In Defense of Staffing!
If you follow my blogs, you know that last week I reported on the very low “user satisfaction” scores earned by the temporary staffing industry in a recent survey of its nationwide customers. The survey, conducted by industry pollster, Inavero, used the demanding Net Promoter scoring methodology to score our industry as a MINUS 3 – down a full 11 points from an already noticeably PLUS 8 score we earned last year. While granted that the NPS methodology makes it tough to score high, it is clear that in 2015 all of us in the staffing industry got a serious wake up call about how our employer customers are viewing our work.
Alarming? For sure. Understandable? I think so and will be blogging on this topic over the next several weeks – sharing what I see as a growing dynamic between staffing providers and their clients that is creating this disconnect between what our customers expect and what we deliver. I will focus on the dynamics of our hometown market, Seattle, Washington.
It is true that our industry has forever battled issues with customer perception. We are an industry that cannot simply create the products we sell (i.e. employees) to our customer’s specifications. And when demand does not match supply, there are always either employees or employers who see themselves as under served .
The current down-tick is no exception, and is exaggerated by new and serious mismatches in the employment marketplace – more demand for core and interim employees, fewer core and interim employees to meet that demand. This mismatch impacts not just the customer’s perception of our work, but our actual ability to deliver the results they want or need. How long has it been since your staffing supplier openly admitted, “I may not be able to deliver the candidate you need in in the time frames you need them, and at the price you want to pay? …and then invited your collaboration to find a solution.
In today’s market, where compromie and creativity are what it takes to solve most problems, these types of “authentic conversations” between staffing agency and their clients are needed daily.
Changes in Supply/Demand – How Ready Are We?
For those of us who watch the employment marketplace closely, there is no question that the 7 years of economic downturn since 2008, has masked serious issues in the underlying demographics of the emerging workforce. Let’s be honest – temporary and contract staffing companies have had a great run since 2007 when the dramatic dip in the global economy put large numbers of good, even exceptional, employees into the marketplace. It was a time when most of these employees were willing if not motivated to accept temporary or contract roles that they would not have considered a couple of years prior.
In 2015, employers, large and small, have been hiring in record numbers, driving down the supply of candidates available for temporary/contract assignments and the temporary staffing industry’s ability to deliver the fast moving, easy to execute, staffing solutions it once did. Yes, a temporary or contract staffing model still moves faster and is often the more cost effective staffing solution when compared to a traditional hiring process, but its not the hands free staffing model it once was. It takes both planning and collaboration between the client and their staffing partner to get it right.
The Underlying Need for Temporary/Flexible Staffing Solutions Continues to Grow!
The Catch 22 of the Inavero study is that as the user’s satisfaction with temporary staffing services decreases, their demand for short term, flexible staffing solutions has increased. In fact as more employers deal with more uncertainty or volatility of their own, or run into obstacles finding their own core employees, they have turned more and more to the temporary or contract staffing industry for solutions. Unfortunately, the temporary staffing industry isn’t one where increases in market demand can be met by increasing manufacturing capacity or becoming more efficient. It is an industry highly dependent on marketplace demographics to deliver the goods, and right now those demographics are not working in our favor.
Are Staffing Suppliers and their Clients Talking – Really?
We know from our own experience that when we don’t prepare our customers for the realities of the current candidate marketplace, we run the risk of disappointing them. And many times it’s the little things that irritate clients the most.
In 2012, job candidates would never think of being a “no show” for an interview – even for an interview for a short term temporary assignment. In 2015, candidates are often offered and will accept “better” jobs before they even complete all interviews, often resulting in last minute interview cancellations or worse yet, not showing up for their interview because they are already working. Is simply “not showing up” rude? We think so. Avoidable? Probably not. (Keep in mind employers behaved in much the same way back in 2008 – when it became commonplace for employers to fill positions quickly, oftentimes cancelling interviews with other candidates at the last moment.)
Between 2008 and 2012, the only jobs growing in significant numbers were temporary and contract jobs. Employers did not have to pay much attention to pay rates, and could easily rely on their staffing provider to “get them the people they needed.” In 2015, below market pay rates present a serious challenge for both staffing providers and their customers. The search for candidates willing to work at below market rates often means long delays in the hiring process, unexpected turnover, and issues with employee quality – all things that can reflect poorly on a staffing provider, but are in fact the result of a staffing strategy out of sync with market realities.
Partnerships between Staffing Companies and their Clients Are Still the Exception, Not the Rule…
…and this particular marketplace is testing the client/staffing company relationship big time. When things go wrong – hiring deadlines not met, candidates cancelling interviews at the last moment, candidates choosing other jobs – it is easy for clients to simply blame their staffing agency for all that is bad in River City. And because the staffing industry is based on a contingent, “pay for performance” business model, the relationships between staffing providers and their clients is often too fragile to work through the problems that are inherent in the current candidate dominated marketplace. When issues develop, it is easy to just change staffing providers, rather than work together on a more sustainable staffing solution.
Can Staffing Ever Become a Commodity Purchase?
No discussion about “user satisfaction” is complete without at least mentioning the impact of a now decade old trend for the purchasers of temporary staffing services to put staffing into the commodity bucket where low ball pricing has trumped other elements in the purchasing equation.
Unfortunately, there have been too many situations where this strategy has turned into a race to the bottom, with minimal attention given to the portion of the bill rate that is focused on the costs of delivering quality outcomes, including the rate of pay given to the temporary or contract worker. As the marketplace shifts, we are seeing “low bid” staffing contracts based on “low ball” employee pay, coming back to bite both staffing providers and their clients – and yes, impacting ratings of “user satisfaction” .
A quality staffing firm knows and understands the delicate balance between the costs it takes to deliver a cost effective service to their employer clients, and the costs of recruiting and maintaining great relationships with the candidate community. 2015 has been a year where the balance between those two relationships has been jarred, requiring a revisit of both service standards and pricing boundaries. It is clear from the data we are now seeing, that the authentic conversations needed between staffing suppliers and their clients focused on finding solutions to known issues, have not been happening at the level required.
I can’t help but close, by reminding my readers that what I am writing about here are industry wide trends….not things that are hitting the PACE team. In fact, for PACE our NSP ratings from the Inavero actually increased in 2015, contrary to industry wide trends. For the two years we have participated in the Inavero survey, we have scored in the top 25 percentile, considerably higher than industry norms. This does not mean we are not impacted by what is going on around us, and are not concerned by what is happening to the industry over all. In defense of staffing, we believe there is a bigger story to tell.
Jeanne Knutzen is the owner, President, and founder of the PACE Staffing Network, an award winning staffing company doing business in the Greater Seattle job market for over 35 years. For a complementary and confidential consult on how to get your company or department better prepared for a very changed recruiting marketplace in 2016, contact Jeanne at firstname.lastname@example.org