TechnologyOne executive chairman Adrian Di Marco is the first to admit that he could have taken a heavier hand with cost cutting, and indeed has come under fire from financial analysts for not doing so, but he believes in paying his staff for their work and hiring when the right people come to his door.
Adrian Di Marco
The Queensland-based software company released its results last week. It didn't meet its initial guidance due to difficult conditions in the UK and delayed federal government investment.
Another issue has been costs which the company has incurred due to growth. In the year before the last results, the company's costs had risen 47 per cent as it tried to grow with a "hire anyone you can get your hands on mentality".
As the financial situation became clear, lowering costs has been the theme. In the year just past, the cost increase came down to 17 per cent. This year, the goal is to reach 8 per cent, something Di Marco considers the base line.
Sometimes you need to bring in new people because you've got to a different level
Adrian Di Marco
Di Marco said he's done it simply by being careful with staff hires, not shrinking headcount rapidly or cutting salaries. In fact, although he, along with the rest of his executive team has taken a hit on the chin in the form of a pay freeze for not meeting the initial guidance, he's still rewarding staff for their work.
"You can't penalise staff," he said. It made sense in any case, he believed, because if the staff didn't receive a pay rise, they'd expect double the next year. "They want to be compensated for what they've lost."
He told managers that they were allowed to on average give a 4 per cent pay rise, more for good performance or less for bad.
As a part of being careful about hires, there was a hiring freeze on the company. Yet this doesn't mean that Di Marco hasn't been snapping up people when he sees fit. After a recent review of Australian and UK operations, Di Marco decided to bring in some new talent — people with vision to take over from those he called "journeymen".
Di Marco used as an example one state where sales had grown by 25 per cent but didn't match what Di Marco had considered was the state's potential. "Sometimes you need to bring in new people because you've got to a different level," he said. "Five to six years ago we couldn't attract the talent we can attract today."
While journeymen were just with the company for the ride, he said, the people Di Marco wanted to hire had vision and could take the company to "a whole new quantum".
He believed the company had reached a critical mass now which meant it could attract these quality employees. Add to that the fact that many people have been laid off due to market conditions, it meant that a better quality of potentials was available for hire. As an example of the type of employee he was looking for, Di Marco named the former CEO of Tower Software Martin Harward who became the company's operating officer for market solutions.
Di Marco said TechnologyOne had taken on some extremely experienced people, from other companies which were jettisoning staff, especially in Research and Development (R&D).
R&D is another area in which Di Marco has rejected a cost cutting frenzy. In the results he revealed that he had spent 20 per cent more on the division. He also announced a new R&D centre in Brisbane's valley to consolidate the company's three research and development centres into one for better collaboration.
This investment will cost $12 million for the fit-out alone, but Di Marco told ZDNet.com.au that he thought it was definitely worth it, as it helped stop research teams becoming siloed.
With 70 to 80 recent wins, and as the leader of a company which, he says, wins three out of four tenders it goes for, he might be right.