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A GFC-exposed skills crunch

Friday, 20 January 2012 | By Michelle Hammond

Expanding your workforce is imperative if you are to diversify and grow your business, but how do you know the people you’re hiring are up to the job? Rob Davidson found this out the hard way.

 

Davidson is the founder of Brisbane-based recruitment firm Davidson Recruitment, which he worked on as a sole trader before partnering with his brother Bruce and, later, Peter Murphy.

 

“We started in the legal, accounting and property sectors. They were three areas we had a strong interest in,” says Davidson.

 

In addition to these sectors, Davidson Recruitment now caters for other major industries, including banking and finance, engineering, information technology, sales and marketing, and mining.

 

In 2011, BRW identified the company as the sixth best place to work in Australia. It was also named Australia’s favourite recruiter in the SEEK Recruitment Awards in 2008, 2009 and 2010.

 

However, the company might never have won these awards if the global financial crisis hadn’t occurred.

 

“The biggest lesson we learnt was during the GFC. We were fortunate and responded early to the GFC, but there was one lesson we learnt that many businesses make,” Davidson says.

 

“To a degree, we were running more of a social experiment than a business… We were obsessed with workplace culture but we didn’t understand it properly.”

 

“We interpreted culture as creating a great place to work, but culture has to be matched by business strategy.”

 

“While we created a lovely place to work, there was not enough accountability and discipline in the business.”

 

According to Davidson, this did not become apparent until the onset of the GFC, when markets took a turn for the worse, giving the company a rude shock with regard to its staff.

 

“We had a lot of people who were good performers in a very buoyant market before the GFC,” he says.

 

“But as Warren Buffet once said, it’s not until the tide goes out that you can see who has been swimming naked. [Certain staff] didn’t have the fundamental sales and marketing skills to survive when the market wasn’t as buoyant.”

 

“However, the benefit of being a private company is that you can respond very quickly.”

 

“Before the GFC hit, we made a significant number of redundancies… We dismissed 27 staff out of 110 in one week. Ultimately, the business was pared back to about 60 people.”

 

While this was a painful exercise, Davidson knew it was necessary in order for the company to survive the downturn.

 

“We were running some pretty lapse business practices that the GFC exposed,” he says.

 

“During the GFC, we reduced our overheads and reduced our business size to a level that was sustainable in that market.”

 

Post-GFC, Davidson Recruitment is far more selective about the staff it takes on, so its workforce hasn’t increased significantly. But the quality of its staff is second to none.

 

“Today, I think we have a much greater emphasis on employing people with a strong sales capability, and we probably also learnt some management lessons,” Davidson says.

 

“We probably put up with underperformance for too long. We learnt a lot about what it takes to create a high-performance culture.”

 

“We weren’t measuring a key metric – profitability per staff member, not per fee owner… There’s no room for average anymore.”