FROM JANUARY 2016's RECRUITER MAGAZINE On a plane from Prague, a director of NonStop Recruitment realised training UK graduates in the Czech Republic could be just what the business needed. The rest is history...
About 100km east of the Czech Republic’s capital Prague lies the small town of Pardubice, where NonStop Recruitment has created a training academy by leveraging European Union funding — setting the company on a trajectory to achieve 100% growth each year.
As founder Kevin Smith tells Recruiter, the firm, having got its internal recruitment and training programme to the standard it wants, is just now “taking the foot off the [growth] brake” with an aim to take on 20 people a month indefinitely.
The training scheme, Smith and NonStop managing director Oliver Donoghue say, is the engine room that fuels the business — allowing it to grow its own recruitment consultants and, by giving each new consultant a different market to work, letting the business grow.
But it has not been without its challenges — from hiring the wrong people and having to let good people go, to a language barrier, constant audits and even a visit from armed police, which they label “comical”, to check they weren’t employing people illegally.
“We’ve shed blood, sweat and tears,” Donoghue says.
The name itself was also somewhat a challenge. Named NonStop after the specific software market it used to recruit for, when they opened in the Czech Republic they quickly learned it was the name given to bars that stay open all night.
NonStop was set up in the UK as an IT recruiter by former Progressive (now part of SThree) consultant Smith, who with only three years’ recruitment experience decided to strike out on his own in 2000.
Married to a Czech national, it was inevitable that Smith would move there one day and when that time came, in 2007, the plan was that he would work from there and commute back to London when necessary. However, he begun to surround himself with a few Czech business support people — an accountant, for example — as it was cheaper to hire top calibre people there than in London. Then came the idea to start training people.
“We had been training people in London but it was more a mentor-mentee relationship, and it was inefficient because they had to discuss everything after every call,” explains Donoghue, formerly of Hydrogen Group’s Finance Professionals.
And on doing their maths, they realised training people in the Czech Republic would cost about half as much as it would in London, thanks to lower overheads.
The company applied for an initial £1.2m-equivalent from the EU Structural Funds, through its enterprise and innovation programme, in September 2008 to start its training academy. That was followed by a later £1.3m grant but they needed to make the investment first, without knowing whether the funding would ever come through.
About this time the financial crisis really began to hit the business — clients were putting a hold on hiring and Smith had bought out the other shareholder in April 2008, leaving the business somewhat short of cash.
“We just had to work hard,” Smith explains. “It got very, very difficult but from personal perspective, it was also a learning curve.
“With Oliver, I had to take control of the business very firmly and we had to make some difficult decisions. We had to toughen up and do so quite rapidly and do it faster than our competitors because we had no money left.”
It wasn’t just a few people they were to take on either. The funding was for 40 people, and specific EU rules meant they could not be client facing, so no recruitment consultants.
Czech nationals were initially recruited for training, but that in itself was a challenge, Donoghue says.
A communist hangover meant it was an insult to motivate them with money, but also, the training programme was still unrefined.
On a flight from Prague back to London, Donoghue overheard a returning stag do talking about how they would love to be able to live in the Czech Republic. It was a light-bulb moment — why not recruit British graduates?
“If I think back to what I wanted fresh out of uni,” Donoghue explains, “it was a job, training opportunity, potential for career progression, opportunity to travel and good earning capacity.”
That is exactly what NonStop is giving, plus the opportunity to live abroad, with all help given to set up a life in Pardubice, including cheap lodgings in company-rented flats.
Fast forward seven years and the training programme, filled with mainly recent graduates, has been refined into distinct sections that teach them all stages of the recruitment cycle, and make them undertake significant research into the markets they will recruit for.
Each stage, but especially the beginning, is subject to a heavy quality assurance (QA) focus. The EU funding, as well as allowing the firm to set up back office functions and begin its training programme, allowed it to create an internal QA function. The QA team covers all levels of the business with a purpose to see where people need the help to develop.
The time to get from new starter to junior consultant has reduced from 5.4 months to just under two, while the rest is entirely dependent on the individual, Donoghue says, adding the academy costs about £4k per person per month with that investment generally repaid in six to 12 months.
Not only is the business able to take on a lot of people, by the time they have completed the training, they are all highly engaged and invested, he adds.
And it is having a direct affect on the business’s financial position, with net fee income and net profit increasing respectively from a little over €2.8m (£2m) and €354k in 2010 to about €7.9m and €1.61m last year. Projected NFI is €11.4m and net profit €2.8m.
Based on the success of the academy, and after an internal survey found people would like to have the option to train in Prague, the company is about to set up another training academy there.
At the beginning of this year, Smith set the business a challenge, or the ‘big hairy audacious goal’ as they call it.
“I said ‘look, I want 100% growth year-on-year, can anyone tell me why we can’t do that?’ And nobody could, so now we’re doing it.”
By the end of the third quarter, they were 82% of the way to achieving that goal, with three months left until the end of the financial year. Headcount is now about 150.
Growth is not just about net fee income though, Smith says, “it is about [people] growing the people under them”.
As consultants progress, high performers are given the opportunity to grow their own teams — it may be in a new location or a new market — through the business accelerator programme, which aims to produce the next generation business leaders.
Growing ‘layers’ in this way, Smith says, is how the business will be able to sustain growth, as well as ensuring the back office, internal recruitment and QA teams grow so the same ratio is retained.
But do they worry the training programme will be turning out clones and shutting the business off to fresh ideas?
It’s impossible, Smith says. “If you’re going to have a company culture and a brand, there needs to be a look and feel as to how that company behaves. And I think everybody should have the same opportunity, meritocracy, training, same management style and structure. I think that’s key because it’s not fair otherwise.”
It also helps eliminate bad habits a consultant may have picked up elsewhere.
But they are quick to point out it doesn’t mean they will never make another senior hire, though if they did it would never be about how much that person bills but rather cultural fit.
And can a 100% growth target be sustainable?
“There’s clearly a limit because if you do it for long enough you’ll end up employing everyone in the world but if it’s sustainable for a business of 40 people, why is it not sustainable for a business of 4,000 people?” Smith asks.
“I can’t possibly know the answer because I haven’t done it yet… But I can try. And what I do know is that if we don’t try, we definitely won’t do it. But if we do try, we might.”