24 March 2016

What Rob Davidson, Stuart Freeman, Daniel Mundy and other successful recruitment entrepreneurs have in common

Recruiters are faced with a very large number of decisions every day: Who to phone screen, who to interview, who to refer, who to call, who to call back and on it goes. As a result, decision making is an important skill. Yet how often is any recruiter, or leader of recruiters, trained in decision making?
Rarely, if ever, I would guess.
This lack of training has little impact when the decisions are relatively minor and the feedback loop is short term.
To use a simple example is the decision made with respect to screening a candidate and then inviting them in for an interview. The feedback you receive about your mistake is almost immediate (eg during the interview or after you have taken reference checks) and the consequences of your poor decision are relatively small (eg one hour of wasted time); no real harm done.
Most recruiters will have some insight about how their screening mistake was made and, as a result, implement that learning to maximise the chance that they don’t make the same mistake again.
The stakes are raised when there is a significant lag between when you make the decision and when you know the decision has been a good one or a bad one. The stakes are even higher when the cost of the decision is large, for example, the decision, in 2015, that the board of Programmed made to purchase the Skilled Group. That decision was a very significant one in terms of cost and it will take some time (years, probably) before the shareholders of Programmed know whether the decision has been a profitable one or an unprofitable one.
Contrast this with the example of Charterhouse purchasing HJB in 2009 for $5.3 million. The investment of Charterhouse’s money and resources was significant and, after four years, it proved to be a disastrous decision; HJB went bust in September 2013.
Chip Heath and Dan Heaths' excellent book, Decisive: How to Make Better Choices in Work and Life (Crown Business, 2013) provides some excellent insight into how entrepreneurs make sound decisions and the lessons in this for all decision makers.
The original research was completed by Saras Saravathy, a professor at the University of Virginia’s Darden School of Business who, in 2002, researched the key traits of entrepreneurs.
What she found was that there was a striking preference amongst entrepreneurs, compared to corporate executives, for testing rather than planning. The mantra of corporate executives could be summarised as: “To the extent that we can predict the future, we can control it”. In contrast, entrepreneurs could be summarised as: “To the extent that we can control the future, we do not need to predict it”.
This point is also a focus of Richard Rumelt’s brilliant book; Good Strategy/Bad Strategy: The Difference and Why It Matters (Crown Publishing, July 2011). In his book, Rumelt proposes that good strategy is a hypothesis about what works; an experiment, if you will. In his book, he recounts the story of how Howard Schultz’s original idea, for what was to become Starbucks, was an authentic Italian stand up espresso bar in Seattle. Schultz tested his idea, and, based on observation and customer feedback, made gradual changes over a number of years (eg introducing chairs and tables, allowing takeaway etc) until he found the formula that worked for mass duplication, across the USA and eventually, the globe.
Schultz didn’t attempt to predict the future of the coffee-buying public; he continually tested his prototype until he found the winning formula.
When I consider all the very smart and successful business owners, I know (well enough to make an informed judgment on), there are very few that focus on testing ahead of prediction.
Some exceptions are: Stuart Freeman (Kennedy Reid), Daniel Mundy (anzuk* education services), Rob Davidson (Davidson), Craig Moore & Jeff O’Donnell (Hahn Health Care), Sue-Ellen Watts (Watts Next), Matt Sampson (Aspect Personnel) and Gavin Bell (Jigsaw Search).
My experience with each of these owners is that when I have a conversation with them they aren’t particularly interested to know my opinion about the future of the recruitment industry, generally, or any particular sector, specifically. Instead, they will ask me ‘Who out there in the recruitment sector is doing interesting stuff? Who is doing stuff that’s working and what are they doing, specifically?
These owners place little value on predictions, they place a lot of value on what’s working so they can understand how that knowledge of what’s working applies, or may apply, to their current business operations, or prospective customer offerings.
Are you attempting to predict, or are you testing?
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