Up From Drudgery

Are your best employees leaving to join competitors or to start their own companies? Stephen Reuning has a solution

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DIEDRE MOIRE CORP. IS not without its imperfections. Typical for its age, the seven-year-old company relies far too much on the talents and energy of its founder, who, in the course of a quarter-hour one Monday morning: repaired a laser printer, debated with New Jersey Bell over underused WATS lines, manned a switchboard during the operator's unexplained absence, and interrupted a meeting to take a message that the office refrigerator was broken.

So what? As he and his firm mature, Stephen Reuning will probably learn to be more executive and less handyman. For now, what's more interesting than Diedre Moire's rough edges is the shape Reuning has given it. He's experimenting with an organizational innovation that, if successful, could make the company a significant force in a service industry -- employee recruiting -- that is full of tiny firms that tend to stay small.

But it's not just in employee recruiting that Reuning's experiment is potentially useful. The East Brunswick, N.J., firm could be a model for other businesses in which the selling of a service and its delivery are closely linked. Insurance and travel agencies, for instance, or financial planning firms, spring to mind. They are all businesses in which the employee who performs or delivers the service or product also sells. His or her performance is easily quantified.

The overarching effect of such a system for service industry employees is that while most firms can provide only a job, albeit a well-paying job, Diedre Moire (mo-RAY) offers a career. Consequently, people who at practically any other recruiting firm would have burned out and left tend instead to remain at Diedre Moire and move up within the organization. Reuning believes that lower turnover will enable him to expand the company by building on the capital that accumulates in the employees he has already trained and nurtured.

A new idea? Not at all. But it's an apparently unique adaptation of a powerful old idea to a new use. Others in the industry say they've not seen it tried before.

REUNING, 31, IS A COLLEGE dropout who devours ideas like a kid eating popcorn. He's read every self-help, sales management, and motivational book on the shelves and listened to the audiotapes, too. Heavily sales oriented, Reuning nonetheless pursues eclectic interests. "Most young, single guys go home on the weekend and party. Steve, on the other hand," recalls a former business partner, "would go home and build a television set and in the process teach himself electronics." More recently, when he needed a computer programmer, Reuning learned programming himself from books. Spanish and basic German, too. And how to structure his business so that it wouldn't peak out prematurely like other companies in the employee-recruiting field.

Reuning left Rutgers University at Newark after a year because, he says, it was too slow. "I could have learned in three weeks what they spent a year teaching me." After two other jobs, he answered an ad and was hired in 1979 by Richard Southern, who operated a small recruiting firm in New Jersey. This company, like Diedre Moire today, occupied a middle spot in the spectrum of recruiting firms. On one end are the high-volume employment agencies whose fees are paid by the job applicants they place in, for the most part, clerical and line jobs. On the other end are high-priced executive recruiters who work on retainer for the company seeking to fill senior positions.

Diedre Moire makes its money by filling technical and line-management positions. It, too, is paid by the company doing the hiring -- usually 30% of the annual salary that goes with the job. But unlike retained search firms, such personnel consultants as Diedre Moire work on contingency -- no match, no money. And they rarely work on exclusive contracts, which means they're competing with other firms on both sides of the deal: for clients with jobs to fill and for candidates qualified (and willing) to fill them. Each deal means closing at least two sales. "When you sell a product," says Michael Randazza, who works for Reuning, "you put it in a box and it goes out the door. In this business, you've got to talk the suit into the suit bag."

Recruiters at Diedre Moire work at small desks in crowded offices. The din of dozens of simultaneous telephone pitches is punctuated frequently by impatient intercom messages -- "Mike Randazza to your desk. Mike to your desk." When a consultant is having a problem closing either part of a sale, he -- most Diedre Moire consultants are men -- may switch the call to a speakerphone so that his manager or colleagues can coach him. It adds to the cacophony. On the walls are charts and pushpins in various colors to track activity. Every morning brings a fresh start, a blank sheet to fill before the day ends. Typically in the industry, recruiters burn out in a few years; the average recruiter holds his job for 33.7 months.

The problem, Reuning saw after working in the business with Southern, is that good people have no place to go in a two-tiered company in which the owner manages and everyone else sells. Poor performers become discouraged and leave. Good performers leave too, often to start their own firms. It's their only escape, the only way they can stay in the business but get off the phone.

That's what Reuning did. He had learned the business quickly while working for Southern, and in 1980 he opened R.M.S. Systems Inc., his own recruiting firm, with Southern as a shareholder. There was nothing remarkable about the firm. It was a clone of the business he was leaving. And eventually its growth stalled, too. Reuning decided to find a solution to the growth problem.

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