| Michael Berman Career Success Stories | |
Norrell Services Turns Freefall into $10M Growth
In 1998, Norrell Services was a staffing company with less than $1.5 billion in revenues and a declining market share. When Guy Milner, who founded the company in the 1960s and built it to nearly $2 billion, moved out of the daily management to the role of Chairman Emeritus, the company began a freefall. The corporate management knew they had to do something with the company: salvage it or sell it. Therefore, they brought in several senior management people to help identify a course of action. Among those recruited was the experienced sales and operations executive, Michael A. Berman.
Mike joined Norrell Services as the VP of Customer Development. His first step was to interview the employees by asking, “What makes Norrell Services special?” The response he received was consistently, “We are the quality shop. We test people that we place and we only place the very best.”
After inquiries with their customers, Mike found out that the customers did not care what agency they used; they just wanted certainty of execution, stability of price, and no hassles with the placement agency. Further investigation revealed that the same high quality temporary employees listed with Norrell Services were also listed with multiple agencies that included national players like Kelly Services and a dozen small privately held firms. Mike looked at the business as an outsider and identified another way to generate revenue from the business. He would never place his own inventory; instead, he would subcontract and place the staffing from other agencies.
With this model in mind, he went to the large corporations like Chase Manhattan Bank and said, “Here is what we’ll do. You give us the master contract and we will agree to certain levels and standards of commitments and give you a flat placement price. You pay us a management fee on top of the fees for placing temporary personnel and we will hit those levels and standards. If we are in range, we do our job. If we go over, you pay us a premium. If we go below the standard, we refund your money.”
Once he secured master agreements for the buy side with large companies across the country, Mike then went to the supply side and contacted the placement agencies. He asked them if they would like to place 50, 100, or 125 temporary employees per month. He charged each a subcontracting fee. He was paid on the buy side and on the supply side. He even got a bonus based on outstanding performance. If an agency received negative reports, he could ask them to either pay more, get better, or he would cut them out of the program. Managing these small companies became much easier than competing with them.
Mike led Norrell Services to a competitive position by getting rid of the staffing layers and focusing the business on hiring good sales people to bring in new accounts and monitor the performance reports. As a result of the business restructuring, they produced $10 million in growth in less than one year, reduced expenses, and were able to sell the company at a premium to Interim Services. The newly merged Norrell/Interim was later renamed Spherion Corporation.
Michael A. Berman provided strategic guidance to Norrell Services that stopped their financial freefall and restructured the company with an innovative business model. Corporate Management achieved the results they wanted; they salvaged the business and sold it for a profit.
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