04 June 2015

Out-of-industry CEOs: A breath of fresh air or a cocky fish-out-of-water?

Recently installed Clarius CEO, Peter Wilson (ex-Datacom) wasn't pulling any punches last week when he announced three recent senior level hires; new CTO Lee Bustin (ex-GroupM), new head of candidate management Leah Thode (self-employed leadership consultant and coach since 2010) and new director of on-demand and outsourcing services Stafia Giannakis (ex-Datacom). These three arrivals join new regional director, Barbara Price (ex-Paxus) who started her new position late last year.

In an interview with industry news service, ShortList, Wilson took no prisoners in his assessment of the culture he had inherited from the previous Clarius leadership team (Kym Quick, Paul Barbaro, Troy Hammond, Robert Fortescue, Kurt Ravn, Ross McKale, Roger Brant, Lachlan Henderson, and Olga Bennett, amongst others who all left the company during 2014).

Here's what was reported by ShortList in their interview with Wilson:

'Clarius was "old world" and lacked sales capability prior to its leadership change...'

"....the company he inherited focused too much on "farming" accounts, and relied too heavily on branding to win new work.”

"If you have a look at the performance over the last two years, the results from the previous management reflect a company that was probably suffering from a lack of efficiency, but also lacking vision from how they were different in the market."

"The business is now more focused on winning new work, and the right style of new work, than what they've ever been. We're gradually bringing in a sales discipline that wasn't existent in the organisation."

"..... he wants to shift the company's business focus from "old world" to new and cost-effective recruitment ideas that make the best use of technology and data.”

"The biggest issue we had here is that we had a foundation of a business that didn't reflect the modern world, whether you were looking at the way we ran our shared services teams, our methods of going to market, and the systems we were using."

Now that all sounds great. How true it all is, I have no idea. I have no current insight into Clarius beyond what is publically available. The last time I was inside Clarius was in 2008, when I conducted regular sessions as part of the company's induction program.

It's the age-old tactic of many CEOs of publicly listed companies; in a bid to pump some air into the share price, the new CEO criticises 'the way things were' by trampling on the departed and announces that 'things will change', 'I will shake things up' and 'we need fresh eyes to look at things differently'.

Wilson certainly ticks those boxes. And to be fair to him he comes from a ten year career at Datacom that shows an impressive upward trajectory having started as GM – Systems, Victoria in 2004 and after three promotions finishing up in the CEO's chair in 2011 until his departure in May last year.

Based on that track record, Wilson certainly deserves a decent shot at making the changes he believes are necessary.

However excuse me if I am not just a little skeptical at how 'bad' things were at Clarius under the previous leadership.

I have seen other out-of-industry leaders come into our industry and fail spectacularly because they completely misunderstood what they were inheriting (both good and not-so good) and also underestimated what it would take to fulfill their lofty aims and promises.

Two successes in the out-of-industry-CEO category have been ex-Optus/Singtel sales executive Peter Acheson (CEO, peopleback) and ex-Coles change executive Mick McMahon (CEO, Skilled Group). On the other side of the coin, you have  John Colvin (CEO, Hamilton James & Bruce, 2004 – 2006), Diane Eilert (CEO, Clarius, 2007 – 2008), John Stewart (CEO, Recruitment Solutions, 2000 – 2002) each of whom was unable to drive sales and profit growth during their respective tenures.

So what does a leader from outside the recruitment industry need to understand about our industry in order to succeed?

Here are four suggestions for out-of-industry CEOs from this rusted-on recruitment industry veteran (who's never been a recruitment agency CEO):
  1. Get the business model right: Are you in the business of low-margin – high volume recruitment or low volume and high(er) margin recruitment? Being clear on your model and the accompanying processes, systems, roles, skill sets and remuneration is a necessary sound foundation for subsequent decisions.
     
  2. Have a clear business development and business delivery process that everybody can execute: Considering how important individual income/margin/sales results are to a recruitment company, it still constantly amazes me that there exists little rigour and discipline in the way in which many recruitment agencies train their people in the selling and delivery of recruitment services. In my experience the 'sales culture problem' almost always starts at the top and erratic or underwhelming sales results are rarely the fault of the coal-face leaders and their teams.
     
  3. Don't underestimate the skills and knowledge inside the company: You may not have agreed with some, or many, of the decisions and actions taken by your predecessor but 'don't throw the baby out with the bath water'. Carefully critique the talent inherited by you and give them all a chance to buy into your way of doing things before you swing the axe.
     
  4. Get out of your office and talk to your staff and customers: As I have written about before (What Andrew Banks and Greg Savage have in common), industry legends Andrew Banks and Greg Savage, prioritised face-to-face contact with consultants, prospects and clients. They understood that far from being a distraction this element of their job was critical in building the skills and motivation in their respective consultants as well understanding what customers wanted, valued and were prepared to pay for, both now and in the future. 

As I have documented each year, (ASX-listed recruiters continue to decline: 2013/14 in review) for the past five years, the history of publicly-listed recruitment company results has been one that has seen far more disappointments than triumphs so I, for one, am very hopeful that Peter Wilson can prove that large traditional recruitment agencies can still deliver consistent sales and profit growth for the sake of their employees, their shareholders and for the credibility of the ever-shrinking publicly-listed recruitment sector.
 

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