Outplacement is one of those euphemisms modern business life is so full of. Effectively the process involves firing people, although admittedly you also spend time trying to ensure they are quickly coached back into the workplace. This mismatch between appearance and reality was made much fun of in the recent Hollywood comedy smash Up in the Air.
The film saw George Clooney spend all his working life flying from anonymous US city to anonymous US city relieving people of their jobs. And the plot development was that his company had decided to make his travelling a thing of the past too, by making him fire people via the internet instead. A witty idea indeed, but only the kind of thing that happens in film comedies, surely? No-one would ever do that in real life. In fact, they are doing so, right here in Yorkshire. York-based David Twiddle hasn’t actually seen Up In the Air.
“I am glad you mentioned it,” he says, “because somebody told me about that film and I couldn’t remember the title.” But he reckons distance-based outplacement is going to help his company Renovo recover from a sticky patch brought about by the credit crunch and subsequent recession and go on to even greater things. There is certainly a gap in the market for such an approach, he says.
Twiddle is a career recruiter who by the age of 37 had already collected all the money that was due to him from the £24m sale of Morgan McKinley, the first agency he co-founded. Gaps in the market are something he specialises in spotting, and Morgan McKinley was no exception. He and cofounder Steve Grant had noticed that at that time in the mid-1990s the recruitment industry in financial services was missing a trick by not focusing on the mid-market of, say, £60,000pa jobs.
“At that time you had people like Whitehead Mann who only focused on the top of the tree,” he says. “They all had headhunting and selecting businesses, but all they did was retained advertising for which candidates had to apply again and again. Then there were people like Robert Walters which was a consultancy. They did no headhunting at all, but worked on a contingency basis. Then there was what you might call High Street – places you could just walk into.
“Yet we came across people at Morgan Stanley who were looking for equity derivative accountants and claimed there weren’t any in the market. That was ludicrous because they themselves had 80, as did Credit Suisse next door, but they couldn’t get them to move because the industry wasn’t directed at them.
“The big headhunters were not prepared to do the work involved in identifying such people for the fees that were then on offer. We were, we did it aggressively, and we created huge demand. We were the first pioneers of mid-market search. Now they all do it.” It was a gap in the market again that persuaded him to re-enter the recruitment market after taking a required year off following the sale of Morgan Mckinley to Imprint in 2005. He had, he says, looked at setting up a business in other industries.
“But they all seemed incredibly difficult compared to recruitment.” The gap in the market he spotted this time was in specialist skills in regional banking.
“The banks in the regions had never historically needed to recruit,” he says. “But we saw a market that was emerging through the sophistication of the products they were selling. They were struggling with the people they had in terms of intellectual ability, and they were being served by accountancy recruiters, which wasn’t always suitable.” And so Hamilton Caine was born – operating this time out of York, which is you would expect from someone born in Driffield and brought up just outside Malton.
“It took a bit of time to sell the concept,” he says. “Banking in the regions is a tight-knit community where everybody knows everybody. But our model wasn’t always about direct approach, it was about making our presence felt, so people would come to us. They had begun to take that on board.” Then, disaster. With the benefit of hindsight, any business that started up in 2005 specifically targeting bankers selling unusual products only had a couple of years to thrive. Twiddle remembers exactly where he was when the first news of the impending credit crunch came through, on August 7 2007.
He was on a beach in Portugal. “I had a call from one of my directors saying it was looking like Northern Rock was going to go bust,” he says. “I knew that the world had just changed at that point. Northern Rock wasn’t a client, but we knew the impact that would have on the market, particularly when a lot of work we were doing was coming out of the hedge fund market that was packaging dodgy debt. They lost all their liquidity virtually the next day, and as a result we had lost a pipeline of about £500,000 by August 10.” So what to do? Diversify would certainly be one option.
But as Twiddle points out, that is difficult to do in a hurry. So other options rapidly became inevitable. By October 2008 – the period he regards as the peak of the crisis – the company had shrunk from having 18 fee earners to having a staff of just six, including four fee-earners.
“I had to think about getting cost base down,” he says, “so we could get to the right side of the fence each month and stop burning cash.” It was around this point that moving into outplacement came under scrutiny. It’s a traditional route for recruiters when times are hard, Twiddle says, because it’s effectively “the reverse side of the coin”. As usual, he spotted a gap in the market initially in terms of how such services could be delivered. “We thought, ‘What if we do something edgy and look at the process from a recruiter’s perspective?’” he says.
“Given our experience, we could certainly say to people who were looking for work,‘You may not want to hear this, but this is how recruiters work, and once you know that you will have 90% of the job market sewn up.’” This is not as trivial as it seems, he says. Many people looking for jobs don’t realise how important it is to refresh your CV every week, because of the way recruiters will use search facilities on sites like Monster.
“Recruiters ideally don’t want people who are out of work,” he says. “They want people who are still in work first, and then those who are only just out of work.” So they will set the search filter to list people who have only recently uploaded or changed their CV first. If your CV has been on the site for nine months and you haven’t changed it, it will be hidden back on the 20th page, which is not a good place to be when recruiters rarely look beyond the first. Twiddle gives a cogent recent example.
“We had someone who had been working for a major building society, effectively as a regional sales manager,” he says. “She had had her CV up on Monster for three months, but had had no calls. The problem was her building society didn’t use the word sales when describing her job, and so neither did she on her CV. But a recruiter looking for a sales person will only look for that. We also told her to refresh her CV every week. After making the changes, she had six calls within a week and was back in work within a fortnight.” Good for the candidate, then. But the problem for the company, now rechristened Renovo, was that most outplacement is paid for by the company letting people go, and most of them were tied up in five-year contracts with the major industry players such as Penna. You could try approaching soon-to-be-redundant people individually, but Twiddle says the marketing costs of doing that are too high to make it worthwhile. The other option was finding Governmentfunded work.
Surprised at how manyprofessionals were coming into Job Centres, in 2008 the Department for Work and Pensions (DWP) did launch a scheme to help newlyunemployed professionals. Renovo won the contract to carry out such outplacement work within North Yorkshire, but such work tended to come in only in dribs and drabs, and the cost of servicing candidates was onerous. Fortunately over the same period, Twiddle had been having meetings with a technology expert he had met on a train who supplied IT into the outplacement industry in the US.
“He felt it was a legacy industry that was very slow to change,” he said. Anyone who could develop the idea of providing services over the internet and by phone instead of face-to-face could bring costs down quite considerably – an important consideration in an industry which has been known to charge up to £5,000 per candidate. Renovo subsequently developed a career management portal that can provide each candidate with three months unlimited access to a career coach who could also support them over the phone. It also calculated that using such a system it could offer the DWP an outplacement service for just £150 per candidate, provided it was done entirely on a distance basis. Such a business model would only work with large volumes coming through.
“Someone who uses our services heavily may cost us £2,000,” says Twiddle, “but there will be other people in the same contract who will not use us very much, if at all. So it balances out, but only if there is volume.” He was surprised at how readily the DWP agreed to his request to start operating nationally with such a service instead of just North Yorkshire, but he suspects it was in a hurry to see results. Results for Renovo have been impressive.
“Since the summer of 2009 we have supported 20,000 people in this programme,” he says. “We have accepted referrals from 465 of the 741 Job Centres nationwide. We reckon we own between 10 and 15% of the UK market in this provision.” Working with MyKnowledgeMap, another York-based company, Renovo has also expanded its portal so that it now includes psychometric tests, links to relevant books and publications, and synchronisation with a wide range of social networks, including Linkedin, which Twiddle says is now a key resource for all recruiters. The company is growing again too.
“We want a £15m turnover and to be employing 150 people in three to five years,” he says. “Although we could do more than that. We certainly want to have 100,000time within five years.” He is confident that such a target can be achieved for two reasons. The first is the forthcoming redundancies in the public sector.
“The public sector hasn’t historically procured outplacement because it hasn’t needed to,” he says, “and now they have really been horrified at the cost of it. I have heard examples of quotes being 20 to 30 times greater than available budget, and for limited support only.” But just as important are the changes the Government has made in its programme for getting the long-term unemployed back into work. Previously, 13 different employment programmes usually aimed to keep such people in a new job for up to 26 weeks, with employment providers paid on a fairly even basis across that time. The New Work Programme will instead be one single project that aims to keep people in employment for two years, and funding will be back-end loaded to encourage employment providers to do everything then can to keep people in work. Twiddle says that as a result employment providers will be looking to work with companies like his to ensure that those newly-employed people have some kind of support. Once again, such support will only be affordable from a distance supplier.
“We may even want to provide a mobile phone to these people which is preloaded with our app,” he says. “So if they have any problems they can hit the red button. We expect to do around 10,000 people in the first year.” He admits that the kind of candidates the company is now dealing with are a world away from the finance professionals it started out targeting – although in recent months its recruitment business, which never disappeared, has started to creep up again. “Last month we placed a hedge fund manager,” he says, “and at the same time we were running a housing association workshop in Lewisham for gypsy travellers.” But such a step change, he says, has proved beneficial for him personally. “I now see that when I set up Hamilton Caine I did it too quickly,” he says. “I rushed straight back into something I knew I could grow quickly, and didn’t set myself a big enough challenge. The net result was that I went home without the passion I knew I always had at Morgan McKinley. This recession has been a great thing, because is has completely reignited my passion.”