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Growing profits Featured

6:22am EDT September 30, 2005
Clarence Schmitz has a world of experience when it comes to running a business. He spent 25 years with KPMG, holding leadership positions in Cleveland, New York, Amsterdam and Los Angeles, and then joined the Jefferies Group as executive vice president and CFO.

In 2000, Schmitz formed his own private equity firm. In 2001, he orchestrated a merger between KPMG’s national finance and accounting business process outsourcing (BPO) practice and accounting firm itAccounts, forming Outsource Partners International Inc. (OPI).

The deal stipulated that Schmitz join OPI as chairman and CEO.

During OPI’s first year, revenue was $2.6 million. By 2003, revenue had grown to $26.8 million, a 941 percent increase from 2001. OPI’s growth slowed in 2004, with $28 million in revenue, but Schmitz expects that 2005’s revenue to be about $40 million.

Smart Business spoke with Schmitz about how he runs a rapidly growing business with 800 employees across two continents.

How do you communicate your vision to employees?

First, there is an internal monthly newsletter where we try to communicate pride-building, things about culture, what’s going on in the business and where we are heading. I have a lengthy column in that newsletter that talks about how we’re doing and opportunities for our people.

I also have a fairly broad-based conference call once a month with a large number of our leaders — probably the top 25 people. We spend at least an hour or more each month talking about what’s working and what’s not.

I also travel a lot. I travel every week somewhere. I go to India twice a year — we have over 600 people in India. I break them down into groups of 30; I take an hour with each group. I give a presentation about where we are and where we are going and, most important, what opportunities exist for them.

Then I entertain questions.

How does fast growth help with employee retention?

We are very unique. And what I promote is not so much the money, because at the end of the day, I don’t believe that money itself is all that much of a retention device.

I promote career advancement. I promote the idea that if people wish to pursue a career in accounting, we offer a very unique opportunity for them. With us, because we are growing so rapidly and because we have such a nice portfolio of clients, people who join us enjoy a very unique career opportunity.

They enjoy career advancement as we grow. They pick up additional responsibilities without having to wait for someone to die, retire, quit or get promoted.

They get to see a large number of different companies. We can rotate people from client to client. They can experience different things and add to their knowledge base. The career opportunity we offer is the No. 1 thing that causes people to be attracted to us and stay with us.

What obstacles have you had to overcome with such fast growth?

The challenge is always managing the various aspects of your business. In our case, I can divide that into, how many people do we have at any one time standing by, preparing for the next client in India? How many people should I have in my sales and service group? How do I balance that versus the India head count?

And then there is infrastructure. As you grow rapidly, some of the systems you used back when you were a $5 million company no longer apply. You have to really expand and upgrade. It’s more than just adding servers and spending money. It is building out that infrastructure that enables people to readily communicate.

Balancing the infrastructure build-out and the ever-changing need for more sophisticated infrastructure, along with my sales and service personnel, along with my India personnel, is a challenge.

Those things can get out of whack pretty quickly. And once they get out of whack, you have a problem, because they can’t be fixed overnight.

How do you continue to improve your business?

I always believe the old adage, ‘That which is measured gets improved.’ So we drive our improvement by measuring the things that we want.

We have a client-satisfaction survey. We also have Web-based tools that enable us to monitor our group on various functions. As we monitor and measure those types of things, we learn both what our clients are expecting of us and we learn from our mistakes. The way to be successful in business is to learn from your mistakes.

The 90-day challenge is a methodology that we deploy on our clients. In addition to improving our business, we’re also committed to improving our clients’ businesses and the way our clients operate. We use the 90-day challenge to sit down with our clients and figure out how they can improve their operations and what we can do and what role we can play.

So we have two levels of continuous improvement. One is for our own business and one is for our clients’.

HOW TO REACH: Outsource Partners International Inc., http://www.opiglobal.com