MRINetwork’s growth plans continue apace

19-Apr-2006

Most companies claim to be growing, but few can compete with MRINetwork for the scale and aggression of expansion.
Gloucestershire-born Steve Mills, the firm’s senior vice president, is now based in the US – but he’ll be spending a lot of time in the UK over the next few months as the company gears up for growth.

The news comes hot on the heels of the announcement of bold expansion in Japan, where MRINetwork has been active since 20004. It plans to open more than 100 franchise offices, and four company-owned outlets, in Japan by 2009.
With the world’s second-biggest economy having enjoyed a prolonged economic recovery, the attraction is obvious.  However, Japan is a mature market. The sceptic will immediately ask: surely the competition in this middle-management recruitment market is intense?

Mills argues exactly the opposite. “Nobody else in Japan was in that space,” he says. “It was revolutionary.”
Mills describes the candidates MRI targets as “impact players”. In the UK, MRI’s ‘space’ means the £50,000-£100,000 bracket.
 “It’s commercial directors, sales directors and mid-management in large companies, or senior management in small companies,” says Mills. “We’d normally stop short of chief executives.”

Headhunting is still new in Japan, especially for middle management positions. “When recruiters started making the headhunter calls, the candidates often thought it was some sort of scam,” said Mills.
The firm’s decision to grow is very much in line with Mills’ upbeat analysis of the market. His opinions are as much a warning to clients as they are an expression of optimism.
He says US employers have reacted faster to the change in the market. “Some people in the UK haven’t cottoned on. They still think they’re in 2002. Then they could take their time when deciding between candidates,” he says.
But, he warns, the best candidates are now getting multiple offers. “If they’re not getting multiple offers, they’re not the best candidates.
“We say to clients: ‘If you don’t see this person this week, you’re going to lose him.’”

Not surprisingly for a recruiter, Mills talks up the advantages of changing jobs frequently. “How to make the next step from middle management is a key question. Our research shows that once you’ve been in  a middle management role for four years, you’re not likely to get to the top in that company. You get stuck with a certain label,” he says.
“Very often, these people have had no pay rise during the time they’ve been there. We’ve been in an area of very low wage inflation.”
Not surprisingly, they move on.
“It can cost 25% more to replace them, but some companies are happy to do this.”
Mills’ vision of the industry extends to a whole new role for consultants.  
“We’ve been seen as bodyshifters,” he argues. “We need to educate the public. This is not just about making a quick buck.
“I see our role develop over the next 10 to 15 years. We’ll become almost like a sports agent, helping people through a lifetime. We’ll become their coach or mentor. I really think that’s how our industry will evolve.”

Mills says MRI’s fees are currently about 30% of the candidate’s first year’s salary. “I can’t understand all this talk about pressure on pricing. Why would you cut your fees when the supply of your product is shrinking?” he asks.
He says demographic factors will keep the supply-demand balance moving in favour  of the recruitment agency.
MRI sees more scope for growth outside the US, which currently accounts for 80% of total revenue. “The overseas proportion could
rise to 50% in the next few years,” says Mills.

Power and telecoms are two of the fastest growing sectors, says Mills. “There’s a real shortage of power finance specialists,” he says. BT has been a major client recently; MRI has placed nearly 200 people with the firm in a managed contract.
MRI has also benefited from Sarbanes-Oxley, new US legislation requiring more financial disclosure and greater transparency in the wake of the demise of energy trading giant Enron. Firms have to hire compliance staff to ensure they present all the required information. “It’s been a major source of wealth creation for recruitment agencies round the world,” says Mills.
MRI is not yet, by Mills’ own admission, very strong in finance recruitment. As a company with 1,100 offices, most of them on a franchise basis, it cannot easily be summed up. “We don’t specialise in any one sector. The offices trade in their own verticals,” says Mills.

Total fees generated by MRI offices worldwide are more than $500m annually. However, as a franchise operator, it only takes a percentage of the total.
MRI reported revenue of $62.6m for 2005. This is less than 6% of the revenue of parent company CDI, also based in Pennsylvania.
MRI started up in 1965 and was acquired by CDI in 1973. The three other parts of the CDI Group provide much more revenue: construction recruitment firm AndersElite, and US units Todays Staffing and Business Solutions.
MRI may therefore look small and non-core in the grand scheme of things. But Mills says: “So far as I know, there is no intention to
spin it off.”
Mills describes MRINetwork as a collection of 1,100 independent companies.
So what is the attraction for those who work for MRI on a franchise basis?

“We find our prospective franchisees in industry,” explains Mills. “We look for entrepreneurs who want to run their own business. We train them and help them set up, and build a business. They feel part of the community. It’s a lonely thing to be doing on your own.”
The network “gives us a lot of power”, he says. “But the biggest benefit they get is training.”
The separate businesses in the network have evolved in a variety of ways. Mills points to the benefits of video-conferencing. Mark Baines, an owner of a MRI business, uses videoconferencing heavily to recruit staff for London firms, though he is based in Wolverhampton.

Mills extols the virtues of software packages such as Caliper, which helps in the selection process. He explains that recruitment is sometimes not simply about picking the “right person”. People have to fit in. Caliper can be used to identify the strengths and weaknesses within a team. “You can then overlay with a given candidate, and see whether he or she would complement the team.”
MRI has also targeted the emerging markets. It has opened in Turkey, the Czech Republic, Bulgaria and the Ukraine. Mills points to the recovery of the Turkish economy. The company is also in Mexico. In China, it has recruited both ex-pats and locals. It has even looked at Brazil. “But we haven’t found the right partner there yet,” says Mills.

To some extent, Mills’ career has followed his own advice on changing jobs. He spent six years in retail management with the John Lewis Group, owner of the Waitrose supermarket chain. In 1988, he was looking for a change. “I got into recruitment the way most people do. I walked into an agency [Austin Benn] looking for a job, and they hired me.”
 In 1991 he was appointed national account manager of Adecco, and in 1993 joined the Travail Employment Group, based in Gloucestershire.
He became the franchise director a year later. In 2001, he joined MRI Worldwide, subsequently rebranded as MRINetwork. In 2003, he moved to MRI’s world headquarters, in Philadelphia.
Mills, 42, describes himself as “fanatical” about sports and would like to have played rugby or cricket for Gloucestershire, but confesses: “I would never have been good enough.” He’s also a keen golfer.
But he adds that the job he’s now in has more than its share of compensations and is well-suited to his temperament. “I am, by my nature, restless. I can’t imagine doing anything where you have to sit in one place for too  long,” he says. 

In the space of a few days he has been in Tokyo, London and then will go back to the US. He has more than 50,000 unused air miles, and will soon be making more transatlantic trips.
“And they call it working,” he says, relishing the prospect of further travel.
He notes that his three-year-old daughter Georgia has now picked up an American accent – but his tone suggests this is something he accepts as an inevitable consequence of his career rather than a matter of any lasting regret.