Forced to Face the Web

While the skunk-works team raced to produce a prototype, Dunkel worked furiously to build momentum for the company's change effort. On any given day, he played many different roles. "I was a strategist and a salesman," he says. "I was also a cajoler and a butt kicker -- a counselor, an adviser, a consoler. You name it, I did it."

On June 8, Dunkel unveiled the beta version of kforce.com and announced Romac's makeover to the world. Wall Street was less than impressed. Some institutional investors quickly fled, fearing that kforce's startup costs would take a hefty bite out of earnings. Within months, Romac's share price plunged dramatically. Amid this meltdown, Dunkel got a phone call from his retired father, Al, who was one of Romac's cofounders.

"I expected him to say something like 'It's all right son. We believe in you,' " he recalls, cracking an amused grin at the memory. "Instead, it was 'What are you doing? What's the matter with you?' And there was my mother in the background, telling him to leave me alone."

Dunkel quickly embarked on a salvage mission to persuade kforce's remaining large shareholders to give him a shot at reinventing the company. Their criticism was as harsh as his father's phone call. "I heard it all," Dunkel says matter-of-factly. " 'This isn't the company we invested in.' 'You stink. Why didn't you tell us this in advance?' 'We've talked to 12 other CEOs in the staffing industry, and none of them think the Web will have a big impact on recruiting.' And on and on."

And how did he respond?

"I asked them four questions," says Dunkel. "Number one: Is the Internet here to stay? Number two: Will the Net radically transform the economy? Number three: Will the Net impact the staffing business? And number four: Is it not the responsibility of a CEO to articulate a strategy for addressing the threats and opportunities posed by the Web?

"Then I said, 'If you answer no to any of the first three questions, the meeting is over, because we have nothing more to talk about,' " Dunkel continues. " 'But if you agree with the first three, then you have to agree that the decision we just made was necessary. And I believe that not long from now, you'll look back and see that every CEO in our industry has adopted a plan for moving to the Web.' "

He was right. In the 20 months since Romac rolled out kforce.com, nearly all of the traditional staffing firms have announced Web strategies of their own. That's not all. While the offline recruiting companies are racing to the Web, some of the pure-play Internet entities are making a grab for old-line recruiting outfits. A case in point is TMP Worldwide Inc. (owner of Monster.com), which has acquired several "unplugged" staffing firms since 1999, including the Highland Search Group LLC, Stratascape Inc., and System One Services Inc.

"Soon after we made our announcement, I sat on a panel at Goldman Sachs with the CEOs of HotJobs and Monster," recalls Liberatore. "And the CEO from HotJobs took the posture that they're going to get rid of us, because we're an added cost that doesn't need to be there. Now it's clear to everyone that technology has a big part to play, but expert recruiters are still a key ingredient."

Still, members of kforce's senior team had no time for feeling vindicated. They had an even bigger worry than Wall Street: How to get buy-in from their own people?

Coke, Popcorn, and Fear

Kforce kicked off January 2000 with a video simulcast for all of its employees. It rented 30 movie theaters throughout the United States so that far-flung staffers could watch Dunkel pitch the company's makeover from the historic Tampa Theatre. They downed Cokes and popcorn as kforce's senior team laid out its Web strategy and raised the curtain on a television-advertising blitz targeted for Super Bowl Sunday. Afterward, people were pumped. But privately, many of them feared such a radical change.

Dunkel announced the Internet initiative right around the time that Merrill Lynch decided to offer online trading, thereby putting pressure on full-service brokerage firms to cut commissions. Kforce's recruiters likewise feared that moving online would eat into their commissions. Many staffers even worried about losing their jobs.

"All we heard was 'You're going to cut our commissions. You're using the Net to replace us. You're going to lay us off' -- all sorts of nonsense," recalls Dunkel. "We dealt with it by relentlessly communicating the message that the online portals are a big threat to our value proposition, and we must do this. We used fear of the online threat as an impetus for change."

It's ironic that kforce's recruiters thought they would lose everything to the Net. As it turns out, those recruiters are absolutely critical to making the Internet initiative work.