How I Billed $900k With My Two Researchers

We received the following letter from a long time reader:

“After 20 years as an Air Force pilot and 10 years as a business development manager for a major advertising agency, I got into this business during the last recession ten years ago when I joined the office of a well-known franchise specializing in accounting and finance people. Their training was excellent and I did OK but left after two years to pursue another totally different career.Evidently, I was ‘bitten by the bug’ and decided to get back in the business on my own specializing in senior level finance and accounting professionals ($75K+). My first year I billed abut $200,000 working from my home but found that most of my time was spent in researching companies and sourcing candidates with very little time to devote to what I do best business development and acquisition.Five years ago, after reading a few articles in your publication about the benefits of in-house researchers, I decided to try a new method. Its success far exceeded my expectations and in 2002, despite the economy, I was able to put a little over $900,000 on the books. I’d be willing to share my methodology with your readers with the promise of anonymity. Any interest?”

We, of course, were very interested in how he uses his researchers to accomplish these numbers, so we agreed to his desire for confidentiality.Stan (not his real name) hired two researchers in January of 1998. His plan was to use one of them to work the client side and the other to work the candidate side of the equation. One (Ann) came to him through a mutual friend and client in the commercial real estate business where she had been his accountant and administrative manager. She was great at her job but didn’t like the fact that she was always chasing deadbeat tenants for money so he recommended that Stan talk to her about the recruiting business. Ann, now age 42, has an Associate degree in Accounting and was a recently divorced mother of a teenager about to leave for college.Stan was impressed with her telephone skills, her enthusiasm and her willingness to try something entirely different. She had a real sales personality coupled with a mindset for details, so he hired her to be the point person for potential client research.As the result of an ad, Stan made contact with Julie, a 45 year-old widow whose most recent background had included 2 years as a researcher for an advertising/marketing firm, 3 years as part of an in-house recruiting team for a large insurance brokerage as well as a recent stint with an outplacement firm. She had a great handle on what motivated people to change jobs and loved to work the phones.He rented appropriate office space so each of them could have a private office and equipped them with state-of-the-art communications and computer equipment. Both were sent to one of the better-known Internet sourcing firms for the latest training about the Internet.Both were given salaries of $40K per year plus a full benefit package. Each was to focus on their particular task Ann on client research and Julie on candidate research. In addition to their salaries, they were to share in profits as follows: Net profit (determined by deducting all expenses from gross cash in) was to be split with Stan receiving 60%; Ann and Julie receiving 15% each and the balance to go towards a retirement program. In the year 2002, expenses were $150,000 leaving $750,000. Stan took $450,000 and Ann and Julie each took $112,500 in addition to their $40,000 salaries (which had been deducted from the $900,000 as business expenses).Stan has no plans to grow beyond the current configuration. He told us that he’s happy with the firm’s position in the marketplace and thinks his specialty area will continue to prosper. He said he’s a great believer in KISS (Keep it simple, stupid) and as long as everyone is happy, there’s no need to alter the firm’s current architecture. He views his two researchers almost as equal partners in his success. They make it possible for him to concentrate on “rainmaking” and making deals come together.The average fee for the 36 “fills” he had in Year 2002 was approximately $25,000. Almost all of his business is done on contingency and about 1/3 of his assignments have an engagement fee component. The largest fee for the year was $53,750. Stan’s normal fee schedule is 25%. No more, no less. He told us that he feels that’s fair remuneration for what he does and, in reality, “that’s what most recruiters are getting these days anyway. When I’m selling a search, I feel it’s counterproductive to give them a price reason to nitpick or say no.”Headquartered in one of the country’s major cities, most of his business is local but he has accepted a few assignments nationwide. Stan who is 56 years old is a salesman’s salesman. His telephone approach is as smooth as silk but he’s got the right amount of gray hair atop his executive image to be very persuasive in person. He’s been approached by several of the silk stocking retained firms, especially after having beaten them in a shoot-out, but he likes his life just the way it is.OK, so how does he utilize Ann and Julie?Stan works mainly with CEOs, CFOs or other top financial executives and he rarely makes a “cold” call where he doesn’t have an extensive dossier on the company. Ann is responsible for gathering this information for him and pointing out what she thinks might be their “pain” points. Some of this information comes from the media but she uses other sources to create a profile from which Stan can make an informed marketing call. She also researches the people to call and usually has some specific information about them (civic or charitable activities, got a hole-in-one, received an award, made a speech, etc.) that will help Stan get through the gatekeepers. Although this seemed to us to be a lot of work for a contact that may never pan out, Stan told us that this information is often helpful to Julie in sourcing potential candidates from firms where no business results. Every scrap of information is entered into their database. Stan strives to connect on at least 10 client phone calls a day and to meet with at least one potential client a week face-to-face.As pretentious as it may sound to run-of-the-mill smilers and dialers, sometimes Ann will make the call to the executive directly or to their gatekeeper to arrange for a time when Stan can reach the target person. She has developed some close networking relationships with many of the gate guardians and these contacts have been helpful in obtaining inside information. Several times she has been alerted by these acquaintances to an imminent opening within their firms and has put in a good word for Stan which has resulted in several search assignments.Stan is a “joiner.” He belongs to several civic, charitable or community betterment organizations and tells me he occasionally uses these memberships to get through to someone who normally won’t take a “headhunter” call. And, his memberships result in meeting hundreds of people with whom he might do business or whose names can be used as the entr?e to talk to those who are reluctant to take his call otherwise.Ann is also responsible for frequent mailings to CFOs and CEOs to keep the firm’s name front and center. These can range from a simple post card to a personal note with an attachment of “something we thought might interest you.”She is also responsible for following market and industry trends and often knows before the media when a company is up for a big contract or about to lose one. She has developed a network of gatekeepers with whom she frequently communicates what she refers to these conversations as “picking the grapevine.” In fact, she told us that she receives frequent calls from her city’s daily newspapers and business journals regarding trends or information on certain companies. Her informational library developed over 5 years gives her access to information unavailable to others.Both she and Julie continually build organization charts for companies that may become clients. If they don’t become clients, Julie has these as additional sources for candidates.Ann also monitors the job boards and the other Internet resources and can tell you almost every financial-type opening that was ever posted for a particular company over the past several years. This gives her a summary of the types of people they have sought in the past which could lead to a potential search in the future. This profiling has been very helpful to her and Stan in a number of ways.Additionally, Ann reads all the accounting/financial trade journals, e-zines and newsletters for information about the latest industry trends and developments. After she is done with them, they are given to Julie who mines them for information about the “people” aspects, looking for information about promotions, new hires or anything else which would contribute to her database of potential candidates (or clients).While Ann’s specialty is providing Stan with the information he needs to make an intelligent call or visit with a potential client, Julie’s mission is to assure that once a search is acquired, there is an adequate pool of potential candidates.Since Stan is always trying to add to his talent pool, hers is a continuing job of contacting people who are qualified for the type of openings they handle and might be interested in making a move in the future.Julie is an Internet virtuoso and while she periodically looks at the major job boards for people, her experience has been that the pickings are mighty slim for the effort involved. While she has had somewhat better success with the smaller specialized job boards, her major forte is recruiting, and she told us that they have never placed a person they found on a job board. She does however use Internet finds as stepping stones to other prospects, some of which have been placed by Stan. She also actively surfs the alumni lists and any other fertile source for top quality candidates, either active or passive.Her favorite ecruiting technique is the indirect approach. She calls CFOs and those reporting immediately to them asking them if they might know of someone with X skills. She is very skilled at starting and maintaining a dialogue with her targets and if they don’t volunteer a name or two, she’ll ask them if they have any needs within their organizations. Often, when they say, “No, as a matter of fact we’re going to be laying people off” she’ll wonder out loud whether they ought to be laying the groundwork for a new job. Stan tells us that she’ll recruit four to six people a day when she’s on a roll. While many of them aren’t suitable for a current search or even interested in making an immediate change, it makes Stan’s job easier when a new one comes up. While Julie may not end up with a full-fledged resume, her notes give a fairly good outline of the person’s career high points. Her current database has substantial information on over 7,500 high-level accounting and financial people in her city.When matching candidates against a current search project, Julie does the pre-interview, usually by phone, to assess the candidate qualifications against the opening. Those who pass muster with her get invited in for a personal interview with Stan who assesses the soft skills. Remember, most of their business is local. She also conducts reference checks for those who reach the final stage and frequently does cursory checks before putting them in the database. She also handles all candidate inquiries and correspondence. If a particularly good article appears to be helpful for passive and/or active job seekers, she’ll send a note with the article attached to everyone in the candidate database. This keeps them current and builds/maintains the brand name of Stan’s firm. It has also resulted in many candidates becoming clients when an opening occurs on their staffs.Once a candidate makes it to the “Stan stage” it’s pretty much his show from then on. He handles all interview prep for candidates and clients and does all the debriefing and closing.So what makes this “machine” work so well? Both Ann and Julie are very inventive and resourceful. Both are detail driven and money motivated. There is no friction between the two since they work different areas. Stan looks like a Brooks Brothers ad and is a perfect point man, but has no patience for what he calls the grunt work. He hates details but loves to schmooze. Business in 2002 was better than 2001 but off by about $300,000 from 2000. He credits the bulk of the firm’s success to what he calls his “back office pearls.” “They are worth every penny and, frankly, without them, I’d be a flop. I’m the puppet and they pull my strings so I’m blessed that they’re so good at what they do.””I’ve seen other firms try to emulate what works for us and it hasn’t worked for most of them. Both Ann and Julie are mature, poised and hard workers. Their lives are such that they don’t mind the night work or the occasional weekend because they share in the profits. Neither of them ever earned over $40K before I hired them. Since both earn well in excess of $100K a year, I’m not likely to lose them. I consider them ‘family’ and I hope they feel the same about me. We’ve achieved a level of task optimization that’s quite rare.”Editor’s Note: We appreciate Stan’s forthrightness for this article. Although we promised anonymity, he has offered to answer any additional questions from readers as long as they are funneled through us at FordyceLtr@aol.com.

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Paul Hawkinson is the editor of The Fordyce Letter, a publication for third-party recruiters that's part of ERE Media. He entered the personnel consulting industry in the late 1950's and began publishing for the industry in the 1970's. During his tenure as a practitioner, he personally billed over $5 million in both contingency and retainer assignments. He formed the Kimberly Organization and purchased The Fordyce Letter in 1980.

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