Wednesday - 19 November 2008
Features
Staffline’s MD Andy Hogarth doesn’t do things by halves — great news for staff and clients. Colin Cottell reports
Even as a schoolboy, it was clear that Andy Hogarth, Staffline's managing director, was a budding businessman. Operating a private tuck shop, he undercut the school's official outlet by buying multipacks of Coke and Mars Bars from the supermarket, and selling them singly.
And so like so many 'self-made' men, Hogarth left school at 16. "School was not my natural environment," he admits, with some feeling.
After a series of dead end jobs, a period managing Conoco filling stations round London showed that business was where Hogarth really belonged.
He soon proved himself a shrewd operator, by setting up shops in the company's petrol stations. In the process, he dwarfed his basic £2,900 a year salary with an additional £25,000 a year from the profits.
Four years as a car salesman for Nissan followed. But "wanting to do something myself", Hogarth felt it was time to move on. This time it was into recruitment, and an Alfred Marks [office and secretarial recruiter] franchise in Stevenage. It became very successful, with Hogarth only selling it back "when everyone piled into recruitment" in the late 80s.
After playing a pivotal role in the management buy-out of a pipeline construction company, Pipeline Constructors Group, Hogarth joined Staffline as financial director in 2002, becoming managing director in 2003.
If any theme can be detected, it's one of a determined and entrepreneurial spirit that has left any organisation he leaves in a substantially better position than before he arrived on the scene.
There are no signs that things will turn out any differently at Staffline. In the past three years, the company's sales have grown from £40m to £120m, while profit before tax has increased from around £1m to £4.4m.
Hogarth also has what some might see as a refreshing attitude to the City. While the share price is still significantly above its December 2004 flotation price of 80p, and in recent weeks has fared better than most fellow AIM-listed recruiters, it has fallen by around a third since September last year. "The share price goes up and down, it has nothing to do with what we do. We just make more money and the stock market does what it wants to do," he says. "To be honest, I have given up looking at it," he adds.
The company currently services around 500 clients a day, with 10,000 contractors on assignment. However, Hogarth admits that when he joined it was touch and go whether the company would survive.
Although historically always successful, since it was founded in 1986, the company had been saddled with too much debt. "A lot of people had lost heart," he explains.
Hogarth set about convincing the company's bank and its staff that "there was a future for Staffline, and there was a good business". And so far, his assessment has proved correct. In late 2004, Hogarth was instrumental in floating the group on AIM.
He is somewhat reluctant to admit that he is ambitious, though he qualifies this by saying he lacks "naked ambition". However, he concedes that some might see his persistent occupation of leadership roles as more than just coincidence. "I haven't wanted to be the boss. But I kind of end up doing it. It's probably not a good part of my personality. It's not deliberate, I don't have to be the managing director, but I like to know what is going on. I am kind of inquisitive," he explains.
But it's also clear that along with this lack of "naked ambition" has been a reluctance to stamp all over others on his way up. "I always do it ethically or nicely. I never rip people off, but I believe that by giving people good service and a product when they want, you can make a fair living.
"I will never be in the Sunday Times Rich List, but there's more to life than money, and being able to sleep at night is far more important than any wealth."
Hogarth admits that Staffline operates at the distinctly non-glamorous end of the recruitment spectrum and doesn't deal with £300,000 per annum salary assignments.
"We operate at the 'chicken nugget' rather than the 'fois gras' end of recruitment," he smiles.
And Hogarth has every right to be chipper. For with 73% of Staffline's business coming from the food production sector, the business has not been affected by the fallout from the credit crunch.
Even rising food prices haven't dented demand for the food processing staff that the company provides and manages on more than 100 client sites.
Manufacturing is still important for the company, however, this has been declining as many firms move their operations overseas.
The Nottingham-based company also has a 17-strong branch network. As well as supplying staff, these sites have the potential to initiate new onsite partnerships with clients. Techsearch, its smallest arm, specialises in temporary and permanent engineering, IT, HR and fast-moving consumer goods placements.
In March 2007, the company bought Market Harborough-based Onsite Partnership. This complements Staffline's core market by specialising in logistics and distribution.
The company recently launched a new service, called Bought Out Labour Technology (BOLT). This is similar to its onsite service, but has specific purpose of creating "an alternative brand".
Almost all the company's sales (99%) come from the temporary side of its business. Staffline relies heavily on the influx of workers from the accession countries of Poland, Latvia and Lithuania. While Hogarth accepts that some are returning home, he is confident that the government will allow workers from Romania and Bulgaria to be taken on as employees, thereby making up any potential future shortfall.
Apart from operating predominantly in the strongly defensive food processing sector, Hogarth says the company's outsourcing business model gives it several key advantages over its competitors.
This is not recruitment in the traditional sense, he explains. "It's more the processes we run. Most of our clients are really great at running their business, but they are not so good at the softer things, such as looking after the workers, which is where we score." This is one of the reasons why the business has done well over the past three years, he says.
Outsourcing also gives Staffline cost advantages over competitors with large branch networks, and their heavy overheads.
The result is that while the company's gross margin is not as high, the client gets a better price, while net margins are similar to those of the competition.
Another key factor behind Staffline's growth has been it relationship with clients. "The whole onsite model has been about giving our clients competitive advantage. It's about providing a better services and
giving clients more for their spend, so we become part of their HR department."
In one instance, Hogarth says Staffline successfully persuaded a manufacturing client in the Midlands that if it paid staff a bit more it would get a better class of worker. With fewer workers producing the same level of output, the client saved £600,000.
Although superficially bad for the agency in that it gets paid per worker per hour, Hogarth says this episode has been crucial in establishing a "good long-term relationship" with the client that so far has lasted five years.
At the same time, any idea that Hogarth is a soft touch is dispelled. "We are not driven by sales, what matters is profits. Sales is vanity, profit is sanity. We turn down a lot of business because it has not got the potential profit," he says.
Hogarth emphasises that the turnaround has been a team effort. "I am constantly amazed as I go around the country about the people who work for Staffline. They are so incredibly dedicated." He says his role is to give staff the freedom to go out and do their job, to try new ideas and even make mistakes, though not the same one 32 times, he jokes.
Hand in hand with Hogarth's personal philosophy, running an ethical business is a recurring theme in how Staffline operates. "Everything we do is ethical," says Hogarth, citing the company's refusal to work with clients with poor health and safety standards as an example. "I certainly don't have the right to risk somebody's health and life to make a profit," he says.
Indeed, though Hogarth describes himself as someone who is not very good at telling people what to do "in a desk-thumping manner", this is one area that gets him riled up. "I get really pissed off if you don't do the right thing by people," he says.
This extends to Hogarth's support of the Agency Workers Directive which he says will drive out "the slightly seedy operators". However, that said, it is clear his motives are not entirely altruistic. "Our contractors are very important to us. We don't have a business without them, so we will continue to look after them in the best possible way, and become an employer of choice."
Hogarth agrees that some people might see recruitment as a strange choice of industry for someone with so strong a moral compass. Indeed, his varied career history suggests that he is a businessman first, and perhaps only then a recruiter.
"I should say that recruitment is something I really wanted to do all my life, but no, I am afraid not," he says adding credence to this view.
However, at the same time, Hogarth evidently relishes his current role. "I am constantly selling, I enjoy selling. I like doing deals, negotiating with banks to raise money… each day is different. The job has the perfect mix."
While Hogarth has clearly been successful in turning Staffline around, he is clearly hungry for more. "Even though we are one of the bigger players, 3% marketshare is nothing. We have barely started," he adds, declaring his ambition to reach 10% over the next five years.
To do this will involve expanding beyond its Midlands base to untapped regions of the South, the South-West and Scotland. But on the evidence of a career that started off in tuck shops, and now specialises in the chicken nugget end of recruitment, few would bet against Hogarth pulling it off.
Andy Hogarth: a snapshot
Born Edgware, London. Attended Watford Grammar School
1972-76 Various jobs in garages, selling trousers, soft drinks, bars, factories, warehouses, driving
1976-81 Conoco/Jet, managing filling stations in and around London
1981-85 Car Salesman for Datsun/Nissan
1985-88 Opened and operated franchise for Alfred Marks (Adecco) in Stevenage
1989-94 University of Central England, qualifying as Certified Chartered Accountant. Part-time jobs including dustman and HGV driver. Acquired and operated a nursing home for the elderly in Rugby. Sold in 2006
1994-2002 Finance director of Pipeline Constructors Group, heading the management buy-out
2002 Joined Staffline as finance director, becoming managing director the following year. Owns Hogarths, a hotel near Solihull, and chairman of a venture capital-backed business, Carnell Support Services specialising in motorway commmunications
Staffline Results
Doing the right thing by people
Published: 09 July 2008
And so like so many 'self-made' men, Hogarth left school at 16. "School was not my natural environment," he admits, with some feeling.
After a series of dead end jobs, a period managing Conoco filling stations round London showed that business was where Hogarth really belonged.
He soon proved himself a shrewd operator, by setting up shops in the company's petrol stations. In the process, he dwarfed his basic £2,900 a year salary with an additional £25,000 a year from the profits.
Four years as a car salesman for Nissan followed. But "wanting to do something myself", Hogarth felt it was time to move on. This time it was into recruitment, and an Alfred Marks [office and secretarial recruiter] franchise in Stevenage. It became very successful, with Hogarth only selling it back "when everyone piled into recruitment" in the late 80s.
After playing a pivotal role in the management buy-out of a pipeline construction company, Pipeline Constructors Group, Hogarth joined Staffline as financial director in 2002, becoming managing director in 2003.
If any theme can be detected, it's one of a determined and entrepreneurial spirit that has left any organisation he leaves in a substantially better position than before he arrived on the scene.
There are no signs that things will turn out any differently at Staffline. In the past three years, the company's sales have grown from £40m to £120m, while profit before tax has increased from around £1m to £4.4m.
Hogarth also has what some might see as a refreshing attitude to the City. While the share price is still significantly above its December 2004 flotation price of 80p, and in recent weeks has fared better than most fellow AIM-listed recruiters, it has fallen by around a third since September last year. "The share price goes up and down, it has nothing to do with what we do. We just make more money and the stock market does what it wants to do," he says. "To be honest, I have given up looking at it," he adds.
The company currently services around 500 clients a day, with 10,000 contractors on assignment. However, Hogarth admits that when he joined it was touch and go whether the company would survive.
Although historically always successful, since it was founded in 1986, the company had been saddled with too much debt. "A lot of people had lost heart," he explains.
Hogarth set about convincing the company's bank and its staff that "there was a future for Staffline, and there was a good business". And so far, his assessment has proved correct. In late 2004, Hogarth was instrumental in floating the group on AIM.
He is somewhat reluctant to admit that he is ambitious, though he qualifies this by saying he lacks "naked ambition". However, he concedes that some might see his persistent occupation of leadership roles as more than just coincidence. "I haven't wanted to be the boss. But I kind of end up doing it. It's probably not a good part of my personality. It's not deliberate, I don't have to be the managing director, but I like to know what is going on. I am kind of inquisitive," he explains.
But it's also clear that along with this lack of "naked ambition" has been a reluctance to stamp all over others on his way up. "I always do it ethically or nicely. I never rip people off, but I believe that by giving people good service and a product when they want, you can make a fair living.
"I will never be in the Sunday Times Rich List, but there's more to life than money, and being able to sleep at night is far more important than any wealth."
Hogarth admits that Staffline operates at the distinctly non-glamorous end of the recruitment spectrum and doesn't deal with £300,000 per annum salary assignments.
"We operate at the 'chicken nugget' rather than the 'fois gras' end of recruitment," he smiles.
And Hogarth has every right to be chipper. For with 73% of Staffline's business coming from the food production sector, the business has not been affected by the fallout from the credit crunch.
Even rising food prices haven't dented demand for the food processing staff that the company provides and manages on more than 100 client sites.
Manufacturing is still important for the company, however, this has been declining as many firms move their operations overseas.
The Nottingham-based company also has a 17-strong branch network. As well as supplying staff, these sites have the potential to initiate new onsite partnerships with clients. Techsearch, its smallest arm, specialises in temporary and permanent engineering, IT, HR and fast-moving consumer goods placements.
In March 2007, the company bought Market Harborough-based Onsite Partnership. This complements Staffline's core market by specialising in logistics and distribution.
The company recently launched a new service, called Bought Out Labour Technology (BOLT). This is similar to its onsite service, but has specific purpose of creating "an alternative brand".
Almost all the company's sales (99%) come from the temporary side of its business. Staffline relies heavily on the influx of workers from the accession countries of Poland, Latvia and Lithuania. While Hogarth accepts that some are returning home, he is confident that the government will allow workers from Romania and Bulgaria to be taken on as employees, thereby making up any potential future shortfall.
Apart from operating predominantly in the strongly defensive food processing sector, Hogarth says the company's outsourcing business model gives it several key advantages over its competitors.
This is not recruitment in the traditional sense, he explains. "It's more the processes we run. Most of our clients are really great at running their business, but they are not so good at the softer things, such as looking after the workers, which is where we score." This is one of the reasons why the business has done well over the past three years, he says.
Outsourcing also gives Staffline cost advantages over competitors with large branch networks, and their heavy overheads.
The result is that while the company's gross margin is not as high, the client gets a better price, while net margins are similar to those of the competition.
Another key factor behind Staffline's growth has been it relationship with clients. "The whole onsite model has been about giving our clients competitive advantage. It's about providing a better services and
giving clients more for their spend, so we become part of their HR department."
In one instance, Hogarth says Staffline successfully persuaded a manufacturing client in the Midlands that if it paid staff a bit more it would get a better class of worker. With fewer workers producing the same level of output, the client saved £600,000.
Although superficially bad for the agency in that it gets paid per worker per hour, Hogarth says this episode has been crucial in establishing a "good long-term relationship" with the client that so far has lasted five years.
At the same time, any idea that Hogarth is a soft touch is dispelled. "We are not driven by sales, what matters is profits. Sales is vanity, profit is sanity. We turn down a lot of business because it has not got the potential profit," he says.
Hogarth emphasises that the turnaround has been a team effort. "I am constantly amazed as I go around the country about the people who work for Staffline. They are so incredibly dedicated." He says his role is to give staff the freedom to go out and do their job, to try new ideas and even make mistakes, though not the same one 32 times, he jokes.
Hand in hand with Hogarth's personal philosophy, running an ethical business is a recurring theme in how Staffline operates. "Everything we do is ethical," says Hogarth, citing the company's refusal to work with clients with poor health and safety standards as an example. "I certainly don't have the right to risk somebody's health and life to make a profit," he says.
Indeed, though Hogarth describes himself as someone who is not very good at telling people what to do "in a desk-thumping manner", this is one area that gets him riled up. "I get really pissed off if you don't do the right thing by people," he says.
This extends to Hogarth's support of the Agency Workers Directive which he says will drive out "the slightly seedy operators". However, that said, it is clear his motives are not entirely altruistic. "Our contractors are very important to us. We don't have a business without them, so we will continue to look after them in the best possible way, and become an employer of choice."
Hogarth agrees that some people might see recruitment as a strange choice of industry for someone with so strong a moral compass. Indeed, his varied career history suggests that he is a businessman first, and perhaps only then a recruiter.
"I should say that recruitment is something I really wanted to do all my life, but no, I am afraid not," he says adding credence to this view.
However, at the same time, Hogarth evidently relishes his current role. "I am constantly selling, I enjoy selling. I like doing deals, negotiating with banks to raise money… each day is different. The job has the perfect mix."
While Hogarth has clearly been successful in turning Staffline around, he is clearly hungry for more. "Even though we are one of the bigger players, 3% marketshare is nothing. We have barely started," he adds, declaring his ambition to reach 10% over the next five years.
To do this will involve expanding beyond its Midlands base to untapped regions of the South, the South-West and Scotland. But on the evidence of a career that started off in tuck shops, and now specialises in the chicken nugget end of recruitment, few would bet against Hogarth pulling it off.
Andy Hogarth: a snapshot
Born Edgware, London. Attended Watford Grammar School
1972-76 Various jobs in garages, selling trousers, soft drinks, bars, factories, warehouses, driving
1976-81 Conoco/Jet, managing filling stations in and around London
1981-85 Car Salesman for Datsun/Nissan
1985-88 Opened and operated franchise for Alfred Marks (Adecco) in Stevenage
1989-94 University of Central England, qualifying as Certified Chartered Accountant. Part-time jobs including dustman and HGV driver. Acquired and operated a nursing home for the elderly in Rugby. Sold in 2006
1994-2002 Finance director of Pipeline Constructors Group, heading the management buy-out
2002 Joined Staffline as finance director, becoming managing director the following year. Owns Hogarths, a hotel near Solihull, and chairman of a venture capital-backed business, Carnell Support Services specialising in motorway commmunications
Staffline Results
Year ending 31 December 2007 2006
Revenue £119m £84.1m
Operating profit £4.9m £3.8m
Profit before tax £4.4m £3.4m
Employees 245 213
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