Two experts on staffing industry boards of directors gave us their views on the subject from different perspectives. A former President and CEO of Remedy Temp, Greg Palmer has served on multiple corporate boards and he has been the buy side advisor on over $3 billion in staffing industry acquisitions. Lisa Maxwell specializes in placing board members, CEOs, and C-level executives for staffing firms around the world. A founding partner of Gerard Stewart, Lisa is a 20-year veteran of the human capital industry and an expert on board composition and strategy.
Q. Greg, we’ll start with you. Over the past decade, you’ve served on 12 boards of directors for staffing and human capital firms. What is it about the industry that’s so appealing to you?
Greg: I strongly believe in the value staffing firms provide to find talent, help companies achieve their goals, and stay compliant. The industry performs several really important services and they do them really well. From providing airline pilots to doctors, I can’t think of a category there’s not a staffing solution out there to support. The industry has been growing steadily for 30 years, but it’s still in its infancy. There are a tremendous amount of new business models getting reinvented and refined, so it’s an exciting place to be.
Q. Lisa, what is it that your clients are looking for in a new board member? Is it primarily industry experience like Greg brings?
Lisa: Certainly, there is big demand for staffing representation, particularly among PE firms who’ve acquired businesses anywhere from $50M-$5B. To the degree that there is a lot of industry consolidation, there is an increasing need for experienced executives like Greg. There is a relatively small pool of candidates who would be sought after for these types of roles, and it ends up narrowing down fairly quickly.
At that point the focus turns to evaluating what they bring the organization and whether the match makes sense. We look very closely at gaps in functional experience and who has the ability to contribute from day one. One thing everyone is talking about is diversity with boards, and we invest a lot of time and energy in building a diverse pool of potential members. We also specifically try to look at diversity of thought. We’re looking for board directors who can offer a differing view and will be willing to face off and challenge the executive team.
Q. What are the primary issues board members advise staffing companies on?
Greg: Keep in mind, there are two different types, statutory and advisory, and you play a very different role depending on the nature of the board. A typical advisory scenario includes a company founder who surrounds themselves with experienced advisors to help them grow their business. A statutory board typically has a lot more teeth, such as you’ll find with a PE firm that has skin in the game. Those boards also typically have more accountability to meet specific profitability and shareholder goals.
Where a board member really focuses depends on the situation. Sometimes a company is looking for someone who has “been there, done that” for a specific scenario, for example turnarounds or sector expansion. If that’s the case, you can sometimes get into the weeds. Other boards focus on working with the management team, making sure they have a plan and direction and help them evaluate how they are executing against the strategy.
Lisa: Definitely there are PE and staffing firms who realize they need counsel beyond just spreadsheet analysis and appreciate the true value that an operating partner brings. They’re looking for high-pedigree members who offer deep insights.
Beyond the obvious choices of previous CEOs, we’ve seen a trend towards companies looking for board members who’ve been in the thick of it and bring real-time, relevant experience with emerging issues. Recently, one client sought a Chief Talent Officer profile to gain a director who understands the full talent landscape in high-growth sectors. Another specifically looked for a digital strategist. The emergence of new business models is creating interesting dynamics on staffing boards.
Q. What are some other trends you’re seeing in the boardroom? Are there topics on the agenda now that weren’t a decade ago?
Lisa: Traditional staffing models are still alive and well and driving many of our board searches, but we’re also closely watching technology innovations that are making an impact. Twelve years ago as RPO was emerging, people thought it was just a repackaged term for staffing and said ‘it’ll never last.’ Today, it’s a powerful business model. Similarly, it’ll be interesting to see which disruptors will build viable revenue streams and have a lasting effect on the industry.
Greg: One firm I work with has two board members specifically focused on technology from different perspectives, seeking out both differentiation and efficiency. Big data is coming to staffing, along with new applications for video, text, and candidate engagement. Also, companies are looking specifically for individuals who have M&A experience to help them scale, as well as deep experience in more than one sector such as technology, light industrial, or healthcare.
Q. How important is it to have a cultural fit with board members?
Lisa: By the time we’re involved, the culture is already created and in play. Because we’re usually looking for a very specific skillset, it doesn’t come up as much when we’re doing a board search. But culture does drive business at staffing companies. Because people are the core of what they do, culture is exponentially more important for a staffing company than for other types of business.
Greg: The longer I’m at this, the more I appreciate the importance of culture. As a board member, I have to ask, can the culture support growth? It translates directly to the quality of service to candidates and clients, as well as internal staff turnover.
Success starts with who’s on the bus. Who’s on your team and can they take you where you want to go? Whatever the scale, size, and shape of your business, can your team deliver on strategy? If you have the right culture and the right people, the company is more likely to do well.
