SI Review: March 2012

Print

Future, Now

Getting ready for the next wave of jobs

By Amy Bingham

An improving economy and companies more willing to hire contingents than add to their own headcount means increased business for staffing companies. That’s the good news. However, that growth won’t be across the board. While some industries will see signifycant growth and hiring activity, others will lose headcount. What will this mean for the staffing industry? How can we prepare for what’s to come, ensure we have the right people in place and that we are focusing on the right skills? Enter the U.S. Bureau of Labor Statistics (BLS), which makes projections in 10-year increments about the population, labor force, number of jobs in specific industries and sectors, and occupations in demand. One of the main purposes for this exercise is to assist educators in ensuring today’s students have skills that the employment economy needs tomorrow, but it can also serve as a predictor for the staffing industry. As companies are looking for workers but are hesitant to add to their own staff , staffing suppliers should be prepared to step in and fill those roles.

Key Projections

So what is the BLS predicting from 2008 to 2018 and how should we interpret the data? To start, the BLS expects the U.S. gross domestic product to grow by 2.4 percent per year from 2008 to 2018, slightly slower than the 2.5 percent annual growth that occurred from 1998- 2008, which included a major recession. Between 2008 and 2018:

  • The population aged 16 and older will only increase at 1.0 percent annually, compared with 1.3 percent growth from 1998 to 2008
  • The labor force will expand by 0.8 percent annually, compared with 1.1 percent annual expansion from 1998 to 2008
  • The unemployment rate will decline by 1.3 percent annually after expanding by 2.6 percent annually from 1998 to 2008.

Projected Industry and Sector Winners and Losers by 2018

The employment economy is measured via two interdependent parts — sectors and the occupations of workers. Sectors are broken further into specific industry. Many staffing firms focus on just a few industries and sectors, with a limited range of occupations. A historical strategic debate is whether to focus marketing efforts on the biggest with the largest growth or the fastest-growing niches. The agency’s projections are also helpful in that they let companies know what sectors to avoid.

The BLS expects the construction sector to add many jobs because of “an increase in infrastructure projects as residential activity recovers from current levels.” Meanwhile, the increasing elderly population is driving the demand for healthcare workers, which encompasses numerous specialties and opportunities for staffing fi rms. Considering healthcare is also expected to be one of the sectors to add the largest number of jobs, it is worthy of serious consideration for staffing firms (which is why healthcare staffing firms are the second-most attractive acquisition targets at this time). Educational Services — an industry largely ignored by staffing firms today — is also fast-growing. Indeed, one of my clients was recently contacted by a charter school management firm desperate for help scaling its recruiting and staffing function as the company prepares to double in size over the next 18 months.

On the other end of the spectrum are the industries expected to lose jobs. Some of the largest losers in terms of the number of jobs are manufacturing industries, as well as certain informational industries that have become marginalized because of the Internet, such as newspaper publishers.

And despite increased output in the semiconductor and other electronic component manufacturing industries, increased productivity, “combined with the movement of some research and development overseas, is expected to result in a decline in employment” in that industry, according to the BLS.

While the BLS data is helpful in identifying future opportunities for staffing firms, it is only part of the story. It’s important also to examine the rate of growth.

Consistent with the overall shift of the economy away from manufacturing and toward services, the sector expected to add jobs the fastest is Professional and Business Services. This umbrella category includes management, scientific, and technical consulting services, specialized design services, as well as computer systems design and related services, all of which are industries that employ significant numbers of information technology skills (which is why IT staffing firms are the most attractive acquisition targets at this time).

Projected Occupational Winners and Losers by 2018

Now it’s time to dig a little deeper. Now that we’ve identified the hot industries, we need to identify which occupations/job titles within those industries are expected to be in demand. Also important are the education requirements for those roles, which can help us predict where there will be skill shortages and therefore opportunity for staffing firms.

For example, the healthcare sector is expected to be among the fastest-growing as well as to add the largest number of jobs, but what types of jobs and what type of training, education or certifications will those jobs require? The difference in the education and training requirements of registered nurses and home health aides is significant, with the latter requiring less education and training and therefore being the faster growing of the two. These are important strategic considerations for any company contemplating entering the healthcare staffing.

A staffing firm not servicing healthcare today can potentially wade in by entering the space filling home health aide positions, because those positions require just certification and short-term on-the-job training rather than a degree and often significant clinical experience for nurses.

Several technology occupations are also among the fastest growing jobs, but the overall numbers are relatively small — especially when compared to several of the healthcare-related professions. Additionally, many IT jobs require high levels of education and expertise, making those skills more difficult to recruit — a constraint IT staffing firms are experiencing today with supply tight and demand high.

Staffing Services Projections

So given all this industry growth, what does the BLS expect to see in the Employment Services category, which consists of Temporary Help Services, Professional Employer Organizations (PEOs), and employment agencies? From 2008 to 2018, the BLS projects employment here to grow about 19.1 percent, with the bulk coming from the Temporary Help Services component (about 75 percent of the total job number to the larger Employment Services sector). So for the purposes of this analysis, we’ll consider them one and the same.

The full breakout of occupations present in the Employment Services sector number several hundred, but consolidating the data into major occupational groups may be the best way to see the overall trends. Clearly, occupations dealing with servicing an aging population are expected to grow at a faster rate than more “standard” jobs provided by temporary help firms.

When viewing the data by occupational distribution, it is noteworthy that in office and administrative support occupations, which comprises just under a quarter of all jobs, the percentage is shrinking but only slightly by 2018. Thus, we can assume there will still be opportunity in this category in the next six years. The market share of most other occupational grouping within Employment Services are not expected to change radically by 2018.

More dramatic and consistent shifts are seen when viewing the data by percentage.

For example, although the portion of office and administrative support occupations are expected to decrease as a percent of Employment Services, the category will actually increase its share of those jobs in the overall economy as businesses are expected to depend more on contingent workers for those types of positions. This trend — greater use of Employment Services for all types of occupation types except one (farming, fishing, and forestry occupations, which is a very small portion) — is consistent throughout the entire sector. So if your firm’s strategic intent has been to exit clerical and administrative skills entirely because commercial staffing margins are the lowest in the industry (a commonly held view), this information may give you pause.

Preparing for the Growth

The data and assumptions based on the BLS projections will be helpful in considering from a global perspective what is predicted to occur in employment in the U.S. by 2018. For a complete picture, it will be important to conduct the same exercise at an individual market level.

Start with what hasn’t changed and what has. What are the known factors for your success? What does your firm do really well that you should exploit as a competitive advantage? Where is your firm not competitive and what must you do to correct these deficiencies for future success?

Next, what industries, sectors, and occupational categories should you target servicing based on assumptions you can make from the data for above-market growth?

Finally, how will you accomplish these goals — organically, through acquisition, or both?

Regardless of your strategy, do these three things better than your competitors:

  1. Be open-minded about your strategy. Change your paradigm. It’s not about how you want your firm to be seen in the marketplace; it’s about meeting the specific needs of employers in the future even if you never thought you’d be in a particular space. For example, staffing firms that figure out how to re-tool the unskilled and semiskilled workforce to address the skill gaps we’ll see between now and 2018 will be big winners. It may mean stepping beyond your core focus of matching and placing into the world of training and talent development. A client of mine partnered with a junior college to train and then place certified nurse assistants on a full-time basis. The entire first class had job offers before they even completed training.
  2. Make sure your sales team can sell consultatively. Invest in training and development for both sales and service staff. Everyone in the organization MUST understand differences between transactional and consultative approaches and become curious sleuths. Initial discussions with a buyer should start with answering this question: what are the recruiting and staffing constraints inhibiting growth for this company, and how can we help?
  3. Position yours as an employment consulting firm. Move the perception of your firm up the value chain from a supplier of temporary help to a holistic workforce consultant. Borrow the best practices of the MSP model large firms have sold so well using a consultative approach and embed them in your message and behavior at all levels in the organization. Your value proposition must make it readily apparent to buyers that your company is the go-to source for employment consulting. Staffing firms are in the best position to educate buyers on the trends and the realities of finding good workers, and the cost savings they can realize in keeping a healthy percentage of their workforce contingent.

Do the historical analysis of your firm. Assess your signature strengths, what has changed and what you need to do to keep pace with the changes. Use information gleaned from employment projections to select a strategic direction you have confidence in for the future. And above all else, execute your strategy well.

Amy Bingham is managing partner of Bingham Consulting Professionals LLC. An industry veteran, she advises staffing firms in the area of sales effectiveness through strategic planning, strategy execution and performance coaching. She can be reached at abingham@binghamcp.com.

[SIDEBAR]

Today’s Landscape

The roots of the modern staffing industry can be traced back to the 1940s, but at the end of the 19th century the forerunners of some of those firms were already in existence, which means we actually have more than 100 years of history. So what have we learned in all this time?

  • Buyer awareness has increased. We no longer have to explain what a temporary worker is. Adoption continues as organizations realize the benefits of using contingent labor to remain nimble and save money.
  • Large accounts are more sophisticated. From on-site to managed services and VMS, volume users of staffing services expect robust solutions and a return on investment.
  • Margins have declined. The commoditization of the industry has put downward pressure on the industry’s gross margins, forcing us to operate more efficiently.
  • Our front and back offices have changed. We no longer operate with manual client and employee files and only cut paper checks for employees. Technology has enabled greater efficiency.
  • Advertising and recruiting methodology has evolved. We rely less on print and radio and more on job boards and social media for increasing our brand and for client and candidate acquisition.

Comments

Add New Comment

Post comment

NOTE: Links will not be clickable.
Security text:*