Ochre House: Colin Cottell spoke with Sue Brooks and Chris Herrmannsen

Have you had a ’ker-ching moment’ recently? If so, you had probably not mention it to Sue Brooks, managing director of recruitment process outsourcing (RPO) firm Ochre House. Brooks uses the term, which imitates the sound of an old-fashioned cash register opening, to characterise what she sees as a thoroughly outdated RPO business model.

“’Process a CV? Certainly Mr Client, we will charge you for that.” “Booking an interview? That’s another ker-ching moment - that will also lead to a charge’,” she adds, a note of scorn discernible in her voice.

In place of what Chris Herrmannsen, Ochre House’s chief executive and Brooks’ business partner, claims was an unsophisticated and tactical way of doing things, that focused on “finding more people for less money in a shorter time”, the two have embarked on the latest stage of a journey to build a business that is different. So out with those ’ker-ching moments’ and in with a business model that is long-term, strategic and built on partnership. “This is our thought process: adding value rather than taking a problem and exploiting it,” says Brooks.

This journey was given a massive boost earlier this year, when Ochre House sold its three recruitment businesses. The injection of funds, following the sale of ASA Law, Parkside Recruitment and ITN Mark Education, has allowed Herrmannsen and Brooks to focus their efforts on building up Ochre House.

“They were more traditional agencies and were not strategically aligned with the Ochre House RPO business,” says Herrmannsen of the three staffing businesses. “We wanted to take all our resources and time to build the Ochre House business as quickly and as well as we can.”

This leaves it as the only remaining part of the group that Brooks and Herrmannsen took over from Trinity Mirror in a management buy-out in 2006. Following the group’s creation in 2006, the RPO arm grew rapidly by at least 45% a year to become the largest part of the business, and now has an annual net fee income of £15m. Ochre House’s clients include O2/Telefónica, BUPA, SAS, Siemens and GE Energy. Herrmannsen says the RPO market is set to double in the next three years and that Ochre House is looking to outperform the market.

In line with the two directors’ minutely planned approach, Brooks sets out a number of phases for how Ochre House interacts with its customers, with each level adding a successive layer of value to clients. It’s a road map, if you will, of the journey that both believe will eventually lead to Ochre House becoming a full strategic resourcing partner for many of its clients, and for those clients to become fully talent-centric organisations.

Phase one begins with “getting the basics right, a standardised efficient process to filling vacancies”, before moving on by “creating the next level of value”, Brooks explains. Most RPOs are good at this element of RPO, she adds.

Phase two is about helping clients plan their resourcing needs. It also involves asking questions that traditional staffing firms would normally avoid, such as could the vacancy be filled internally or even is there actually a vacancy at all. “It’s about recruitment prevention. We don’t go external until we are absolutely certain we have optimised what we have already got,” says Brooks. Indeed, Brooks estimates that typically 70% of all recruitment is unnecessary. This is either because staff leave or because the organisation simply doesn’t know whether or not it already has people in the business with the necessary skills and capabilities.

It is in this phase that the focus on efficient recruiting is supplemented by more emphasis on effective recruitment, with Ochre House’s embedded resourcing business partners working with the client’s HR business partners and business heads. The final phase, according to Brooks, is full talent management and strategic partnership. This is where Ochre House “starts to help shape the client’s strategic approach to its people to ensure it is directly aligned to its [the client’s] goals”, she says.

It is here that Brooks believes the difference with “first-generation RPOs” is most striking. “The value we are trying to drive here is that if we get the right people in the right place, that is not only saving the client money, reducing attrition and improving quality of hire, it is also increasing value to the business in terms of sales and new customers.”

It is indicative of Brooks’ confidence in the link between the right people and business outcomes, that in the case of one supermarket Ochre House receives a percentage of the profits made by individual stores. “The company is measuring our success not on how long it is taking us to fill a vacancy, not on attrition rates in a store, but is actively measuring us on store profitability,” she says.

Indeed, so confident is Brooks of its business model that Ochre House is prepared to wait several years for a return on its investment. In the case of the supermarket client, this investment included providing more than 20 resourcing staff, as well as tools, and technology. “We only realised our return on that investment when we delivered value to the business,” she says.

At this stage, Ochre House works with customers across all aspects of talent management, including employer branding, internal mobility, staff development, staff engagement and productivity, says Herrmannsen.

For example, with onboarding, rather than just focusing on the process, the emphasis is on making sure it is used efficiently, so that it results in highly engaged staff that are ready to perform. “If we can do that, we can improve on the ultimate outcome of making that hire, which is to add value,” says Brooks.

Retention is a commonly used KPI (key performance indicator) by Ochre House’s clients, particularly in phase two, and again, the RPO’s remuneration is linked to its performance. Herrmannsen says that Ochre House is responding to the needs of customers, who increasingly don’t just want to win “their fair share of battles” in the war for talent but also want to manage that talent.

“It’s not about new people on a conveyor belt and having to replace them four weeks down the line. If we can find, hold on to and develop the best talent, that is going to be the biggest differentiator between ourselves and our competitors,” he says.

To achieve this, Herrmannsen says there is not one preferred approach but a continuum. At one end of the scale, Ochre House provided one telecommunications firm with a complete resourcing function of more than 20 staff from scratch, while at the other end another client already had its own staff. In the latter case, Ochre House took on those employees [onto its own payroll]. “Normally, it is somewhere in the middle of the scale,” says Herrmannsen.

Ochre House hasn’t got to where it is today by accident. Brooks and Herrmannsen first met in 2005, when Herrmannsen acquired Brooks’ business Profiles Resource Management. Since then Brooks, who Herrmannsen describes as “the operating and intellectual leader of the business”, has headed up the RPO, while Herrmannsen in his own words has played more of a “corporate or investor” type role. But whatever their different roles, it is clear they have long shared a vision: to challenge the way that RPOs and their clients view resourcing.

“When we set up Ochre House, it was to challenge the marketplace. We needed to prove this was possible,” says Brooks.

However, the strategy is not based on some vague notion that strategic partnerships are the future, but is a very logical response both to the wider economic and social trends and to the changing needs of clients.

As Brooks explains, declining profits margins, an ageing population, especially in Europe, and globalisation have all combined to pressurise organisations to be as efficient as possible, but also simultaneously to grow. These together with a recognition that growth depends on having talented people, provide a favourable backdrop for Ochre House’s continuing expansion, she argues.

In addition, although 60% owned by private equity house NBGI Private Equity, the firm is in the enviable position of being debt free, and both Herrmannsen and Brooks are looking for further expansion. The company already works in partnership with US RPO firm Pinstripe, and it placed people in more than 30 countries last year. Its staff in London speak 22 different languages and the company is increasingly looking abroad for opportunities.

“Customers are expecting us to operate in multiple territories across the world, and we will be looking to expand our global footprint,” says Herrmannsen. The company is also looking to build capacity to grow the strategic partnerships aspect of its business, says Brooks, who adds that this is likely to involve acquisitions. And who would bet against it?

But just don’t mention those ker-ching moments.

Source: The Recruiter

Posted by Colin Cottell