Competition in the executive headhunting sector glowed white hot in the mid to late noughties, with an intensified push for leaders with an eye for growth being followed by recession and the onset of caution and inertia at the top of many organisations.
And it was within this turbulent environment that Rachel Hannan was able to build one of the fastest growing search and selection consultancies in the country.
GatenbySanderson, co-founded in late 2002 with fellow entrepreneur Graham Goodwin, grew to just under £23m turnover in the first seven years and blossomed into an empire with offices in Leeds, London and Birmingham with almost 90 staff.
Rachel was always destined to be a high flyer of some description – at 13 she was intent on becoming the first female RAF fighter pilot. But that teenage ambition was sadly burnt to dust when her poor eyesight consigned her to a life on civvy street.
Perhaps the passion she has today for fast cars is a manifestation of that unmet dream of a career at the controls of high powered machines. Staying on terra firma, she went on to complete an English Language and Literature degree, before working as a tax accountant for Coopers & Lybrand – which merged with Price Waterhouse in 1998 to form PwC.
The role gave her tools she’d use in her later entrepreneurial life, but it wasn’t long before Rachel decided that a change was needed.
She says: “I don’t know how I ended up in tax. I think it was just the draw of the big six firms as they were then. I don’t regret the time I spent there. It was a brilliant organisation to work for. But the subject matter was very technical. However, having finance as a skill has been really useful and stood me in good stead for the next 20 years, but I never thought that I was actually that good at it.”
It was at this point that Rachel took her first foray into the recruitment market, working for small search firm GNW Executive Search in Harrogate. Although the move was initially another shot in the dark, it would prove to be the perfect environment for Rachel to develop her skills and business acumen.
With Rachel harbouring ambitions to become a journalist, she started out at the firm as a writer before getting involved in the recruitment process, which she found far more interesting. Thrown into a world of blue chip clients she thrived and quickly found her feet in the most cutthroat of sectors.
As her passion for the sharp end of recruitment grew, however, it wasn’t long before Rachel was planning her next move.
She says: “Because I was working for a small firm I got involved in much more than I would in a larger organisation. Your experience was much more intense and you learnt a lot more that way. The fact that the firm had a real blue chip client base made it all the more interesting. However, because it was an owner managed business there was eventually nowhere else for me to go in terms of a promotion and by then I’d learnt a lot about research, headhunting and business development. The bulk of client winning was done by the company’s two directors and I felt that I wasn’t able to be as commercially astute as I could be.”
Knowing that she needed experience on the front line of recruitment, Rachel joined larger agency HW Group plc in Leeds. However, through her no-nonsense approach, she made it clear that being eased into the business slowly was not for her.
“HW Group was predominantly a contingency recruiter so it was very fast paced and the kind of place where best practice is not always stringently adhered to,” she says. “When I joined I said ‘don’t give me a job if you expect me to man the phones all day’. Looking back I was a real pain. “But, it’s no good focusing on targets like the number of phone calls or client meetings you have, if when you get to those meetings you haven’t got the knowledge required to come across as credible and interested. That’s worse than not ringing the client at all. I learnt a lot at HW Group about how to do things, and how not to do things. I certainly realised that I had to go out there and get business rather than waiting for it to come to me.”
Then, with the cogs of the PwC merger turning, Rachel saw an opportunity to re-join her old employer at a time of rapid expansion.
The late 90s and early noughties saw a growing emphasis on efficiency within the public sector, with more government departments and local authorities outsourcing their recruitment.
By utilising her ability to spot opportunities and market trends, Rachel’s second spell at the company would leave a more permanent impression. It was also during this time that Rachel really began cutting her teeth in business, with her second spell at the newly merged company including work in a number of professional service environments.
These included executive leadership and development work and corporate finance, which enhanced her potential as an entrepreneur.
She says: “Looking back, applying for a job at PwC was a pretty arrogant move as I didn’t really think about the fact that they might not want me. It was a really interesting time to return to the organisation as there were opportunities to explore new markets as well as gain experience in various parts of the business.
“I realised early on that the big growth area for PwC in search and selection was the public sector, not the private sector. Moving in this direction had never been my intention, but, I’m quite good at spotting opportunities and, seeing as the private side of the search practice was fairly stationary and was up against a huge amount of competition, I began exploring the public sector a lot more. Traditionally the public sector hadn’t used consultancies in its recruitment but by the late 90s there was a greater emphasis on making sure that they
had the right kind of support.”
Moving over to deal origination in the company’s Leeds office came in particularly useful, opening her eyes to the intricacies of corporate finance’s inner workings.
“For me deal origination is the sexy bit of corporate finance,” Rachel says. “And corporate finance is the sexy bit of accountancy. I learnt a lot at that time about how deals are done, how corporate finance works, and how private equity firms scour the markets for deals. My time in corporate finance gave me a real insight into private equity and venture capital organisations.”
After a brief spell in global HR consultancy at PwC, Rachel made her entrepreneurial bow – and what an entrance she made, jointly setting up the public sector headhunter GatenbySanderson, in Leeds.
Alongside business partner Graham Goodwin, she invested £40,000 in the venture. Despite the risks involved, Rachel was confident in her abilities as an entrepreneur having helped to set up her former partner’s Yorkshire door and window manufacturing business in her mid to late 20s, writing up the business plan that would help him secure a bank loan.
However, for Rachel the new business still represented a step into the unknown, without the weight of a blue chip company behind her.
She says: “My business partner and I had developed good reputations in the market place already and with the experience we had, we both knew each of us were driven enough to make sure it succeeded – failure was not an option! At the time it seemed like an easy decision. Looking back I think ‘wow’. It was quite a big risk to give up a stable, well paid role with a well-regarded organisation.”
With zero debt on its books, the firm got off to the perfect start winning two senior appointments with Barnsley and Liverpool Councils in the first month.
A successful start to the business saw the launch of a London office in only its second year. The firm opened an office in Birmingham in year three, by which time it had attracted the attention of the managing partner of rival executive search company Veredus who joined GatenbySanderson as a partner, helping the company to add weight to its claim as a small but very experienced practice.
However, storm clouds were building over the recruitment landscape, with the financial crisis beginning to impact on the public sector by 2010. It was at this point Rachel decided to sell her share of the business after enjoying its best ever year.
“I knew if I stayed in the business I’d have to stay another four or five years, maybe longer. I could see what was coming. There was a two year lag for the public sector when the financial crisis hit the UK, with the major public sector cuts not really kicking in until after the general election.
“It got to a point where I really enjoyed the process of building the business but wasn’t enjoying the subject matter quite as much. I’d been doing senior appointments for a long time and I was more interested in how you build businesses than appointing senior people. Also, I was working around 70 hours a week and there were other things I wanted to do. I felt that if I didn’t exit at that point then it would be another five to seven years before
I had the opportunity again as I could see that the next few years were going to be really difficult.”
It was another hard decision for Rachel, particularly as the firm had put a number of measures in place to help GatenbySanderson weather the downturn, including investing heavily in technology as competition for each vacancy intensified.
Rachel says: “The company has been through a really difficult time but now it gives me great pleasure to see it back on track and going from strength to strength. Sanderson is my mother’s maiden name so I am delighted to see the business doing so well. That business will always feel like a part of me.”
Exiting the business gave Rachel millionaire status – but she recoils at such labels and wealth is something she seems to wear uncomfortably. Her one extravagance is an Aston Martin but her insistence that money is not the motivator in business seems unusually genuine in this case – where many other successful entrepreneurs make such utterances somewhat hollowly.
She has put the proceeds of the sale to good use, however, by becoming a prolific angel investor in Yorkshire. She’s invested in a number of ventures to date, while also providing sound advice to new entrepreneurs and those looking to grow their businesses. Her involvements include the Sheffield dotforge accelerator programme, which provides start-up businesses with intensive mentoring and coaching from experienced entrepreneurs.
Each venture is given £25,000 of private venture capital, half of which is funded by national development agency Creative England, with the other half provided by private sector businesses and investors.
Her other investments include those in technology, medical devices and software as a service, as well as a social enterprise Skill Will in which she was the founder investor.
There was even an investment in a music festival, although she openly admits this was a mistake. “I allowed myself to be overly influenced by the passion of the management team and enthusiasm and credibility of my fellow investors,” she says with a smile. “It was heart not head. It was a turnaround situation when we went in and it was just too late to make the difference needed. We lost the money, but I gained some very valuable lessons.”
An aspect of post GatenbySanderson life that Rachel particularly values is the freedom financial security has given her to support local people and communities. She is a business mentor for the Prince’s Trust and on the board of the Leeds Community Foundation, which has raised and distributed £20m to local charities and community groups in recent years.
Meanwhile, it is as an adviser that Rachel can really play to her strengths; spotting potential opportunities for growth and speeding entrepreneurs to market. As Rachel has learned, setting up your own business is something not to be taken lightly and she is keen to stress this to anyone considering going it alone.“It amazes me how many people start a business with no thought of how they are going to realise the value of it”, she says. “When we set up GatenbySanderson, we knew what our strategy was, or what we hoped it would be, to enable us to exit in seven to 10 years. You can’t be too rigid because you never know what the market’s going to do or how things will work out. It’s really difficult for people who’ve started a business and want to retire or realise its value, as often this value is associated with them as an individual, making it impossible for them to leave. Helping people work out how to solve this puzzle is really interesting.”
While helping others to achieve business success continues to dominate Rachel’s days, she hints that she herself may have a new enterprise in the offing. She gives little away, only that it’ll be “something a bit different” from recruitment. Given her knack of thinking big and her mastery of calculated risk taking, it’ll no doubt be a soaring success. See future issues of BQ for details.