SI Review: June 2011


Got It? Flaunt It!

Wow customers with tools and services that satisfy their post-recession agendas

It’s often said that success comes from fulfilling others’ needs, so as the economy recovers, it’s imperative that owners of small to midsize staffing firms keep their finger on the pulse of buyers. Of course, buyers are always looking for industry staples like great candidates and top-notch service, but this time they’re seeking additional tools and solutions to meet their broader strategic agendas.

Buyers are tasked with increasing operating efficiencies and lowering fixed labor costs by shifting staffing duties away from line managers while finding new ways to utilize outsourced human capital. Although their wish list may not be revolutionary, staffing firms that manage to fulfill their needs can stake out a fresh position in the marketplace.

“There are opportunities to fill service and technology gaps and staff everything from astronauts to zoo keepers for anyone who is willing to listen and come up with a solution,” says Lori Williams, an industry consultant and principal with Creative Management Consultants. “Unfortunately, some owners may miss out because they haven’t changed their business model in decades.”

So if your staffing firm offers these services, shout it from the rooftops; if not, consider expanding your repertoire to retain current customers and entice new ones.

Unique Markets

On the surface, it appears that high levels of unemployment and a saturated marketplace might preclude small, commercial staffing firms from expanding into profitable niche segments. But many niche firms are struggling to fill a broad range of positions. At the same time, buyers from the Pacific Northwest to the East Coast report critical shortages of skilled workers in some categories.

For example, rehabilitation specialists would rather be free agents than full-time employees and they’re hard to find, according to Rhonda Stickley, senior director of Talent Acquisition and Workforce Planning for Providence Health & Services. Yet local healthcare staffing firms can’t always fill her requisitions for physical or speech therapists, because they’re busy looking for travel nurses and pharmacists.

She sees an opportunity for an innovative, local firm to dominate the space by catering to the unique work preferences of rehabilitation specialists and offering them guaranteed pay, benefits and travel assignments.

“Owners can’t be afraid to take a reasonable risk to increase revenue or they’ll cease to exist,” says industry consultant Mike Neidle, president of Optimal Management Inc. Often, all a midsize firm needs to do is hire a single expert or reallocate internal resources to inject itself into a prime sub-niche market, Neidle says. Creative executives always find a way to overcome superficial barriers.

Neidle cites an instance where an owner exploited a neglected sub-niche market by capitalizing on an imbalance in the local labor pool. The owner applied for a government grant, hired a trainer and turned unemployed IT professionals into valuable entry-level tech writers. Because the federal government and many states provide workforce training subsidies, staffing owners can take the opportunity to build an inventory to pierce difficult sub-niche markets.

In another instance, a reluctant staffing firm owner overcame concerns about workplace injuries by creating a customized safety program and profitably supplying contingent plant specialists to the petrochemical industry.

“There are unique markets in every city that are not on the radar,” says Neidle. “Instead of competing for the same business with everyone else at terrible margins, why not talk to your customers, understand their problems and offer something different.”

Turnkey Solutions

From manufacturing to marketing and IT, companies are saddled with a backlog of projects that were shelved during the recession. But line managers won’t be ordering contractors or temps any time soon because they lack the internal resources and time to manage such a large inventory of projects.
Instead, line managers want turnkey solutions that include a project manager; a stable group of contractors; a mix of offshore services; and non-traditional pricing such as time-and-expense, fixed-price, risk/reward or value-based models.

In fact, IT managers say they’re willing to pay more for a team of hard-to-find SAP or EPIC consultants who won’t defect in the middle of the project, and offering guarantees or bonuses to such professionals can help staffing firms boost the profitability of turnkey, fixed-price projects.

“Staffing firms can make a lot of money by estimating a baseline cost for each project and offering to share any savings with the client,” Neidle says. “Offer the project manager and contractors incentives for beating the budget, so they’ll focus on outcomes and shun competing offers.”

Stickley says staffing firms have a competitive advantage over traditional consulting firms because they can solicit contingents from several divisions or build strategic alliances and assemble industry-specific, cross-functional teams.

“There’s an opportunity to help healthcare providers automate patient records, create new operating efficiencies and manage projects related to healthcare reform by offering specialized cross-functional teams comprised of IT, business analysts and clinical professionals,” she says.

Program Makeovers

Many contingent workforce programs are out-of-date after the long recession. And because line managers don’t have time to tackle such a project, some buyers are soliciting outside help to revise job descriptions, supplier scorecards and create uniform summaries for candidate submittals, for example. Meanwhile, buyers who contract with managed service providers (MSPs) could be shopping for a complete makeover.

Although MSPs have been successful in lowering hourly bill rates for contingent workers, they’ve inflated internal operating costs by shifting the responsibility for screening and selecting candidates onto line managers. Smaller staffing firms may be able to carve out a position in large accounts by reviving traditional on-site services or dedicated recruiters to relieve overtaxed line managers.
“We need someone to come in and look at all our staffing duties to see where they belong, because we’ve got too much on our plates,” says Andrea Grex, program manager for Wolters Kluwer. “MSPs have reduced our hourly rates, but their model drives most of the tasks back to the hiring manager; there has to be a better balance between self-service and margin management. “

Strategic Workforce Planning

Many companies downsized their human resources departments and in-house recruiting teams during the recession, and they are reluctant to rehire now that the economy is improving. Instead, they’re considering recruitment process outsourcing for some hiring needs and increasing their reliance on agencies for temp-to-hire and full-time placement in other areas.

This reluctance to upsize human resources is a boon for midsize staffing organizations because it provides an opportunity to close the gap by offering current clients counter-cyclical and complementary human resources services such as outplacement and consulting expertise for employee benefits, payroll and communications.

But the emerging need for holistic workforce planning could be the most lucrative opportunity, because it gives staffing owners an overview of the entire enterprise and the chance to proactively suggest strategic and innovative solutions to a variety of human capital challenges.

One staffing firm owner recommended to a buyer a pilot program utilizing virtual call center contingents, after learning about customer dissatisfaction with offshore agents during a workforce planning session. Another staffing firm, after hearing about an upcoming early retirement program in an oil and gas company, proposed the oil and gas company bring back its retirees as part-time contingents in order to preserve critical institutional knowledge.

“Most staffing firms are focused on survival, and there’s constant pressure to bring in orders,” Creative Management Consultants’ Williams says. “Yet adopting a more strategic approach and proactively solving customer problems can turn desperate order takers into order makers.”

Next-Generation Tech

Technology is always advancing. As a result, many buyers may find their tools and technology out of date coming out of the recession. Review your current offerings and your buyers’ needs. While most companies transmit orders and manage staffing transactions via an automated tool, first-generation systems don’t provide the functionality, consolidated data and strategic capabilities that buyers need to meet their near-term objectives. Fulfilling their technical wish list is not optional for owners of small to midsize staffing firms, Williams says — it’s a matter of survival.

• Mobile apps — Managers want to be able to review candidates and initiate staffing transactions anytime and anywhere. And with companies increasing their global footprint, line managers are travelling more and communicating via mobile devices.

• Consolidated data — In most cases, information for traditional consulting firms and independent contractors is housed outside a company’s vendor management system, making it difficult for buyers to mitigate risks and control costs by enforcing assignment terms, monitoring statement-of-work engagements or preventing contractors from switching consulting firms to secure higher pay rates.

• Performance management — Managing the performance of contingent workers is a top priority for line managers because the process optimizes expenditures. But current software programs don’t provide an administrative tool or overlay, so buyers want a single platform that incorporates contingent job descriptions with individual performance goals and links post-assignment performance data to supplier scorecards.

• Business intelligence — Buyers have taken a seat at the strategy table within their organizations, but many lack the required business intelligence to help line managers weigh their options and discern the ideal solution. For example, Wolters Kluwer’s Grex would like an automated decision tree that uses historical data to compare the costs and advantages of full-time hires with long-term or short-term temps, independent contractors or even the services of an offshore provider.

“We need analytical tools and information to understand the plusses and minuses of each human capital solution so we can take a consultative approach and make appropriate recommendations to line managers,” Grex says.


Leslie Stevens-Huffman is a freelance writer in Southern California who has 20 years’ experience in the staffing industry. She can be reached at


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