The head of a specialist recruitment firm took four years to find the right general manager. And the appointment became even more critical when the boom times went bust.
| Entrepreneur |
Rhonda Livingston, Managing Director |
| Company |
Learned Friends Group |
| Business type |
Recruitment: legal staff, executive personal assistants, accounting staff |
| Founded |
1984 |
| Employees |
32 |
| Head office |
Sydney; offices in Melbourne, Hong Kong and London |
| Contact details |
+61 2 9241 7500 |
Key Learning Points |
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Cashflow management
If you cannot manage the cashflow of your business, then hire someone who can. They must have sound financial management skills and a proven track record.
Recruitment
Hire slowly, fire fast. Be non-negotiable in the skill sets that you demand of key employees.
Retrenchments
It is hard, but necessary. Remember this: cutting some staff today may help save the business - and the remaining staff - from a much worse tomorrow.
Niche finding
Tailor your business to what your clients need. Learned Friends created separate divisions for lawyer recruitment and the legal secretarial/office support because that was what clients wanted.
Strategic vision
Do not get bogged down in administrative detail, especially in tough times. The Chief Executive must stay focused on the strategic direction of the business.
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The Learned Friends Story
Times are tough in the recruitment sector as the international economic downturn continues to bite. Rhonda Livingston’s Learned Friends is among many recruitment companies that have had to make some painful decisions about cutting costs. Learned Friends recruits lawyers, legal secretaries and other legal-support staff, as well as accountants. Last financial year, its turnover slumped by about $2 million dollars.
Livingston says: “If you look at the profit results for some of the major listed companies, it is not hard to understand why every recruitment firm has had a very tough 12 months, if not two years. There have been recruitment freezes across the board.”
In Sydney and London, Learned Friends operates professional divisions that recruit lawyers and para-legals. The company runs separate divisions for legal secretarial and other office support staff. Learned Friends also has a Melbourne office and has opened a fourth branch in Hong Kong, which is solely focused on lawyer recruitment. But the company has had to cut staff at its two largest offices - Sydney and Melbourne - in order to reduce costs and restore profitability.
In Sydney, four people - a mix of consultants and administrative staff - were retrenched. In London, where the legal recruitment market is equally grim, two consultants have been retrenched and some administrative staff have not been replaced after resigning.
Livingston says there is no easy way to tell staff that they are no longer needed: “Emotionally, it is hard to handle. But I have been able to do it by staying aware that if we don’t do it, nobody will have a job. In any business, the amount that is paid out in salaries is a fairly high percentage of the overall costs. So head count in tough times is always a big issue.”
Learned Friends is looking at other belt-tightening measures that it hopes will reduce the need for more staff cuts. In London, where rents are high, the firm is looking for cheaper premises. With fewer staff, there is no need to pay for unneeded space. The firm particularly wants to increase its profitability in the UK because profits in pounds become even more attractive when converted into Australian dollars.
Livingston says the appointment a new general manager has been vital in improving cashflow and growth prospects. Livingston needed to step back from a full-time manager’s role at her firm in order to focus more on strategic issues. But she needed someone to take over the day-to-day running of the company. Ironically for a recruitment specialist, it has taken her four years to find the right person. Although she describes that as “pretty tragic,” Livingston has clearly profited from the experience.
“When I was first looking for a general manager, I just thought I was looking for someone who could take away the headaches,” Livingston says. “You kind of make the job fit them. But the focus that I needed was financial management, someone who really understood cost efficiencies and cashflows. Without revenue generation, your systems and procedures are hopeless.”
Livingston says without someone with financial management expertise to advise her on cashflow, redundancies and other cost-cutting steps, she may not have been able to keep all the company’s offices open.
Livingston has also learnt to be tougher in what she demands of her staff. She says business owners often fall down when it comes to measuring results: “People say, ‘I’ll have that report for you next month’. Three months later, you find out that you didn’t make any money for those three months. So one needs to do a bit of desk thumping at times.”