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Founded out of a Big Four accounting firm, Resources Connection has the experience, expertise, talent and geographic footprint to serve major companies with multi-national needs



Services
Management Services
(RECN-NASDAQ)

Resources Connection, Inc.

695 Town Center Drive, Suite 600
Costa Mesa, CA 92626
Phone: 714-430-6400



Stephen J. Giusto
Co-Founder and CFO

Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
Published - March 29, 2007

BIO:
Steve J. Giusto

Chief Financial Officer and Executive Vice President of Corporate Development

Steve J. Giusto is co-founder, Chief Financial Officer and Executive Vice President of Corporate Development for professional services firm Resources Global Professionals.  As CFO, Mr. Giusto leads financial planning and corporate development for the company and is principally engaged in the corporate finance, investor relations, operations, and administration of the company’s more than 70 offices in the U.S. and overseas.  His responsibilities include supervision of the firm’s financial reporting, planning, analysis and statutory activities worldwide, as well as assessing the firm’s fiscal performance and setting future targets. 

As CFO and Executive Vice President of Corporate Development, Mr. Giusto has ensured that Resources Global Professionals’ business model, systems, processes, and talent base continually enable the company’s growth and profitability.  Under his fiscal leadership, Resources has continued to thrive financially since going public in December 2000 and has expanded its operations to service an impressive and diverse client base of more than 1,900 companies, including more than half of the Fortune 100 throughout North America, Europe and Asia. 

While supporting growth and profitability, Mr. Giusto has helped build a unique firm business model that allows for competitive pricing and efficient delivery of specialized professional work to clients and combines the most appealing traits of consulting firms, staffing firms, and Big Four accounting firms: high-caliber professionals, competitive pricing, significant client control over projects, and a relationship-oriented approach to assess clients’ project needs.

Mr. Giusto is a Certified Public Accountant (CPA), and prior to helping found Resources as a subsidiary of Deloitte & Touche North America in 1996, held various positions in Deloitte’s Real Estate practice.  Prior to 1992, he also served for two years in the Office of the Managing Partner for Deloitte’s national office. He was admitted to the Deloitte & Touche partnership in 1996.

Mr. Giusto is based in Resources’ Costa Mesa, Calif. headquarters. He has served as the Chairman of the Board and currently serves on the Board of Directors of the American Cancer Society in Orange County, and is chair of the Finance Committee for the Board of Trustees of Cate School in Carpinteria, CA.

Mr. Giusto graduated with a Bachelor in Science degree in Business Administration from Cal Poly San Luis Obispo in 1985. In 2005 he was named the Honored Alumnus of the Orfalea School of Business at Cal Poly.

Company Profile:
Resources Connection, Inc., through its subsidiaries, provides professional services to various industries and enterprises in the United States. It provides finance and accounting, risk management and internal audit, information technology, human resources, supply chain management, and legal professionals to clients on a project basis, under the name “Resources Global Professionals.” The company assists its customers in various accounting and finance projects, such as mergers and acquisitions due diligence, financial analyses, corporate reorganizations, and tax-related projects. It also provides human resources management services, such as compensation program design and implementation; information technology services, including transitions of management information systems; and internal audit services, such as documenting internal controls. In addition, the company offers budgeting and forecasting, audit preparation, and public reporting. Resources Connection also provides policyIQ, a Web-based content management application, for document and communicate policies, procedures and internal controls, and to track ongoing employee compliance. The company serves corporations, medium-sized companies, and small entrepreneurial entities through its offices located in the United States, Canada, Australia, Europe, and Asia. Resources Connection, formerly known as RC Transaction Corp, was founded in 1996 and is headquartered in Costa Mesa, California.

CEOCFO: Mr. Giusto, what was your vision when the company was founded and where are you today?

Mr. Giusto: “The vision of the company was that there was a fairly significant niche in professional services that was not being well served, where client companies were looking for very experienced talent to help them with internal projects and they did not have a meaningful and value-added outlet for that demand. We built the business to fill that niche and it has turned out to be an excellent insight because by creating a business that serves that need, we have been able to grow from zero dollars in revenue in 1996 to in excess of $700 million in revenue in our fiscal 2007. Therefore, the vision that we had ten years ago is the vision that we have today.”

CEOCFO: What is a typical company that utilizes your services and how does the model work?

Mr. Giusto: “Our client base is large with about 2000 clients. Similar to most professional services firms, it is skewed towards our largest clients. About 100 of our 2000 clients make up 50% of our revenue and the top 50-100 clients tend to be names that you would recognize. They are Fortune 500 businesses, generally with multinational operations. The reason we serve companies like that is the company was founded out of a Big Four accounting firm, so we have experience and expertise in serving major companies. Secondly, we have built from being a US-only company to now being a US-based multinational, with offices all over the world. The large companies that we serve tend to have multi-national needs, so the reason that we focus entirely on major companies is that they tend to fit our footprint and our service capabilities.”

CEOCFO: What industries, if any, do you focus on and do you see that changing?

Mr. Giusto: “We have a very broad-based group of clients, so there is no industry concentration and no client concentration. Therefore, despite the relatively small number of clients that make up a large percentage of our revenues, none is greater than 3% of our revenues. The industries that we serve are extraordinarily broad; they include financial services, insurance, oil and gas, healthcare, communications and professional services. You name it we serve it.”

CEOCFO: Are your people going in as consultants?

Mr. Giusto: “We call them internal consultants in that a typical external consultant like a McKinsey & Company comes in with a methodology and a deliverable and they take full control of a project. In our model, which we think clients find very attractive; they know what they want to get done, but they do not have the appropriate group of talented people in their organization that have the time or capabilities to get that project done. We come in as a resource to them as internal consultants and we provide as many or as few consultants that they need for as long as they need them. They are our employees working under the direction and control of our clients.”

CEOCFO: Why are professionals choosing to offer their services through Resources Connection?

Mr. Giusto: “There are more and more very seasoned professionals who like the variety of projects that you can get in a firm like ours. They do not really want to be selling their services to companies, but they do want to use their experience and talents to help clients solve problems. Through Resources Connection, they get a diversity of clients and projects. They have considerable say over access to projects they take and do not take so they get more control over their professional careers, which may not be the case in a traditional firm. We pay them for every hour they work, so if you work 60 hours a week for Resources Connection, you are paid 60 hours. For most of us who have grown up in professional services, you work those long hours and are paid on a salary basis, so you did not really make any incremental amount of money when you were working that hard. Therefore, it is the best of all worlds for our associates.”

CEOCFO: How is your firm able to always have talent available for your clients?

Mr. Giusto: “The source of long-term value for a company like ours is talent, so we are  constantly looking for the next talented person to join the company and we have grown from three or four of us who founded the company to about 4000 people globally today. Therefore, we have been very successful at attracting people to the model. However, in order for us to continue growing at the pace we expect to grow, we have to continue to attract talent to the company and that happens in many different ways. Certainly, we are becoming a fairly well known business in the professional services community, so people do come directly to us but we are also out aggressively looking for talent as well. It is one of the key drivers of our success and one of the core competencies in terms of how we differentiate ourselves.”

CEOCFO: Tell us about the professional services industry and the market place.

Mr. Giusto: “Professional services is a very diverse sector. You have any number of different consulting models, any number of different niches that are served, from law firms to accounting firms to traditional consulting firms and firms like ours that are a bit of a hybrid. The marketplace is growing rapidly, particularly in the accounting and finance area where we focus our efforts. In our view, there is a long-term imbalance between the supply and demand for talent in the world. Therefore, you have for instance very large and rapidly growing economies in China and India where the supply of very experienced talent is not at all adequate. You have an environment in the developed world where internal controls, corporate governance and financial transparency have become top-of-mind based on many of the scandals that have happened over the last five or six years with the genesis of Sarbanes Oxley, and things like that. Therefore, the professional services industry broadly is growing rapidly. It is a multi-billion dollar market that we are addressing.”

CEOCFO: When you are addressing, for example the China market, are your employees local or from other areas?

Mr. Giusto: “Typically, our services are delivered locally. We have a fair number of associates who travel but on balance, most of the services that we provide are provided out of local markets. Therefore, we have offices in China that are in Beijing and Hong Kong and we are building a practice in Shanghai. In India we have offices in Mumbai and Bangalore. Elsewhere in Asia, we have offices that are growing as well. Our recruiting strategy in all markets is similar in that we are looking for experienced people from the local market who can serve clients in their local area. At the same time, we have one consolidated delivery model across the world, so if there is a need anywhere in the world that cannot be served locally, we will search throughout our office infrastructure to see if there is an associate that fits the need and who is willing to travel to that location to serve the clients. It is a client-centric delivery model primarily coming out of local markets, but with the capacity to access talent from elsewhere.”

CEOCFO: Do you need a lot of internal personnel?

Mr. Giusto: “We rely on some decent technology, but it is primarily a people-driven business. The relationships that we build with clients are based on interpersonal relationships between our people and the executives of the companies we serve. The recruiting that we do is based on building the relationships with associates. We offer an interesting mix of very experienced professionals who work directly for clients. Another group of professionals are salaried employees that manage the business, build relationships with clients and monitor the performance of our associates. They make certain that the quality of the services that we are providing the clients is extraordinarily good and when things are not going, as they should be, they are right on top of it to make sure an alternative is discovered and brought to our clients as soon as possible.”

CEOCFO: What is the financial picture at Resources?

Mr. Giusto: “We have been fortunate to be very successful financially. This business has been profitable almost since the first month we have been in business. Wall Street expects us to do well north of $700 million in revenue this fiscal year. In our eleventh year in business, they expect us to make a considerable amount of money and as the CFO of the company, I expect that earnings power will turn into cash flow. We have a very well capitalized balance sheet with more than $200 million of cash on our balance sheet supporting our business around the world. Therefore, we are well positioned to continue following the vision that we set out some ten years ago.”

CEOCFO: What type of challenges do you see as you continue to grow?

Mr. Giusto: “The biggest challenge to any people organization is maintaining the culture, building the employee base and while you are doing that, maintaining a level of quality that will differentiate you from others in the marketplace. Therefore, everything that we do is aimed at addressing those particular challenges and we have been successful to date. However, we are careful about who we are, how we serve our clients and to ensure the culture that we have built into the company continues to be nurtured.”

CEOCFO: Do you see the need for offices in countries where you do not have a presence now?

Mr. Giusto: “We have about a quarter of our business coming from outside the United States and we expect that over time, at least half of our revenues can come from outside the United States. Therefore, we have been aggressively building our international infrastructure, but there are still areas that we would like to be in that we are not. Our primary international areas of focus are Europe and the Asian Pacific region. In Europe, we are in many countries, but not in some very significant countries for example, Germany or Spain. In Asia Pacific, we are in most of the areas that we would like to be in, but we are relatively new to that market and we are early in our growth phase, so we are focused on getting some of the newer markets in Asia up to scale. As we do that, we expect that our international growth could outpace growth in the United States.”

CEOCFO: In closing, why should potential investors be interested and what does not jump off the page about Resources Connection?

Mr. Giusto: “This is a business that has grown rapidly that we expect to continue to grow rapidly and grows rapidly while generating significant profits. We are addressing a very large target market and we are the leader in our space. We have defined the space and in our estimation, we are the best known and respected company in our space. We have a multitude of opportunities to continue to grow the company both on a geographic basis and with the variety of services that we provide. Our issues are only on execution; the strategy is working very well and the positioning of the company is working well. We are working hard to continue executing and if we do that, we will build value in the company, which will build strong returns to shareholders.”

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“The vision of the company was that there was a fairly significant niche in professional services that was not being well served, where client companies were looking for very experienced talent to help them with internal projects and they did not have a meaningful and value-added outlet for that demand. We built the business to fill that niche and it has turned out to be an excellent insight because by creating a business that serves that need, we have been able to grow from zero dollars in revenue in 1996 to in excess of $700 million in revenue in our fiscal 2007. Therefore, the vision that we had ten years ago is the vision that we have today.” - Stephen J. Giusto