Friday, May 7, 2010

Manpower Inc.

Manpower Inc.

Fact File:

􀀹 Founder: Elmer Winter and Aaron Scheinfeld.

􀀹 Distinction: Made “temp” an indelible part of the corporate


􀀹 Primary Products: Temporary workers for assorted positions worldwide.

􀀹 Annual Sales: $9.770 billion.

􀀹 Number of Employees: 2,016,000.

􀀹 Major Competitors: Adecco, Randstad Holding, Vedior.

􀀹 Chairman: Johan R. Walter; President and CEO: Jeffrey A. Joerres.

􀀹 Headquarters: Milwaukee, Wis.

􀀹 Year founded: 1948

􀀹 Website:

During the past half-century, few companies have mirrored the times—and successfully

changed with them—better than Manpower. Born with the Baby Boom generation, it

was launched specifically to supply short-term help for the countless industrial operations

that sprung up across the United States after World War II ended. It then followed

America’s almost unceasingly upward economic trajectory through the mid-1970s, when

recession put a crimp into many of these manufacturing concerns. Manpower responded

by evolving from a supplier of factory help to one of highly skilled office temporaries. In

the process it became the largest company of its kind in the world.

But the parallels with its era don’t end there. Over the next decade Manpower proved that

it had accurately judged the tea leaves and it grew into a significant multinational

company, finding work for about 700,000 of its temps worldwide and reporting annual

revenues of more than a half-billion dollars. Its leader, though, presciently saw sings of

yet another paradigm shift in business and society—which once again would dramatically

alter the type of services required by the corporate world. And in the mid-1980s,

Manpower spent millions to equip its offices with computers to train workers for the tasks

that were just then beginning to form. And when large numbers of college-educated

women who had left the workforce to start families sought to return, Manpower was there

to provide them with appropriate positions.

Befitting its role as a reflector of significant events in the late-20th century, there has

been corporate intrigue and executive infighting galore. Another economic slowdown led

to another directional shift. A movement into matters of public concern further altered the

product mix. And a merger of two overseas competitors bumped Manpower to second

place on the global stage. Despite it all and a name that is no longer politically or even

technically correct—Manpower today supplies some 2 millions workers to 400,000

companies, operates 3,400 offices in more than 50 countries, and records annual sales

approaching $10 billion. Not bad for a little personnel firm from Milwaukee.

Manpower was founded by Elmer Winter and Aaron Scheinfeld, a pair of Wisconsin

attorneys who decided in 1948 that the time was right for a company that could rapidly

and effectively fill many of the industrial positions springing up around the Untied States.

Winter and Scheinfeld hit the nail on the head and their company, which did indeed

supply “man power”, thrived without much variation over the next quarter-century. But

when the firm suffered a 75-percent drop in profits during the 1975 recession, it was

obviously time for a few changes.

The impetus for this new direction came about the very next year, when the Parker Pen

Company of nearby Janesville, Wis., bought 80 percent of Manpower’s stock. It installed

Mitchell Fromstein as president, a former speechwriter for the legendary football coach

Vince Lombardi. Fromstein would be integrally involved with Manpower for decades to

come, but he began making significant contributions right from the start. One of this very

first was to switch the company’s emphasis from factory to office jobs, in order to fill the

most pressing needs of the business world’s emerging white-collar infrastructure. By the

time a new economic downturn brought about a new round of corporate downsizings, he

had Manpower positioned as a ready source for skilled temporaries who could instantly

step in as replacements. He also signed exclusive national contracts to provide such

staffing for major corporations such as IBM and Hewlett-Packard.

Fromstein consistently reduced Manpower’s reliance on smokestack industries until

more than half of its temps were performing clerical duties, and another quarter were doing only “clean assembly work.” He also expanded successfully overseas, and soon had Manpower tallying

the majority of its business abroad. With annual sales of nearly $ million, his company became the world leader in its business. Italso became the chief wage-earner in its own house, and by 1984 was responsible for 83 percent of Parker’s sales and 96 percent of its profits. To reward these achievements Fromstein was named president and CEO of the parent company.

Parker also expected him to keep his position at Manpower, of course, and he did not

disappoint. In 1986, Manpower’s steadily increasing revenues were nudging $900 million,

and 400,000 of its 700,000temps were employed in secretarial or clerical positions.

(Interestingly, 75 percent of them were now women—most of whom were married and

had children under seven as well as a college degree.) Ever watchful of his markets

Fromstein noticed a steadily increasing need for workers with computer skills. For the

past few years he had turned an 11-member team loose on a program called Skillware,

which developed proprietary training material for the varied word-processing packages,

spreadsheets, and database managers that Manpower temps were likely to encounter.

Fromstein spent $5 million on PCs for his 1,300 offices to jumpstart the computer literacy

effort. The days of slotting some-one who performed well on a typing test into a hundred

different openings, he said, was gone.

Despite such shrewd tactics, his free reign at Manpower would soon come to an

unceremonious end. In 1987, his board accepted a takeover bid from British temp agency

Blue Arrow. The offer, initiated by English dealmaker Antony Berry, gave $1.3 billion toIf change is happening on the

Manpower’s stockholders. Fromstein personally took away $29 million and agreed to run

Manpower from Milwaukee while Berry retained control of Blue Arrow in London. The very

next year, however, Berry convinced his board to sack Fromstein. And for the first time in

13 years, Manpower was without its visionary leader.

Fromstein, for his part, felt Berry’s approach would never work at Manpower. The English

firm wanted its U.S. subsidiary to aggressively enter fields such as healthcare, even

though they required special (and expensive) training. Fromstein felt such relatively lowskilled

positions as file clerk, secretary, and customer service representative were a

better bet. Blue Arrow was out of touch in other ways, he believed, such as insisting its

American employees read a home-grown newsletter that was, as Fromstein later told

Time magazine, “poor in quality, provincial and British in nature with little articles about

the soccer team in South Wales.”

Not surprisingly, Manpower franchisees strongly backed the man who had transformed

their company. In 1989 they helped oust Berry and reinstate Fromstein, who now had

control of the entire British-based firm. He immediately began ridding the corporation of

poorly performing Blue Arrow offices and moving administrative duties back to

Milwaukee. Local interest was so great that the Brewers, the city’s major league baseball

team announced the news on its scoreboard during a game.

From an outsider’s perspective, the early 1990s weren’t the best of times to regain

control of a business like Manpower. “Restructuring” was a kind way to describe what was

happening throughout the American economy, where as many as 1,500 jobs a day were

being eliminated in cost-cutting moves. At best, companies that did not lay off were

cutting positions through attrition.

So here it was again: Business was in another slump, hiring was off, and temps were

always the first to go. But Fromstein once more saw possibilities for a world leader that

was now recording $2.7 billion in annual revenues. Manpower’s jobs had evolved from

“emergency” fill-ins to flexible long-term assistance, he repeatedly pointed out in

interviews, and temps in general were now twice as prevalent as they had been 10 years

earlier (although they still represented just 1 percent of the total workforce). Manpower

was additionally leveraging its heavy presence in Europe, he noted, where penalties

against hiring and then firing permanent workers could often be severe. That’s why the

company had 450 offices in France and 800 in the United States—even though France had

just one-fourth of the U.S. population.

And sure enough, when the economy picked up and hiring resumed, Manpower was again

there to serve the businesses that needed it. By the mid-1990s, it even became the

largest private-sector employer in the United States. Ironically though, it was no longer

the world leader in its field. Two international competitors—Switzerland’s Adia and

France’s Ecco—merged in 1996 to take that title. Fromstein, apparently unconcerned, was

moving in yet another new direction. As a member of a White House panel on welfare

reform, he became interested in training and placing recipients in private-sector jobs. He

then collaborated on just such a project in Milwaukee, and sought additional ways that his

company could assist further.

Today, nearly 170,000 Manpower employees are working each week. Its most profitable

and prevalent customers are offices and light industrial sites, but increasingly popular

“call centers” and professional positions in the information technology, engineering,

finance, and telecommunications fields are becoming important in its overall scheme. The

company supplies personnel for 96 percent of the entries in the Fortune 100, and about

40 percent of its employees ultimately find full-time jobs with their customers. Manpower

also performs employee testing, training, and other contract services for business of all


And even without its long-time leader (who retired in 1999 and was named Chairman

Emeritus), Manpower has continued staking its claim on cutting-edge personnel

programs. In mid-2000, new president and CEO Jeffrey Joerres announced an alliance

with “the world leader in psychometric testing and assessment” that would create an

online system for more effectively selecting and training temps. The result, he said,

allows Manpower to continue closely matching its services to the ever-changing needs of

its clients—much as it has successfully done over the past half-century.

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