Transcript
Speaker: What's the secret of getting great talent and getting the most out of it? We'll talk to the leaders of a best place to work staffing company to find out. Welcome to The Market That Moves America, a podcast from the National Center for the Middle Market, which will educate you about the challenges facing mid -sized companies and help you take advantage of new opportunities.
Speaker: Talent is the number one challenge facing middle market companies. Today, on The Market That Moves America, we're going to talk to a staffing company, a company that helps others with their talent needs and learn how they manage talent and drive growth through efficiency.
Speaker: I'm Tom Stewart. I'm the executive director of the National Center for the Middle Market at the Ohio State University Fisher College of Business. We're the nation's leading research outfit studying mid -sized companies, which account for a third of private sector employment in GDP and the lion's share of economic growth. It is indeed the market that moves America. The National Center for the Middle Market is a partnership between Ohio State and SunTrust banks, Grant Thornton LLP and Cisco Systems.
Speaker: I've got two special guests with me today. They come from Signature Consultants, a staffing company headquartered in Fort Lauderdale, Florida. Jeff Gray, who runs National Accounts, and Mark Nussbaum, the chief operating officer, are with us. Jeff, Mark, welcome to the podcast.
Speaker: Thank you for having us. Happy to be here. Hey, Jeff, you joined Signature back in 1997, the year it was founded, and you've been with it all the way in its journey, and you've been one of the people who've helped grow the company into one of the largest privately held IT staffing firms. Can you tell us a little bit about the company and its growth? Tom, I'd be happy to, and I appreciate you
Speaker: aging me a little bit there, dating me back to 97 when we started. But look, one of the things I enjoy the most is talking about signature. And we are a private, as you said, a private nationally based IT staffing and consulting firm. And we have been doing business for the past 21 years. I'm really doing a good job and our main focus being on servicing our two constituents, our clients and our consultants.
Speaker: Today, we operate in 30 different markets, basically in all 50 states in the US, some business in Canada and internationally. I think what's special about Signature is that we've been able to do this in a very competitive industry and we've grown organically. For the past 20 years, our secret sauce has really been focusing on, as I said, our consultants and our clients and our internal staff
Speaker: And I'm very proud to say that we've been recognized for eight years by staffing industry analysts, our industry group, as one of the best places to work in the industry. And that is surveyed by our internal staff and our consultants, two very important pieces of our puzzle. So, Mark, as you look at that organic growth,
Speaker: I mean, you've got 19 offices, 30 some odd states, 50 states, and companies of all sizes, I guess. How have you been able to drive so much growth so fast? I mean, Jeff, this is only 21 years. How have you been able to drive so much growth so fast without M &A? I think the answer is
Speaker: In part, Jeff's answer, when he talked about best place to work for eight years in a row, when you focus on your culture and you focus on your environment, if you have good people, they excel and they attract other good people. And we have focused since day one on being a great place to work.
Speaker: And it's been recognized officially for eight years, but I'm hoping it's been true for all 21. And I do honestly believe that culture is the driving force of the growth.
Speaker: When you say it's a great place to work, I mean, you are deploying temps, right? I mean, you are deploying people who might be working for other staffing companies. What are the key elements that make a place like Signature a great place to work? What brings you those people and keeps them with you? I'm going to answer it part, and I am certain that Jeff is going to add on, but I would say,
Speaker: The first and most important element is that we care and that we understand for the people we place that they're temporary workers in somebody else's environment. And we try and let them know we care. We're here for them from taking them out to lunch and just spending time with them to summer socials, to holiday events, to calling them every week and just asking how they are and if there's anything we can do for them.
Speaker: And then that ends in quite a few referrals. Not only from our consultants, but from the hiring managers we work with who are pleased at the happiness level of our consultants. And I'm sure Jeff has a few other thoughts on that. Yeah. Well, I mean, Mark, we've talked about this before and Tom, it's a great question, but I think that's what the misconception is of the industry and what, how signature tries to operate. We are.
Speaker: firmly in a temporary staffing business in the industry, okay? But we don't choose to operate like that, frankly. We don't treat our consultants as temps. One great example I can give you is what we take a lot of pride in, and that's success of remarketing our temporary workforce. And as a company, we're averaging redeployment of our workforce at the end of their engagement, 20 % of the time,
Speaker: And in our financial services division, one of our largest areas of focus, we're remarking them 30 % of the time. And that's really unheard of in quote, the temporary staffing business. So that would be number one. And that's the mindset and the philosophy. Um, the other is our values and you know, our values and one of the main ones and is, you know, work hard, treat people well, um, be honest, but do the right thing as the rapper.
Speaker: We've also treated our consulting workforce and our staff through thick and thin and the downturns and the up and downs of the markets and economy. Also not as temporary. When we've had customers in certain situations have to affect rates, we've protected our consulting workforce when typically in the industry that is passed down to the consultant doesn't feel very good. Same thing with the internal staff. We really are taking the long view in terms of how we have
Speaker: set our company up to operate in the temporary business. And by taking that long view, I think it helps us separate and differentiate in this industry. So Jeff, go back to it and unpack for me the 20 % and 30 % number, because I'm not sure that outside the industry, I know 20 % of water, 30 % of what. So when you say that you are redeploying your temporary workers faster than others, how does that work? How does that show up?
Speaker: Well, let's just look at it this way. We probably will pay 32 to 3 ,400 consultants this week. And when you look at the numbers I was throwing out, and I'm sorry to be throwing a bunch of numbers at you, we're redeploying at the end of their assignment when typically their contract would end and they would go away and find another job. We are finding them another job without a break in service with signature on average 20 % of the time across the country and within financial services
Speaker: 30 % of the time, we're redeploying them without a break in service. That is a big deal to a temporary worker. So I finish on Friday and I start again someplace else on Monday. That's what you mean, basically that fast. And if you take that out for like a two -week period, how does that number go up?
Speaker: I don't think, you know, look, when we look at redeployment, we're defining it to the scale within a 30 -day time period. Okay. Got it. From the when their contract ends to when they start a new engagement. Got it. Got it. The reason I'm asking this is, I mean, you know, every company talks about, you know, people are our most important asset. But in your case, it's literally true. And I'm almost thinking of an analogy to like Southwest Airlines.
Speaker: which was able to be more profitable than other airlines because it could turn its planes faster. And so it was, in effect, spinning the machine faster, getting more productivity out of the machine, although in this case, the machine is your people. And I imagine that that saves you money.
Speaker: Tom, it is the most efficient way to deploy somebody. They're already on your staff. They're already on your payroll. You know them. You're certain of the quality of their work, and you can put them on another thing. It is clearly the most efficient way versus having to recruit, locate, engage, and deploy.
Speaker: So that it sounds to me like you've got some expenses associated with that, but you are also getting more savings than you've got in the long term and the long run. Maybe even in the quarterly look, it actually turns out to be a much more efficient way to run the shop. Absolutely. Well, because... Go ahead, Jeff. Yeah. No, go ahead. I'll let you finish, but then I have one other point. It is most of the expenses associated with the identification
Speaker: Engagement in this tight talent market once you have them engaged It's more effective for them and more effective for you to keep we engaging them Yeah, it's an efficiency play I mean at the end of the day as well because we're not having to go and identify another person it gives us the same process onboarding screening qualification process and so those relationships and the loyalty that is created
Speaker: really pays tremendous returns. And whether we're investing in consultant care or our redeployment focus, we really are seeing the benefits through that long -term relationship. As you said, in the temporary industry, most people don't believe that's possible, but it really is. It is a tremendous benefit, Tom, for our customers because the redeployed resource is somebody you really know their work quality is outstanding.
Speaker: Yeah. So I'm seeing a number of things that come together there. What you just said, Mark, is a redeployed workforce with higher quality. That means you have a, in sort of TQM terms, you have a lower error rate, right? You're less likely to have to recall somebody because she or he isn't working out. You've got a higher asset utilization rate insofar as you can consider this human capital an asset you are doing, and you are reducing your cost of capital
Speaker: Because and again human capital because you're not having to acquire so much of it because you keep and redeploy more of it
Speaker: What's interesting is that all of this stuff, on the outside, it sounds like touchy -feely stuff. And on the inside, it actually looks like a very beautifully designed model for efficiency. And I gather you're doing the same thing with internal staff, that you are really, I mean, as you grow really fast, one of the things I've seen with mid -sized companies is as they grow really fast, that they have to figure out how to grow their internal functions
Speaker: fast enough, but not too fast. How do you guys manage that? Let me speak to the middle and back office, and I'll let Jeff speak to the front office on that. The way we addressed it in the middle and back office was in a global theme, and we set the rate of growth of expenditure in the middle and back offices at half the rate of revenue growth.
Speaker: So it put its own dampening effect on, but empowered and energized the leadership of the middle and back office because they just have one big boundary. Now go create what you need to create to get it done. So that was our approach. So the company grows by $2. You got an extra dollar to spend on the back office functions. No, if it grows by 2%, you get an extra 1%.
Speaker: of what you're already spending in the back office. OK, got it. Because there should be economies of scale as you're growing at this rapidity. But then the folks in the back office functions get to duke it out or negotiate it or figure it out themselves as to how they're going to allocate that 1 % across the various functions of HR, marketing, SG &A. Hopefully, we're not duking it out because we
Speaker: really believe in a team of teams concept and that the departments are just there for bureaucratic purposes but the problems are shared by everybody so together it's allocated. Every once in a while there's a little duke out but by and large it's a team of teams approach. And Jeff you were saying you're going to take that how that looks out on the front end. Well I would say we take a similar approach I mean we look at and I'll give you one example we look at all of our business units
Speaker: and we're looking directionally which way they're moving. It's not as a glass half empty or half full, it's which way is the water moving. And in our local markets or in our lines of business across the country, we're basically talking to them about how they're growing their revenue and how they're growing their gross profit relative to their expenses. And we're applying a similar model. We're asking them as they're growing and moving in the right direction to apply a very simple formula.
Speaker: And that is, grow your expenses as a percentage of your gross profit. It doesn't make sense unless we're making a conscious decision to double down and bet it all year after year, that we should be getting some leverage year to year as we're growing and as we're becoming more efficient and getting it better at how we're running our business. So, you know, simply stated, an office that is growing their gross profit at 20%, we're asking them to grow
Speaker: their expenses at 15%, for example, so that we get leverage and we move in the right direction. You guys know this because you were part of the process, but at the National Center for the Middle Market, we just released a study of analyzing
Speaker: 20 ,000 company data points on growth and derived, calling the study the DNA of middle market growth. And one of the growth types that emerged was what we called the efficiency expert, and you guys are a really gorgeous
Speaker: What I think is really interesting, and maybe Jeff and Mark, you could each take this, is oftentimes when people think of efficiency, they're thinking of the bottom line, and they're not thinking of efficiency as an engine that drives the top line.
Speaker: And can you talk about how at Signature you actually connect that bottom line efficiency or that operational efficiency not just to profitability but also as the engine of growth?
Speaker: Yeah, well, I mean, Mark can complete my sentence on this one, but I would put it's a balancing act for sure. And I'm sure in your research, you found that out because where do you draw the line between growth and reinvestment in operations and efficiency? And it's always the question, am I cutting too much or am I crimping people's style too much and not giving them the dollars needed for the investments?
Speaker: or whatnot, but I mean, we've invested typically 2%, if not more, maybe even higher, and Mark would probably say higher annually of our bottom line to drive our top line growth. We averaged three times the industry growth rate over 21 years by taking this approach. It's really when we've become this size where that question that you just posed even becomes that more important because of the leverage points we have
Speaker: at our revenue size and the numbers that we're talking about now at the bottom line and everything in between. So it's a balancing act and we're certainly positioned for growth right now and are investing a lot of our bottom lines back in while at the same time getting really good at those efficiency points that we just talked about so that we feel really good about both as we get to where we want to go, which is a double in size over the next three to five years.
Speaker: And Tom, I think if you were to put it in simple terms, we don't focus just on efficiency. We're driving the top line because we're focusing on the effectiveness of our service offerings to our customers. And so much of our growth is repeat business because we try and be effective with their time, our time, their money, our money. Yeah, makes sense. I'm also thinking that the money you save is the cheapest capital that there is.
Speaker: as long as you're not robbing your seed cord. Seed cord is, yeah. Yeah. Interesting. So as we're coming sort of the end of our time here, one of the things I'd love to do, as I sort of suggested when we started, is ask you guys in your own experience, because after all, you're sending your consultants out to many, many, many, many, many, many other companies, what are some of the lessons about
Speaker: talent management in particular that people can learn from you. I've heard people talk about in the modern economy, all employees are temps. We're all volunteers or we're all temps. But if you think specifically of you guys as orchestrators or conductors of an orchestra full of temporary, literally temporary employees, what can other companies learn
Speaker: From you or put it the other way around what are some of the worst practices that you roll your eyes at and think gosh these guys are if only these guys could Could do a little better. They would themselves do a lot better Tom if I might Jeff just go first on this and I think it's this simple. They're not assets. They're not talent. They're people and
Speaker: And the worst practice you see is when people forget that there are people doing a job. And the best practices you see, and we try and practice it, is we remember that. And so we take into account they're holistic. We're demanding. We expect high levels of performance. But we're also understanding we're expecting high levels of performance from human beings. So that to me is the number one practice.
Speaker: Mark, the only thing I would add to you is just another example and one more point, but it's the blocking and tackling. One of the pieces I think is critical as we near the end of the conversation is you have to do the basics of the job. I 100 % agree with Mark. They're people. The blocking and tackling is do you stay in touch with them? Do you call them every single week? Ask them how they're doing.
Speaker: Do you create a caring environment and not always call and talk about work or business, but, you know, how's your father doing? I heard he was in the hospital. You know, those things are critical. And when you look at something as simple as we call our consultants every week and you're like, well, that doesn't sound very, very sexy. The truth of the matter is most of the companies in our industry don't stay in touch with their people. It's one of the biggest complaints in the industry. So we've decided to make it one of the best things that we do.
Speaker: And when we look at the surveys that we do of every single person that finishes an assignment with us, whether they are redeployed or not, one of the things they say is that we're one of the best at actually staying in touch with them and caring about them as people.
Speaker: You know, I think it's interesting to think that in a sense, whether you're out on a remote site on a temporary job or in an office somewhere, work can be lonely and to have people in touch with you on that and have a process, interestingly, so that people are in touch with you and sort of break that can make a huge difference in your level of engagement and then therefore in the level of performance. Yeah, it's one of our key measures, Tom,
Speaker: of individual performance is just those things you mentioned. Is there recontacting and redeployment?
Speaker: You know, we're gonna wrap this up, but just for our listeners here, we've had two conversations now with companies that have different styles of growth DNA with Dasky, which has been a very acquisitive company and has grown through inorganic means, and you guys here at Signature Consultants who have grown entirely organically, and each of you has struck the same theme
Speaker: like a drum, that the importance of managing people and of focusing on people and of putting people first in the system is an absolutely critical element for driving growth.
Speaker: If you want to learn more about Signature Consultants, their website is a good one and full of interesting information, sigconsult .com, www .sigconsult .com is their address. I'd like to thank very much Jeff Gray and Mark Nussbaum from Signature for being with us. So, gentlemen, thank you enormously, and thank you
Speaker: And thank you all for listening to The Market That Moves America. Never miss a new episode. You can subscribe to the podcast on iTunes, Stitcher, Google Play, or wherever fine podcasts are found. Or you can subscribe and learn more about the National Center for the Middle Market at our website, which is middlemarketcenter .org. Thanks very much.
