Number one company
Roth Staffing is a highly competitive company. And its growth strategy is simple: find out what customers want and give it to them in spades
There is nothing extraordinary about the offices of Roth Staffing Cos., in Brea, Calif. They're the usual collection of cubicles with computers, housed in a glassy cube of a building set in the deepest suburban reaches of Orange County. Inside, it appears to be business as usual; there's nothing to suggest that this is a company whose growth has exploded by 20,332% over the past five years, putting it at the top of this year's Inc. 500 list.
Roth Staffing is no high-tech wonder or Internet star. It operates in the mundane temporary-staffing industry, and all the company's growth has been internal--notable in an industry addicted to consolidation, in which companies routinely gobble up one another in acquisitive frenzy. On top of that, Roth Staffing competes in a glutted and cutthroat field. Orange County alone has more than 300 temporary-staffing businesses, and it's not unheard of for Roth's customers to receive more than 30 cold calls a week from other staffing companies seeking to place their workers. Nationwide, there are more than 100 such staffing companies that have revenues in excess of $100 million. And Roth is joined by 30 others in the industry on this year's Inc. 500 list.
The staffing industry itself, at nearly $60 billion a year in annual revenues, is huge and growing at a rate of close to 17% a year. Roth Staffing founder and CEO Ben Roth, 47, has figured out how to get his company more than its fair share of that growth by staying ahead of the industry trends. "We had a choice to either change with the industry or figure out how to change the industry itself," Roth says. What he discovered was that the industry was desperate for a higher-quality workforce than it currently had. "We wanted to be a company that was extremely responsive and not encumbered with all the traditional industry practices," he says.
Trim and well coiffed, with a Rolex on his wrist, a monogram on his cuff, and a sporty Mercedes out in the parking lot, Roth, present appearances notwithstanding, did not grow up in the lap of luxury. His mother was a social worker, and his father was a credit manager.
After graduating from college, in 1974, Roth planned to go to graduate school, but at the time he and his wife had less than $2,000 between them. "We had to eat," he says, which led him to a job selling business forms for a national company, where within a year he became the second-highest producer. In 1983 he joined Houston-based Talent Tree Staffing Services. There he rose to become president of the company's western division, which at one time accounted for 80% of the business's profit. When Talent Tree was sold to a large British company, in 1987, Roth, who had a stake in the company, got rich--and later got even richer when he cashed out with a hefty earn-out.
More important to Roth than the earn-out was the absence of a noncompete clause in his exit agreement. "When I saw that, my eyes popped out of my head," he says. "I was too young to retire."
Over the next 14 months Roth thought about where the staffing industry should go. He polled potential customers and grilled them on what they needed. He heard the same wish over and over: quality. That, he reasoned, could be achieved only if staffing companies did more for their employees. In 1994, Roth incorporated Roth Staffing Cos., which now has three divisions: clerical, accounting, and information technology, all of which also handle permanent placements. Company sales have risen from $361,000 in 1994 to nearly $74 million in 1998. The company has 240 full-time employees and about 5,000 temporary workers, who are spread out over 65 offices in seven states.
That growth has occurred because Ben Roth decided he wanted to do things differently. "We didn't want to be the biggest; we wanted to be the best," he says. "We wanted our customers to rave about our service."
Roth looked for creative inroads into areas of the industry in which he could stand apart from the competition. Heeding the advice he'd heard in his earlier research, Roth focused on how he could create a culture oriented to employees.
In Roth's staffing-industry experience, the only people who received equity opportunities were top managers and investors. At Talent Tree he spotted an unsung cadre of skilled people who had worked hard yet had not been offered equity. He recruited four of those former employees to be the drivers of Roth Staffing and gave them equity stakes. "I had gotten a chance to get some sweat equity in my previous company," he says. "I wanted those people to have a similar chance here."