31 March 2015

We’re only just getting started: 10 years of people2people

Twenty two years ago I met Mark Smith when he joined my Recruitment Solutions Sydney temporary accounting team after deciding that a career as a Big 6 (now 4) auditor wasn't for him. Shortly afterwards, ex-CBA Account Manager, Simon Gressier joined the permanent accounting team and a couple of months after that another bored accountant, Manda Milling, joined Simon in the permanent team.

Mark went travelling and worked in London and Brisbane before returning to Sydney and rejoining Recruitment Solutions. Manda and Simon moved into leadership roles and then married.

The purchase of Recruitment Solutions by Chandler Macleod saw the landscape change for each of them and in 2004, Mark, Manda and Simon, decided to go into partnership with their former Recruitment Solutions Director, Greg Savage and people2people was born. The new business opened its doors in Market Street, Sydney on 2 February 2005.

Co-founder, Mark Smith, kindly agreed to answer my questions about the people2people journey of the past ten years.

Ross: What was the founding directors' motivation for starting p2p?

Mark: Recruitment Solutions Limited was bought by Chandler Macleod Group in late 2003 and, as a result of this change, I was considering my options.

Manda and Simon were at a fund raiser with Greg Savage in late 2004 and following a discussion they approached me again, having declined an initial approach in 2003, to see if I wanted to join them in a new venture.

Co-founders, Simon, Manda and Mark, February 2005

and now in 2015
We believed that there was a gap in the market for a recruitment firm who valued longevity in its employees. At the time the job market was strong, candidate short and generally very aggressive. This meant many clients were dissatisfied with a very transactional service from consultants, many of whom were transient. We were confident we could do better.

Ross: What were your original goals for p2p and have you accomplished these goals?

Mark: At the start we wanted to build a strong accounting and business support recruitment business in Sydney. We achieved this, growing very quickly before being interrupted by the GFC in late 2008. One of the most important decisions was to start building our temporary business from the first day.

At the start, our temp business was slow to grow but with consistent effort and investment, we eventually gained critical mass and it now forms 60% of our gross margin. We are building a team of specialist temp and perm recruiters within ten clearly defined specialisations. We have a long way to go, but we are on our way.

Ross: In the early days, what was the hardest aspect of running your own business, considering the executive directors all came from the same large recruitment agency (Chandler Macleod/Recruitment Solutions) as employees?

Mark: The hardest thing was knowing that the buck stopped with you. From day one we had to take responsibility for all aspects of the company. It is why we took months to open our doors. We wanted to make sure we did it the right way. We had employees on day one who were relying on us to provide them with the tools to enable them to do their jobs well and make money.

Investing in these tools up front was risky, but not supporting our people was even riskier. It hurt when we were spending big money without seeing a decent financial return but we were adamant about how we wanted to do business and resource our employees.

Ross: What service offerings did p2p start with in 2005 and how have these services evolved over the subsequent ten years?

Mark: Our original temp and perm accounting and business support recruitment business has grown to ten specialisations and a small RPO business, called onsiite. More recently, we have seen opportunities in sectors where we did not have a presence previously, such as Supply Chain and Operations. We enter a new market when we can exploit a niche or leverage an existing competitive advantage. Similarly, our onsiite business process outsourcing team was born after a client requested a tailored service offering.

Ross: What did you do in the early days to define and create a distinct p2p culture and how has this evolved over the subsequent ten years?

Mark: At p2p we started on the premise of providing a great service with integrity. We never compromise our integrity to make a placement. This shapes our culture. As we grew we made the decision to develop our own consultants. Our rotational graduate program was structured to do away with specialised admin staff. Administration is undertaken by graduates or trainees.

Everyone working in our office is either a recruitment consultant or training to be a recruitment consultant. The management of the company is highly inclusive; company performance, tactical and in some cases, strategic decisions are made through consensus via our annual Strategy Day. Finally, I'll repeat what I say to everyone who joins p2p. "I wish I could have hired just one normal person" - maybe that's our culture!

Ross: p2p are well known as having a ‘grow your own' approach to hiring its own recruitment consultants. Why did you do take this approach, how well has it worked and what have been the most significant learnings along the way?

Mark: When we started to grow, we did decide to also grow and develop our own consultants. We did this because we had trained new consultants previously but also at that time we were unable to hire experienced consultants as they didn't want to join a ‘start up'! Now, ten years on, it is clear that this is one of the best decisions we have made. The managers of three of our teams have come through this program.

The program enhances our culture and instills loyalty as shown through 18 of our 50 people (36%) having been with the company over five years. Our consultant turnover last year was just 6%. The graduate program is not the only reason for this, but it is a big part of it. People are able to have a career with us.

Ross: P2p has expanded from one office to four offices. What have you learned about growing through the expansion of your physical presence?

Mark: It's not easy! Having success in one location does not automatically lead to success in another. People are tribal and each office has evolved on its own. People need to have experienced success in one office before they move to one of the new offices.

They can then transfer the systems, procedures and more importantly the behaviours, of their original office. Secondly, you need to have your systems and procedures in place. It's old news now, but get everything in the cloud so you can apply a ‘cookie cutter' approach to every new office.

Ross: What role has Greg Savage, as a non-executive director, played in the growth or p2p? How has it changed (if it has) over the ten years?

Mark: Greg has been an advisor to Manda, Simon and I since we opened. Whenever there is a big call to make or a significant strategic decision, we would run it by Greg for his view. Most times (pleasingly), Greg confirmed our own thinking but with some decisions he provided an invaluable perspective we hadn't considered. A good example of this would be the way we handled the GFC.

With Greg's advice, we were able to steer the company through the turmoil and gain market share. I would also suggest having a non-executive Director on the board, whether you have the opportunity to have Greg or someone else, creates a reporting line that many new recruitment company owners don't have. This means that in your day-to-day actions you will make decisions not purely based for your own benefit but also with the consideration of how you report this decision to the Board. This is a great discipline as it keeps you from getting distracted and/or making ill-considered decisions.

Ross: What are the most significant changes that p2p (and more broadly, the recruitment industry) have had to deal with in terms of client and candidate behaviour since 2005?

Mark: The rise and subsequent disruptive effects of social media and technology is the biggest change. This change is most evident in the sourcing of both new clients and candidates. You have to be very savvy in managing your candidate pool. Just running ads on job boards is not enough.

You need to build a community and brand integrity, so that when your consultants approach people directly, you are likely to get ‘I know you guys' rather than being ignored ....and believe me, it's much easier to be ignored now than it was ten years ago! As a business owner, I spend more time thinking about how the company can generate leads for our consultants than anything else. Their time is expensive and I want them to make every call count.

Ross: Tell me a little about the role that technology plays at p2p in 2015.

Mark: Technology can be both highly beneficial and a big drain on your business. At people2people we have embraced technology as part of our growth plan. Our goal was to be scalable and efficient, which technology has enabled us to do. As an example, it costs us $6.15 per person to process their salary/wages in a month. The Australian average is $12.00.

We have achieved this by using integrated systems and technology. On the downside, technology can absorb an inordinate amount of time with little benefit and can be expensive if you don't have the internal resources to maintain it. Luckily at p2p we have a couple of nerds, including myself, who are keen to embrace technology.

Ross: What are you most proud to have accomplished at p2p?

Mark: Manda, Simon and I are most proud of the way we have developed our people. It sometimes sounds a little twee, but we view the people2people team as our family. It is particularly rewarding to see young fresh-faced graduates develop over time, become managers, build successful careers and be rewarded financially. Being a part of our people's success, which is inextricably linked to the success of the company, is our most notable achievement.

Ross: What changes, if any, do you think the recruitment industry needs to make to its traditional business model (perm and temp contingent recruitment) in order to remain relevant to its customers over the next decade?

Mark: Put simply, recruiters need to have access to talent and/or job opportunities which people cannot access themselves. Brand integrity, both as a company and an individual, is critical.

You need to promote this brand relentlessly, so that when you approach talent and employers directly, they will recognise your brand and take action. What has not changed is the fundamental skill of a consultant to facilitate and coach the best talent and employers through the recruitment process. Without that fundamental human skill, the social media and technology advances mean nothing.

Ross: What are the p2p goals for the next five years? Do the Directors intend to change the growth model (ie any plans to raise capital or realise shareholder value through a minority/majority/full sale or an IPO?)

Mark: We are looking to continue to grow people2people in Australia and New Zealand. We want to build greater depth in our ten specialisations and take a greater market share. Our journey is just beginning, so any IPO and sale is not on our agenda. Most likely, it will be building partnerships with successful recruiters in new geographical markets, who can take advantage of our brand and systems and who want to be part of a larger group.

Ross: How did p2p celebrate its ten year anniversary?

Mark: Quietly on the day and without fuss, however, later in the year we will make a bit of a splash with all of those people who have shared in our success over the last ten years. People we have helped with their career or employers who we have helped build their teams... and our consultants both past and present; some of whom have married each other! Officially, our birthday was 2 February and it was a quiet affair in the office. Manda, Simon and I shared a quiet beer and the next day we were back at it.

Ross: Thanks Mark, I appreciate you taking the time to answer my questions.

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