Remembering a Pioneer
The Entrepreneurial Vision: Creating the modern staffing industry.
"How would I like to be remembered? I just want to be remembered like my father. I want to be remembered as a pioneer."
William Russell Kelly, founder of Kelly Services, Inc. and creator of the modern temporary help industry, came by his pioneering spirit in the most direct way possible. Russ inherited it from his father. As the New York Times put it in a 1963 article, Russ's father, James Watson Kelly, was "one of the great oil pioneers at the turn of the century, who gained and lost fortunes in France, Spain, South America, Canada and the United States."
Much of Russ's boyhood was spent on a 150-acre site adjacent to the Koksilah River on Vancouver Island, British Columbia. While the senior Kelly traveled the world, his children enjoyed horses and the outdoor life.
Later the family home was an estate in France, but Russ remained in the U.S., where he graduated from the Gulfcoast Military Academy at Gulfport, Mississippi.
"I was the smallest kid in school," said Russ. "Didn't grow tall until I was in college. But I made sergeant. Holding that Enfield rifle on my shoulder in the Sunday parade, leading three or four companies of boys. That makes you proud."
Getting an early start, Russ began college in 1922 at the age of 16, at Vanderbilt University. At his father's suggestion, he transferred to the University of Pittsburgh a year later because the school offered a program in oil management. He studied business administration, but with the Jazz Age in full swing, Sigma Chi fraternity life received more of young Russ's attention than did his books. A stern letter from his father -- half a world away on an oil project -- made an impression he never forgot. The letter closed with a reminder that hard work was the only path to success.
Russ took the words to heart. But soon after, his father suffered a stroke, and the family fortune declined. Russ would be working hard, but not in college. In 1926, in his senior year, Russ left the university to work as a Hudson automobile salesman in Pittsburgh. In 1928, while the family was living in Buffalo, New York, his father suffered a second -- and fatal -- stroke. No longer just supporting himself, Russ Kelly became a major contributor to his family, which included his mother, three sisters and three brothers.
Seeking an income that was steadier than selling automobiles, Kelly visited Altoona, Pennsylvania, where he was introduced to the Assistant Treasurer of The Great Atlantic & Pacific Tea Company, the A&P.
He was hired on the condition that he work extra hours on his own time, learning the food business and the techniques of auditing. Part of the appeal for Russ was that the A&P accounting office was brand new and utilized the latest business systems and procedures.
Russ saw challenge and opportunity there, a wide-open door to a future with unlimited possibilities for advancement. He worked nights and weekends, mastering the intricacies of auditing and learning the ins and outs of the big food chain's operation.
The stock market crash in 1929 and the ensuing Depression brought difficult times for ambitious young people. The early days with the A&P were characterized by frequent moves, but much to the frustration of a young man with plans and dreams, they were mostly lateral. During one year, Russ recalled, he worked under five different managers, doing much the same thing. Between 1928 and 1938, by dint of sheer hard work, his salary moved up from 35 to 55 dollars a week. That was a tidy sum during the Depression years and enough for a serious young Russ Kelly to marry Marian Hines in 1937.
Then, in 1938, with the economy showing signs of recovery and the company reorganizing to take advantage of it, Russ thought things might finally be opening up for him. And when he was called into his boss's office on his tenth anniversary with the A&P, Russ was prepared to receive a promotion, a raise, or at least a note of recognition for his decade of hard work. Instead, he was fired. The reorganization had eliminated his job and left him an early victim of what today would be identified as corporate "downsizing."
Although he was disappointed, Russ's ten years at the A&P had been a valuable experience. It had brought out his natural inquisitiveness, giving him the desire to thoroughly learn and understand every operation with which he was involved from both the human and the process point of view. He gained the experience of working with and understanding a large organization. And he learned to be flexible and persevering, qualities that would serve him well in future jobs, and even more when he started his own business.
To round out his business experience, Russ took a series of jobs, each of which prepared him for the responsibilities he took up during World War II, and ultimately for the establishment of Kelly Services.
He sold home-study courses with the International Accountants' Society to hone his skills in sales. Although Russ proved effective at sales, he jumped at an opportunity to put his knowledge of organizations and systems to work with the Frontier Fuel Company in Buffalo.
Even closer to the mark was his next move, to Pacific Transport, a Buffalo trucking company. Kelly had developed a keen interest in trucking through work with A&P suppliers. It was said that he could look at a stack of orders or a warehouse full of produce and know exactly how many trucks, drivers, and helpers were needed to get the job done with a minimum amount of spoilage and downtime.
With World War II on the horizon, Russ tried to enlist, but after taking a physical examination, was turned down for military duty. There was no problem with his ears, however, and when word trickled down from some old friends at the A&P that the Army Quartermaster Corps was looking for civilian specialists who were experienced in large-scale procurement, Russ found a way to serve. He joined a group of chain store specialists in Chicago. His job was to interpret Army regulations, to cut red tape and to help create a modern chain store food buying operation for the Army.
Another early challenge was to find ways to rush shipments of perishable goods. At that time, it was not unusual for suppliers to have to wait months for payment of their invoices, resulting in long delays in deliveries and choking off vital supplies to the troops. Kelly and others on his team of talented young auditors and expediters established a centralized payment system and gained a national reputation for getting the job done when they assured payment within eight days of deliveries made anywhere in the country.
The drive and ingenuity Russ brought to his wartime job did not pass without notice. One of his associates from those years remarked, "Russ pushed food the way General Patton rolled his tanks."
And while he was helping to fight a war, he was doing what he did best during those years of preparation -- learning. Russ became a master of office procedures and cultivated a keen understanding of business. He was also planning for better times, by beginning to save. As the Allies closed in on victory, Russ was able to look ahead to a postwar America.
The enormous energy of wartime production would soon need to be converted to peacetime products. But while other visionaries of the period saw their dreams in molten steel and manufactured products, Russ saw his in paperwork and services. He believed that in the postwar economy the needs of the office would be just as great as those on the factory floor. The importance of his insight would not be fully appreciated until the new "service economy" emerged in the 1980s.
When the war ended, Russ, now 40 years old and stationed in Chicago, decided it was time to do something about his long postponed ambition to own his own business. He joined a management consultant firm while he weighed his options. He decided to start a business service bureau, a place where customers would bring in their typing, duplicating, inventory calculations, addressing, mailing and other business projects and have them done by the bureau staff. It seemed to be an ingenious solution to the problem of processing those huge piles of paperwork.
But where to set up his business? Russ's wartime food procurement experience provided him an intimate knowledge of cities across the country. Although he had no particular ties to Detroit, he was familiar with the manufacturing companies operating out of the city called the "Arsenal of Democracy" during World War II. Now, the nation's automobile companies were prime candidates for the services he planned to offer.
Russ had saved about $10,000 by this time, and he used most of it to buy 20 Comptometers (the "high-tech" calculating machines of the day) and several typewriters. He rented space in the Transportation Building in downtown Detroit and opened the Russell Kelly Office Service for business in October 1946. Kelly was president, salesman, recruiter, trainer and handyman. His wife supervised the staff, which consisted initially of two women whom Russ had trained himself. The fact that there were more machines than staff was a sign the company had plans to grow.
But the real foundation for growth was something less visible. Russ pledged that any work he won for the bureau would be done to the highest standards. From the beginning, Russ was a firm believer in the philosophy, "A satisfied customer is always a customer." He guaranteed his services from the very start. If a customer was dissatisfied, a bill was not sent, or an adjustment was made. This policy has prevailed since the company's first sale in 1946.
Russ brought to his own business a work habit going back to his days at the A&P, to rise early every day and hit the floor running. He always believed his most productive part of the day was long before most people started theirs. As it turned out, Russ would need every minute and every ounce of energy to make a go of things. And his experience in sales would be drawn on to the maximum possible extent.
In the first two weeks, sales totaled exactly zero. The first customer was a local CPA who brought in a small typing job. Russell Kelly Office Service discharged the assignment to the highest standards, and the customer went away satisfied. Though neither he nor Russ knew it at the time, this customer was going to play a notable role in the company's future.
Over the balance of 1946, work came in at a promising if not breath-taking pace. Events seemed to follow the plan for the service bureau -- typing and inventory calculations brought to the office, processed there and returned to the customer.
In December, the CPA (his first customer) called again, in desperate need, not of work to be done at the bureau but for a typist at his office. To help him out, Kelly sent one of his regular employees to work in the customer's office. The billing for that first day was $6.75.
While not providing temporary help as we know it today, by loaning out one of his permanent employees Russ had taken an important step beyond the service bureau business. But at this point he did not see the dawn of anything new, just an additional service for a customer. He still saw the service bureau as his primary business.
However, the need for that "additional" service soon arose again. First it was a steel company that needed help with its payroll but was reluctant to send company records to an outside service. Kelly hired 13 women specifically to go to the steel company's offices to complete the project. Next came a call from a firm in Marysville, about 50 miles from Detroit. Fifty office workers were needed for an emergency. Russ responded by hiring 50 new employees specifically to do that job.
Not according to plan
About this time, Russ realized that something new and different was happening. The idea of loaning permanent employees for a short period of time was not new. Accountants and others had done that for years, and Russ had already begun assigning permanent employees to certain customers. However, hiring temporary employees specifically to do office work for short periods of time was new -- and a very promising idea. But it was unconventional, and in the late 1940s the world of business was not organized for the quick adoption of unconventional ideas.
At the same time, Russ was beginning to see a leveling off in service bureau work. The post war shortage of office machines was over, and the customers Russ had targeted were now better equipped to do their own work. However, they often lacked the skilled people essential to the task.
"When the first customers called and asked for a comp operator without a machine, a typist without a typewriter, I was aghast," Russ said later. "You know, this was heresy! Finally we relented, and we got into the 'people business.' I believed we could find the skills to do anything that needed to be done in an office."
1947 proved critical to the new enterprise. The company landed its first auto industry contract, typing purchase authorizations for the car companies as they scaled up for civilian production. Another development was the creation by Russ of policies and procedures that gave structure to the growing "temporary" business. Many of these remain as industry standards today.
For instance, Russ extended to his temporary help business the service bureau's guarantee, still in effect today. It was a real confidence builder for companies trying out his new "temporary employee" idea. He also established an indemnity policy requiring customers who hired away Kelly's temporary employees to pay a specified amount for the loss of the employee. In Russ's words, "I wanted people to appreciate the investment we had made in our temporary employees."
In the same year, Russ suffered a personal tragedy. His wife Marian was killed in an automobile accident. Russ's huge and growing workload proved to be a blessing, and he threw himself even more deeply into his work.
Russ was facing new challenges now. As his idea caught on, Detroit businesses were often heard to call out, "Get me a Kelly Girl!" He now had to find a way to recruit enough workers to fill the positions for which he was getting calls. Temporary help was taking off. "I had two choices. I could lower our standards or make a concentrated effort to find the additional quality personnel needed," he said.
Anyone who knew Russ knows that there was really no possibility of lowering standards, which meant that he had to double his efforts to make this new concept work. With limited funds available for want ads, Russ's best source of new employees was referrals. His own employees, enjoying the kind of work the company offered, were only too happy to help by directing friends and relatives to the company.
In order to fill positions in the new business of temporary help, Russ turned to people who were not already in the workforce full time. Despite his shyness, he began to speak to women's organizations, to PTAs, civic groups, and clubs. He found a vast untapped resource of talent, especially women whose children were in school. Many had enjoyed their previous office experience and were interested in the opportunity to accept temporary employment. He also worked diligently to contact and welcome skilled older women, and minorities, who often faced difficulties when they wanted to change jobs or enter the business world.
By 1951, the company was on a secure footing, recording more than a million dollars in sales. That same year, things improved in Russ's personal life as well. He married Margaret Adderley, a personnel recruiter and shorthand instructor for the company. For many years, she and Russ hosted the company's popular annual manager meetings. Russ also took Margaret's young son Terry under his wing. He was more than pleased that Terry showed an early interest in the business and considered that in planning for his own succession.
Managing a growing enterprise
In the early years, Russ turned to other family members to help him grow the company. His first recruit was his brother Richard H. Kelly, five years his junior. A graduate of the University of North Carolina, Dick was then on the staff of the A&P. Brothers James W. "Jim" and Theodore E. "Ted" Kelly also came aboard a few years later.
In the 1950s, with Dick by his side, the business grew rapidly. Company sales during its first full year of operation in 1947 had totaled $92,000. By 1954 sales had climbed to $1,500,000, reflecting the wisdom of moving beyond the service bureau business.
"If we can do this in Detroit," the Kelly brothers thought, "why not in other cities?" They began to explore the possibility of expansion. First they purchased a small service bureau in Louisville in 1954 (with Dick moving there as manager) to test the feasibility of direct expansion. In January 1955 they opened a pilot licensed branch in Grand Rapids. Later in the year, 29 more licensed branches opened. Less than a decade after its modest one-office beginning, the company was doing business in 16 states and the District of Columbia.
Russ brought Dick back to headquarters in 1957 as executive vice- president. When the company went public in 1962, Dick served on the first board of directors. In 1965 when Russ Kelly became chairman of the board, Dick became president.
Meanwhile Terry Adderley had been moving ahead steadily. After serving the company in various capacities during summers and school breaks, Terry graduated with a BBA from the University of Michigan in 1955. He earned an MBA in finance from the University's School of Business in 1956. After two years in New York City, in the Treasurer's Office of the Standard Oil Company of New Jersey, Terry Adderley came home.
Terry joined the company full time in 1958, as manager of the Louisville office. He returned to the corporate headquarters in 1960 and became a vice-president the following year. Terry was elected to the board of directors in 1963 and was named executive vice-president in 1965 when Richard Kelly became president. During these years, Terry took his turn at managing most departments of the company. He led the move to public ownership, and in 1962 the stock began to trade on the over-the-counter market.
Russ had always been proud of the name Kelly Girl, which had been coined by his temporary employees in order to more easily identify themselves when working in the customer's office. The term gained national recognition for quality temporary employees. As a result, the company changed its name to Kelly Girl Service, Inc. in 1957. But times were changing, and so were the services the company offered. Marketing, technical and light industrial services had been added, and a greater number of men were being employed by the company in all service sectors.
As the number of new services increased, Russ and Terry began a search for a new name, one that would encompass the total business of the company. In 1966 the company became Kelly Services, Inc., a name that would cover a variety of services. The new name was easily translated into other languages, and was fittingly close to the name Russ had painted on the door in the Transportation Building in downtown Detroit in October of 1946.
The gift of a smooth transition
It is a great challenge for the founder of any organization to prepare for retirement and an orderly succession. This is a step that many leaders fail to accomplish, to the detriment of their companies. But it is one that Russ Kelly accomplished with his usual grace.
Russ's withdrawal from the day-to-day operations of the company was accomplished with a matter of fact, business as usual ease and naturalness. As Dick Kelly and Terry Adderley moved into their leadership positions in the mid-60s, Russ announced that he was going to leave the running of the company to them.
When Dick Kelly became ill in 1967 and retired, Terry Adderley became president. Over the years, Terry would call Russ to describe his innovations, his management decisions and his plans for the company. Russ might ask a question or provide a new perspective. But his confidence in Terry was complete. Russ was a close, valued friend to Terry through the next three decades.
Russ continued to follow the fortunes of the company closely. The results were dramatic. In 1946, the company's first-year sales had been $848. In 1967, the year Terry was named president, sales were $63 million. In 1996, Kelly Services' sales were $3.3 billion; the company ranked 406 on Fortune magazine's list of the 500 largest companies in America, and was number 392 on the Forbes 500 list. Russ also took pride in his entrepreneurial success, and inclusion since 1985 in Forbes magazine's annual list of America's 400 wealthiest people.
Russ was also proud of the awards and honors extended by customers, community organizations and the business press. These included Forbes's designation as "Best Business Services Company for the 1990s," the Michigan Minority Business Development Council's Corporation of the Year award, and Business Week's list of "Women-friendly" U.S. companies. In 1996, The Business Women's Network recognized Kelly Services for having the second largest number of female corporate officers in the United States.
Russ was especially pleased that his own dedication to quality and service had become a core value of the company. Recent honors for quality included Ford Motor Company's Q1 Preferred Quality Award, Chrysler Corporations' Quality Excellence Award, the Xerox Certified Supplier Award, and Kraft Foods' Rick Stuedemann Award for Supplier Excellence.
Russ in retirement
Russ's retirement was quite active. No lover of airplanes, he was nevertheless a world-traveler, with a sense of adventure nurtured from childhood. Steamships and the last of the great trains carried the Kellys far from their home base in Ft. Lauderdale, Florida.
An exceptional bridge player, he shared the table with some of the world's best players, including Charles Goren. In later years, he switched from bridge to gin rummy as his card game of choice -- it was a more sociable way to pass the time with his friends and family.
Russ had loved horses since his childhood in British Columbia, and thoroughbred racing became a passion. An accomplished horse person, he was a regular at the Turf Club, and for years he kept a stable of thoroughbreds which he raced and bred with success. Before he "retired" from the sport, his horses won a number of major races.
Among his friends and family he retained his keen mind and sense of humor until the very end of his life. Family was especially important to Russ; he remained close to them before and during his retirement.
With great pride, Russ watched from his home in Florida, as Kelly Services celebrated its 50th anniversary in October, 1996. In a special anniversary message, videotaped for employees, he said, "I just can't tell you enough how happy I am to see the wonderful organization that's grown out of our little company. I am very proud of all of you. Keep up the good work. I love you all, and thank you."
Never to be forgotten
Russ Kelly removed himself from the limelight many years before his passing, but true pioneers are never forgotten. In January 1997, Russ was profiled in Workforce magazine (formerly Personnel Journal) as one of the 25 most influential persons in the American workplace during the preceding 75 years. But then, any one of the millions of people who have worked for his company could have told you that.
William Russell Kelly, founder of the modern temporary help industry, Chairman and founder of Kelly Services, Inc., died at his home in Ft. Lauderdale, Florida on January 3, 1998. He was 92. This article was written shortly after Mr. Kelly’s death.