A Bullhorn client, Neil Bernstein, of All Medical Personnel in Florida just sent me this article about Florida’s unemployment insurance crisis:

http://bit.ly/7acB6o

Because the federal government extended unemployment benefits last year, many state unemployment insurance funds are headed for bankruptcy unless they dramatically increase rates in 2010. For most employers, this is troubling, but for staffing firms placing employees in temporary assignments, this will be crippling. Because unemployment fees are front end loaded into the first 8 weeks of employment, unemployment is a big expense for staffing firms because of the short duration of most staffing assignments. Compound that with the fact that staffing firms typically have very high unemployment experience ratings and you have what amounts to a massive increase in costs for staffing firms. And, firms engaged in long term contracts with their clients will be unable to pass through these costs. This means that for lower wage employees, contract margins will likely swing into the red.

This problem is particularly acute in states like Florida, but is affecting the entire country. Staffing and recruiting firms are subsidizing a large portion of the unemployment benefits extension. Considering temporary workers only account for 2% of the US work force, this doesn’t make a lot of sense. And, this issue is extending the staffing industry’s worst downturn in its history. The media focuses a great deal of attention on the losses the automotive industry has suffered, yet the staffing industry employs nearly the same number of employees nationwide and it took a staggering 25-30% hit last year. In fact, the staffing industry probably should have received TARP or stimulus funds in 2009.

Perhaps it’s time the industry started to make some noise. As a staffing industry executive, in case if you haven’t done so already, it’s time to contact your state representatives. And, it’s also time to get involved with the American Staffing Association (ASA) so they can get their lobbying efforts into high gear and get the industry some much needed relief.

2009 was a year of winnowing. And, what made it such a tough year was the fact that the prior four years were easy years of growth. Four years of wind at our backs had made us all soft. Even those of us who survived the dotcom bust, who knew that markets can turn at any time, had grown a little complacent. Relaxed spending here, relaxed hiring there, a little less scrutiny of the numbers and suddenly, the strategies that made sense in years like ’06, ’07, and ’08 simply would not work in a climate like 2009.

Bullhorn was no exception. I still believe that we fielded a good team in 2008. People worked hard and we accomplished a lot. We had good raw talent, but 2009 required a different level of play all together. We were like freshmen showing up for pre-season practice: we were out of shape and our game had big holes. We simply didn’t have the benefit of the hard lessons of 2009. The hard-scrabble fight of a recession forced us to examine every aspect of our business, question prior decisions and make hard choices.

While there were many sleepless nights along the way, I can’t argue with the results. If the Bullhorn team of 2008 were up against the team we’re fielding in 2010, it wouldn’t even be a fair contest. Even though most of the individual players are the same, we’d outsell, out-service, out-innovate and out-smart them at every turn. Those scrappy freshman are juniors and seniors now, all at the height of their game and all working together as a team. Of course, hindsight makes me wish we had been more disciplined from 2004 - 2008, but I simply have to look ahead at what we’ll be capable of in 2010.

So, here’s where the team made big improvements in 2009:

Visibility and Process – We have always been a metrics driven organization. Our executive team dashboard used to contain 4 key metrics which we reviewed weekly as a team. The metrics were good diagnostics of the business’ health, but they were lagging indicators. It was only clear what had happened, but no one could tell what was going happen. For instance, we would look at Net Promoter Score (NPS) client survey data every quarter. Yet, we had no visibility into the leading indicators of client satisfaction: our Technical Support team’s ticket backlog or response times. So, we could never get ahead of potential customer service issues. We could only react. The same held true for our sales pipeline, or professional services productivity and even our development process.

We spent 2009 tearing into every area of the business, retooling it and making it measurable down to the individual desk level (this was critical). Then we aligned functional, team and individual goals around making big improvements. We changed processes and operational systems in almost every area of the company: R&D, Quality Assurance, Technical Support, Sales, Professional Services and Finance.

Now, when the executive team gets together, we have a whole series of charts, trend data and metrics we use each week that truly give us insight into what’s going on so we can get ahead of problems. It’s amazing the effect it’s had. Even something small, like instituting bi-weekly development demos so the entire company knows what the development team has been working on has had a big impact. It’s brought the company together and given each team much greater visibility on where we’re headed.

Culture and Team – we spent much of 2009 thinking about our culture. What makes a person a true fit for the Bullhorn team? What are the raw attributes of our best employees that make us win in the marketplace? Integrity, intelligence and hard work are obvious. What company wouldn’t value these things? The five core values that truly capture our culture are not so obvious. We have spent the past 5 years refining the core values list and I’m sure we’re not done yet, but my team feels more investment and ownership of the values than ever before and that’s a true sign that they capture who we are, rather than what we wish we were.

In 2009, we held up a measuring stick to our entire employee base on the five core values: Passion, Impact, Energizing, Edge and Accountability. We rewarded those that stacked up well on that score and were very candid with those that didn’t. We had always stressed candid feedback, but in-depth leadership training for every manager and supervisor made the message hit home. Managers dug deep and had some very tough conversations with those that weren’t measuring up. Ultimately, that candor helped people understand where they stood at the end of the day so they could adjust – and most did. As a result, the entire company is performing at a much higher level. And, we have a strong template for hiring and measuring our employees throughout the year.

We also spent a lot of energy balancing resources. We had grown quickly since 2004 and we had team sizes that didn’t necessarily align with the market. For instance, we were winning enterprise deals, but our resource allocation was geared to small and mid-size clients. We needed to segment our sales, account management and service staff to better service our entire client-base. Getting the mix of resources aligned to fit the market was an important step in getting our footing right for the next phase of growth.

Listening – the entire organization has tuned into the client much more than ever before. We’ve always been ahead of the curve here with things like Bullhorn Brainstorm and our use of NPS, but 2009 made us redouble our efforts. We knew that the economy was creating tremendous pressure for our clients and they themselves were in the process of changing and restructuring. We could either be seen as vendors or partners. We chose the latter and carved out resources dedicated to helping clients gain greater adoption of the system and conducting Quarterly Business Reviews (QBR’s) to help us stay close to our client’s goals as their strategies evolve. In the end, the organization has deepened its relationships with its clients and that will no doubt yield dividends as the market picks up in the years to come.

Innovation – 2009 was a year where we got serious about innovating. We’ve always invested a lot into R&D, but we really turned the heat up in 2009. We made the bet that every one else would be in hibernation mode, just trying to survive. And, we could really lead the market if we invested into the down turn. Not only did we increase our investment in our core product offerings, but we also wanted to invest in truly innovative initiatives. So we created a whole new R&D team dedicated solely to creating new products and services. That team is probably as big as the entire R&D team of our next largest competitor. The pay off of this investment will be big. We’ll be launching the first new product offering into beta in Q1. We had a very small alpha test in December and the early returns have been incredible. This team will continue to help Bullhorn lead the staffing and recruiting market in 2010 and beyond.

On to The 2010 Season
And we won’t stop refining our game in 2010. There’s a lot of work left to bring up our skills across the board. Every functional team will be growing in 2010. Adding resources while preserving and improving quality will be a challenge in of itself. And, just as we leveraged the new found discipline we gained from the dotcom bust during the years of expansion, we’ll leverage what we learned in 2009 into 2010 and 2011. While I don’t know if the wind will be at our backs in 2010, I do know that we’ll be a better company for having trained so hard in 2009.

Bring it on!

I’ve just returned from the UK, where Bullhorn has built quite a buzz over the past year. The staffing and recruiting market was hit hard in the UK, just like it was here in the US. And, things are starting to pick up there as well. The remarkable thing about the UK market is the sheer density of staffing and recruiting firms in a 25mi radius of London. Agencies compete fiercely and their and margins reflect it. Most firms operate on margins 25-50% lower than those enjoyed by firms in the US. One’s first thought would be, how could firms make money in that environment? While I don’t have the answer, I can tell you that the bottom lines of these businesses look similar to those of their US counterparts. Staffing penetration in the UK is higher and the market is mature, so perhaps firms just “make it up on volume”. The UK staffing market is more mature than the US market, so perhaps this is a forecast for where the US market will head over time?

While the UK recruitment industry is more mature than the US, the IT market is behind. Software as a Service (SaaS) is not yet industry standard like it is here in the US. In many ways, it’s 2004 in the UK - many of our sales calls involved lengthy discussions about the SaaS delivery model. Unlike 2004, most savvy IT professionals in the UK recognize that moving their applications to the cloud makes sense for so many reasons. It’s CEO’s, MD’s and CFO’s that still need convincing that running hardware locally is actually riskier than outsourcing it to a partner who specializes in secure application management and delivery. Of course, Bullhorn has come a long way since 2004. We didn’t have our SAS70 type II, or Safe Harbor in 2004. And, the fact that we spend more on R&D, hosting and security than any of the largest staffing firms in the world (let alone our competition) makes for a compelling argument.

We’ll be investing a lot more into the UK and further international expansion next year, as many of our enterprise customers are bringing us there already. 2010 promises to be an exciting time for Bullhorn and let’s hope the entire staffing and recruiting industry.

I finally gave in to the social tidal wave and started micro-blogging last week (using twitter). At the same time, Bullhorn employees started using Yammer internally. Twitter asks users the question, “what are you doing?”, and publishes their responses to the web. Yammer, asks the same question, but publishes it only to your fellow co-workers. It’s set up and controlled by an administrator for the company. So, it’s not public to the outside world. What I like about it is the fact that it lets every one share information, links, press releases, thoughts about competition, etc without flooding every one’s inbox with individual email messages. Now, if I see that a competitor is doing something new, I just post a quick update with the link and every one who’s interested can chime in without filling up every one else’s inbox.

A few months back, Jim Lynch, one of Bullhorn’s Product Managers, posted a feature request to Bullhorn Brainstorm to integrate Yammer-style micro blogging into Bullhorn, but the entry didn’t get much response:

I wouldn’t have voted for it a few months ago. But, now that I’m hooked on Yammer, I’d be all for it. I can see this being especially compelling for staffing and recruiting firms, given the transactional and collaborative nature of their work. Let us know (on brainstorm) if you agree.

Today is Bullhorn’s 10th anniversary. It’s hard to believe it’s been 10 years since November 19, 1999 when Barry Hinckley, Roger Colvin and I embarked on this amazing journey. We certainly had no crystal ball that would predict who or what we would become - one of the most successful Software as a Service companies in the World. But, we knew one thing - we would build mission-critical, cutting edge technology that would have a dramatic impact in the way people go about their jobs.

The company has evolved rapidly throughout the years and we have learned as much from our mistakes as our successes. One constant has been our commitment to building world class products and services and, most importantly, a culture of building Bullhorn around great people who embody our core values of Passion, Impact, Energizing, Edge and Accountability. As a result, we’ve built an incredible team.

In addition to the tireless efforts of our team, we attribute much of our success to our clients. You believed in us and our vision, well before others could see its potential. You’ve helped shape who we are, through both your feedback and support. You’ve been a driving force in our success thus far, and you’ll continue to play that role in the future.

In many ways, we’re just getting started. We’re all looking forward to writing the next chapter.

One thing I hear over and over again from executives in the staffing and recruiting industry is that their database is an asset. If someone has spent years building a database of clients and candidates, they feel that data is something of great value to their business. Certainly, it is expensive to pay people to build out a database. And, there’s no doubt that data helps drive the flow of business - what jobs are open, what candidates are a fit, what phone # to call, which candidates to avoid, etc. But, here’s the problem with valuing the data: the vast majority of information in these databases is freely available to the public.

Want to know who the VP of Sales is at Bullhorn? Go to linkedIn.
Want to know his work history and education? Ditto.
Want to find people with enterprise software sales experience in Boston? We all know where to go to get that.
Want to know what Raytheon is hiring for this month? Their website will tell you - better yet, their VMS will let you know.
Want to know what a candidate’s interests are? Go to Facebook. 

Perhaps 15 years ago, knowing these things about your clients and candidates gave businesses an edge. But, every year, more and more data is becoming freely available on the internet and its value as a competitive edge is eroding. In fact, the value of your data is probably near zero already.

The game has changed. It’s not about what or who you know (or knew yesterday). It’s about how fast your firm can process and react to information. How quickly can you generate a list of qualified candidates for an order and blast them an email, SMS or phone call? How quickly can you get in front of the new VP of Development at the startup that announced VC funding this morning?

The staffing and recruiting industry is going through a tectonic shift. This type of radical change in access to information only comes around once a generation. Those who are agile and open their minds to the possibilities will ride the wave to big gains. Of course, some firms will still make a few bucks doing it the old fashion way - clinging to their data, but this will be the exception not the rule in the future.

Someone recently sent me a really good article from Harvard Business Review titled, “Moving up in Downturn”. Usually, HBR articles are pretty disconnected from the real business world. It’s as if they’re written for the sole purpose of helping management consultants sell more services to confused middle managers in the F500. This particular article however, I felt was actually helpful. The thrust of the article was about how companies can tune their strategy to get ahead in an economic downturn. In its 11 pages, the article talks about the three phases of a downturn and lays out some simple Do’s and Don’ts for businesses. Here’s my take at the crib notes:

Storm Clouds Gathering

When it’s clear that problems lie ahead, e.g., the summer of 2008, executives have to face reality quickly. Acting as if the storm will blow over will leave your firm flat-footed when your business gets hit. Contingency planning is of critical importance – “what will we do if orders drop by 10% next year? What about 30%?” Executives and managers need to resist the urge to tell employees that the downturn won’t affect them or that it won’t be bad. Contingency planning is not a sign of weakness. It’s good business.

The Hurricane Hits

When things get ugly, e.g., November 2008 - February 2009, the firms that had their heads in the sand typically over react with aggressive cuts. Cutting deep after things are bad seldom solves near-term cash problems and ends up causing damage to the business that lasts beyond the downturn. Companies that have their contingency plans ready put them to work and are positioned to make strategic moves. Firms can focus on quality and customer service, or finding acquisitions at a bargain. Competitors who have to cut deep late in the game will do so at the expense of the quality of their service.

Skies Clear

Just as you shouldn’t slam the breaks suddenly when things look bad, dropping the accelerator to the floor when outlook improves doesn’t make sense either. The companies that cut too deep will probably over spend to try to repair the damage they caused by cutting into bone. Overspending can cripple a business even further by creating inefficiencies and destroying profit margins. Companies need to temper their growth strategy against their businesses’ ability to scale.

Applying the Principles in 2010

It seems like 2010 will be a year of recovery. And while no one knows how fast employment will come back, it’s likely it will be a better year than 2009 (let’s all hope). If the last recession is a guide, you can usually pull off 2 or 3 big strategic plays in a recovery before your team gets busy with the business of managing success. We’ve spent the last few months here at Bullhorn mapping out our big plays for 2010 and weighing our options. It should be a very strong year for Bullhorn, even if the economy doesn’t come roaring back.

_______

PS, since people always post questions about the iPhone despite the blog topic, here’s an update: We’re making really good progress on the iPhone sync solution and a large percentage of Bullhorn employees using it every day. Although we ran into some snags rolling it out into beta this month, we should have the beta out to customers in December.

And, no, iPhone is not part of our recovery strategy. It’s just good business.

I have a new iPhone and so does just about every one on the team at Bullhorn. For those of you who read this blog, you probably aren’t surprised, even though it’s only been 5 months since I wrote about my Blackberry Curve. I can sum up my experience with the iPhone with one word: love. I know that I’ve professed love for phones in the past, so I’ll spare you the “this is different” story. Suffice it to say that it’s true love (at least until something better comes along).

The iPhone has 2 major advantages over every other device on the market: the user interface and the App Store. The user interface is so easy to use and intuitive. Using finger gestures rather than clumsy keys makes it feel like it knows what you want to do. And, the speed of the iPhone 3GS is amazing. Add to that the 50,000 applications built for the platform and you have something truly unique. There are applications that let you book travel, look up movie times, stream music, improve your golf swing, etc. If you can think of it, it’s probably available in the AppStore.

The AT&T network and email/sync support previously made the iPhone a tougher sell and with them resolved, the device is a no brainer. These email, calendar and contact sync functions are solid for business users now that the device supports ActiveSync (the technology that lets Bullhorn sync with it). The phone is clear and AT&T has improved their network significantly in the Boston over the last 6 months. Previously, I would drop 15-20 calls per month with AT&T compared to Verizon’s 1 or 2. But, this time around, I have only dropped 2 calls since buying the iPhone a month ago. I imagine that AT&T has made similar investments in other cities as well.

Every time I sit down in a meeting at Bullhorn now, we spend at least the first 5-10 minutes talking about our iPhones. This is a world of difference from any “phone” I have ever used. And, I think that RIM (makers of the blackberry) and Palm are going to have an uphill battle keeping up with the pace Apple has set.

So, it will be no surprise to hear that all this love will be trickling down to our customers too. We’re really getting behind the iPhone. We’re planning to build an App for the device so Bullhorn users can fully leverage the platform. And, we’re launching a beta program in a few short weeks to support syncing email, contacts and calendar to the device. So for all you Bullhorn users, who have been holding your breath, hang in there a few more weeks.

So, just when you thought all the potential uses for Twitter had been exhausted, along comes the online pig pile or, “Twitpile,” as I’ve termed it. A site called Fixoutlook.org has launched with the sole purpose of gathering complaints about Microsoft’s popular email application, Outlook. The site encourages visitors to levy their complaints via Twitter and tallies votes. The complaint is somewhat arcane. It calls out Microsoft’s use of the MS Word rendering engine for HTML email content. Yet, so far over 18,000 people have tweeted their concern over this practice. 

Tracking Fixoutlook.org’s growth isn’t even as interesting as Ashton Kutcher’s competition with CNN to get to a million Twitter followers, but it does have some serious implications for companies and their brands if Twitpiling really takes off. It’s likely that one of two things will happen:   

1. Twitpiles will get serious attention in the marketplace and companies will be forced to respond quickly and publicly or face public defamation
2. Twitter chatter will become static and no one will be able to discern any thing meaningful from it

We use Bullhorn Brainstorm to track the popularity of feature requests. Users get to post new feature requests, complaints and ideas. The most popular features get the most votes and our team uses the data to enhance the product and service. It’s a public channel we’ve set up for our customers to allow them to create their own tweetpiles (albeit a little more organized). It’s a great tool and it helps us identify deficiencies in the product all the time. Before it launched, there was a great deal of hand wringing. What if it exposes our warts to the world? What if our competitors use it against us? Ultimately, we decided that the information was going help us be better and the transparancy would be good for us. And, our competitors have nothing like it - perhaps they have more to hide?  Twitter has the potential to bring that kind of public feedback to just about every product and service under the sun. For staffing and recruiting firms, it could bring a wave of twitpiles from candidates: 

Tweet, “ACME Staffing stinks” if they’ve wasted your time on an interview that went no where 

Most people would rather be in the driver’s seat, providing an outlet for both good and bad feedback, rather than letting the haters create their own channels online. So, if Bullhorn set up Bullhorn Brainstorm to help collect feedback from users, shouldn’t our customers do the same for their clients and candidates? Would you do it?

Over the past few weeks, Bullhorn has been working on some innovations to address feedback we’ve received from customers and prospects. We’ll be making an announcement early next week, so I won’t give any thing away other than this: it all hinges around making it easier for people to do business with Bullhorn. Whether you’re a prospect or an existing customer, we’re trying to tailor our products and services to better meet each customer’s needs. 

In this climate, buyers of any service are in the cat bird seat. And this is especially true if you’re a buyer of staffing services. Demand is down 30-40% and there are a lot of unemployed workers flooding the job boards. Any one who is willing to leverage 3rd party recruiting firms in this climate knows they have a lot of bargaining power. So, what have you done to make your service meet the market? In many cases, the answer is unfortunately, “we cut our price” or “we cut our margins”. These are blunt instruments. The idea is that you’ll raise your price when the market picks up, but doing so without adding more value to the customer is a risky proposition.  

A few firms that I’ve spoken to recently are keeping their prices in tact, but are breaking up the service that they usually provide as a bundled offering. They’re looking at the spectrum of activities that they typically perform for clients and break them up: sourcing, pre-screening, interview coordination and on boarding. The idea is that a cost-sensitive client can spend less to fill their open positions, but the provider isn’t delivering the same level of service at a lower price. And, over time, the firm can up-sell the client to use more of its service. It’s a shift in the way sales people and recruiters have to position their offerings, but it also potentially positions firms as partners and solution providers rather than just “vendors”.