American students going into engineering and IT. Well the health care is the same thing. We don’t have enough people going into nursing and the different fields in that category. So look, I mean if a company wants to grow, acquisition is going to be a part of it. And most of my clients, if you’re not growing, you’re losing ground. The United States population is continuing to grow which means the staffing industry is continuing to grow. So mergers and acquisitions, it’s probably going to be another good … my guess is 2020’s going to be another good year for M&A and there’s a lot of good reasons to be doing it.

David:

And with that, one of the questions that maybe is more relevant for the owner/operator and middle market guys but one of the conversations I have is, everybody’s trying to figure out, how do they maximize their multiple? And I don’t know if you have any … that might be different based on vertical but if there’s any tips that you have on what you’re seeing in the market?

Tom:

If you’re an owner/operator business, it is maximize the value, client concentration. Gosh David, I mean I don’t know how many PNLs I’ve looked at where 80% of the revenue is with the top three accounts. 80% of the revenue, 90% of the revenue, top five accounts. Gosh, if you can reduce client concentration, that’s a big thing that increases the value of the asset. Solid gross margin, a history of solid gross margins, that’s another one. And the gross margins range obviously, between IT and light industrial and accounting and finance. So in staffing industry analysis, they’ve got all kind of great data on what those averages are. But a history of good gross margins. The owner of the business not tied into the day to day, not tied into the key relationships. Big red flag for a buyer. So if you’re a owner/operator type business, you’re running a 10 million dollar a year business, the way you’ve got to think about it is, how do I reduce the risk to the buyer. And so if the buyer looks and says, “Oh, Tom’s staffing and Tom’s got a great relationship with the three largest accounts. But like  nobody else in his organization has got ties into those accounts.”

Boy, well they’ll still buy the business. But they’re going to want old Tom to hang on for a year until they get a selling branch manager in there. Oh and by the way, you’re not going to get 80% cash. You’re probably going to get 25% cash, until the cash down and the rest in some kind of an earn off structure. So reducing client concentration, having good margins, having the owner not involved into the day to day aspects of the business. Those are for the middle market type businesses. Increasing the value of those middle market businesses, if I’ve got one office doing whatever, if I’ve got one office dealing 12 million dollars and then I’ve got three other offices that are dealing  two million dollars each, well what is that? Is that really a four office operation? So I mean, if you’re in a region and you’ve got good coverage in that region, with offices and offices that are doing well, you’ve got again, you’ve got a business model.The business model that we want each office to do 10 million in revenue on 50 million in revenue. I’ve got five offices, they’re all running at 10 million in revenue.

I mean that’s just like wow, this guy’s running a clockwork organization. Really well managed, on and on and on. Same things apply with client concentration. Even those larger firms, you want to reduce client concentration. You want to have good margins. Typically, the buyers don’t like to see more than 10% of direct hire in the mix of things. And good with the middle market firms that are looking to sell good management and staff. Good management on staff that will go with the acquisition. So it’s … because obviously, if a larger enterprise account buys the middle market, they’re going to need the management to stay and transition and help with the transition and all the work that needs to go along with that.

David:

Oh that’s great insight. And you mentioned the client concentration a couple of times and I don’t know if this is related directly to staffing? I’ve heard there’s a rule of thumb, you don’t want a client to be over 20% of your business. Do you have any rules or guidelines around the client concentration?

Tom:

I heard the same thing. No client north of 15, 20% of the business. That’s a good staffing industry standard that … Yeah, hey so when you look at some of these light industrial, like gosh if you’re running whatever, you’re running an eight million dollars light industrial staffing business and you’ve got these margins that are 13%. I see these businesses in Chicago here, the average gross margin for light industrial staffing is running around 13% of that’s what it is. I mean it’s light industrial Mecca, here in Chicago. It’s north of three billion dollars of light industrial revenue in the Chicago land area. But at 13%, I mean a buyer looks at that and says, “Well hell, I can just hire a salesperson  or throw up an office and for 125 thousand dollars I can get an office up and running and just steal the business from competitors or incumbents and undercut them. So, if you’re a small business like that and you’re at 16 or 18% gross margins, 19% gross margins, much much more desirable. Much more desirable for a company to look at and say, “Hey, I want to buy.” So client concentration, margins, those are a big thing.

David:

Perfect, perfect. Great insight again. One other thing and kind of jumping to another subject but I have a lot of conversations with staffing execs and one of the things I hear people wondering how to do correctly is  compensation within their group. And compensation that’s going to be meaningful and retain clients. What are your, I guess insights or any thoughts around staffing industry compensation?

Tom:

Hey yeah, so great question, great topic. It’s typically November and so my group does a lot of compensation work. You either build a new comp plan, doing comp that analysis, all the way up and down the food chain. Everything from presidents and senior level execs to staffing coordinators and recruiters and sales reps and what not. And look, I’ll say two things. One thing is that a lot of these compensation plans in the staffing industry are pretty boring. They’re not compelling, they’re not engaging, they’re not rewarding the right kind of behavior. Why stick around for that if I’m a 20 something year old kid? So with compensation, look, you’ve got to build a comp plan that has multiple components, multiple sales levers that are rewarding the right kind of behavior and compelling engaging comp plans. So that’s one big piece of comp. And the other thing which sort of, when you do the analysis of how sales people and recruiters are compensated in the staffing industry with other industries that exist out there in the greater world, generally we’re at the top of the food chain. So not the top top of the food chain but salespeople  and recruiters in this industry, they make good money.

They’re probably … I probably should be careful about what I’m saying because I’m not probably going to get a lot of love from salespeople and recruiters, which provide a lot of value and do a lot of good work and all that stuff. But when you compare what they’re getting paid, it’s sort of what I call one of the sins of the staffing industry, is that we pay salespeople and recruiters pretty well. They can make pretty good money doing what they’re doing. So when you’re designing these comp plans, you really have to be careful about how much money, what percentage of the gross profit you can allocate to the salespeople? How much money can you allocate towards  to the recruiting people? And we’re seeing a bases creep up. And as bases creep up, you can’t keep a percentage of gross profit. You’re going to be paying out the same. So you’re going to have to adjust down. Well kind of knowing what those are, based again upon a gross profit that you’re generating is very, very, very important. And obviously, keeping it engaging as well. Yeah, it’s a great topic. A lot of staffing companies struggle with comp and how to make comp work.

And there’s always, what do we do with splits? And what if one sales guy knocked on a door and another sales guy advanced the account and how do we pay them on that? And there’s all these squabbles and things about that.

David:

Do you have any examples that … I’m sorry, I didn’t mean to cut you off.

Tom:

Yeah, go ahead.

David:

I was going to ask if you had any examples of I guess pitfalls or specific examples of the comp plans that aren’t engaging.

Tom:

Oh gosh.

David:

And some side of the few things we can avoid.

Tom:

Fantastic, fantastic question. So number one, comp plans, that pay way too high of gross profit. So they’re paying, maybe they’re paying a sales guy a 50 or 60k base. And then a percentage of gross profit that they’re paying out. Occasionally I see this where hey, we just pay a flat 10%, or a flat 12% of the gross profit production of that individual. Well, you want to build a comp plan where you’ve got a graduated scale. So maybe the first … just as an example and there’s several models out there. But as an example, first 10k of gross profit they make 2 ½% . And the next 10K, they make 5%.  And the next 10k they make 7%. And the next 10k they make 10. And anything on a monthly basis over 40k, they’re making 12 ½%. So when you don’t have a graduated scale like that, you’re not rewarding people, you’re not encouraging people to get up to 40, 50k of gross profit production on a monthly basis. So that’s one pitfall. The other pitfall is that comping people on growth profit production … yes, got to do it. A lot of staffing companies do it. But that’s a lag indicator, if that’s a result.

A lot of staffing companies do not compensate on lead indicators. In other words, what closes deals? What brings in new business? Well man, it’s going to networking events, it’s the face to face meetings, it’s following up on leads on recruiters,it’s doing certain things on LinkedIn and what not. On the fulfillment side, it’s the time I’m spending with candidates on the phone, it’s the number of client interviews that I’ve got candidates interviewing a client side something. We kind of know what these are, right? I mean the lead indicator, the performance drivers haven’t changed in the industry all that much. But no, there’s very, very, very few staffing companies compensate on lead indicators. We call them performance drivers, so that’s a big thing. I had a client, I picked up a client one time. Gosh, this guy was … Well anyway, I was in a meeting with him and his CFO and his VP of sales. I said, “Hey, what percentage of the gross profit are you allocating to your sales people and recruiters?” And the CFO kind of does some numbers in her head and she said, “60%. Six zero. I quickly did the math. I assumed that 30% of the gross profit was going for G&A expenses so then you got 10% left over from that income.

And I’m like, “Damn.” I said, “You guys are running a 40 million dollar business and you’re making a 1% to the bottom line? That is painful to me.” And the owner just looked at me and  said, “How did you just figure out I’m making 1%?” Which was, that was the case. They were making … He was running a 40 million dollar a year business. He was making a 1% net income. I’m like, “Dude man, sell your staffing businesses and go buy a grocery store.” That was apples and oranges and lettuce, if there’s no work comp exposure on those things.

David:

On 60%, I’d hope they’re commission only but I doubt that was the case.

Tom:

No, it wasn’t. It wasn’t. God that comp plan was so far out of whack. And that’s a pitfall that I find, is that people … hey the salaries keep creeping up but they don’t adjust, they don’t want to adjust the percentage of gross profit that they’re paying. But yeah and I’d say another pitfall is that they’re not in any way … oh there’s just so much great stuff you can do with comp. There’s just so much great stuff, to make comp plans engaging and what not. But no rewarding performance drivers, no quarterly targets that change on a quarter to quarter basis. “Hey Tom, you’re a new employee so hey, you get five new accounts, you’re going to get a 1500 dollar one time bonus. I mean, just whatever. I mean and then you make a contest, a quarterly contest out of it for the guy. Maybe you’ve got a senior sales exec that’s got … that’s kind of been sitting on his laurels for a little bit. Well, throw some targets out there for account penetration and growing a revenue in each one of those accounts. So you can make a comp plan where you’ve got a component of it that’s different for each sales person based on how long they’ve been with the organization and their book of business.

I mean there’s so much great stuff you can do with comp. But like our industry, it’s just these plans, most of them frankly, they’re boring plans. And hey look, what’s smart A type talented salesperson wants to go work for a company with a boring comp plan. Do you know? David, do you know any?

David:

I don’t.

Tom:

I don’t know any.

David:

I don’t know any at all.

Tom:

Yeah, right?

David:

If they don’t see it as exciting, it’s going to be hard to recruit the right people.

Tom:

Right? Exactly. Exactly. Yeah, to my point. Anyway, fun stuff, fun stuff.

David:

That’s great and again some great tips there that I hope their listeners can take and put into action. So last question that I had is, do you have any story, case studies, with clients or even just with industry players  of people you think are doing things really, really well, or some different approaches to the market that you think are going to move them forward faster? Any kind of major changes that you see in the market right now? 

Tom:

Yeah, yeah, yeah. I would say I’ve got clients that are early adopters on the on demand staffing. And which is, the on demand staffing, there are three different business models that are out there. So the on demand staffing, that’s the folks that are using these platforms like Shiftgig and Work In. And they’re transitioning, moving from butts in seats to building a marketplace and what not. So I have some clients that are moving in that direction in a really good, strong healthy way. And you kind of know what happens there. So the goal is we’re going to hang on to a person for not 8 weeks or 13 weeks.We’re going to hang on to a person for three years. And so if you’re hanging on to a resource, if you’re redeploying a resource over the course of three years, versus 13 weeks, well just imagine the number of head count per internal recruiter and sales person you can get onboard. So that’s a case study. Hey,I would say the other case studies of things is like niching, niching, niching. So a lot of folks, a lot of staffing businesses, they get sidetracked into opportunities or whatnot.

Still today, the magic words to a hiring manager’s ears are, “hey, all we do is place.” Or we focus on, whatever with these kinds of healthcare workers or these kinds of IT workers. Or we have a pod of recruiters. All they do are  these kinds of engineers. David, that is like gosh, I mean, how many staffing companies out there, they are all things to all people? There’s no niching, there’s no focusing. Well, if there’s no focus, then there really is no real value. There’s no real value added that they’re offering to a prospective.

David:

How do you specialize and what are you doing different if you have no focus, right?

Tom:

Yeah, correct. Yeah, yeah. I mean look at my business. I get calls from people that are non staffing companies and I refer them to other friends of mine, other associates of mine. But I mean I’ve succeeded doing what I’m doing because I’m focused on the staffing industry. And it’s a great industry. I mean we’ve enjoyed a … when I got involved the industry, I don’t know what it was 50, 60 billion in revenue. It’s 160 billion in revenue now. So it’s been a good industry. So yeah, I would say those are two good strategic lessons to take back. Oh, here’s the other thing I would say is the whole digital marketing. So there’s this new term that we’re hearing out there called smarketing. And so what’s happening now is that the marketing departments, which historically we used to think about putting PowerPoint presentations together and managing the website and helping with job fairs and things like that,well that job really has become redefined. And so marketing now is much more about digital marketing, pushing the messaging out, clarifying the messaging, utilizing tools such as Facebook and LinkedIn and helping train salespeople and recruiters to build their brand on LinkedIn and what not.

So clients of mine that have moved wisely, I wouldn’t say aggressively but have moved wisely in that whole field, in that whole smarketing, digital marketing what not. I mean if you’re not doing that, you definitely need to be looking at making some changes there.

David:

Yeah, that’s definitely a trend that this conversation I’ve had as well. Historically in staffing I think marketing has been looked at as just a cost center. And I think it’s one of the … I had a digital marketing agency and I’ve noticed that a lot of firms I think have been staffing, compared to other industries, heavily under invest in that front. And I’m noticing a lot of firms not only starting to have a director of marketing or CMO but also looking at tools that automate the recruiting process [crosstalk 01:07:12], using tools like Great Recruiters to improve their online reputation. So I’m seeing a lot of things along those lines where there’s a lot that can be done out there. It’s just a matter of, to your point earlier, making sure that you’re aligning that first with the business goals. So I completely agree on that.

Tom:

The AI, there’s AI tools now that will analyze your job ads, your job postings and saying, “Hey, if you use this word instead of that word, you’ll get a 9% increase on hits.” You’ve got to love it. It’s great. I love it. I think it’s like this is what’s so exciting about the staffing industry. It’s that there’s some really, really great tools that are going to help recruiters do what they love to do. Get on the phone and talk and recruit and meet people and present people and what not. Who wants to sit there and write another job ad?

David:

Exactly, exactly. I think automate what you can and focus on building the relationships is definitely the route things are going. So with all of that, are there any closing remarks? I mean also you’d like to share with our audience?

Tom:

Hey staffing industry’s a great industry to be in. This industry exists because the buyers of staffing services can not do what we provide. And the other thing is that, staffing industry is going nowhere but up. I mean occasionally there’s an article that comes across my desk about oh, the staffing industry is going to become extinct in nine months. Those articles, the people that are writing those articles have no idea. There’s a lot of reasons on why the staffing industry is only going to continue to grow and it’s only going to become a more important service industry for business at large and a great space, great place to be in. And we, the Visus Group here, we provide organizational development consulting work, either looking at the sales function, the recruiting function, comp plan, financial analysis, helping on the IT stack. There’s a whole host when you think about organizational development, you think about all those functional areas of IT sales, recruiting, legal, operations. And that’s what we’ve really focused on it’s helping people that are managing and growing those staffing businesses, to help them do it better, faster, cheaperand increase the value of that asset, in the end.

David:

Absolutely. Tom, it’s great insights today. Really enjoyed the conversation. I appreciate you being on the staffing show with us today and just again, thanks again for your time.

Tom:

Yeah, thank you for the invite.