Editor’s note: This is part one of a two-part series on building and managing a virtual recruiting team. Jordan Rayboy is a big biller, who, after running his business from an RV, now runs his seven figure firm from a home in rural Oregon. Part two — solutions to the issues he details here — will post tomorrow. This article originally appeared in the December 2011 edition of The Fordyce Letter.
When Jeska and I took off on our RV adventure five years ago, we had a fairly simple plan — to build a successful niche search firm while traveling the country full time and living our dream.
Initially, it was just the two of us and one dog with no employees (we’ve picked up two more dogs along the way). This business is interesting though — you tend to become a victim of your own success. The more client openings you fill, the more they want to work with you and refer you to other colleagues. As we quickly found out that first year, there comes a time as a solo practitioner when you simply run out of bandwidth to deliver and are essentially leaving money on the table.
When it was time for us to expand our team, we naturally gravitated toward a virtual model with remote team members. Is this right for your office? As with most things, the answer is probably, “It Depends!”
With today’s technological advancements in communication and collaboration tools, it’s easier than ever to succeed and interact as part of a virtual team. Some of the benefits of virtual teams include:
- Live/travel anywhere you want.
- Can hire people that live anywhere.
- Better work/life balance.
- Lower overhead than a physical office.
- Attract top recruiters who want to work virtually or move locations.
- Flexible hours based on time zones.
- More productivity possible due to no commute.
However, with virtual teams, life is not always gravy. Some distinct disadvantages include:
- No non-verbal communication.
- Laziness or lack of self discipline kills, faster than in a physical office.
- Less connection/relationship building amongst team members.
- Less learning by osmosis — hearing each other on the phone (this is the biggest drawback in my opinion).
- Balance of being a policeman and a rainmaker.
- Providing enough value to keep top performers from leaving to go out on their own.
This last point is critical; so much so that it deserves further discussion.
A search firm owner typically provides value for a recruiter through:
- Infrastructure (office/desk/phone, IT, database/ATS, company brand, etc.).
- Culture (training, opportunity for advancement, relationships, etc.).
- Economics (commissions, equity, benefits, etc.).
Recruiters will eventually ask themselves on some level — what value am I getting for the percentage I’m giving away?
As an example, If they bill $400k, using a typical 35/40/45/50% accelerated commission payout, increasing every $100k cash-in, they will W2 $170k pretax. What value is this producer getting from the office/owner in exchange for the $230k they are giving away? That owner will need to do a lot to keep this person long term, perhaps surrounding them with a team of resources, investing in training and professional development, providing constant coaching/mentoring, or even offering some kind of equity ownership opportunity.
I speak from first-hand experience on this, having left my old job to go on my own the year after cashing in $855k, with pretax W2 of $360k, and post-tax take-home of $240k. The value proposition for what I was giving away vs. getting in return was way off.
Thinking of governing by fear and locking your people down with draconian non-compete agreements? If they are going to leave, this won’t stop them. Truth be told, the idea for the RV adventure was originally created as a way around the 200-mile non-compete I had with my old office.
With the tools available today, a huge database that used to require years of cold calling and name gathering to build can now be constructed in less than a week. Great recruiters likely won’t have a problem leaving their old clients alone for a year while they rebuild their business development muscles and acquire new clients. Past key accounts will almost always come back after the year is up and quickly put in place a new agreement with their preferred recruiter. My point is, non-competes may act as a deterrent to some, but will not work to keep employees from leaving if you, as an owner, are not providing value. This is just as true for a physical office as it is for virtual.
Learning From Mistakes
My journey toward building an efficient and effective virtual team has been a bumpy ride. Some mistakes I’ve made along the way and things I’d do differently include:
1. Scaling up way too fast from solo to ten team members in four months.
As the soul rainmaker, I built out a team of six project coordinators (basically candidate fulfillment recruiters), an admin, a researcher, and Jeska running operations. While I was still able to produce enough JO’s to feed the army, it eventually got to the point where I was spending more time each day answering questions from the team than I was on the phone producing revenue. I’d probably say that a team of 2-3 PC’s and an admin/researcher is probably an ideal size in terms of bandwidth and operational efficiency for a single big-billing team. One admin/researcher can probably support a few teams, perhaps even in different niches.
2. Turning from rainmaker to policeman.
Truth is, how many big billers really enjoy policing their people? Probably not many. However, recruiters tend to respect what you inspect, not what you expect. I’ve since outsourced all responsibility for tracking and metrics to my admin. She even runs our metrics meeting.
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Training on style and not methodology.
What I do works great for me, but I falsely believed that it would work just as well for the recruiters on my team. I initially tried to do all the training myself. Today, there are several cost-effective options for training programs from the industry’s best, most of which involve conference calls, online videos, or webinars. These delivery methods are ideal for the virtual model.
3. Doing too much fishing for the team instead of teaching how to fish.
Typical producer mindset here — I believed no one could make as good a plan as I could, or write as good a script. So in the interest of getting new recruiters making placements faster, I did a lot of the dirty work for them. This came back to bite me later on.
4. Hiring a former big biller as a full life cycle search consultant and paying that recruiter a big draw.
Ultimately, the person produced almost nothing (two total JO’s, no placements) in three months. Truth is, they probably were able to survive financially without making placements, and the urgency was not there for them to bust ass to come out of the gates with a full effort. Now, every recruiter comes on with a small draw initially, going to straight commission after a few months. If you don’t produce, you don’t eat.
5. Hiring a former PC from my old office, who ended up being poison to the culture of our team.
He was a capable recruiter who understood the business, but he just had a negative attitude. He never participated or contributed to group discussions. He wasn’t a team player, and he constantly undermined me as a manager. It was best for the team when he chose to move on.
6. One PC, who appeared money motivated, and I thought was destined for greatness, failed miserably because had no work ethic and was just plain lazy.
Getting up and kicking your own ass every day is a requirement for being successful in a virtual model. This guy didn’t have it. Living in South Beach and partying all night probably didn’t help him.
7. Several PC’s didn’t succeed virtually because of numerous distractions at home, and a general poor work environment.
If there is a stay-at-home spouse with kids at home during the day and you are trying to pound calls all day while sitting at the kitchen table, it doesn’t take a genius to recognize this is not a recipe for success. Living in an apartment so small you don’t have room for a proper desk also is not a good idea. Can you recruit from bed or a lounge-chair? Occasionally. For 40 hours per week? Unlikely.