Reviving Manpower Inc. - The Joerres Way

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Case Details:

Case Code : BSTR208
Case Length : 13 Pages
Pages Period : 1998-2006
Organization : Manpower
Pub Date : 2006
Teaching Note :Not Available
Countries : US
Industry : Staffing Services

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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The Problems

Manpower's problems began in the mid-1990s. At this time the company's revenues were increasing but profits remained flat. Analysts cited Fromstein's long stint, with most of his decisions going unopposed by the board members, as one of the key factors for the stagnating financial performance of Manpower. According to an executive search firm Korn/Ferry International, CEOs in most large US firms have an average tenure of seven or eight years...

The Solutions

Joerres began tackling Manpower's problems by first focusing on getting more small contracts. He consciously avoided national level contracts. According to Mark Marcon (Marcon), an analyst with RW Baird, this strategy made sense because smaller staffing contracts had gross profit margins between 20% and 25% - twice that of national level contracts.

In 1999, the share of revenues that came from small contracts was about 35%. By 2004, this share increased to 50%, thus bringing in higher profits. The next step Joerres took was to get rid of incompetent staff and also employees who had overstayed in the company. He eventually replaced 48 out of the company's top 50 managers...

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Joerres had started his career in IBM selling mainframes and computer systems and knew the importance and relevance of the IT industry. He felt that the company had neglected this sector terribly. Joerres set an ambitious target of achieving 33% of Manpower's US revenues through IT staffing by 2001, from about 18% in 1998.

Initially, Joerres wanted to expand IT related services of the company and then spin it off into a separate business. However, in 2000, Manpower acquired The Elan Group (Elan), which was a leader in IT staffing services and integrated its IT services division with Elan...

Targetting New Communities

Manpower joined with the Association of Rehabilitation Programs in Computer Technology (ARPCT) in May 2002 to provide IT careers to people with disabilities. Through this program, the company aimed to provide training, mentoring and placement services. This association was aimed at targeting two problems -shortage of skilled workers in the IT sector, and unemployment among people with disabilities in the sector...

The Road Ahead

Since 2002, Manpower has been posting healthy growth in the net earnings as well as total revenues. At JW, revenues tripled to US$ 341 million in 2004. From an operating loss of US$ 9.9 million in 2003, the company reported an operating profit of US$ 51.4 million in 2004. Other subsidiaries like Right and Elan were also registering healthy profits. The total revenues of Manpower increased from US$ 10.6 billion in 2002 to US$ 16.8 billion in 2005...


Exhibit I: Financial Details of Manpower
Exhibit II: Manpower -- Stock Price Chart (January 1996 - December 2005)
Exhibit III: A Brief Note on the Global Staffing Industry
Exhibit IV: Competitors of Manpower Inc
Exhibit V: Financial Details Of Adecco Sa


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