This article features in the current edition of Recruitment-International…

In 2005 I interviewed Tim Millward, CEO of Extrastaff , the driving and industrial recruitment business which was then in its infancy and various members of his team. To recap, Tim had founded and grown another driving and industrial recruitment business, Big Jobs, which he sold in 1999 to a high street plc. He had completed an MBA and returned to the recruitment sector opening Extrastaff from scratch in 2003 with his old Operations Director, Steve Hill. When I interviewed him in 2005, Extrastaff had been going 2 years, had 5 high street branches and £6m turnover.

It’s the end of the summer 2012. Extrastaff now operates from 12 locations, with 3 due to open in the next 3 months. Turnover in 2011 was just shy of £15m and this year will be in excess of £18m. The business has grown 20% year on year since the recession started. In spite of being in a very traditional sector Extrastaff has been listed as the 41st fastest growing recruitment business in the UK out of over 16,000 and the 12th largest driving recruiter in our recent Top 250 Report. What is interesting is that all this growth has been achieved organically by expanding from within rather than by buying other businesses. Therefore I wanted to know what it was about this extraordinary business that makes it so successful and how have they managed to continue growing whilst the UK economy itself has stalled?

Tim is a big believer in financial strength and focussing on quality. There are so few barriers to entry in recruitment that unless you have a quality product for your clients, you can’t compete – anyone can buy turnover short term by cutting rates but in the long term that can kill a business. Extrastaff is about to celebrate its tenth anniversary and the only year that showed a marginal dip in sales was 2008, the first year of the financial turmoil. Every other year has shown dramatic growth, not only from new branch additions but also from the existing branch network and maturing desks. Extrastaff weathered the financial slowdown without having to make any branch closures nor redundancies, they even kept their 2 annual parties – whilst other businesses were radically reviewing systems and costs, Steve and Tim had been through recessions many times before.

“We have always monitored individual performance accurately; both lead and lag indicators, so there were no costs to be cut. Instead we were able to focus on training and sales and had built the financial strength to deal with it. The temptation in recruitment as in many other businesses when the market slows down is to try to compete on price and that’s always a mistake. Sure, everyone’s margins have been squeezed in recent years but it has gotten to silliness in some locations; we’ve had competitors going up against us using off shore and onshore tax schemes to avoid tax or employers national insurance liability and agencies based 300 miles away from our client admitting blatantly that they don’t interview their drivers face to face. I agree with Andy Hogarth from Staffline’s comments in the Telegraph who commented; that many of these schemes are still prevalent but luckily, clients are becoming more immune to silly price promises and are starting to realise that if it looks too good to be true, then it probably is.

Extrastaff is in it for the long term and are building a robust business and brand. That takes investment in time, effort and money”. Mid recession, Tim and his team found it frustrating watching some competitors going into administration and prepacking, with the ownership and even the name in some cases remaining the same, whilst walking away from millions in debt without any consequence.

Tim has been in business a long time and focusses on fundamental financials and by delegating as much as possible to his senior team. Steve runs the branch network and teams, Danielle Wilson runs the company’s sales and Gary Prince is the super organised Finance Director who keeps track of it all. Tim’s role is therefore managing just a few people and strategic planning ie all the major changes happening in the business. I asked Tim what’s the most difficult issue you have to deal with in the day to day running of the business? “Externally, it’s the massive amount of legislation affecting our industry. Take for example the Agency Workers Regulations – in a sector where a driver can be working for five different companies a week and it takes 6 weeks not working for a client for their clock to be reset to zero, the bureaucracy involved can be immense. Our philosophy has always been that however cumbersome a piece of legislation is, once it becomes law we all have to deal with it to offer a great service to our clients, so better to deal with it professionally and efficiently, than to gloss over it. We closed our whole branch network down for 2 days in 2011 and took everyone (including head office staff ) to a hotel to train them all on the impact of the legislation and how to deal with it efficiently. That meant that when they were talking to their clients, they could speak with some authority on the subject and business actually increased as a result. Ultimately, when dealing with legislation – no one wants it so just make sure you do it better than the next person and deliver to your clients.

From an investor’s perspective, I’ve always been a little worried that recruitment businesses can be fairly light on tangible assets. My philosophy has always been to try to buy freehold premises rather than leaseholds and we own a number of our offices including the head office building, which I bought in 1995 but which we’re now outgrowing. We’re moving to a bigger building in the next few months and will renovate it completely putting in a proper training centre and a big IT facility and to house the growing head office team. If you’re going to do a job you might as well do it properly.

Extrastaff has spent the last two years investing heavily in IT and has developed its own bespoke, state of the art front office IT system called EFOS. This will not only work to Extrastaff ’s high standards and methods but make the whole business a hundred times more efficient, with clients being able to log on to certain parts of the system for timesheeting, reporting and compliance purposes. DVLA checks and CRB checks will become electronic and the branches will have an iPhone app to assist with their 24hr out of office service.

“We’re really excited about it and it’s been a huge 2 year project making the whole system smart enough to make our consultants lives easier and more effective. Having searched the market for a suitable IT package we discovered that none would work without having to radically change Extrastaff ’s systems. These changes would have had a detrimental effect on quality and staff morale. Extrastaff ’s parallel EFOS ready website is also just about to go live”.

I spoke to Steve about how he motivates his teams to keep going when times are difficult. Steve and Tim have been working together for nearly 25 years. “Despite the fantastic advances and obvious advantages of our new technology, it remains very much a people business. As obvious as it sounds, the job is still very much about managing people through people by effective delegation and empowering individuals to make decisions. I think the communication we have throughout the company is second to none, from Head Office, through the Senior Management teams, down to the Branch Administrators. We also try to promote from within, which is borne out by the fact that all our Area Managers and indeed our Sales Director were formerly Branch Managers with us. Three quarters of our Branch Managers were formally Consultants. Continuity is not only vitally important as we expand the branch network, but also brings a feel good factor with it. We are able to mentor up and coming consultants and branch managers, who can see that there is clear progression within the company.

I believe our use of monthly objectives as opposed to annual appraisals gives us a much better understanding of what’s really happening in the branches on a day to day basis. Staff are encouraged to tell their direct line managers what they want to achieve in the coming month ahead. It means we are able to react to situations much more quickly and effectively and also enables us to give praise and reward employees when and where it’s due rather than 6 months or a year after the event. Verbal communication is as important today as it’s ever been. Too many people in recruitment hide behind computer screens and think managing teams is all about sending blanket emails or texts. When you have 12 separate offices that’s not easy to avoid but we seem to do pretty well at it.. ask my staff !

“What sold it to me was the way Steve put the time and the effort into my development process. I thought it was the norm, fake promises etc but something in his approach made want to take the risk. I joined the Ilford branch as an industrial consultant. Time has passed, I am now an Area Operations Manager with three branches with all the support available to me which has made me into the business woman I am today”.

Ash, Area Operations Manager

“Within my fi rst week of Extrastaff I had spoken to most of the consultants, administrators and branch managers within Extrastaff welcoming me and offering support and advice if ever required and since then I have always remembered and now do the same to any new starter who starts within Extrastaff ”.

Dean Jeffery, Branch Manager

“Accessibility, autonomy and integrity. This pretty much sums it up for me; Extrastaff is the first recruitment company I have ever worked for that delivers exactly what it says it is going to, achievable targets, a superb commission structure and a sense of humour that permeates through the company.”

Dave Sargeant, Senior Industrial Consultant

Extrastaff has developed some innovative ways of motivating their salesforce. Steve says, “Any job, no matter how glamorous, has its boring aspects and elements of repetition and every job has its plus points. I often think that when I see some of our temps collecting refuse at 5.30 on a cold Tuesday morning. Yes it’s an early start and physically demanding but at least they will be finished by midday in time to get a round of golf in, whilst I am still at my desk – not always true, as I’m someti mes on the course myself, but you get my drift ? Sales can become a monotonous routine, no matter how good you are at it. You can pay a Branch Manager or Consultant a big salary and commission and bash them on the head every day about making copious amounts of cold calls, but unless they are like Metal Micky and have no personality (not good in recruitment) the quality of those calls will suffer in time and you create resentment, even in the best salesperson. You need to build a positive environment where you not only enjoy sales but are duly rewarded for it too. That’s why Dan, our sales director, came up with the idea of the Company Sales Day. The objective was to get each branch competing against one another to make as many productive calls and visits as possible in one day. However it’s not just about the volume of calls. The day has a specific theme. We’ve had days based around wild animals, through to Countries of the World, famous events on this day to celebrations on fireworks day and the Olympics. The basic premise is to get all the branches dressing up based around the theme and doing stupid things (much of which is unprintable!), whilst answering random quiz questions and hopefully making sales calls – which they do by the bucket load!! It started 4 years ago as a one off day, since when it’s become a biannual event. Teams get awarded points for decorating their office and themselves but we have one of the highest staff retention figures in the industry.

As the business has expanded, we have gained critical mass which means people start to take you seriously. It’s also gratifying to have won many awards. Their focus on quality has led to Extrastaff being nominated preferred suppliers to many of the larger logistics businesses, including DHL, something Extrastaff are very proud of. “Our Area Operati ons Manager, Bev Perry had a team of drivers following the Olympic torch around the UK and Extrastaff had teams in other Olympic venues, including Westfield Shopping Centre where Brian Hay reported “Of the three agencies we used on the project Extrastaff were the clear Gold Medal winners”.

“We aim to provide a service to clients and temps which is better than our best competitor and that means if you say you’re going to do something then you have to do it. That’s the same whether you’re dealing with clients, with staff and everyone you work with. It’s very pleasing that the all our Extrastaff team have bought into and engender this culture and doing random things, which we at Head office have great delight in dreaming up – We’ve had kissing a policeman whilst dressed as one of the seven dwarfs through to patrolling a high street car park dressed as a tiger. The branches also have to sing a song, allied to the day, down the phone to the payroll & accounts teams at head office, who then vote for their favourites.

Believe me X Factor has nothing on our Extrastaff branches. We coordinate the results on an hourly basis and intersperse the day with questions based around recruitment legislati on or company procedures, just to keep their minds focused. Our teams create hundreds of visits and in many cases convert new clients. The prizes for the day are nominal, but it’s the overall prize at the end of the day that matters. Team building, fun, increased competition and more business, which of course means more commission, as we pay 10% of desk revenue generated. I’m sure they would like to do it like this every day – just not sure the traffic wardens or policemen would agree!!” We’ve just taken delivery of the latest batch of 2012 Extrastaff Mini Coopers – all with Union Jacks on the sides in celebrati on of the Jubilee and the Olympics”

Tim says Extrastaff ’s aim is to be an employer of choice, somewhere that people aspire to work. “There have only ever been two things holding me back from opening new locations; one is finding excellent staff to open them and the other is locating prime high street branch premises (all our branches are high street shopfronts). With the downturn in the UK economy and the strength of Extrastaff as a rental covenant, finding premises has become less of a problem. The trouble is finding great sales people who have a quality ethic. Most of our managers and area managers have been promoted from within. The trick is to pay people fantastically well, but it’s equally important to make their bonuses and commissions easy to calculate and understand and not to change goalposts as so many businesses seem to do. I always invite newbies to phone our existi ng staff for references – moving employer is such a big move for someone