One of the most difficult things to teach new sales people is how to build strong business relationships, and yet it really is not all that difficult.

There is an old saying that “people buy from people”, and I don’t think many professional sales people would argue much with that.

I would however modify that a little and would like to suggest that in today’s hyper-competitive, global economy people buy from those who deliver the best value. Yet, if there is not a good relationship that business connection is always at risk. So my suggestion is that the best answer today is “people buy from people who deliver value”.

It is not really enough to be good, you need that relationship in order to keep serving your client well.

So … what does it take to have a good business relationship?

1. Regular communication … face to face!
2. A real interest in your client … which means listening more than talking.
3. A willingness to go to bat for your client.
4. An ability to have an honest discussion and even say “no” when you have to, but in a way that is professional.

When I talk with other business owners and sales managers it appears that they are all concerned about the time their sales people spend in the office as opposed to getting in front of clients. The only way to build a good client relationship is to be out talking with them. It all starts by talking, by getting to know each other at a professional level and a little bit on the personal level. Very often good clients can become good friends, but that is just one of the great bonuses that comes with the job. The real goal is to have a great business relationship … an ability to pick up the phone and know they will meet with you, and are happy to hear from you.

I love going on sales calls and talking with clients, hearing about their challenges, and telling them about Eagle. Every time I am reminded about what a great job it is to be a salesperson.

To sales people my message is this … clients want to talk with you, they want you to pay them attention and look out for their needs. What a great job you have … so get out there and build the relationships one at a time!

Staffing Industry Analysts produce a number of periodicals, analysis and information about our industry. Procurement professionals are one of their target markets and the following is an interesting perspective about the fact that staffing suppliers need to make money too! The article is in response to a question from a procurement person.

As you can see the role of procurement is to squeeze, but even this professional recognises that there is only so much blood in a stone!

An interesting sidebar .. SI Analysts suggests that the typical gross margin for technical contractors is in the 23% range!
*****************
Be careful what you ask for

By Bryan T. Peña Bryan T. Peña is senior global commodity manager, professional services and technology, for Avery Dennison Corp.

The Question:
We asked our staffing supplier for a 5 percent reduction in bill rates while offering a 20 percent increase in business. The supplier initially said it couldn’t agree because the bill-rate discount would cut too deeply into its profit margin. Are we being unreasonable? If so, what other concessions should we consider?

The Answer:
As I’ve said in previous columns, the contract renewal period is a great time to look at your vendor program holistically and identify places to optimize the relationship. And from a procurement standpoint, the search for savings is never-ending. However, there is a point at which you need to look beyond simple dollars and seek ways to bring other types of value to the table. While such things are disregarded by most finance and accounting departments, you still can make a case for them.

To discuss how to calculate acceptable pricing concessions, we need to discuss margin versus markup. Many contracts focus on the markup as the primary driver for pricing. It can range from 18 percent to more than 100 percent and is the difference between bill rates and pay rates — something quite different from gross margin.

In basic terms, margin is profitability expressed as a percentage of bill rate and markup is bill rate expressed as a function of pay rate. If a temp is paid $10.00 and you add a 50 percent markup, the bill rate is $15 and assuming for simplicity, no other tax or benefit costs, the gross margin is 33 percent of the bill rate.
Why should you care? In order to get something, you need to give something in return. And most often in procurement circles, that translates to, “I’m going to increase your business so you should discount your price.” There is nothing empirically wrong with this approach — after all, it is the basis for the consulting industry.
But you need to be realistic about what you expect. Depending on the profitability of your account to the vendor, the amount of concessions you can expect is directly proportional to the amount of additional revenue you will generate.
Getting Real. Let’s assume a staffing vendor has a gross margin of 15 percent and a customer wants a 5 percent discount on bill rates. For the vendor to stay even, the company would have to increase volume by 50 percent. Again using a $10 cost basis, a 15 percent gross margin translates to a 17.7 percent markup for a final bill rate of $11.77. By subtracting the cost from the final price we get a profit of $1.77 per unit. If we apply a 5 percent discount to the price we get a new bill rate of $11.18. But costs remain the same, so we get a profit of $1.18, or a 59-cent reduction for the vendor. To ensure your vendor the same dollar amount of profit he was at before, you would need to deliver 50 percent more business. Obviously this is a very simplified example but in basic terms it should hold true.

According to Staffing Industry Analysts Inc., the publisher of this magazine, the typical gross margin on contingent workers with technical skill sets is 23 percent. This translates to a markup on cost of around 30 percent. In this example, that same 5 percent discount would need to be accompanied by a 15 percent increase in revenue just to get the vendor back to the same dollar amount as before.
The case for your aggressive discount demands becomes bleaker when we begin to discuss net margin. Net margin is just what it says: gross margin less operating costs, which include everything from computer repairs to rent to the purchase of new light bulbs.

Again using the benchmarking data, a staffing company’s typical net margin is in Q2 2006 is anywhere from 3.9 to 4.5 percent. By plugging a 5 percent billing discount into this equation, you would obliterate your vendor’s entire profit.
In reality, most well-negotiated major contracts have a net margin of even less, which makes it even more unlikely to expect major concessions in the form of discounts.
Let’s go back to the initial question and figure out the short answer.
If we assume your supplier’s current contract is in line with averages in the benchmarking data, and if you continue to insist on a 5 percent bill-rate discount, you would have to find a new vendor. That’s because your current supplier is likely to walk away. Or, if it agrees, and continues to make such bad business decisions, it will soon go broke.

Hope Remains. Despite the financial realities I’ve noted, there are still reasonable concessions you can ask for that could save your company at least some money. One thing to look at is payment terms. For instance, you could ask to pay invoices in 60 days rather than 30. And you could negotiate a discount for early payments. Depending on your internal cost of funds, this could really equal serious money. Check with accounting or finance.
Ask for free or reduced-fee drug screens and background checks. Your staffing supplier may have an agreement with its primary screening vendors that would make this possible.
Check with HR on the number of contingent workers converted to traditional employees. If they are high enough, you could re-negotiate the conversion fees. Similarly, you could ask for a longer period during which you can convert a temporary worker free of charge.
Also, take a look at something called “tenure rates.” Some suppliers will reduce their markups on temps who stay with you for a specified period of time.
While everyone tries to chase hard-dollar savings, we need to remain aware of the business realities faced by the people across the table from us. They need to make a profit and it doesn’t do anyone any good to have the best contract rates in the world if your requisitions go unfilled. Only by partnering with your vendors to mutually manage profitability can you ensure a truly productive long-term relationship.
Submit your questions regarding staffing, procurement or vendor relations for future Procurement Guy columns to bryan@procurementguy.com. Please include your contact information.

As a business owner there are lots of things that can affect my sleep! As your company grows you put your faith in more and more people to do a good job in representing your company the way you would want it done. In a networking event last night I was talking to some young entrepreneurs and explaining that process of “letting go” can be a little traumatic, particularly at first.

Every now and then you are reminded about why you had those trepidations!

A couple of weeks ago I blogged about a company we were considering as a supplier to distribute our newsletter. It is easy for me to sit here and blog about what was wrong in that situation, but as a business owner I cringe and hope that we are doing a better job!

The latest event to catch my eye was another classic. One of our practices is to survey our clients on a regular basis, we do a small sample survey each month and try not to “hassle” the same client more than once in any 12 month period. To date this has been done using our own technology but we decided to go and see what was available on the market.

One of our staff was doing some research and went to the website of an industry leader in this field. Their website was very helpful because it also provided links to many of their competitors with a bold statement that they are priced better than those competitors. I found this to be an interesting approach, and as it happens there were at least two flaws in this approach:

1. A little research amongst those competitors revealed that there was better pricing available.
2. The “industry leader” failed to respond to email queries about their service, while the listed competitors were very responsive!

So … this company was kind enough to introduce me to its competitors, make incorrect statements about pricing and then show inferior service. This is definitely the stuff that keeps a business owner awake at night!

I was trying to think of a quick blog item for today as I have many meetings and evening function to attend. So … I thought I would share this site with you.

It is one of my favorite places to visit, probably about once every 3 months or so. The site is called Springwise and contains the Idea Database. What I like about this site is that it showcases creative business ideas that people have put into action. Merely by spending a half hour at the site on a weekend let’s my mind contemplate new ideas and try to understand if any of the concepts can be applied in my world.

Some of my favorite businesses include:

1. The 5 Star hotel for cars … in Belgium, this place is also a private club offering meeting rooms overlooking the “swanky” cars stored there.

2. How about the power generating windmills that can be installed in a regular home and generate enough power for about 20% of the hiomes energy needs?

3. How about the renaisance of that old North American legend the drive in movie … only these one’s are portable!

This site has some fascinating ideas … let your creative mind wander at this site!

- There once was a young boy aged 7, who was forced to go to work because his family lost their house.
- The little boy’s mother passed away when he was 9 years old.
- The boy grew to become a young man and lost his job as a store clerk at age 20 years.
- He went into debt at age 23 years to become a partner in a small store, and at age 26 years his partner died leaving him with a debt it took years to repay.
- At 28 years he proposed to the love of his life … she turned him down!
- He made three tries to get elected to Congress before finally making it at age 37 years.
- His own son died at age 4 years.
- At age 45 years he ran for senate … and lost.
- He ran for vice-presidency at age 47 years … and lost.

You might think by now that this man would say enough is enough, but Abraham Lincoln believed in himself and at age 51 years was elected to be the President of the United States.

Anyone who is pushing for success will face adversity, it is how you react to adversity that defines who you are! As they say in the commercials … Be All That You Can Be!

My wife Janis, who also happens to be Eagle’s President and one of Canada’s Most Powerful Women (among other honors) gets asked about this ALL the time! It seems to be especially prevalent at gatherings of women business people … and it drives her nuts!

The first question she will get from the floor at these events is inevitably around the issue of raising a family, having a high powered job, getting a higher education and balancing it all. Of course, unlike me, she is very calm as she explains what to most people is patently obvious … there are no silver bullets!

Some thoughts …

- Success is EARNED, whether you are male or female.
- There is an impact on your career when you leave a job to have children, or take time out for some other pursuit.
- If the expectations of your employer are not met because of your non-work commitments then there will be an impact on your career.
- Most organizations want good people and will be as flexible as they can to accommodate their needs, but they are businesses that have to be competitive in a very competitive world … that is just reality.
- You make your own choices about how much time to devote to family at the “expense” of your job. It should be a conscious choice and reflect what you want from life.
- In today’s business world, if you are good at what you do, and put in the required effort you will likely be rewarded.
- There are still “old guard” people, companies and industries … but their days are numbered.

Janis managed to get an MBA while working full time. We have two children, either of whom anybody would be proud to know and we have a great relationship with both. We both committed to our careers, to our family and to making it work. It meant we both sacrificed at times, and I think that is the key … both partners in a relationship need to be willing to help each other get where they each need to be. However … we are all different, and each needs to find their own definition of balance!

My friend Colleen Francis has a regular blog and recently wrote about her “Beef with Balance”. Colleen is another powerful and successful business woman, and like most I know does not dwell on the fact that she is a woman … she just happens to be good at what she does and works hard to be a success!

Some years ago I made a significant mistake in job choice. I was at a vulnerable point in my current role due to a change in circumstances, and I was approached about an “exciting” opportunity. The new job came with a great title, good “potential” income and it was by all accounts a successful company. As you can probably guess things did not go so well … three months later I walked out. The bottom line was that their corporate culture was not a good fit and I was never going to be happy there. I had some good sales success in a short period of time and could likely have done well financially … but I was miserable.

Mistakes are easy to make as we pursue our careers. Here are some lessons that I would share with anyone thinking of changing their situation:

Some facts:

1. If you have been in your current job for a while and are doing well then you have some status with your current company. That can be important.
2. When you start at the new company then as the new kid on the block you will be under scrutiny.
3. You know the “warts” in your current organization … nowhere is perfect, you just don’t know the ‘warts” where you are going yet.
4. Most people don’t fully explore the opportunities in their current organization before they leap … remember what happens when you “ass u me”!

Some things to do:

1. Develop a career plan … one that takes you along your chosen path (or paths) as far as you can envisage (it might just mean visualizing your ideal next situation).
2. Give everything you can to your current job … the experience will be yours forever, the reference will be invaluable and that is what you are paid to do.
3. Be very clinical in weighing up your options. The new company is on its best behavior, the warts will come later so make sure you understand what they are likely to be.
4. Develop a list of criteria for your new job that will tell you if it is “good enough” to make a move. Things to consider might include:

a. Is the income real … or are there lots of promises? Compare it with your real income today (T4) not what you “perceive” is your income.
b. Does the new role give you the advancement in your career you need?
c. Does it have room for growth?
d. Is the location going to work? An awkward commute waers thin with time!
e. Do I like the people?
f. Have I met enough of the people? Arrange to talk with peers.
g. What is the culture like? Does it come through in their actions … or is it just words?
h. Am I going to be able to be successful in this role?
i. Have I checked references? Lots of them.
j. If I had the same interview with my current company what would be different? Is it enough?
k. Is there enough time off? Is the new employer going to be accomodating to my needs?
l. Are the hours going to work … with my commute, my family, my other needs?

A new job can be one of life’s most exciting times, but it can also be a disaster. Do your due diligence before going to a new job and don’t give up on the old one too early! Done the right way, that grass can actually be greener … but it is definitely not always the case!

When I was younger I firmly believed that I had not an ounce of creativity in me … I was not artistic in any way and I imagined that it was always others that came up with the good ideas. I certainly don’t feel that way any more !

So … what makes the difference? What makes some people seem creative and others can’t seem to get out of their rut? Is there some magic to thinking creatively? Is it a learned skill or is it in the genes?

The kind of creativity demonstrated by various artists has to be in the genes, in the same way that a professional athlete needs to have a predisposition for their particular skill. However (a) the natural ability is not enough, hard work is also needed and (b) it is also possible to become a very good athlete (artist) through discipline and hard work!

So to all intents and purposes I think creativity is a learned skill and there are a number of ways to increase your creativity in business. Here are some ideas:

1. READ a lot! This should include novels, fiction and fact, biographies, business books, newspapers, magazines, blogs … anywhere that you can stretch your mind.
2. Understand how things are done in other industries, and keep an open mind about how they might apply in your industry.
3. Brainstorm ideas with other people … away from the hustle and bustle of the daily grind.
4. Employ some of the tools available to stimulate the creative side of your brain. A quick Google search uncovers many sites offering innovation tools or networks to help you work through creative ideas.
5. Understand and enjoy the innovation you see in other people’s ideas, such as Larry Keating’s “No Panic Computing” I talked about a couple of days ago. Here is a website of relatively new business ideas that are truly creative.
6. Ask lots of questions and truly listen!

My work is in the staffing industry and we are on the cusp of being incredibly important to the future of Canada’s industrial capability, as we struggle with growing skills shortages and increased global competition. Our focus needs to be on finding creative staffing solutions that ensure Canadian industry is second to none, and that is how we will bring true value to our clients … not by offering the same solution as the next guy for a dollar less! 

—————————————————————————————————————————————–

Kevin Dee is CEO of Eagle (a Professional Staffing Company)

Want to know where Canada’s hot jobs are?   Visit the Eagle Job Centre!

—————————————————————————————————————————————–

Welcome to 2007!! January started out with a whimper in the West – for about 2 days – then it took off like a rocket! All indicators point to another very busy year for the Information Technology sector in Western Canada. Companies, big and small, are reporting that they are planning for the same or a greater number of projects as in 2006. There have been indications that new technologies such as Service Oriented Architecture (SOA) are ready to take off; however, there has yet to be much technology-specific interest shown from a staffing perspective. Microsoft is full into the launch of VISTA and with past releases there has tended to be a number of technology upgrades deployed by organizations wishing to make the most of the new platform. Compliancy, security and business continuity continue to be hot topics as are technology rationalization, collaboration and Information Lifecycle Management (ILM). These “themes” are expected to drive IT spending throughout 2007.

Threats to this positive forecast include rising project costs – huge cost overruns are being reported on everything from the Olympics to the Oil Sands to Health Care spending. Many organizations are recalculating the ROI on their projects to ensure they still make business sense. In Alberta, at least, the overheated economy relies on the continued strength of oil prices which have been dipping down around the key $50 mark. Companies across the West are capping non-budgeted spending and on the staffing-side, we are seeing them hold very firm to their set rate tables. “Economics 101″ is playing out as the market searches for a sustainable balance of supply and demand.

What we are seeing now is a strong need for PMs, BAs and Developers, which is a sign of a strong project trend for at least the next 6 months. The permanent placement market is heating up as organizations are making a rash of new hires to meet their growth expectations for the New Year. Companies also are interested in contract-to-hire scenarios that allow them to on-board IT people with known skills and a good organizational fit. The Government of Alberta tendered a higher than average number of staffing RFPs in January and Vancouver continues to heat up spurred on by infrastructure upgrade projects and a general up tick in business conditions. In a “Freaky Friday” phenomenon, there have been a relatively large number of IT people leaving their jobs to try out contracting life while at the same time there has been a large number of long-term contractors accepting permanent positions – this makes for interesting times as these people learn to adapt to the new realities that go with these significant changes.

Across the West’s major cities demand for over the last month could be characterized as follows: Edmonton – BAs, PMs and .NET; Vancouver – Java, Testers; Calgary – PMs, SAP, Content Management, Data Analysts and Architects; Winnipeg – BAs and PowerBuilder.

The employment stats remained relatively unchanged from the previous month in Ontario. According to a report by Statistics Canada, overall employments gains throughout 2006 were in full-time jobs; however, over the past three months, close to two-thirds of these gains have been in part-time positions, most of which were in Ontario and Quebec. According to a report put out by Bentall Capital, the strong service sector output and job growth that has offset the decline in the manufacturing sector in the GTA will experience some weakening through 2007. It is expected that Toronto will post its weakest pace of economic growth since 2003. This is, however, expected to improve by 2008.

At Eagle, January was an unusually slow month across the GTA with many people extending the Christmas holidays into the first week of January; however, momentum seemed to build towards the end of the month. Within the government sector, business is increasing across many ministries. In-demand are contractors with health care experience, followed by architects (solutions, enterprise). There seems to be a downturn in contingency staffing needs within the Financial Sector, which can be attributed to tight budgets and the completion of many projects.

The market continues to be a sellers market with a continued high demand for top talent. Contractors are recognizing this reality and more are rejecting contract extensions. Many are actively marketing themselves through their current contracts in hopes of getting better rates for their skills. In this contract-rich market, contractors are also declining interviews due to multiple interviews and time constraints. This is a trend that we have not experience in quite awhile. Despite the market, hiring managers are still slow to hire and are losing prospective candidates to other contracts. In effort to maintain those contractors already in place, long-term contract extensions are becoming the norm with the average term being one year.

Hot skills in demand in the GTA on the contract side include: SAP (all modules), Peoplesoft, Achitecture (Enterpise, Appliacti), BAs, Testers and Tech Support. In-demand skills on the full-time hiring side continue to include PMs, and Java Developers in addition to IT Cobit, Peoplesoft, BAs and QAs with Insurance skills.

In Eastern Canada and in particular Ottawa, the big news was the arrival of the highly anticipated, long awaited and much discussed Federal Government new Procurement RFP dubbed “The Way Forward”. The Way Forward is in many ways the son of the sponsorship scandal, the Federal Accountability Act, some external procurement consultants who missed the mark (at quite a hit to the taxpayer) and a whole lot of political hot potatoes. Although a long and winding road was taken to get to this point, it is interestingly, a successful example to be held up where the buyer (the Feds) and seller (vendor community) had a thorough, although sometimes challenging, dialogue before going to tender. It is the first step in the government’s overall transformation in the way it procures goods and services, and in this case in particular, how the Feds will buy technology services as it pertains to single body staff augmentation. The next piece to come out will encompass the solutions or project side of The Way Forward. The Feds remain by far the single largest buyer of IT professional services in Canada. How they go out to the vendor community to buy is and will continue to be, of critical importance to both the IT vendor and consultant community.

In the interim, it appears as though activity is heating up with the government as the March fiscal year end approaches and budgets are assessed. There has been particularly strong demand of late by a number of departments for security resources including analysts and security specialists. This is most likely pent up demand that has come as a result of the conclusion and awarding of the Cyber Protection Supply Arrangement (CPSA) , a vehicle that allows for the procurement of security resources. The hot market continues to hamper organizations who are unable to effectively shorten their time to hire and the Feds are one such organization. Restricted by a long and arduous hiring process that sees some RFPs for single bodies take weeks if not months to conclude, government clients often find themselves starting all over having selected consultants who have long since taken other contracts. Although many consultants have a preference towards government engagements due to the potential for longer terms, with private organizations much more willing and in fact adept at hiring more quickly, government clients are often at the losing end of that scenario. It is hoped and expected the new task-based procurement vehicle will be effective in resolving this “time-to-hire” challenge.

Permanent placement activity remains strong throughout Eastern Canada as a number of organizations are operating in a new fiscal year with new budgets. The “looming” talent shortage, as it is often referred to in the m
edia, for many organizations is not “looming” but in fact, very current and very real. And most are actively looking at both creative sourcing strategies, as well as complete fundamental alternative options such as off-shoring or outsourcing.

Skills in demand in the region this month include: Lotus Notes Developers, .Net Developers, SAP Consultants particularly HR and MM modules, SAN and BUR Storage Specialists, Java Programmers with JSF and Senior Project Managers.

There has been much talk about innovation lately. The Canadian Federal Government even have a website devoted to the subject.

Please excuse this unabashed plug for a Canadian innovator.

Personally I am always impressed when I see a creative approach to business, and particularly when I see it from people I know! Larry Keating from Keating Industries, another good Canadian success story, has come up with an innovative way to make mobile computing as hassle free as possible. His “No Panic Computing” solution seems to hit the mark, particularly for independent contractors!

As an independent you want to have reliable and, most times, portable computing power. To have real 24/7 support, data backup to a secure facility and an easy monthly payment seems like a great solution. The monthly payment is of course a business expense to write off against taxes if you are a small business.

Way to go Larry, this is a good solution and I wish you every success!