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A Temp Strategy for Permanent Growth

By Stacy Perman It was a series of fortunate events that propelled Robert Funk, the son of a dairy farmer, from rural poverty to running a billion-dollar franchise empire. In 1965 and fresh out of college, Funk had planned on returning to tiny Duvall, Wash., to purchase his cousin's dairy farm. His cousin, however, wasn't quite ready to sell, telling him to get a job and return in two years.

So Funk, who had earned a masters in business administration and theology from Seattle Pacific University, turned to ACME Personnel Services, a professional staffing outfit. They placed him at the Seattle office of financial-data giant Dun & Bradstreet (DNB

), where he handled credit reports.

Funk didn't care much for the job, and when leaving it three months later, told ACME that he was better suited to helping people than pulling companies' credit reports. As it turned out, ACME was impressed with Funk and offered him a position at its Oklahoma City headquarters. His cousin decided not to sell the farm, and Funk stayed at ACME for nearly 20 years.

GAMBLING MAN. When ACME's president died unexpectedly in 1983, Funk, who by then had become a vice-president, teamed up with two partners and decided to buy 6 of the firm's 84 franchises. It was a gamble: Not only was it a period of economic instability, but ACME was on the verge of bankruptcy. "It was the worst recession since the Dustbowl," he says. "And we barely had enough for the payroll the first year."

Convinced he could transform the outfit, Funk mortgaged his house and 20 acres of land outside Tulsa and plowed all of his savings into the business. Then he borrowed another $150,000 from a local bank. In the early days, he kept overhead low by having his wife, Nedra, handle all accounting and bookkeeping. And instead of downsizing, Funk retained the experienced staff -- a considerable financial expense, but with it came dedication and loyalty that he credits for the company's survival.

In a strategic move Funk now calls "fortuitous," while most of his competitors continued to focus on executive recruitment, his newly named Express Personnel Services decided to concentrate on flexible, temporary hires. Funk hired a marketing team to get out and sell the concept. "That was counterintuitive," he says. "In a recession, it's usually the sales and marketing people that are the first to be let go."

SCREENING RESOURCE. The venture took off, bringing in $2 million in revenue in its first year. The following year, he purchased the rights to 30 ACME franchises across the country. Today, Funk presides over an Oklahoma City-based professional-staffing company with some 500 offices in the U.S., Canada, South Africa, and Australia. Last year, Express registered $1.3 billion in revenue and placed nearly 300,000 people.

Funk, who also owns the Oklahoma Blazers hockey team and Express Ranches, one of the nation's largest cattle breeders, says he takes his business philosophy from motivational sales guru Zig Ziglar. "If you help enough people, the money runs to the door," he says. "We are in this to help people -- and we've succeeded. We've found hundreds of thousands of people jobs, and with franchises we've helped people to have their own businesses."

Now the sixth-largest staffing firm in the U.S., behind industry leader Manpower (MAN

), privately held Express keeps growing by continually recruiting and interviewing potential hires to expand its already-deep database and supply talent on short notice. "Because of our expertise, in a bad economy, we become a real screening resource," Funk says. "And in a good economy, we know how to recruit when there is a shortage of talent."

SHIFTING POOL. Sales jumped 30% in 2004, according to Funk, and Express rolled out 58 new locations. By 2009, he expects his business to double to 900 locations and hit $2 billion in revenue.

The tectonic shifts that have hit the American workforce in recent years through layoffs and outsourcing, as well as an increasingly mobile labor pool interested in flexibility, have meant that more companies and potential hires are turning to staffing firms.

According to the Bureau of Labor Statistics, 9 out of 10 businesses now use the services of a staffing-industry firm, with more than one-third surveyed saying they plan to increase the practice. And the American Staffing Assn. reports that temporary-job placement has been increasing 10% annually over the past seven years. In 2003, the employment-staffing industry earned $63.3 billion, with the vast majority -- $56 billion -- coming from temporary staffing.

FLEXIBILITY'S APPEAL. Express provides temporary and permanent staff in the professional, clerical, and light-industry sectors. Unlike some competitors, it focuses mostly on placement in small- and midsize outfits. In addition, it offers clients a range of value-added services. "We realized that most of these companies don't want to deal with the time and expense of having their own HR department," Funk says. So Express provides them with a Web-based payroll service, health, and 401(k) administration, and benefit-consulting and legal services.

Funk encourages companies to keep 20% of their staffs as flexible hires, allowing them to keep a weather eye on the economy and the worth of prospective employees. If and when business picks up, temps can be switched to the permanent payroll.

How does it work in practice? As an example, Funk cites a manufacturing outfit that recently needed 30 people to work for between 6 weeks and 12 weeks. Within a half hour, Express was able to tap its inventory files and assemble group of potential hires. During their temporary employment, all paperwork and payroll was handled by Express, reducing the burden for the manufacturing firm.

MORE THAN "WARM BODIES." When Funk took the helm, Express was split evenly between company-owned branches and franchises. He noticed that the franchisees were much more aggressive in their marketing and earned more than their corporate counterparts. So to help grow without much capital on hand, he shifted entirely to a franchise model.

Over the years, however, that strategy has grown to encompass part of Express's desire to build relationships with its customers and the communities in which it operates -- efforts that are more successful in the hands of local franchisees who know their cities and towns. "It's all about relationships," Funk says.

Jean Goetz, who has operated an Express franchise with husband Carl in Fort Lauderdale, Fla., for the past 14 years, maintains detailed profiles on each potential hire and meets with them personally when a job order comes in -- a process that she believes provides a better match for companies. "We just don't send out warm bodies, which I notice some of our competitors do," Goetz says. "We evaluate each person."

NEXT MOOO-VE Funk, of course, has even bigger plans. "I eventually see us as No. 1 in the U.S.," he says. "I'm 64. I'm old. We've got to get there more quickly than most. We'll see where we are at in 2009 and determine what it will take to get us there through internal growth. We have no plans to merge or make acquisitions."

In the meantime, he has begun franchising his cattle operations and hopes to expand the business into Eastern Europe and South America. "I guess I've gone back to my roots," he says. Robert Funk may be back on the ranch, but he's come a long way from the farm. Perman is a reporter for BusinessWeek Online in New York

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