"Stick To Your Knitting!"

Wise old granny. She knew that people are different. That they have different skills, abilities and aptitudes. She didn't need psychometric tests or political correctness to tell her. All she needed was good, old-fashioned common sense. As she used to say, "Don't try and fit Square Pegs into Round Holes".

However, here we are on the threshold of the 21st Century; over 500 years since the Venicians invented double-entry bookkeeping!; with management guru's coming out of ever crevice - yet we are still reluctant to take Granny's homespun (sorry, lousy pun) advice.

The whole of the staggering growth of the recruitment industry is based on Granny's homily. Except that nowadays, of course, we have to have a fancy jargon name for it. Outsourcing.

Agencies rely on the fact that their customers have increasingly realised that sourcing staff (permanent or temporary) by using the old route of their own Personnel Departments is now history. Dress it up how you like, as "focusing on core activities", "outsourcing non-core activities", "process re-engineering", "investment prioritising", or "skill optimising ". It all comes back to Granny's words of wisdom. Customers are concentrating upon what they are good at (be it making sproggel grommets through to selling rosary beads at Maine Road) and leaving the specialist task of recruitment to the Agencies.

So why, therefore, is the recruitment industry so poor at learning from the lessons of its customers and, of course, Granny?

Here we have a group of individuals, whose clear and indisputable strengths lie in dynamic, sales-orientated, short order, quick moving, staffing supply and assessment. They excel at removing the "Surprise-Surprise" element from recruitment "Blind Dates".

The psyche needed is clear. It is a mixture of what Belbin called Resource Investigators, Myers Briggs would deem ESTJ and most laymen would consider extrovert. In my experience they display other curious traits like being "morning people", having a phone grafted to one ear and wanting expenses paid before they have even got the receipts. Nonetheless, this is not a criticism; it is probably just a typical, humble accountant's perception.

The important point is that whatever their genetic, psychological or socioeconomic cocktail mix looks like, such people are vital, because only they possess the aptitude, attitude and mindset to do the kind of job that they are required to do.

Armed with a specialist's mindset and driven on by a battle cry of "outsource or die", the recruitment industry then largely forget the words of dear old Granny.

Having excelled at their (front office) strengths, many Agencies then forget their specialist skills, ignore their mindset and feel naked or incomplete if they don't dabble in the murky waters of the "Back Office".

The reasons vary. Ego, empire-building (especially if you employ a Finance Manager/Director - who then needs to justify their existence), control (?) and (alleged) cost effectiveness are all amongst the list. The result is the same. A reluctance to outsource.

The effect is a dilution and erosion of the scarcest resource in most businesses. Management time. Instead of playing to their strengths and focussing on wealth generation through sales, the generalist Corinthian spirit comes out and ultimately the Bottom Line suffers.

The usual toe-in-the-water approach looks to the common halfway house of factoring. There are many fine companies in this field, However, let's just explore the key processes for a second.

In simple terms, one timesheet generates two transactions. A Payroll one and an Invoice one. Each then needs further processes. Payrolling leads onto PAYE/NI accounting and (probably) a BACS interface, whilst Invoices require credit controlling and risk and debt management. Moreover, because of their mutual timing difference, they obviously generate a significant working capital requirement.

So, if all these processes and sub-processes are linked to one original, common component (the timesheet), then why split off 50% of those beautifully integrated data flows out to an outsourced specialist (the factorer), whilst leaving the other half (the payroll) to the mercies of another (usually in-house) team?

All the benefits of system integration are lost at a stroke! Brilliant!?

Equally common is the Invoice Discounting route, but the same issue applies. By dissecting the integrated "Back Office" process flows, then the integrity of the "Whole" is lost.

Worst still, by trying to do in-house, certain parts of that "Whole", so the outsourcing lessons from our customers go rushing on by, over our heads.

"Back Office" activities require a different mindset, psyche and skills to those of the front office.

That's why accountants are sad, boring people with no sense of humor (or pulse!) who thrive on tedious, attention-to-detail and wear socks inside sandals on holiday. It's neither wrong nor right. It's just different. Believe me; I am one (but the doctor says I am recovering nicely).

To conclude, some thoughts: -

1) Play to your Strengths
2) Don't try and fit Square Pegs in Round Holes
3) Outsource your non-strengths (and/or the bits that don't add value)
4) Focus your (scarce) management time on Wealth Creating Sales
5) Don't split up your Back Office processes
6) Outsource them to integrated solution specialists (Who are, in turn, playing to their strengths!)
7) Stick to your Knitting
8) Remember Granny, Wise old bird!

Ian Humphrey is the Managing Director of Back Office Support Services. He was formally the Group Finance Director of a large PLC recruitment company and retains his sense of humour by supporting Manchester City FC.