Interview: a family affair

After an exciting and varied career, James Reed has finally settled at the family business. He spoke to Jenny Hirschkorn about life in the world of recruitment

'I grew up with this business,' says James Reed, chief executive of employment group Reed Executive, the company founded by his father, Alec, in 1960. 'I remember going round with my father when I was in short trousers and meeting people. When I joined the company as a director, many of those people were still in the business and remembered me. They welcomed me as a friend.'

He is fiercely proud of the company's origins: his father started with just £75 and worked alone from a single branch in Hounslow for a year. But Lady Luck and a well-developed sense of business acumen make a winning combination, so soon the 26-year-old Alec was riding high on the recruitment boom as nearby Heathrow Airport built and staffed Terminal 3.

Reed Executive expanded rapidly throughout the 1960s, with a strategy to secure prominent, prime site locations and to develop a distinctive brand on the high street. In 1971 the company was floated on the London Stock Exchange. It has continued to grow organically, rather than by acquisition, and its last published full-year figures show a turnover of £373m and a profit of just under £11m.

Pick 'n'mix

Thus Reed's childhood was one of growing prosperity as the business flourished. Nevertheless, it was not his early intention to join the family firm. Instead, after graduating in PPE at Oxford, he had a varied career spanning 10 years before finally deciding that he could make a worthwhile contribution to Reed Executive. 'When I left university, I knew I wanted to work for an entrepreneur,' he recalls, 'so I wrote to Anita and Gordon Roddick of the Body Shop offering my services. I was really impressed when Anita rang me back at home on a Saturday morning and said she and Gordon were looking for an assistant, and could I come in for an interview on Monday?'

He spent a year with the Roddicks, working on a variety of projects. 'It was a great transition from university to the world of work,' he says. 'The Body Shop was a very exciting place to be.

It had just floated and, although I knew something about the recruitment business, this gave me a different perspective on what business was all about.'

Reed then had a brief flirtation with the world of advertising, working as a media planner at Saatchi and Saatchi, but found the environment too restricted for his tastes. 'I prefer to be mobile and I like variety. It was too concentrated for me.'

A period with Help the Aged in Afghanistan and an MBA at Harvard Business School followed, and then came a four-year stint in television production at the BBC. But he says that when he realised he was not going to be the next Steven Spielberg, he decided this would not be an enduring career.

The crunch came in 1994. His father told Reed that if he did not join the business - stressing that he was under no pressure to do so - he would probably sell it. 'He said that there was no point in having a family business with nobody in the family involved in it.'

So, at the age of 31 and with a growing family (he now has five children), Reed decided it was time to settle down. He joined the company in the challenging post of director of operations, but modestly attributes much of his success in that role to the buoyant market conditions of the mid-1990s. 'I was lucky,' he says. 'The economy was picking up and the results were good.'

Top job

Three years later, he took on the top job, becoming chief executive on 1 February 1997. The company was doing well, but there was something nagging at the back of his mind: he had read some research that showed that the average life expectancy of a Fortune 500 company is 40, and with Reed Executive's 40th birthday looming on the horizon, he was determined to ensure that his company did not fall victim to such a fate.

'I believe that if a business is becoming large, you have got to keep the spirit of a small business. You do this by breaking it up into smaller units, making sure that the people running them are having fun and enjoying their jobs. You have got to put a lot of emphasis on individuals and giving people the right space and opportunities to really flourish. That is what happens in a small entrepreneurial business that is doing well and it's what I think a lot of big organisations lose sight of. They become large, bureaucratic and frustrating to people because they can't get the job done.

Reed, therefore, devised what he calls the Starburst Strategy, whereby the company was reorganised into five smaller, more versatile business units, offering services ranging from the core business of temporary and permanent office staff, through professional recruitment services specialising in financial markets, to outsourcing, IT solutions and learning.

The company's most visible presence in the recruitment market comes from its 280 branches that operate across the UK and Ireland, with 2,500 people currently on the group's payroll. This physical network is supported by an electronic network that is centred on the website, reed.co.uk. In fact, Reed Executive was the first major UK recruiter to recognise and harness the power of the internet, and its online presence was established as long ago as 1995.

Window to the world

Being at the leading edge of technology is another part of the strategy that Reed believes has kept the company young and vibrant. 'In the beginning, the internet was off most people's radar screens, and I admit that we stumbled on it pretty much by accident. One of our IT contractors said we should have a website. I could see that it had the potential to be a better way for people to look for jobs because you could search in a way that you couldn't do in the press or a shop window. I see it as our window to the world.'

But the company's approach to the internet differed from the great wave of venture capitalbacked start-ups in the sector that were, quite literally, banking on disintermediation - that is, removing the human element from the recruitment process. Reed Executive already had in place a sophisticated infrastructure, and Reed has always seen the internet as complementary to that rather than a replacement for it. 'Sooner or later you are going to have to talk to someone, there will have to be an interview, and lots of our clients wanted that to be earlier in the process rather than at the last moment.'

In fact, what Reed Executive has done with its website would be considered pretty wacky by most conservative observers. They have created what they call 'Freecruitment', a virtual marketplace in which employers and rival recruitment firms can post vacancies absolutely free. The site has won numerous accolades, including being voted one of the top 20 sites in the world by The Sunday Times, but what on earth can be the benefit to Reed by helping the competition?

'We believe a crowd attracts a crowd,' says Reed. Too right. In January alone the site received 1.3m visitors. 'Inevitably, many of the people who visit the site register with us and we can then place them with our clients. What's good about it is that it makes the whole market work better. It creates more fluidity. It's counterintuitive and something that could only work on the internet.'

It is this slightly eccentric streak that Reed feels gives the company its unique personality. 'We have done a number of things over the years that are not business-related but which I think are the right thing to do.' Such things as the foundation of Reed Charity, which owns 13% of the company and which, in turn, has become a vehicle for setting up several new charities including Ethiopiaid, Women@Risk and the Academy of Enterprise.

It is Reed's belief that it is vital for 21st century-businesses to demonstrate a policy of social awareness. 'I think it is important that people in business do more than make money for themselves and their shareholders. We try and use our expertise in a way that would be helpful to voluntary organisations. Besides, I think that people in the business want the company they work for to do that, to feel that they are part of an organisation that cares for people.'

Sharpening up

With five years at the helm under his belt, Reed's tenure is already considerably longer than that of many other CEOs, but he feels that he has still a good deal to offer the company. Indeed, the tangible aura of enthusiasm and commitment that surround him could not be fresher in someone on their first day in the job. 'Some people say the right tenure for a chief exec is seven years, but I feel that in the next five years we can achieve a hell of a lot. I'd like to stay in this job for as long as I'm good at it, and I hope someone tells me when I'm not, not least of all because I have got a big interest in the business. If I'm not doing well, I'll get someone else to do it. I'd prefer to fall on my sword.'

He doesn't underestimate the size of the task in the present climate, however. Many pundits regard the state of the recruitment market as a leading indicator of the wider economy, and it is a matter of record that Reed Executive saw a marked slowdown beginning in July last year. 'One of the reasons so many people are looking at our website, I believe, is that they are losing their jobs. The labour market is a very different market to what it was a year ago. But I'm not going to complain about it, because we have had the good years and the climate now requires a different focus.

'I think there are plenty of things you can do when the market is a little tougher. Our challenge is to keep people motivated. It's easy to become demoralised by market conditions, but I say to people that the market is like a rock. You can't do anything about it. You can break yourselves on it or sharpen yourselves on it. We intend to sharpen ourselves.'

Reed, it seems, has finally found his métier.

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