Hall, Kinion & Associates, Inc.

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Hall, Kinion & Associates, Inc.

2570 North First Street, Suite 400
San Jose, California 95131
U.S.A.
Telephone: (408) 895-5200
Toll Free: (888) 757-4254
Fax: (408) 383-0902
Web site: http://www.hallkinion.com

Public Company
Incorporated: 1993
Employees: 2,317
Sales: $173.83 million (2001)
Stock Exchanges: NASDAQ
Ticker Symbol: HAKI
NAIC: 561310 Employment Placement Agencies; 561320 Temporary Help Services

Hall, Kinion & Associates, Inc. (Hall Kinion) touts itself as the talent source, providing world-class contract and direct-hire technology talent. Hall Kinion operates more than 30 offices in 22 markets in the United States, England, and Asia. The sectors served by the company’s staffing services include technology, financial services, healthcare services, energy, and government.

Origins

For Brenda Hall, 1981 was filled with tragedy and uncertainty. Her father died that year, and with his passing, Hall lost her only source of income. She had been helping her father run his real estate training service, but his death signaled the end of employment for the 28-year-old Hall. Hall’s situation was bleak, her prospects poor. Divorced and bankrupt, Hall was raising two daughters without the assistance of child support from her ex-husband. She had completed only one year of college. She had never earned more than $20,000 a year. Remarkably, a little more than a decade later, Hall was presiding over one of the fastest-growing companies in the United States, in pursuit of reaching a revenue goal of $1 billion.

Hall’s pursuit in 1981 was a job, any job. She found employment as a recruiter for a Bay Area franchise of Snelling Personnel Services, a national temporary staffing firm. Hall distinguished herself, earning a promotion to manager within a short time. By 1987, she had remarried and given birth to another daughter. She also had lost her job again. Hall’s boss had decided to relocate, but his plans did not involve her. Hall took two months to decide what she should do next. Her plan was bold. Hall decided to borrow $70,000 on her home equity to start a Snelling franchise in San Jose. From that point forward, success followed her as doggedly as misfortune once had.

The San Jose operation managed by Hall proved to be the brightest light in a vast empire of Snelling franchises. Within two months, the San Jose office turned its first profit. By the end of 1987, Hall’s operation had generated $464,000 in sales and it had gained the employ of a key individual, Todd Kinion. Hall hired Kinion—her sixth employee—several weeks after setting up shop. She hired Kinion as a high technology recruiting specialist, the specialty of the Hall Kinion operation that would emerge later. From 1987 forward, with Kinion at her side, Hall presided over the dominant franchise in the Snelling chain, which included more than 350 offices nationwide. Hall snatched up one Snelling award after another, earning distinction as Manager of the Year, Office of the Year, and Franchise of the Year on numerous occasions. As the San Jose operation expanded, Hall and Kinion started their own sideline venture, forming Hall Kinion in 1991. Most of their time, however, was devoted to promoting the growth of the Snelling franchise—until a legal dispute entered the frame.

Independence in 1993

In July 1993, a new era in Hall’s career began. She filed a breach of contract lawsuit in federal court against Snelling, which was settled in mid-1993. Subsequently, she merged her sidelight venture into the San Jose operation, forming a “new” Hall Kinion, a company “born a $10 million baby,” according to Hall, as quoted in the November 8, 1993 issue of the Business Journal. By the time of the merger, the San Jose operation had grown to two locations, one in San Jose and the other in Santa Cruz.

At the time of Hall’s independence from the Snelling chain, the temporary employment industry was recording robust growth. Nationwide, corporations were downsizing their operations. Increasingly, companies were outsourcing corporate functions to third party contractors and hiring staff on an as-needed basis when particular projects demanded more personnel. As a whole, the temporary employment industry was recording an annual growth rate of 30 percent. Hall’s operation was growing at a rate ten times faster than the national average. Given Hall’s immediate plans for the company, its strong rate of growth promised to continue. Several weeks after Hall became free of the Snelling chain, Hall Kinion opened its third office, establishing a branch in Provo, Utah. By August 1993, the company had hired the staff for a fourth office, scheduled to open in Fremont, California, in early 1994. A fifth office, slated to open in March 1994, was to be located in Austin, Texas. Beyond these immediate branch openings, Hall had identified 13 suitable locations for the Hall Kinion network of branch offices to be established, in cities that stretched from coast to coast, from Seattle to Boston. Hall predicted the company would generate $20 million in annual revenue by 1995 and $50 million by 1998.

Although the ambitious expansion plans announced by Hall drew notice, much of the attention paid to her growing firm stemmed from the strategy underpinning the expansion. Hall had a vision, one that impressed industry onlookers. Hall sensed a revolution was coming, a sweeping movement whose point of emanation was in Hall Kinion’s backyard, in Silicon Valley. Hall planned to shadow, if not lead, the revolution by establishing Hall Kinion branches in important research and development markets. Her company would then use these satellite offices to connect its clients to Hall Kinion’s headquarters using sophisticated videoconferencing equipment. In a November 8, 1999 interview with the Business Journal, Hall explained: “We see Silicon Valley not as a geographic description, but as a phenomenon that’s spreading all over the country, like little fires. Long term, I believe the geographic location will be the heart and brain of high-technology, but the arms and fingers will be all over the United States.” Later in the interview, she continued: “The savings of time and money for the company (the Hall Kinion client) and the candidate is enormous. [Videoconferencing] allows a business to see the best talent available in a given specialty, no matter where that talent is located. It opens up the whole hiring spectrum.”

As Hall pressed ahead with her strategy and her expansion plan, she marched through fertile soil. By the mid-1990s, the temporary staffing industry was one of the fastest-growing industries in the country. Hall Kinion’s industry niche was recording particularly remarkable growth rates. Some high technology companies used contract engineers for as much as one-fifth of their workforce. Companies also used temporary staff to fill gaps in their quality-assurance technical teams, adding to demand. In this expanding market, Hall Kinion supplied high-technology companies with contract engineers, temporary administrative and clerical workers, and permanently placed professionals and managers. The company found its candidates by advertising in newspapers, placing postings on Internet bulletin boards, and through a web of business connections. Applicants and employers then were brought together with videoconferencing technology.

In 1994, Hall Kinion’s revenues reached $14.3 million. In 1995, by which time the company had added offices in Denver, Seattle, and Portland, Oregon, revenues increased 39 percent to $20 million—the exact figure targeted by Hall two years earlier. The gain was attributable to a substantial increase in the number of applicants placed by the company. Typically, Hall Kinion received a 30 percent commission on the base annual salary of those applicants successfully placed into jobs. In 1995, the company placed more than 700 contract engineers, up markedly from the 290 contract engineers it placed in 1994. During the banner year, the company also placed 900 technical support and administrative applicants, appreciably more than the 550 applicants placed in 1994. The surge in business was enough to make Hall Kinion the largest full-service, high-technology staffing firm in Silicon Valley, and, more impressively, the 44th fastest-growing private company in the United States, as measured by Inc. magazine in 1995.

Electric Growth During the Late 1990s

Flush with success, Hall laid out bold plans. She announced that the company would open four branch offices in 1996, selecting Austin, Boston, Phoenix, and Raleigh, North Carolina, as the sites for the next wave of high-technology’s “little fires.” Hall predicted the company’s revenues would double in 1996 and announced her intention to convert to public ownership within two years—an uncommon event in the staffing industry. Hall’s next announcement bordered on the outlandish, particularly coming from the chief executive officer of a $20 million-in-sales company. Hall promised a 50-fold increase in sales. “Eventually, we intend to become a $1 billion company,” she informed Knight-Ridder/Tribune Business News on Christmas Eve, 1995.

Company Perspectives:

Hall Kinion sources and delivers vital human capital solutions to high-demand niche business categories and markets. Our company began as a leading talent source for the technology industry, providing highly trained, specialized short-term contract and direct-hire IT professionals. With roots in Silicon Valley, Hall Kinion has expanded operations to the most vibrant technology markets around the world. This strong foundation of experience and success has allowed us to expand our service to other professional industry sectors such as real estate, healthcare and financial services.

Hall Kinion’s growth and actions in the years following Hall’s stunning pronouncement supported her claim. Revenues more than doubled in 1996, reaching $51 million. In August 1997, within the time frame set by Hall, the company completed is initial public offering (IPO) of stock, raising $35 million. Earlier in 1997, the company had obtained additional capital to finance its expansion, securing $10 million in venture capital and becoming one of the first firms to raise venture capital funds in the staffing industry. Armed with cash, Hall moved forward with her expansion plans, intending to aggressively add to the company’s presence in 14 markets, which by the time the company’s IPO was completed included an office in London, England. Hall Kinion’s new status as a publicly traded company caused her to temper her growth projections, however, lest she disappoint investors. “I will say (we plan) to continue to grow intelligently and strategically,” she said in an October 22, 1997 interview with the Business Journal “And to become a major force in uniting the Silicon Valleys of the world,” she added.

By the end of the 1990s, Hall Kinion stood as a formidable, rising force in the staffing industry. The company’s revenues, which increased 46 percent in 1999, reached $180.8 million for the year. Its net income shot up 74 percent to $7.7 million. The company entered 2000 with 35 offices in 22 markets, not counting an office in Tokyo—the company’s third overseas operation—slated to open in February 2000. The pace of growth recorded in 2000 exceeded the record pace established in 1999. In 2000, the company’s revenues swelled 64 percent to $296 million, bringing Brenda Rhodes (formerly Brenda Hall) nearly one-third of the way toward reaching her lofty sales goal.

The drive to $1 billion in sales took a hefty blow in 2001. For the year, revenues plummeted by more than $100 million, falling to $173.8 million. Recessive economic conditions were primarily to blame for the devastating loss, but Rhodes remained optimistic about the company’s prospects. To create a stronger company, she consolidated and eliminated some of Hall Kinion’s branches, which left the company with 31 offices by the end of the year. Hall Kinion also exited three markets during the year and dramatically reduced the size of its workforce.

Looking ahead, the company hoped to rebound from a depressing 2001. Optimism sprang from the company’s attempts to diversify its business. For several years, Hall Kinion had been tapping into new markets by providing staffing services to businesses involved in energy services, banking and finance, medical technology, and government services. In the fall of 2001, the company formed a new business segment, Hall Kinion Finance and Accounting, to foster growth in these new markets. By the end of 2001, one-fifth of all the company’s placements were in markets governed by Hall Kinion Finance and Accounting. Hoping to receive meaningful growth from its new business activities and to revive its vitality in its traditional area of expertise, Hall Kinion prepared for the future, endeavoring to rekindle the fantastic growth of the late 1990s.

Principal Subsidiaries

TKO; Hall Kinion Associates, UK Ltd.; HK International (Japan).

Principal Divisions

Hall Kinion Finance and Accounting.

Principal Competitors

COMFORCE Corporation; Kforce, Inc.; MPS Group, Inc.

Key Dates:

1987:: Brenda Hall forms her own Snelling Personnel Services franchise in San Jose, California.
1991:: With Todd Kinion, Hall forms Hall, Kinion as a sideline venture.
1993:: The Snelling franchise and Hall, Kinion are combined.
1997:: Hall, Kinion completes its initial public offering of stock.
2001:: A new division, Hall Kinion Finance and Accounting, is formed.