Drake Beam Morin, Inc. Business Information, Profile, and History

Company Perspectives:

DBM is the world's leading provider of strategic human resource solutions that help organizations align their workforces to meet changing business needs. Known for over 30 years for its innovative and effective career transition services, DBM offers in-depth capabilities in transition, retention, development, and selection. Founded in 1967, the company currently has over 200 offices in more than 40 countries.

History of Drake Beam Morin, Inc.

Drake Beam Morin, Inc. is a world-wide leader in human resource services. The company is best known for so-called outplacement consulting. Firms that are terminating large numbers of employees call on Drake Beam Morin (DBM) to ease the transition and help these employees find new jobs. The company offers career counseling, personal and professional coaching, and provides office space to laid-off workers during their job search. DBM also consults with client companies on other human resource issues, such as employee hiring and retention as well as executive pay. DBM is divided into three main operating divisions. Its Center for Executive Options specializes in job transition and coaching for displaced executives. The division maintains offices in major American cities, including New York, Chicago, Los Angeles, San Francisco, and Dallas. Overseas, the Center for Executive Options works out of major cities across Europe, Asia, South America, and Australia. DBM's second principal division is its Executive Compensation Advisory Services. This division compiles information on executive pay, and consults with client companies on executive pay decisions. The DBM Publishing division puts out books and other materials on an array of human resource topics. DBM was a long-time subsidiary of publishing company Harcourt General. In 2001, DBM was acquired by the Thomson Corporation, a Canadian media and publishing firm, with worldwide sales of $6 billion.

A New Human Resource Service

Drake Beam Morin, Inc. was founded in 1967 as Drake, Beam and Associates. John Drake and Jerry Beam were psychologists in private practice in Boston when they decided to form a human resources consulting firm. The company's first major client was the American Can Company, which retained the new firm to counsel some of its employees that were being laid off. Two years later, Drake, Beam landed another large assignment, handling terminated employees for drug company Warner-Lambert. Through its early work, Drake, Beam more or less invented the human resources field that became known as outplacement.

Outplacement comprises a variety of services to those who are newly unemployed. Drake, Beam offered counseling for those shocked and saddened by losing their jobs. The company helped workers assess their former careers and set goals for the future. Eventually DBM's outplacement services included providing office space, telephones, copiers, fax machines, and clerical help to job hunters. DBM's services were contracted for by the company that was terminating employees. The fee was usually a percentage of the employee's former salary. DBM could often smooth the difficult job of breaking bad news. Terminated workers were often angry and upset, and companies felt it easier to hire a specialist to handle this traumatic situation. Clients hired DBM not only to counsel terminated workers but to ease their anger, possibly reducing wrongful firing law suits. DBM also advised clients on keeping up morale among employees who had been spared the axe, as even those who kept their jobs often suffered while a company was in transition.

In 1974, William J. Morin joined the firm and eventually added his name to the masthead. Morin was not a psychologist but a marketing and human resources expert with in-depth experience working with terminated employees. In his book Trust Me, he described an early job he held as a sales manager, where he was told to go out and fire 50 salesmen working under him. The first man to whom he broke the news was so shook up he appeared to be having a heart attack. Morin confiscated the man's company credit cards and company car, leaving him with a severance check for one month's pay. The experience was almost as depressing for Morin as for the man he fired. And after he had fired 49 other salesmen, Morin himself was let go. When Morin joined Drake, Beam, outplacement became the firm's specialty.

The same year that Morin joined the company, the consulting firm was also acquired by the publishing firm Harcourt Brace Jovanovich. The company became Drake-Beam, Inc., with headquarters in New York. Drake-Beam also opened its first regional offices, starting with one in Chicago and one in Los Angeles. At a time of rapid corporate mergers, downsizings, and realignments, the need for outplacement services grew. The firm opened an office in Paris in 1978, its first outside the U.S. By 1979, Drake-Beam estimated that the number of people receiving outplacement services was doubling annually. William Morin became CEO of the company in 1979, and the name changed to Drake Beam Morin, Inc. The company attracted clients making major changes, such as letting go hundreds of executives at once. DBM began setting up separate offices, which it dubbed Career Centers, near client companies. Terminated workers were usually asked to show up at nine o'clock daily at the Career Center, dressed for work, so that even though they were unemployed, they kept to a business routine. DBM counselors evaluated things like interviewing skills and management style, as well as critiquing resumes. The temporary offices provided the typical executive amenities--coffee, clerical staff, telephones, interaction with peers.

Growth in the 1980s

Drake Beam Morin continued to expand through the 1980s, opening regional offices across the country. It opened an office in Dallas in 1981. This and other southern regional offices grew by as much as 15 to 20 percent a year in the 1980s, following corporate downsizings and revampings, particularly in the energy, banking, and agricultural industries. Corporations were willing to pay fees of between 12 and 17 percent of each terminated employee's salary for DBM's outplacement services. DBM took on a big client in Detroit in 1982, when the J.L. Hudson retailing firm decided to cut one-third of its management. In a consumer-related industry like retailing, public relations were very important, and Hudson retained DBM well before it announced its terminations in order to insure that it didn't lose customer goodwill. The Hudson layoffs involved more than 200 executives. In this case, Hudson actually built DBM a suite of offices adjacent to its headquarters to use during the lengthy outplacement process.

By the mid-1980s, DBM operated around 35 regional offices. The whole field of outplacement was growing, and DBM was by far the largest company in the field. Revenue in the outplacement industry overall was said to have grown from $35 million in 1980 to $225 million by 1986, and a number of firms crowded the field. By 1988, DBM had annual revenues of around $75 million, with 77 offices worldwide and 500 consultants. Its next closest competitor, Right Associates, of Philadelphia, had sales of just under $30 million, and the other outplacement firms in the top ten all brought in less than $15.5 million. More than 150 firms considered themselves outplacement consultants by 1988, compared to only 43 at the start of the decade. Profit margins could be as high as 50 percent in the field, and it didn't take a formal certification process to set oneself up as an outplacement consultant. The flock of new entrants to the niche brought price cutting. Some firms were driven from the market, such as Mainstream Access, a top-ten outplacement service that filed for Chapter 11 in 1988. But Drake Beam Morin continued to gain market share.

Changing Conditions in the 1990s and Beyond

The outplacement industry continued to grow in the early 1990s. An analyst that tracked the industry estimated that companies would pay over $600 million overall to outplacement firms in 1991. DBM took on a huge job in the early 1990s, handling outplacement for computer giant IBM as it let go 10,000 of its employees. Even DBM, the largest outplacement firm in the business, found its resources stretched by such a large assignment. The company relied on temporary consulting staff to supplement its full-time consulting staff of 500. DBM also expanded its other services while its business grew. It began developing an adjunct program for the special problems of displaced women executives in the late 1980s, and then added a training division. This division offered fuller counseling services for enhancing career management skills for employees who were not necessarily scheduled for termination. The program gave advice on subjects such as retirement planning, career mapping, and management style. By 1992, the training division generated about 15 percent of DBM's annual revenue. DBM also expanded overseas. By 1992, the firm was split about evenly between U.S. offices and offices abroad, with 50 offices scattered across the globe in major cities of Europe, Asia, Australia, and South America. DBM opened an office in Mexico City in 1994, anticipating more business there as passage of the North American Free Trade Agreement heightened competition in the region.

Yet revenue and profits began to shrink for DBM in the mid-1990s. 1994 was an especially low year, and the company's fiscal outlook continued poor over most of 1995. At the end of 1995, the firm announced that its long-time CEO William J. Morin had resigned. Morin claimed in an interview with the Wall Street Journal that he had wanted to expand DBM's career management and change management services, against the wishes of other top company executives. Competitors in the outplacement industry also quoted in the Wall Street Journal article proposed that DBM's parent, Harcourt General, had wanted to sell the company, and Morin had nixed the deal.

The rumored sale did not take place that year, though in 1996 DBM did take what looked to some to be a sharp turn in its business philosophy. The outplacement industry continued to turn in gloomy revenue figures, at least in North America. In May 1996 DBM announced that it was forming a strategic alliance with Manpower, Inc., the world's leading temporary employment service. Manpower would help DBM clients get temporary assignments through its worldwide employment network. DBM claimed this was a realistic way to get laid-off people working quickly, and many temporary assignments did lead to permanent positions. Competitors, however, claimed that temporary work was a merely a band-aid that outplacement counselors should be encouraging clients to avoid. But both DBM and Manpower looked forward to benefiting from the new arrangement. Manpower in particular had been squeezed by consolidation of its competitors in the temporary employment industry. And both companies had extensive networks of overseas offices where some North American workers might be channeled.

By the late 1990s, most of the U.S. economy was booming. This, unfortunately, was not good news for the outplacement industry. DBM decided to close 16 of its 95 North American offices in 1997, laying off some 65 employees. DBM claimed it was still bringing in more and more clients, but its revenue per customer was falling. The massive layoffs of thousands of workers DBM had handled in the 1980s were a thing of the past. Yet the company said its overseas business was still good.

Drake Beam Morin had been the subsidiary of publishing company Harcourt General for most of its life. Rumors of a proposed sale of DBM surfaced in the mid-1990s, when William Morin resigned and competitors noted that DBM was a strange fit for Harcourt, which mostly published academic and trade books. In 2000, DBM's parent was acquired by a large Anglo-Dutch publishing conglomerate, Reed Elsevier, for $4.5 billion plus assumption of $1.2 billion of Harcourt's debt. But Reed Elsevier did not want to take on DBM. As soon as the deal was finalized, Reed Elsevier spun off DBM and two other Harcourt assets to the Canadian media firm Thomson Corp. The arrangement was finalized in July 2001, with Thomson paying Reed $2.06 billion for DBM and the two other units. DBM became part of the larger company's Learning Division. The Learning Division was itself a $2 billion segment, and Thomson had total revenue of around $6 billion. No immediate changes to DBM's business were announced with the sale. By 2001, DBM had grown to a network of over 200 offices worldwide, serving clients in 45 different countries.

Principal Divisions: Center for Executive Options; Executive Compensation Advisory Services; DBM Publishing.

Principal Competitors: Right Management Consultants; Adecco SA; The Murdock Group Holding Corp.

Chronology

• Key Dates:
• 1967: The firm is launched in Boston as Drake, Beam and Associates.
• 1974: William Morin joins company, which is acquired by Harcourt Brace Jovanovich.
• 1979: The company's name is changed to Drake Beam Morin, Inc.
• 1988: Annual revenue reaches $75 million
• 2001: DBM is acquired by Thomson Corp.