Changing the Way the World Manages Contract Labor
It may surprise you that Harold Mills considers himself the “worst employee I ever knew,” but not for any of the reasons you might imagine. Instead, he just liked to challenge the “status quo.” Mills explained it this way: “Though I worked for well-established and certainly well-led corporations like GE, where I learned a great deal, I wanted to know what the new products and the new initiatives were. I wanted to push the envelope. To have that kind of inclination is a lot of fun, but it can sure get on people’s nerves.”
Mills continued, “For instance, once I went into the office of the president of my business unit and told him, ‘I want you to take away my salary and just pay me based on my P&L results. I know we can grow this company and grow it aggressively.’ My boss laughed, but I told him I was serious and he agreed to check with corporate. Well, they came back and said it was against company policy. At the time I thought, ‘I’m taking away risk, so theoretically there was nothing for you to lose,’ but they said ‘no.’ Right then, I realized those kinds of bureaucracies were not aligned with my disposition.” Smiling broadly he added, “I wanted to be out on the forefront, taking the risks and reaping the rewards.”
That is when Mills started looking for market opportunities and particularly those market opportunities that were truly disruptive, so that he could jump on or jump in.
Finding the Niche
Mills had been working with the founders of ZeroChaos, whose business model was not producing results. The principals asked if he would be willing to come in to help and his first step was to reinvent the company from a B-to-C to a B-to-B model.
Part of ZeroChaos’ genius is they are “not a staffing company;” in fact that was their strategy: “How do we do something different and distinguish ourselves from the thousands of staffing companies out there?” Instead, ZeroChaos is a managed service provider, meaning they help companies to economically and efficiently manage the various staffing companies they utilize. Some firms ZeroChaos works with may use 70 or more staffing companies, so instead of having to deal with 70 companies, ZeroChaos’ clients only have to deal with one.
In addition, they developed software that Mills proudly refers to as “an eBay for people.” Employers input their needs – e.g. nine programmers for 20 months – and then ZeroChaos matches the need to the various staffing companies in their database, who then bid on those positions in a reverse auction process. This generates savings which are then passed on to clients. Once the employee is selected, ZeroChaos manages and captures all the time and expense, the invoicing, staffing company performance metrics, virtually everything related to a contract workforce. And they do it in 33 different countries around the world!
Breaking from the Field
While Mills was working in corporate America, he asked, “Why was I paying the staffing company $40 an hour, while the employee working for me was only making $20-25 an hour? Something wasn’t connecting.” That became another dimension of ZeroChaos’ business plan – to provide employers with a clear accounting of every dollar they were spending on a contract worker. It was a transparency unique to the industry, which caused companies and employees to love them and staffing companies to…well you can imagine.
As Mills explained, “That was part of our sales pitch: ‘Even if you don’t use us, ask your provider these questions, because more than likely they’re not providing full disclosure.’ That is what built our momentum, the transparency forged our partnerships; customers know exactly what we make and what our costs in the supply chain are.” Nevertheless, it was a real challenge to get to the decision makers, so they would have a shot.
Their first large customer was EDS (Electronic Data Systems). Part of Mills’ strategy was to ask them to pay ZeroChaos what they were being charged by their lowest-priced competitor, a price Mills knew they could beat. Then they created a schedule, comparing what that rate was versus what ZeroChaos would have charged. Then, to sweeten the pot, ZeroChaos would give back to EDS, every month, a check for the difference. The first month it was around $5,000, then it grew to $10-$15,000 and within 18 months, Mills was flying to Dallas to deliver a monthly check for $250,000. Mills said, “We had to come up with ways to demonstrate value to a customer and showing up every month with a check was pretty effective.
“We started off small and proved ourselves; then those companies became a great customer reference which opened doors to others,” Mills explained. “When you deliver checks each month, your customers sell for you. I could say to a potential client, ‘You’re fighting with a handgun, but EDS is fighting with a bazooka’…That has an impact.”
However, sometimes to gain momentum you have to push the rock uphill. “First of all, it was tough to convince people that we weren’t a
fly-by-night dot-com company. In fact we rebranded ourselves away from ZeroChaos.com, which wasn’t a strong selling point in 2001. Secondly, we had to demonstrate we could deliver on what we said,” Mills shared.
“It is my own experience, and I believe the experience of all entrepreneurs, that at some point you hit a wall and that wall seems immoveable. The only thing that gets you through is a passion for what you are doing. We really believe we can change the way the world manages contract labor. Yet when we couldn’t convince people that we had the answer, I went to my wife and sat her down and said, ‘We’ve only got $1,000 left.’ She looked at me and said, ‘Let it ride.’”
His wife’s faith was well grounded. Word began to spread and the company grew from managing 1,000 employees in 2004 and $84 million in revenue to 65,000 on-sight employees today and $3 billion in projected 2013 revenue. Mills quipped, “I don’t know if I’m driving the horse or barely hanging on! But we’re going in the right direction.”
Then he added, “We don’t spend millions of dollars in R&D, but we do spend thousands on wine.” Laughing, Mills continued, “We listen to our customers, identify their challenges and needs, looking for problems we can solve. Then, when you talk to another client, you find that they are dealing with similar issues. That is how we have grown; one solution works for many customers.”
It was that determination to solve problems that launched ZeroChaos into the international market. “IBM was a great company for us, so we were continually asking the question, ‘How do we serve IBM?’ They came to us and said, ‘You’ve done great work for us, but we have this problem in Copenhagen, Denmark we think you can help us out.’ Truth be told, I’m not sure I knew where Copenhagen even was.
“As they described the problem, it was similar to others we had solved. But then we sat down with our team and came up with 100 reasons why we shouldn’t do it; however, one reason we should was that a company like IBM was going to find a solution to their business problem and that would be with us or with a competitor. We didn’t know what we were doing, but we were determined to figure it out.
“We hired lawyers and accountants in Denmark and we were up and running in Copenhagen in 60 days. Of course it was a heck of a learning experience for us, as well as a risk/reward scenario, but we knew it wasn’t rocket science. We wanted to learn their way, not impose our way. Everyone we hired was Danish contract employees, working on Danish projects; it is a pattern we’ve used elsewhere, and we hire locals rather than expats. What we transferred were our services and processes. Fortunately we were able to deliver great results for IBM and developed a partnership that is now in 13 countries.”
Mills went on, “International business isn’t easy, nor is it free. The key is partnering with the right professionals, because you can’t assume you can do things there like you do things here. Like the old cliché, ‘Think globally, act globally’ or as I heard the other day, you have to be ‘glocal.’”
Companies that ZeroChaos worked with two years ago had 10 percent contingent labor, today it has grown to 18 percent. Looking into the future, Mills expects it to move to 25-30 percent as Boomers look for more flexibility and Millennials seek control and autonomy. Therefore the growth of ZeroChaos is almost limitless.