Fastrak

fastrak/mike1st/mark2nd VALERIE J. NELSON Contributing Reporter Across the country, as many as 3,000 employees of On Assignment Inc. went to work today in the science labs of other companies. And a significant portion of their paychecks will go into the increasingly deep pockets of the Calabasas-based company originally known as “Rent a Chemist.” The temporary staffing company’s ability to match the right scientist to a research project brought it record net income of $5.6 million on record revenues of $88 million last year and helped establish it as the leader in the high-tech temp field. That record 1996 performance was a 29 percent increase in net income and 21 percent increase in revenues from the prior year. Customers most frequently utilizing On Assignment scientist-temps are from the biotechnology, pharmaceuticals and other related industries. Since 1994, On Assignment has made Forbes magazine’s list of the 200 “best small companies in America.” “The unique thing about On Assignment is its emphasis on very high-quality outsourcing. Many of their employees are permanent employees. They only have temporary assignments,” said Bernard J. Picchi, an analyst with Lehman Brothers. H. Tom Buelter, chief executive officer of On Assignment and the one who is largely credited with bringing the 12-year-old company to the forefront of its niche, likens his concept of employment to that of a Hollywood actor. “I’m sure if Tom Cruise were finished making a movie, he wouldn’t consider himself unemployed. He’s simply between two assignments. That’s where the future of employment is going to go. We are ultimately changing the word from ‘temporary employment’ to ‘temporary assignment.'” It also helps that the company is in sync with the rest of the business world. As the concept of cradle-to-grave employment evaporates, companies that have downsized are turning to temporary staffing when there is a burst of work. An average of more than 2.4 million temps are employed daily at U.S. companies more than double the average daily temp employment in 1991, according to the National Association of Temporary and Staffing Services, the largest trade association for the industry. And much of the growth in temporary placement is coming in the technical and professional industry segments. When Buelter arrived at On Assignment in 1989 from Kelly Services, he left behind a $50 million (annual revenues) Kelly division he had built called Assisted Living, which placed temporary health care workers in home care settings. Upon arriving at On Assignment, his task was to bring profitability to a company that had wandered from its initial scientist-for-hire concept into other pursuits, such as consulting and executive recruiting. Buelter came up with the “account manager concept,” which experts credit with enabling the firm to make such high-quality matches that one in five of their temporary placements end up as permanent hires. Under that approach, account managers are hired and trained to serve as a liaison between scientists and employers. The account manager is responsible for searching out talented scientists-for-hire as well as drumming up business from companies interested in hiring such scientists on a temporary basis. The account managers themselves are actually scientists who were pulled from the field, then given the human resource skills that allow them to make placements in one of 85 On Assignments branches in 50 markets around the country, Buelter said. Their inside knowledge of the tasks that need doing whether it’s research assistants to wash glasses for $10 an hour or a scientist brought in at $1,000 a day for advanced research is what allows the company to make “the quality assignment … and the higher margins,” he said. Because of the skill its employees possess, its profit margins can be as high as 70 percent more than the average for all temporary workers. For example, On Assignment charges $20 an hour for a lab support worker, and pays such workers $12. Carole Cargile, human resources administrator for the Neocrin Co., an Irvine research and development company in the diabetes field, had six On Assignment research assistants working through the end of February on a “critical project” and plans to convert five of them to permanent positions. “We have gotten r & #233;sum & #233;s from other agencies, but it seems that On Assignment’s people are much more qualified and have the background we need,” said Cargile, who has been hiring On Assignment temps for four years. On Assignment does outperform Kelly Services in a number of markets, concedes Rolf Kleiner, vice president of Kelly Scientific Resources, based in Troy, Mich. “We encounter them more in second-tier cities, and we are in much bigger companies than they tend to be. … Five or six other scientific staffing companies compete with us, and we encounter them with about the same frequency,” he said. Buelter counters that Kelly “doesn’t compete at all with us, because they are much more in the commodity business.” While Kelly Services is known as a commodity temporary-help provider, its 16 scientific staffing units mirror On Assignment’s specific approach. Each unit is run by scientists and is “highly focused” on the technical market, Kleiner said. On Assignment’s Lab Support division brings in about three-quarters of the company’s overall revenues each year. A second division provides temps who are trained in credit, collection and medical billing to financial services and health care industries. A third division places skilled science professionals in environmental jobs. The third division was established when On Assignment acquired EnviroStaff, a Minneapolis-based company, in March of last year through a stock-swap deal valued at about $6.2 million. Analyst Picchi said he thinks the stock has languished it has been trading recently for about $34 a share because it has escaped the attention of the big brokerage firms. That could soon change. In a January research report on the company, Picchi calls On Assignment’s “business model its greatest strength” and writes that the company “meets five of the sixth criteria that we believe define all true growth stocks.” Picchi said his only concern for the company is how it will invest the cash it has on hand. On Assignment’s trafficking in skills placement is not a capital-intensive business. With no debt and about $15 million in cash on hand, the company seems well positioned to expand. Of the future, Buelter would only hint that the company is “thinking globally” and has plans to extend its temporary placement skills into other professions. “We are going to do some very significant things. We probably will have to add new specialties, and we are looking into new niches,” Buelter said. “That is the most highly guarded trade secret I have.” — 30 —