Each Tuesday Dynamic Business will feature a company or an entrepreneur that has endured, and overcome, an incredible challenge. This week we hear from Michael Floyd, CEO of Carrera Partners.
While Australia managed to avoid the lows of the GFC that hit America and Europe, some industries were hit by the downturn in global business. The recruiting industry, and, as a result, Carrera Partners, was one of them. Though many businesses would have similar tales to tell, it’s how Carrera Partners overcame the period of the GFC that makes its story so compelling.
From 2007-2011, the business struggled with the flow-on effects of the GFC.
“Being recruitment specialists, the GFC was a challenging time. With restricted budgets and recruitment freezes across many organisations, we had to be incredibly careful with our planning and resourcing,” says Floyd.
Carrera Partners however, had invested in the future and predicted tough times ahead.
“We had earlier invested in a cutting edge financial management system that allowed us to predict the onset when no one else really saw it coming, allowing us to make key decisions before business was impacted.”
“We made a decision early on to invest in our people above and beyond anything else. The leadership team agreed it was imperative to continue to communicate our expertise and experience as the best sales, marketing and communications specialists in our field, to stand out from the rest during this time.”
Making this decision meant that Floyd and the directors of the company had to ask the staff to accept reduced pay and hours in order that the business could make it through lean times. Floyd remembers this as a difficult thing to ask of his staff.
“For the directors to cut our salaries was a given as they had an invested interest in the business, but to ask that of the team was a big thing. We promised we would return back to normal as soon as possible. We treated our people with respect and were as transparent as possible, so they could clearly understand the big picture. In times of great adversity, you usually find people pull together for a shared outcome.”
Despite his reservations, Floyd was encouraged by the reaction from the staff, whose feedback he describes as eye-opening.
“They were hugely supportive, with 100 percent opting for a pay cut with reduced work hours rather than lose their jobs. It told us a lot about our people and culture, that they were just as committed, as we were, to continue business as normal during this time.”
Decisions were also made regarding the direction of the business during this time. In 2008, Carrera launched its contracting division which accounted for over 50 percent of business during the GFC.
“Budgets were tight across all sectors and businesses and job seekers alike were increasingly considering contracting as a viable, cost effective solution. Our clients’ business continued to require resources and to reduce the risk of long term commitments, contractors were engaged in place of full time employees.”
Since the GFC, Carrera has managed to hit the ground running by retaining all staff, so that when clients once again were functioning at full capacity, they’d be ready to attend to their requests. Floyd credits quick thinking and action with this success and is happy to see things have turned around.
“Business is thriving. Since the GFC, we’ve reviewed the areas we can provide expertise over and above our competitors. We have since focused on having broader conversations with our clients to develop talent management services that add value and complement current acquisition and ‘exiting’ of talent. We’ve tripled the business in four years and have grown the size of our team exponentially. We have offices in Melbourne, Sydney and Brisbane with specialists in every area of our clients’ business – FMCG, Services, Industrial – on hand to deliver superior insights and top tier talent. Our contracting division has grown by 300 percent since inception.”
Though Carrera Partners managed to make it through relatively unscathed, Floyd does think that he’d act a bit faster if he had his time again.
“Given the chance to do it again, I would act faster, tighten expense controls and drive new business more intensively. It can be common for many businesses to limit new business during challenging times and I think this is one of the areas that helped us through a challenging time.”
If you’re facing a challenge, Floyd has these three tips for how to overcome it:
1. Financial management tool that drives cashflow forecasting
It sounds obvious, but you would be surprised at how many businesses do not have a dynamic financial forecasting tool to indicate future cash flow. Making the investment in a tool that can communicate the business needs and forecast the future 12-24 months will be the best thing you ever invest in.
2. Communicate early and be transparent
Communicate with your team early. More often than not, staff will have an inkling something is not ‘business as usual’, so it’s imperative to communicate as early as possible.
3. Manage customer relationships in a structured manner
Many businesses go into survival mode during challenging periods and forget the future. There has to be a balance between the ‘here and now’ and a long-term approach. Keep an eye on the future to have meaningful conversations with your customers.