Rewriting the recruitment rule book
IF recessions tend to spur innovation and clear the way for the groundbreakers, Paul Marsden is hoping he can be this recession’s innovator in the recruitment sector, an industry that made him a multi-millionaire on the eve of the downturn.
In 2007, at the height of the market, Marsden sold the boutique financial services recruiter Astbury Marsden in a management buyout worth £17.5m, a figure he wryly admits would be impossible to realise now. After a year-long due diligence process, he began drawing up plans for a new business that would streamline and transform the recruitment company model – and then the Lehman Brothers bust happened, sending recruitment into a tailspin. Instead of retreating, however, Marsden pressed on merrily, spying an opportunity to make hay as the competition floundered.
“Virtually everyone I spoke to thought I was mad to start a recruitment company in a dead recruitment market,” he says on the anniversary of the Lehman collapse, “but there’s logic behind it. Competitors were disappearing, and the costs are probably a third what they’d have been in 2007.”
READY CASH
With the luxury of ready cash from the buyout and no debt, Marsden has spent the past year taking advantage of low morale at other firms to poach talent for his new venture, Twenty Recruitment Group. The name is an attempt to separate the company from the staid monikers that dominate the industry, but it’s not just cosmetically that Twenty is breaking with the old way of doing things.
Marsden has invited leading sector specialists to head up divisions for various professional services disciplines – such as corporate finance, management consultancy, IT, financial services – each of which he is funding separately. These division heads have total responsibility for deciding their funding budgets and growing the business, and they and their teams have the ability to earn equity in the division as they generate profits.
It may seem like a franchise operation, but Marsden prefers to see it as taking a private equity approach, investing capital in areas requiring it, while spreading his risk across different divisions and even geographies – international expansion is planned.
It’s a nimble strategy that seals the rest of the group from the impact of any one sector failing, and enables Twenty to adapt to market situations, growing each branch according to its own timeframe. For instance, Twenty’s first move into the market a year ago was with a corporate recovery division – “from banking recruitment to bankruptcy recruitment” as Marsden quips – to take advantage of what was occurring then. He’s now growing the financial services wing, as that sector gradually shows signs of life.
ENTREPRENEURIAL
Marsden reckons the equity deal giving staff ownership of their division’s growth process will also foster an entrepreneurial approach – something he sees as a fundamental requirement for the post-recession recruitment industry.
“Beforehand, most recruiters were inexperienced, didn’t have to do too much and wouldn’t have much contact with line managers. Now they’ve got to fight for every job, so competition is dwindling but service levels will be much higher.”
Twenty’s managing director, Adrian Kinnersley, jokes that Marsden, who has been in recruitment since the late 80s, is “the Nostradamus of the industry” for calling the top of the market and selling Astbury Marsden when he did. So what does he foretell for the City job market as it exits the recession?
“There’ll be a lot of churn as demoralised people feel safe enough to look for new jobs, but they may be disappointed to find the grass isn’t greener on the other side,” he says. “But it’ll be a very slow upturn. We’re not expecting to be profitable for a couple of years, but it’s a great opportunity for us to grow the business steadily.”