Unusually relaxed and undemonstrative for a business leader,
Ben Noteboom insists that hes not obsessed with work. But
the chairman and CEO of staffing giant Randstad Holding keeps
charging ahead in a fiercely competitive industry.
Since Noteboom took over in 2003, Randstad has nearly
tripled its annual revenue, to 14.2 billion
($19.7 billion) last year. Its now the worlds
second-biggest human resources provider after Switzerland-based
Adecco. Much of this expansion has come from mergers and
acquisitions, especially the 2008 takeover of Dutch rival
Vedior then the No. 4 player globally in a
3.3 billion deal.
But Noteboom, 53, also excels at driving organic growth,
almost single-handedly at times. In 1997 he set up Randstad
Inhouse Services from scratch to provide on-site human
resources services. At first, sitting in an eerily quiet office
with only a secretary reporting to him, Noteboom wondered if
hed made a big mistake. But the unit delivered more than
2 billion in revenue last year.
To offset economic cycles in what is often a low-margin
business, Amsterdam-based Randstads broadly successful
strategy has been to push up volumes. During the first six
months of 2011, revenue jumped 17 percent over the same period
last year, to 7.6 billion. The earnings before
interest, taxes, depreciation and amortization margin was only
3.4 percent, compared with 3 percent in the first half of
Founded in 1960 by Ger Daleboudt and Frits Goldschmeding
the latter is still its top shareholder, with a 30
percent stake Randstad has some 27,500 employees and
roughly 4,200 offices. Temporary staffing across most sectors,
about 40 percent of it blue-collar, makes up the bulk of its
business; on any given day it deploys half a million workers
under the brands Randstad, Rowlands International and
Tempo-Team. But fees for permanent placements yield an outsize
share of profits: 10 percent, compared with less than 2 percent
Picking up Vedior gave the group much more clout in the
higher-margin professionals market, as did Septembers
acquisition of Fort Lauderdale, Floridabased SFN Group,
which specializes in sectors such as finance and information
Noteboom points to four trends that will help keep
Randstads business thriving. First, employers want more
flexibility in their staffing. Second, as the number of
working-age people in Europe declines, companies will be
chasing a smaller pool of workers, whom they can entice into
changing jobs more often. Third, deregulation is gaining
momentum throughout the European Union and should increase
demand for temporary employment. Last, employers are looking
for one-stop staffing solutions.
Randstad is the biggest staffing company by revenue in
several parts of Europe, notably Germany and the Benelux
countries, and the third largest in the U.S. Listed on Euronext
in Amsterdam, it has a 4.4 billion market
capitalization. Although the companys stock has been
climbing recently, it closed at 26.30 on October 21, down
39 percent from a two-year high of 43.10 in February.
Noteboom, who studied law at Erasmus University in his
native Rotterdam, spent his early career with Dow Chemical
Co.s Netherlands branch as a sales and logistics manager.
In 1993 he joined Randstad to work on two small M&A
Back then annual revenue was less than $2 billion. But
Noteboom was so bullish about Randstads prospects that he
came on board without an official job title simply an
understanding that he would soon rise to senior management. A
few years later he launched the division that would make his
reputation and propel him on to the board in 2001.
Today, Noteboom, who spends 40 percent of his time traveling
across the 43 countries where his company operates, is
perfectly poised to read the employment market. In July and
again last month, he spoke with Staff Writer Neil Sen about
Randstads growth prospects in a rapidly changing labor
Institutional Investor: Judging by the state of your
business, is the employment market slowing?
Noteboom: No, not as far as we can see. Globally, there has
been an upturn since September 2009, when our blue-collar
business in the southeast of the United States started to
recover. As we had found before, if that market improves, the
rest of the employment market in the U.S. and much of the rest
of the world tends to follow. Not all countries or sectors are
booming, by any means. The U.K., for instance, where our
business is predominantly white-collar and much of it public
sector, is slow overall. Some countries, like Germany, where we
have a more comprehensive view of the market as the biggest
staffing company, are doing much better.
Youre in a very cyclical industry. How
confident are you about Randstads
We had our worst year in 2009, with a 27 percent decline in
revenue. Thats quite something for any business. All
sectors were affected, especially automotives. Yet we still
reduced debt from 2.4 billion to
800 million over the two years following the
acquisition of Vedior, and we still made a profit last year,
when our revenue grew 14 percent. Were very diverse now,
and were not dependent on a small number of clients. No
single client represents more than 1 percent of our business.
Im also proud of the resilience shown by our employees on
the ground, notably in our Japanese business, which expanded
when we bought FujiStaff Holdings in 2010. We have several
branches in Sendai, an area that was badly affected by
Marchs earthquake and tsunami. We were very fortunate
that none of our employees was harmed, but it was still a big
achievement to get everything up and running again in ten days.
We project there will be a minimal impact, with only a few
million euros of lost revenues in Japan out of a total of
around 500 million.
Is yours a good business to be in?
Yes, staffing is a growing business. In the public and the
private sectors, people see that temporary staff can improve
efficiency. To take an obvious example, supermarkets know that
they need more people on certain days, or certain times of day,
than others. Accordingly, legislation is moving our way. In
Europe, for instance, the market is opening up thanks to the EU
Temporary and Agency Workers Directive of 2008. Countries such
as Spain and Italy will have to allow temporary staff to work
in the public sector, and France opened up its public sector to
staffing firms last year. Other countries, notably Japan, are
also beginning to recognize temporary staffing in legislation.
The potential growth in continental Europe can be seen in the
relatively low penetration so far of flexible labor. The
average stands at about 2 percent, compared with 4.5 percent in
the U.K., where labor laws are more liberal.
Do you think labor is becoming more
Yes, and the demographics suggest there will be more
mobility in the future. According to a study by the University
of Amsterdam in cooperation with us, the European Union will be
short some 32 million people of working age by 2050.
Thats about 10 to 15 percent short of the total demand
for labor and is likely to make those engaged in employment
much more mobile.
How well has the integration with Vedior
The merger went better than I dreamed it would. It was a
sizable acquisition, and the company was only 10 percent
smaller than we were by number of employees. First, we have
kept the key people in senior management levels below the board
and appointed two Vedior board members to the executive board.
Second, weve coped well with the big challenge of
rebranding. Vedior had 180 brands across 53 countries, whereas
Randstad had only three in 20 countries. Whats more,
Vedior had separate companies attached to those brands, so that
in Australia, for instance, it had 27 brands with 27 managing
directors and 27 COOs. Weve had 125 rebrandings in the
last two years, and we will have done more than 130 by the end
of the year. Now 95 percent of our business is branded
Randstad, and we have simplified the management structure.
Vedior had a bigger professional business than us, so it was
very complementary, and our combined revenues were
14 billion in 2010, compared with
9 billion for Randstad before the merger.
Are you in the market for another big
We couldnt pull off another deal like that now; there
is no one of ?Vediors size available. I always want the
company to be bigger, but for us priorities one, two and three
are organic growth. However, Ive said we will look out
for potential additional acquisitions, and we have made a
number of smaller acquisitions since the Vedior deal. In the
summer we bought SFN Group, which has complementary strengths
in staffing and professionals, for $771 million. This
doubles Randstads U.S. revenues, to $4.6 billion,
and makes us the third-biggest human resources provider in
North America, behind Adecco and Manpower.
Chief executives are often very focused on share
prices. How worried are you about the decline of
Randstads stock during the past 12 months?