Forced to Face the Web

A year and a half ago, David Dunkel blew up his company. Now he's attempting to reassemble the fragments and to remake them into something that is faster, smarter -- and totally Webified. Whether he and his executive team succeed will depend entirely on their ability to navigate a chastened dotcom world, where speed and innovation alone no longer guarantee success. As Dunkel's experience shows, big ideas are great -- but success depends on crisp and reliable execution.

Dunkel is chairman and CEO of kforce.com, the Web-based reincarnation of a staffing-services powerhouse formerly called Romac International. Kforce trades in the new economy's hottest commodity: high-end human capital. Working out of more than 100 offices across the country, kforce's 2,300 recruiters seek out free agents and job hunters -- most of whom are specialists in either information technology or finance and accounting -- and match them with employers, who in turn pay a commission on each hire.

As the battle for tech-savvy talent intensified in the mid-1990s, Romac (which didn't become kforce until January 2000) went on a growth streak. Revenues for the Tampa, Florida-based company, which went public in 1995, swelled from $46 million that year to $746 million in 1999. (The latter figure incorporates revenues from Source Services, another staffing firm, which merged with Romac in 1998.) But at the peak of its success, Romac was blindsided by the Web.

Dunkel, 46, who joined Romac in 1980 and became CEO in 1994, is a boomer version of a chief executive, southern-style. A self-described "devout Christian," he plays guitar in an Allman Brothers-Led Zeppelin cover band and keeps a photograph of the Three Stooges on his desk. He's also a fast-forward sort who calls it as he sees it. Not so long ago, what he saw was that the Web would have little impact on the staffing industry.

"I went to an industry forum in 1995, and this guy stood up and talked about how the Internet would have a huge effect on recruiting," recalls Dunkel. "I sat there and thought, 'No way.' In my view, recruiting was far too sophisticated to automate. I said the Internet will never change the fact that people will always be at the core of recruitment. I was right about the people side, but I was wrong about the Web."

Was he ever. By 1998, the rules of recruiting had changed. Dunkel watched in alarm as job seekers flocked to the online bulletin boards of born-on-the-Net companies such as HotJobs.com and Monster.com, bypassing staffing professionals who still depended on phones and faxes. Realizing his mistake, Dunkel dispatched one of his most trusted advisers, Ray Morganti, to compile a white paper on the Internet and its effect on the staffing industry. The report only increased Dunkel's sense of alarm: Morganti issued a flat-out warning that staffing companies must pivot to the Net in order to cut costs and to make job hunting more convenient.

"High level of urgency; it's worse than you thought; markets moving fast" is how Dunkel characterizes the report. "Ray argued that the Web is a big threat to our business. Online competitors are moving into our space and attacking our value proposition."

In the spring of 1999, Dunkel gathered nine of his go-to executives and took them on a two-day off-site to his New Hampshire farm. Ostensibly, the goal was to map out a counterattack against the Web's job-posting sites. But Dunkel had already made up his mind. Romac was finished. The challenge now was to become the first old-line staffing company to embrace the Web. They would build something entirely new.

A Slugfest on Golden Pond

Dunkel's spread in Holderness, New Hampshire overlooks Squam Lake, where the movie On Golden Pond was made. Perched on a ridge top and surrounded by deep woods, the place takes up 350 acres. A small herd of buffalo grazes on its fields. But the mood wasn't exactly serene when the off-site got under way.

Inside the ranch house, Dunkel and his team were locked in a pull-no-punches brainstorming free-for-all. The goal was to "wring out" a strategy for moving Romac to the Web. More than a few of the combatants emerged from the dawn-to-midnight sessions with (metaphorical) bloody noses.

"The biggest fights were over cannibalizing the company," recalls Dunkel. "There were fisticuffs over that -- not literally, but there were some very violent disagreements. One camp argued that if we moved the business online, our recruiters would quit. The other side said that if we don't go online we won't have a business. I just laughed -- and started some more fights."

Joe Liberatore, now 37, who went on to become president of kforce Interactive and then chief sales officer of kforce.com, was firmly in the online camp. With his goatee and semi-spiky haircut, Liberatore is very much a new-economy dude who tends to lapse into MBA-speak. "Threat component" and "disintermediate the staffing advocate" came up several times in conversation.