Head2Head is the leading provider of insourced recruitment services in the Canadian Marketplace. They are the Recruiters of Recruiters. At over $30M in annual revenues with 8%+ margins, and revenue growth of 93% this year alone, it is also one of the fastest growing companies in Canada too.
Today, we get a very special in-depth interview with one of the principles behind this phenomenal success story. Paul Dodd is the CEO, President, and Co-Founder of Head2Head.
Head2Head was founded in May 2000 as a provider of integrated outsourced recruiting solutions, primarily in the form of contract recruiters placed on-site with clients. Originally positioned as a cost-efficient recruitment model for small and mid-sized organizations, Head2Head’s services were also quickly adopted by large, global, blue-chip organizations such as Microsoft, Accenture, and RBC.
Paul Dodd himself is a 20 year veteran of the recruitment industry, with successes in both Canada and Europe. He co-founded Head2Head with the current COO, Stan Hamersak, in 2000. And since then, they have built an industry leader. Read on for Paul’s great insights!
Being an entrepreneur is like building your own house: a challenging, rewarding experience … and when you’re in the middle of it, you swear you’ll never do it again … but consolation is in the building and completion
What was the spark that led you to starting your business?
I’d worked in recruitment for a number of years, and found that recruitment services were often expensive, ineffective, or a combination of the two. Recruitment was so frequently a significant source of client frustration; I couldn’t help but think, “There’s got to be a better way.”
At the same time, a number of different recruitment solutions were emerging in Europe that were really changing the way that companies sourced and hired talent – and there was no established service provider of these kinds of solutions in Canada. Few had even considered an approach outside the traditional contingency and retained search models.
Now Europe is much more an agency marketplace than North America, which meant that I couldn’t just directly implement the European approach in Canada. But at the same time, North American companies were growing their internal Human Resources capacities. This provided the opportunity to generate and increase interest in bringing related competencies in-house – like hiring contract recruiters, instead of engaging external service providers.
Where did your business’s seed capital come from and how did you go about getting it?
All of our start-up funding was from personal sources: personal investment, equity, and as big a line of credit that Stan & I could get, with our properties provided as a guarantee. When you need to build a business, cash is a huge asset and when you don’t have that liquidity, it made for some nerve-wracking times, especially in the early years!
Tell us a bit more about Head2Head.
As the leading provider of in-sourced recruitment services to the Canadian marketplace, Head2Head has been able to maintain an infrastructure that accommodates a diverse client group without loss of core efficiencies while maintaining industry-leading financial margins. By leveraging a proprietary database of more than 4,000 recruitment professionals, as well as the more than 500 recruiters actively qualified as Certified Recruitment Professionals, Head2Head provides innovative recruitment solutions that help clients do more with less. Head2Head now serves a growing client base of over 350 clients—over eighty percent of which return as repeat buyers – and has been instrumental in sourcing, screening and placing more than 13,000 individuals in new jobs, resulting in nearly $700M in salary spend in 2010 alone.
I think that Head2Head is still best known for our first offering: “recruiting recruiters.” We place both permanent and contract recruiters who work on- or off-site at the client’s discretion. In the case of contract recruiters, this means that the client doesn’t pay per hire – they only pay for the recruiter’s time.
We also offer a wide range of other services, from traditional recruiting services to include contingent, specialty, and executive searches, through to managed recruitment solutions and talent management support. We like to define ourselves as the “client-centric” recruiting firm, which means that we’re not selling pre-packaged solutions. Our focus is really on customization, and building the best possible approach to meet specific client recruitment challenges.
Historically, our area is an undervalued marketplace from an investment perspective – we can’t generate private equity because those companies prefer more tangible products. Because of this, the definition of success revolved around building stability as a result of increasing sales and managing costs, as well as taking market share.
How successful has Head2Head been at doing exactly that then?
Head2Head has experienced 263% growth from January 2008 until today. Our current run rate is at $34M for this fiscal year, with an 8%+ profit margin at a rate of growth of 93% for this year alone. In the past three years, we’ve grown from 24 employees to our current internal team of 32.
Wow, very successful then. What about the geographic markets that you serve?
We have offices in Toronto, Calgary, and Vancouver, and the majority of our business is in Canada. But one of the advantages of our approach to recruitment is that we aren’t restricted to working locally. We have a network of more than 4,000 professional recruiters that literally spans the globe. This capacity, coupled with technological advancements in the last decade, has enabled us to successfully complete engagements for client locations across the world – places like Siberia, India, Singapore, China, and lots more.
(Editor’s Note: Do take a look at this nifty chart detailing Head2Head’s rise!)
We’re not just building better solutions; we’re constructing the support structures needed to develop and deliver those solutions.
What makes your platform unique and better than other recruiters out there?
Head2Head really brings price point sensitivity and internal efficiencies to what is generally a very mundane, services solution. We’re committed to developing customized, innovative solutions in response to specific clients’ needs. That means that every time our account managers talk with a client, they’re trained not to necessarily recommend a specific Head2Head service, but to ask, “What’s the most effective and cost-efficient way to solve this client’s recruitment challenges?” We’re always coming up with new solutions and new approaches. No two companies nor leadership teams are alike, so why should the same recruitment approach work for both?
Of course this means that we need some unique skill sets in our sales and delivery teams. The types of people who are successful at Head2Head are those who – like the company as a whole – approach things a little differently. We’re always looking for people who can really listen to clients, who can delve deep to understand their needs, and then think creatively to not just come up with a solution, but the best solution.
How did you brand Head2Head and market it?
Right from the beginning, I wanted Head2Head to stand out in the marketplace. We’re a different kind of recruitment company, and we needed that to be reflected in the branding.
While our cheeky, colourful brand did undoubtedly turn away some customers, it just as effectively attracted the companies that we most wanted to work with: small to medium sized businesses that were willing to try something new to achieve big savings in their hiring costs. Once we had established the credibility of our solutions, we were quickly able to grow to serve a wider marketplace.
Overall, our brand has resulted in recognition for innovation, for challenging the status quo, and – more importantly – putting some of the “excess dollars” found in traditional recruiting solutions business back into the client company. With these elements as the foundation of our brand, we can not only talk to clients about the ways we save money, but also how they can use those savings to improve employee training and engagement, or extend the spending to related channels, such as technology platforms or social media for recruitment.
While our cheeky, colourful brand did undoubtedly turn away some customers, it just as effectively attracted the companies that we most wanted to work with.
How did you build up your Management Team?
Trial and error!
When you’re trying to align people with vision, I think that there are always inherent risks in working with different types of people. Those with an entrepreneurial spirit and drive can be critical in a company’s early years, but you also need to find the right balance with other employees, those who are looking to build a stable, secure career. Finding the right balance was often tricky.
But building a strong management team was essential to building value into the business. What we ended up needing were people who have complimentary – or better – skills than the two founders, myself and the company’s COO, Stan Hamersak.
What insights do you have from building and attracting your workforce?
Different stages of company growth attract – and require – different types of people.
When we first started Head2Head, providing employee benefits was not only cost-prohibitive, but wasn’t of interest to the kind of entrepreneurial-spirited workers that we needed to get the company off the ground. Those people were far more interested in seeing those costs transferred into income.
But as Head2Head matures, we’ve had to place a greater focus on areas such as customer service and improving delivery channels – and to deliver on these areas effectively, we need different people with different behaviours. We’ve found that now we need people who can focus beyond sales and revenue, and that the best talent in these areas are best attracted and retained through more comprehensive employee programs and total rewards.
Could you give us a description of your biggest success so far?
Our biggest success is probably our recognition in the marketplace as the recruiter of recruiters. With more than 10 years behind us, we’ve now generated a significant asset: a pool of more than 4,000 professional recruiters. It’s absolutely unparalleled in the Canadian marketplace.
In the last few years, other local recruitment firms have begun to offer similar services – trying to catch up, as we like to think of it. It’s been fun to have clients report that some have actually explained these new offerings as being “like Head2Head.” I think it really speaks to the traction we’ve achieved.
The types of people who are successful at Head2Head are those who … think creatively to not just come up with a solution, but the best solution.
What other milestones has Head2Head celebrated recently?
2010 has been a big year for Head2Head. We celebrated 10 years in business – definitely a milestone. I remember times when I wondered whether I’d make it through the year, and now we’ve celebrated the company’s tenth birthday. What’s more we had 100% growth this year, which is especially significant, coming after a year of recession.
Head2Head also took the first major steps to achieving a long-term goal of establishing ourselves within the public sector. In the past year we became an approved recruitment vendor for the Ontario Public Sector, and have already landed some large government contracts. We’re definitely looking to expand further into the government sphere – and that means that we’re working to fully develop the competencies required to support public sector clients.
Internally, we’ve had a focus on developing more robust talent management strategies to support our team. It’s part of a drive to develop a more comprehensive internal culture that will continue to define us – creating something that’s visible, understandable and relevant to clients and team members alike. The hope, of course, is that this will in turn result in increased revenue.
Do you have plans to expand to new markets?
In the short-term, we’re actively looking to grow our business with public sector clients – within Ontario, certainly, but also leveraging our experience to gain a foothold in other provinces. We’re also finding that some of the solutions we’ve developed for our public sector clients are really solid products – like our booming resume screening business – can also be adapted to the needs of our core client base. Looking a bit more into the future, we also expect to expand into the US market within the next two to three years.
We’re also putting significant effort into expanding our portfolio of managed/outsourced solutions under the auspices of our RPO division. Clients are definitely showing more interest in managed recruitment solutions. In particular, we’ve found significant traction (and revenue) providing individual components of the recruitment lifecycle – talent mapping, or conducting candidate pre-screening products, to name just two – on an as-needed or project basis. The market has saluted Head2Head contract management services because it has grown 116% over the last 12 months.
I try to keep in mind that no matter what you do or know, you’re always going to make mistakes. While I’d approach building the company differently now, I don’t know that I would be as successful without the confusion and experience of things going wrong.
Now, on a more personal note, what are your goals as an entrepreneur?
At this point in the journey, my main goal is to ensure that the business is ready to be led as a managed enterprise going forward. This means that the focus is really on developing the business to be more robust, and planning for future growth and success.
For all the work we’ve done to date, this is really the transitional period in which we’re defining which of the many potential directions the company is going to take, and then building the foundational structure on which the business will stand in the coming years. We’re not just building better solutions; we’re constructing the support structures needed to develop and deliver those solutions: everything from internal leadership and account management, to customer service, contractor managers, and payroll support, on down.
What is your exit strategy?
Head2Head was always set up as a disruptive play in the marketplace. We’ve been saluted as being innovative and taking some significant market share, but recruitment is a business sector with significant fragmentation – we’re still just $30 million in revenue in a $6 billion industry. There’s so much room for growth.
I think Head2Head will be an attractive strategic alliance for someone to harness, especially given the strength of our brand. With that in mind, the focus of both Stan & myself has been to develop a leadership team that have the aptitude, skills and knowledge to really help drive the company forward. While it’s not an immediate concern, succession planning is definitely always in the back of my mind.
Do you have any other ventures you are working on?
Not in terms of something obtuse like property management, no. All of our current ventures can be seen as extensions of existing Head2Head services. I’ve been working on clarifying Head2Head’s services – really developing a more simplified business offering in response to clients’ needs.
To me, the best part isn’t the promise of freedom, it’s the mental stimulus … Every day presents its own challenges.
Now, as advice for other entrepreneurs, how do you define Success?
Success for me is finding the right balance between my goals for the company and some level of personal comfort and security. It’s about finding reward and fulfillment in both the personal and professional spheres of my life, and maintaining the balance between the two.
For an entrepreneur, I think success is also about taking a concept and not just bringing it to life but also proving it across the different stages of business growth. It’s one thing to be successful when first out of the gate, but it takes different skills to maintain that success when the company is two years old, or five, or ten.
To what do you most attribute your successes?
Three things: focus, family, and a great team.
If you were to recommend a book or movie to a young entrepreneur, what would it be?
Two books stand out for me. James C. Collins’ Good to Great is a great management book about becoming a standout company, and how to make the transition from “average”. More recently, I’ve found a lot of value in Made to Stick by Chip Heath and Dan Heath. Some excellent lessons there on how to communicate your ideas, strategies and brand so that they resonate with the audience.
Boiler Room is also a great film for young entrepreneurs, work, work some more and some more again. No one is really lucky in this world, you make your own success & luck for the most part and it has a direct correlation to effort & determination.
How has being an entrepreneur affected your life?
Being an entrepreneur is like building your own house: a challenging, rewarding experience … and when you’re in the middle of it, you swear you’ll never do it again. There are so many emotional ups and downs. The highs are amazing, and the lows are absolutely heart-wrenching but the consolation is in the building and completion. Moreover, it’s also the most effective MBA program anyone can sign up for.
What is the best part about owning your own business?
I’ve found that the best part of owning a business is actually a bit counterintuitive. The benefits of running a business are often said to be the freedom and flexibility that you have, and that you’re able to determine your own success. But with growth and success, all of those things are challenged – if not thrown to the wind.
To me, the best part isn’t the promise of freedom, it’s the mental stimulus. When you own a business, there are so many things that you have to consider beyond just revenue, or sales and operations, or the fiscal aspects of the business. Every day presents its own challenges. I’ve found that owning a business has meant many frustrating days and sleepless nights – but there are so many other intellectually stimulating opportunities, not forgetting the emotional satisfaction of winning when you are up against so many obstacles.
If you had the chance to start over again, what would you do differently?
I’d test my assumptions more thoroughly. However solid the idea, the market can react in unexpected ways – or not react at all – leaving you scrambling to accommodate.
I’d also have greater appreciation for the people, processes, technology and tools needed throughout the company’s development – and try to invest proportionally in the right aspect at every stage.
At the same time, I try to keep in mind that no matter what you do or know, you’re always going to make mistakes. While I’d approach building the company differently now, I don’t know that I would be as successful without the confusion and experience of things going wrong. I’d even be so bold as to suggest that sometimes it was only ignorance that allowed me to ride through the tough times.
Making good decisions takes a balance of both logic and emotion – doing what you can to make solid, logical decisions, and then trusting yourself, your team and intuition to translate that vision into reality.
The Recruiter of Recruiters
First of all, I would like to thank Paul for taking so much time out to do this interview. Thank you Paul! You are a real inspiration to us all.
Head2Head, is the leading recruiter of recruiters here in Canada. And even now, on its 10th year anniversary, the growth of the company is still accelerating. It did not get there by chance. It took hard work, it took dedication, and it took leadership.
Paul, here, has provided us with an amazingly detailed look into what it takes to build a company to a multi-million dollar level. How challenging and how much of a sacrifice it takes to get it done right. But above all else, he has shown us how rewarding it all is at the end, when you do get to see your work come to fruition.
To what do you most attribute your successes? Three things: focus, family, and a great team.
Head2Head provides a comprehensive list of recruitment services, offered on an as-needed, ongoing, or project basis, across four areas of specialization: Recruitment, Human Resources, IT, and Supply Chain/Procurement.
Click this link to take a look at the great company Paul has built, Head2Head.