Simon says

Simon says

Keeping turnover ever upwards needn’t be an obsession in these tough times, says Simon Pearson as he explains how he has successfully engineered sales at his company.

By his own admission, Simon Pearson talks for England, even if no-one’s listening. But, he says: “I’m talkative in small groups, but I get stage fright among bigger numbers.

My daughter said, ‘how can you get stage fright? You never stop talking’. I said, ‘I know, but only the dog listens to me at home’.

“I was talking the other day and everyone just wandered off from the kitchen and only the dog was left. I said, ‘listen, when I speak only the dog listens’, and my wife Catherine said, ‘no, he just wants his food’.” Readers who are nervous about the havoc the banking debacle might create for their company’s turnover might find that listening to Simon pays, however.

After the many business hoops this titan of online business has jumped through, he can vouch for the fact that there are better indicators than rising turnover on which businesses can be judged. He speaks from the experience of losing a third of his business six months after starting it in 1986, of withstanding further loss in a market place devastated by the 1990s recession and, more recently, of having to restructure to face market pressures in the media maelstrom in which he works.

Pearsons specialises in public sector recruitment and attracts job applications globally, working closely with government agencies, local authorities, the health service and other public bodies. Despite a flat January, this year’s turnover could match last year’s £16m, something hundreds of other people running media operations can only wish for.

Its 62 staff in Middlesbrough, Newcastle and Leeds provide e-com solutions, website development, online strategies for recruitment and marketing, and HR services. It used to be a simple advertising agency.

Someone once told him: “Turnover – vanity, profit – sanity, cash – reality,” and Simon swears by this. Pearsons’ turnover in the last two and a half years has been engineered down £9m from £25m, but profit margins have almost trebled.

“We’re beyond the vanity of turnover,” Simon says. “We could go down to £14m with profit margins fully trebled.

By managing costs effectively and maintaining client loyalty we’re far more profitable than we ever could have been at £25m.” Pearsons entered the new millennium with all but 5% of the firm’s commissions for recruitment advertisements coming via newsprint.

But the firm became an early entrant to digital, launching its online jobs board www.sector1.net in September 2000. Now the newsprint share of commissions is below 70%, with online diversity fostering a more integrated approach.  In 2004, business advisers KPMG undertook a consultancy which is still in effect today. “They fine-tuned us, made us sharper, leaner, meaner and more focused while maintaining the Pearsons service ethos,” says Simon.

“They helped us over to a more digitally led business by structural change. I had been strutting about, chest puffed out, and plcs in London were saying Pearsons was a pain in the neck.  KPMG admired the growth, called us a real success, but said profit was nowhere near what it should be. We had gone for growth through people, offices, cars and equipment, not keeping control of the costs.

The answer was to make us much more digitally focused. Over six months, we underwent root and branch restructure.

“Reluctantly, we closed our traditional marketing and exhibition side, which gave 5% of turnover. In tough times, you must focus on core business. It was a hard decision. Some people involved had worked with me for a very long time. You don’t do such things lightly, but I had a business to run, and you must protect the business as a whole.” There were eight redundancies.

“Everyone had thought we were mad launching Sector1 six months after the dot com crash in April 2000.

We had this huge volume of public sector, not-for-profit recruitment ads we had to circulate locally, nationally and internationally. They can run to 3,000 vacancies a month.

“They still dominate what we do in the North East and Yorkshire. We saw online as the way of moving things forward then. We went to the bank for a loan, which was naive given the dot com crash. But I had done many presentations. I went into the bank, did the build-up. I said it was internet-based. I was a Star Trek fan, still am, and the bank manager had that beam me up Scotty look.

His eyes glazed over. “Banks still don’t understand the internet and, needless to say, I didn’t get funding. So we went to our clients instead. We offered, once their ad had appeared in the Press, to load it onto Sector 1 for free.

“They said yes, and in return we asked if they would put more vacancies on Sector 1.  Again, they said yes. So our clients did the advertising for us. I’d like to say it was all my idea, but it came from one of my colleagues.

“Now it gets 4m visitors a month. We carry 2,000 vacancies a week roughly. Its heritage is not-for-profit, but we launched in October to the private sector. Build-up there has not been so fast because of the recession, but it’s a very strong product in the North of England, with something like 450,000 unique users a month.

“So already it is a unique jobs and careers board covering a unique area of the North East and Yorkshire.  No other jobs board comes near to it in content or traffic. It has been really successful.  We want to make Sector 1 the life, soul and heart of the world of work.” To that end, additional online content is planned, including an Agony Aunt offering careers advice.

“People will be able to text in, and questions will be answered online. We’ll feature career programmes and build up to be the Facebook of the world of jobs and careers.

“In our small way, we’re as good in terms of functionality, if not better, than our national competition. We haven’t the muscle or money to take them on nationally, but we don’t want to.  What we want is to be very strong in our own area.” In a very young sector, Pearsons is a mature digital recruitment and marketing company, and unusually for a business that was once a recruitment advertising agency, Sector 1 carries editorial content too.

“How can we give clients unbiased advice? Easily.  If it didn’t work, we would lose credibility.” Understandably, Simon now advocates external opinion.

He explains: “Often, you can’t see the wood for the trees. We were told a few home truths – like the unchanging thing in business is the need to change!” While Simon stresses that Pearsons will remain a North East business, it extended to Leeds in 2001.

The Newcastle operation followed at Horton Park, near Ponteland, three and a half years ago. Middlesbrough has 25 staff in account handling, creative, finance and back office. Newcastle is the digital centre and major account handler employing 30.

Leeds, an account handling centre, employs seven.  Leeds was downsized in the overhaul, but does very well on a low overhead.

Simon’s only reservation about consultancy came when he was advised to take the title of chairman.

“I thought, ‘Oh my God, they’re putting me out to grass. End of the world’. I said, ‘don’t you have to be 80?’

” The sight of an elevator suited to wheelchairs in premises he was considering did not help, but they told him he misunderstood, citing five company chairmen aged between 45 and 50, and said he should be more a steady hand on the tiller, looking strategically, managing the direction of the business and leaving daily operations on MD level.

For two and a half years, he has been doing that while also networking intensively to raise the profile of the business, now around 10th among the independents in its sector.

“It’s the best advice they ever offered me,” he says – partly because he now also has more time with his Parisian wife Catherine, who is an invaluable sounding board, and with daughter Isabel, 24, an aspiring actress, and sons Alexandre, 23, who is studying theology at Edinburgh, and Henri, 17, who is at Ampleforth School.

More time, also, to talk to the dog – if only he would listen.