Reviving Manpower Inc. - The Joerres Way
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Case Code: BSTR208 Case Length: 13 Pages Period: 1989-2006 Pub Date: 2006 Teaching Note: Not Available |
Price: Rs.300 Organization: Manpower Industry: Staffing Services Countries: US Themes: Leadership, Revival and Growth Strategies |
Abstract Case Intro 1 Case Intro 2 Excerpts
"Joerres' ability to turn around Manpower was impressive - especially during a recession, which normally kills the cyclical staffing business. He put through no grand overhaul at the suburban Milwaukee company, just a series of incremental changes: tweaking the company's sales mix, gradually updating the management ranks and making acquisitions to add new product lines." <
- Forbes, May 2005.
Introduction
For the financial year ending December 2005, US-based Manpower Inc. (Manpower), World's second largest provider of employment services, generated revenues of US$ 16.08 billion and operating profits of US$ 436.5 million. The company's financial performance in 2005, marked significant improvement compared with its performance during the late 1990s, when Manpower faced several problems. For the financial year 1998, its net profits had declined to US$ 76 million from US$ 164 million in 1997, in spite of growth in revenues. Manpower had been through serious problems in its key markets - the US and France. The company went in for several low-end contracts in these countries which returned low margins.
Additionally, it failed to gauge the growing demand for skilled workers in the information technology (IT) industry. Manpower lost its leadership position in the staffing services industry worldwide, to its arch rival Adecco SA, a Swiss company, in 1998. Industry analysts opined that Manpower's CEO and Chairman Mitchell S. Fromstein (Fromstein) had been too complacent and slow-footed during changing times. In May 1999, Jeffrey Joerres (Joerres) was appointed as the CEO of Manpower. Joerres had worked with Manpower for the previous seven years handling several positions including Vice-President Marketing, Senior Vice-President (global account management and development) and Senior Vice-President (European Operations).
Joerres was entrusted with the job of getting Manpower back on the growth path and helping it regain its number one position in staffing services. Commenting on the task ahead for Joerres, Adam Waldo, analyst at Credit Suisse First Boston said, "He must remake a company more intent on revenue and market share than on profits, return on capital, and margins." Manpower's stock price touched its all-time low at US$ 22 in August 1999 from an all-time high of US$ 50 in August 1997. This made industry experts speculate that there would be a takeover bid. At that time, Anthony E. Spare, the Chairman of Spare, Kaplan, Bischel & Associates6 that owned 45,000 shares of Manpower said, "Either the current management fixes it, they look outside for new managers, or the company gets acquired." Joerres admitted the serious problems at the company, saying, "We have not done justice for our shareholders, and I'm working my tail off to fix it.".....
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