SI Review: January 2011

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2020 The Future of Staffing, Where Will You Be?

Fast-forward to the year 2020. What will it be like? Will we be getting around in alternative fuel cars? What about those jet packs we were always promised? And what of the world of work, and specifically, the world of staffing?

While no one knows for sure what 2020 will bring until it's here, we at SI Review spoke with staffing executives, workplace experts, and other industry veterans about what they think the year will hold for the staffing industry in particular.

What will be the same nine years from now? What will be different? What trends might there be? What challenges and obstacles will the industry face? What sectors of staffing will likely be "hot" and not so hot? SI Review asked execs and others in the industry to look into their crystal balls and provide some predictions.

Staffing in 2020:
"A Good Place to Be"

Most staffing execs we spoke with say they expect the staffing industry to grow quite a bit by 2020, fueled by the need, on the one hand, for a flexible workforce, and on the other, desire from the worker for a mobile, educational and flexible work arrangement.

As Barry Asin, president of Staffing Industry Analysts, says, "In 2020, staffing will be a good place to be."

Growth

Today, roughly 10% of the workforce is contingent, according to Staffing Industry Analysts, publisher of this magazine. Staffing Industry Analysts' own long-term projection for 2020 puts the U.S. staffing industry at 3.4 million employees, $185 billion in U.S. temp revenue, and 2.2% temp help penetration.

By 2020, between 15% and 25% of the workforce will be contingent, as more and more companies recognize the benefits of it, believes JoAnn Wagner, CEO of SOS Staffing.

Wagner believes staffing in the United States will grow and start to catch up with Europe, where the industry is significantly larger right now. "I think that's a possibility," she says.

Tim Giehll of Bond eEmPACT and others echo this as well, with Giehll seeing our contingent levels mirroring those of Europe and Asia.

"Well over 20% of companies will use staffing as of 2020," foresees Scott Wintrip, founder and president of StaffingU. "Right now that number is in the teens. It will be, by best estimate, mid-20s. This is in alignment with what the BLS [Bureau of Labor Statistics] has predicted."

Moreover, growth will not just be in numbers, but in reach. Roy Krause, CEO of SFN Group, says: "I think staffing is going to be much bigger than it is today and much more encompassing."

Adds Bob Dickey, CEO of Sapphire Technologies: "I still believe as a whole the entire staffing industry within the United States is immature. It's going to be a much larger piece than it is today. Barring an economic event, we think that it will continue to mature."

Jill Ater, founder and COO of Denver-based 10 til 2, a staffing company that helps place working mothers in part-time jobs, says: "I believe more and more businesses will turn to contract labor and by 2020 it will often be where business gets the majority of [its] HR supply."

Concludes Don Palmer, VP of MATRIX Resources: "People are going to continue to need people. The demand for labor is not going to go away. People are going to need more contingent workers as a percentage of the overall workforce. I see contingent staffing … across the board; it's going to expand."

The Drivers

David Searns, president and CEO of Haley Marketing Group, says the climate indicates sunny weather for staffing, for various reasons. "Best guess is that we're going to see a very good time for staffing," he says. "Work is changing. People want more control over their employers, duties, schedules and lives. This is a HUGE opportunity for staffing firms to play the role of the true workforce partner, enabling organizations to find creative, on demand solutions to talent acquisition. The movie industry already follows this model. Other employers are catching on."

Workplace consultant and author Lynn Taylor sees the following drivers working in favor of the contingent space. "[This is happening] because: (a) companies saw the benefits to flexible staffing during many recessions; (b) technology continues to mitigate the need for as many full-time employees, onsite; (c) social networking and technology has enabled teams, alliances and work to be created and performed more expeditiously; (d) outsourcing is not going away; [and] (e) the cost of real estate."

Consultant Tom Kosnik emphasizes customer savings and other drivers. "There are so many external factors influencing the growth of the staffing industry," he says. "Economics is the big variable. It is more cost effective for companies to outsource a certain percentage of their workforce, plain and simple – on-boarding costs, off-boarding costs, reducing unemployment expenses and healthcare expenses, etc. From a dollars point of view, it makes sense. Legal is the other big variable. Buyers will want to mitigate liability down to a staffing vendor. And who would not? To quickly staff up and retract a workforce without tons of liability, this will be desirable. Other legal issues such as discrimination and sexual harassment, these are big issues for HR departments. Some of these liabilities can be mitigated down to staffing vendors. Healthcare – and who knows what is going to happen with healthcare? – but healthcare expenses alone could make the staffing industry soar, not so much with Fortune 2000 companies, but with small to midsize businesses. …All these factors favor the growth of the staffing industry."

Another factor is increased scrutiny of independent contractor status by government agencies. This will open up new opportunities for staffing firms to essentially take over that headache, and manage the full range of contingent workers.

For example, Lori Schultz, president of Yoh, believes there will be more compliance around 1099 workers, which will present more opportunity for companies to be in that business, she points out. "More companies will want to outsource that because of mitigating risk," she says.

"Legislation is likely to drive further contingent labor, along the European model," adds Art Papas, president and cofounder of Bullhorn, an automation company specializing in staffing.

The Staffing World in 2020

In 2020 we will continue to see staffing's services evolve, and its delivery methods change as well. Currently, commercial staffing is still about 45% of the overall market. However, by 2020, our analysis predicts that professional skills will comprise nearly two-thirds of U.S. staffing spend. Within that overall market, staffing executives we spoke with talked about individual sectors.

Technology staffing will continue to be strong, predicts MATRIX's Palmer.

Yoh's Schultz believes there will be an increase in healthcare and pharmaceutical staffing. "My belief is the whole professional sector will continue to grow," she says. "We'll see a nice increase in the professional sector."

Government staffing should also be strong, believes Don Stallard, CEO of The Reserves Network. "There will be more government staffing available in 2020," he says.

Accounting and finance staffing will have a cyclical nature but will be strong, predicts StaffingU's Wintrip. A number of people will be leaving this sector and "that will be one of the largest areas of mass exodus and will create a lack of talent for buyers."

LaSalle Network's CEO, Tom Gimbel, predicts that, "engineering [staffing] will be really big" as there will be "a lot of infrastructure building going on in 2020."

Senior care staffing and part-time staffing also will continue to grow, believes 10 til 2's Ater.

In terms of what might not fare so well, "Administrative staffing will be down because so much of the technology will be voice-driven and voice-active, and there will be so much professional level staffing," Gimbel believes.

There are other directions staffing is headed, as well.

One interesting thought comes from Lynn Taylor. She says, "I have recently been talking about the 'tempreneur,' a combination of a temporary and entrepreneur, borne out of a need for temporary work at a higher level – combined with an entrepreneurial status. This allows for the best of both worlds, and each provides a hedge against the other. One is more fluid and comes from marketing of your services being provided by other sources, such as through temporary firms or through repeat business with former clients. This is typically on routine or seasonal stints. The other 'preener' side, is more traditional and 'entrepreneurial.' There are longer contracts, higher level and less hands on. You can liken it to a consultant who actually rolls up the sleeves and does the work. The term is all about flexibility – the ability to switch gears to either side, depending on economic and industry cycles, as well as 
one's seniority in the field."

More Companies to Go Global

More staffing companies will operate on a global basis in 2020, execs believe. "Your clients are looking more for economies of scale," says Schultz. "Mid-sized players will be forced to look into more globalization. They're going to need companies that will support them globally."

LaSalle Network's Gimbel points out that: "Firms will realize that they can go global without actually having facilities overseas. That will be a huge plus."

And it works both ways. Explains SFN Group's Krause: "More and more companies will be considering their workforce on a global basis. We're going to have to go global just to find the talent."

Moreover, the global push won't be limited to the large staffing firms, says Art Papas. "It won't be just the largest players," says Papas. "Barriers are falling. Boutique players can compete across borders with Skype. … This mirrors their clients."

On the flip side, Winter Wyman's Scott Ragusa, president of contract business, believes… believes we could see more instances of foreign staffing companies purchasing companies in the United States. For example, by 2020 there could be more Japanese firms coming into the American market, he says. "There will be positives and negatives to that," he explains.

Some of the companies that "go global" will be successful and some won't, says Jorge Perez, SVP of Staffing for Manpower NA, noting that contending with cultural differences and different laws and regulations in other countries can be challenging.

Outsourcing Will Be on the Rise

Gary Nelson, chairman of The Nelson Family of Companies, believes more companies will be outsourcing, or contracting out a business function that used to be performed in-house to an outside provider, in 2020. More companies will be outsourcing projects, he predicts.

Staffing firms will become service bureaus for firms, believes Express' Stoller. "We'll look at ourselves as being a little more of a service bureau instead of only a staffing firm," he explains. "A service bureau is more providing payroll and providing compliance work. What ADP and Paychex do, staffing firms can do. Staffing firms will have much more of a human resource component to their business and will offer more HR services."

One example of this will be that staffing firms will conduct background searches and drug screening in-house, Stoller believes. "I think that will become routine," he says. "It will just be blended into the staffing firm. They will head that up."

In addition, staffing firms themselves will continue to segment and refine their workflows. Says veteran staffing consultant Tom Kosnik, "Work tasks will continue to be redefined. As the workplace changes and worker's values shift, and the population grows and contracts, jobs will be dissected and redesigned. We are starting to see this in the staffing industry. We now have dedicated "sourcers" (employees that source the Internet for resumes). We are starting to see outsourced "cold callers" or "appointment setters" for sales reps. Sourcers and appointment setters can work from anywhere in the world. We are also starting to see this in the medical jobs (x-rays are read by doctors in India), in the legal jobs (reading through tons of emails is done from the Ukraine), in the market [research] jobs (market research is done in China), etc. The implication is that jobs will be dissected and work tasks will be redesigned, and staffing firms will be asked to find people who can do very specific work tasks."

The Role of Staffing in 2020

In 2020, people will be more educated about the staffing industry and the benefits of contingent work, believes Schultz of Yoh. She says staffing also "will be a much more widely accepted industry globally. We'll start to see much more global recognition of the contingent labor force."

Eric Gregg, founder of the Inavero Research Institute says: "The goal for the industry has got to be for the industry to be viewed by talent as a viable career option."

As the contingent market surges, staffing firms have a unique opportunity to serve as consultants to the clients they serve.

"Staffing firms can transform from a vendor focus to a supplier focus," says Giehll, "going from providing bodies and services to becoming a strategic supplier." He envisions staffing executives serving a key role in workforce planning, for example. "There's going to be a whole ecosystem built around the flow of people."

Besides the consultant aspect, the delivery models themselves will change in 2020. Many staffing firms, with the help of the next waves of technology, will change their model from "providing people" to "getting the work done." This may look something like the project-based assignments pioneered by IT staffing.

Explains Jon Osborne, VP of Research for SIA, "The earliest staffing products, such as office/clerical temp, are already mature, so they may grow at some modest pace, but nothing extraordinary. This will force staffing firms to seek new growth in other areas, such as solutions and/or by offering other related services. Solutions are already picking up some areas of professional staffing and even in industrial staffing as the model continues to evolve."

In addition, virtual teams may come into play, across geography, specialization and perm/temp classification. These virtual "work teams" will come together on projects, aided and abetted by technology.

Customers appear to be aligning themselves to these ideas as well.

The Workforce in 2020

The year 2020 will bring a very interesting workforce mix, with approximately five generations in the workforce at once. Two of the main cohorts that will affect the way you do business are the Baby Boomers and the Millennials.

Baby Boomers Retiring: A Challenge and an Opportunity

One of the challenges staffing firms will face in 2020 is the continued worker shortage. Right now Baby Boomers are retiring but there aren't enough younger workers to replace them. And the current labor shortage isn't expected to go away any time soon.

"The biggest shift is going to be in demographics – not generating enough people to support a healthy pyramid for the future," says Manpower's Perez.

Says Papas of Bullhorn, "The Baby Boomer exodus is going to be massive. It will be a huge churn if not a war for talent. At the very least it will leave musical chairs at the top and be good for staffing."

When Baby Boomers leave the workforce, it leaves the younger workers who remain without an experienced mentor, points out TRS' Wright.

Scott Mayer, CEO of Brookfield WI-based QPS Employment Group, says: "With many of the Baby Boomers leaving the workforce, finding skilled workers will be a challenge for our industry."

Adds Inavero's Gregg: "We're going to need to fill a lot of knowledge worker [degreed/skilled] positions, and it's going to be difficult to do that. The more differentiated that skill set is, the more difficult it is going to be to find the talent for it."

By 2020, many Baby Boomers will realize that they didn't save enough money for retirement and that they need to head back to work. They'll want to work on a flexible schedule, something staffing firms can use to their advantage to get some extra business.

Lynn Taylor, workplace expert and author, calls this cohort GU: Generation Unretired. "Baby boomers are not retiring and retirees are not either," she says. "That is not to say they are all working for corporate America. Many will be highly sought after as project employees who can call their own shots because they have the work savvy and experience that their more junior counterparts do not possess. It takes years of experience to develop the intangibles, such as diplomacy, which are critical to a work deliverable."

"The temp industry in general is going to have 20-25% of the workforce made up of retirees, people who retired and are going back to work," says David Alexander, CEO of Soliant. "That's going to be the demographic that just shoots through the roof."

Adds TRS' Wright: "The economic blows of the last few years, coupled with the fact that most Boomers failed to adequately save for retirement, will force many Boomers to work into their 70s, 80s or even 90s. With the life expectancy expected to be about 80 by 2020, there will be a need for jobs for the elderly. The opportunity for clerical and professional positions with low physical demands will create staffing positions that could cause 'designer type' staffing firms to appear [to be] catering to placing elderly staff in professional positions."

Employers Will Need to Cater to Millennials

Staffing companies and other employers will need to cater to Millennials in 2020, points out Diana Wright, CEO of The Right Solutions, a Tontitown AR-based healthcare staffing firm. "The Millennial generation, born between 1982 and 1998, will have a huge impact on every aspect of society, exhibiting many of the qualities of WWII generation Americans," she notes. "Millennials have a strong entrepreneurial bent. Twice as many say they would prefer to own a business rather than be a top executive. … Employers will need to adjust virtually all of their policies and practices to the values of this new generation, including finding new ways to motivate and reward them."

Marketing to Candidates

Whatever demographic group you are hoping to build your business around – most likely some of each – candidate marketing will become increasingly important.

Says Brad Smith of Haley Marketing, "As more companies change to flexible workforce models the notion of 'temps' being unskilled will become a thing of the past. Staffing firms that say they provide 'better talent' are really going to have to come through if they want to stay in business. In order to attract the best talent, staffing firms are going to have to devote time, energy and marketing dollars to attracting professional talent. I see a staffing firm become more like a sports agent, representing and negotiating for talent."

Hinda Chalew, Staffing Industry Analysts' VP of Marketing and Interactive Services, says, "Messaging will have to be targeted to the person and to the location in which the person is at the moment. At the moment will be key. The challenge will be how to do corporate branding in the personal world; I think there will be a revolution in corporate branding, meaning I think the world will become something like 'Hinda's Adecco.' And Adecco will have to understand what needs, wants, desires and aspirations I have to be able to brand their services to me."

The Workplace in 2020

Mobility, flexibility, the morphing of job classification and technology will all be key influencers in the workplace of 2020.

Lines Are Blurring

We are increasingly seeing contingent and perm workers working side by side, and in the future, this is more likely to be so.

Dan Pink is a thought leader on employment and workforce trends. He says, "I think that the difference between who's 'contingent' and who's 'permanent' is going to grow ever more blurry. That's already happening. One of the biggest changes in the world of work over the last two decades has been a massive shift of risk from organizations to individuals. For example, in my father's generation, most workers had defined benefit pensions. Today, most have 401(k)s and other defined contribution pensions. The burden for saving for retirement is now on the person more than the company. Same for healthcare. A greater portion of premiums now are paid by individuals rather than their companies. Meanwhile, co-pays go up – and workers have to dig deeper into their own pockets. Now sprinkle in the idea that very few 'permanent' workers have any expectation of permanent employment. (Indeed, the lifespan of companies themselves is shrinking. Even organizations are proving impermanent. Lehman Brothers, anyone?) The result is that there's less of a difference in form between these two types of employment."

Social Media Expected to Continue to Transform

The use of social media in recruiting has really taken off in the past few years, and most staffing executives expect that trend to only continue into 2020. Social media may be different in 2020 in that it will likely be the mode of communication and used by recruiters even more than it is today, execs and thought leaders believe.

"There was no such thing as Facebook before 2005, and now it is changing our laws, our communication, our philosophy on what is confidential and appropriate to discuss in public," comments TRS' Wright.

Social media is contributing to a mega-trend, notes Papas. Email will go the way of the fax, he thinks. This will be replaced with social media. He notes that Millennials find voice mail rude and that voice traffic is declining. The megatrend? Communication is getting more convenient.

Hinda Chalew predicts: "Email will go away, and all of us will be communicating on social platforms."

Schultz looks to the future: "It's going to really transform the way we do things. It will be the way to be able to communicate. It gives us greater access to talent, which we wouldn't have if we didn't have social networking."

Amar Panchal, CEO of Akraya, a Sunnyvale CA-based information technology staffing and solutions firm, says: "[Among] high school and college students, [social media is] the way they communicate these days. The way to reach them will be through social media. [Nine] years from today, it will be absolutely critical. It will be the primary way of recruiting. … Recruiters will be able to relate to job seekers better if they understand and use social media."

Jon Olin, a partner in ettain group, a Charlotte NC-based IT staffing firm, says: "Certain aspects of social media I think will continue to be hot, while certain aspects will fade away. Linking social media capabilities with job boards and job hunting will be a hot trend. Posting job openings to your Twitter/Facebook/LinkedIn account will be not so hot in 2020."

Flexibility

As we have seen, both companies and workers want flexibility. The seeds of this in the workforce are already planted: for example, we're already seeing several bills including the Working Families Flexibility Act, which would give workers the right to request flexible work terms and conditions such as number of hours, times and the place of work. Employers would be required to follow certain procedures once a request is made.

Says Taylor, "Many employees … want the freedom to step out of corporate America. … Workers are happy to take matters into their own hands. A feeling of 'there are no guarantees' drives the very core of the meaning of contingent. I am contingent because the only guarantee I have is placing my career future in my own hands."

Says Kosnik: "John Izzo wrote a book titled Value Shift. I encourage all my clients to read it. … The thesis of the book is that the values of the workforce are shifting, have been shifting, and this shifting will continue. Employees will have 5+ career changes – can you imagine! Employees will move away from 50-hour work weeks. They will 'downsize' in order to 'upsize' the quality of their lives."

He continues, "My friends from Europe say that 'Europeans work to live' and that 'Americans live to work.' Well, look to Europe again. We will see more Americans work to live quality lives with their families. The result, organizations will have to accommodate the workplace to meet the desires and trends of employees. This trend will favor the staffing industry."

Kosnik's idea might extend to technology as well. David Searns of Haley Marketing had this to say about the technology leading us to 24/7 connectivity: "We did a recent research project for a client and discovered that the biggest challenge hiring managers face has nothing to do with staffing. Their biggest challenge is they are always on, always connected with technology, and the unrealistic expectations that come with it. We're expected to be accessible 24/7 with no down time. I don't know the exact stat but more than 50% of people check email throughout their vacations. What kind of vacation is that?"

He continues, "I'm hoping, and this may be nothing more than wishful thinking, that we'll see new tools that help us manage the influx of emails, social media message and other requests for our time. Technology got us into this … maybe it can get us out. If not, maybe we can go back 
to the days of people having administrative assistants – and we'll see a huge rise in demand for clerical staffing!"

Challenges

There is a lot to look forward to in 2020, but there are challenges as well. Of course, there are always unforeseen events, but there are currents converging today that can build into waves in the future.

For example, increased regulation at the federal and state level will be a challenge, points out QPS Employment Group's Mayer. "As more companies need help finding workers, our industry will grow. And the bigger we get, the more regulations we will face."

Echoes StaffingU's Wintrip: "This is a direct relationship to our industry getting bigger. The more you get bigger, the more you get noticed."

It will be important for staffing executives to work with associations to combat legislation that is going to hurt the industry, Wintrip stresses.

Another evolution that is both a challenge and an opportunity is the increasing irrelevance of staffing's Holy Grail: The database.

For years, staffing firms have guarded their databases with alacrity, and there have been many well-documented cases where recruiters have tried to get access to these customer files, or indeed, of taking their own customer databases with them. This is likely to change.

"The value of information has plummeted" says Papas. "You still need something that makes a connection, but information is now pulled, not pushed – staffing firms need to get their value out there."

Continues Papas, "As the value of the database goes to zero, the value of your network and relationships goes to 100."

Other challenges the industry will face in 2020 include creating or adding value to clients, shrinking margins and becoming a commodity-based vendor, ettain group's Olin points out.

Soliant's Alexander says: "Pricing is going to continue to be an issue. Clients are going to continue to commoditize our product. Customer service has to be there. It's going to be an uphill battle for us preserving margins long term. Staffing companies in general have to watch their costs. We're in gravy train days [now] compared to how we're going to watch costs in 10 years."

One of the challenges staffing company clients will face between now and 2020 will be who owns staffing services, ettain group's Olin says. "Many client companies bounce back and forth between procurement/supply chain and HR," he explains. "Some clients use procurement to select suppliers, but leave it to HR to manage. Without a clearly defined map of accountability, suppliers will struggle to be successful and clients will continue to struggle to gain executive buy-in and create a successful program. Is it a service you are buying or part of your talent acquisition strategy?"

And, of course, healthcare reform and regulations are also a big issue. Healthcare reform is currently scheduled to be completely in place by 2014. This will change the landscape in that staffing firms may be forced to pay fees if their temporary employees don't have healthcare insurance.

There are certainly uncertainties and challenges on the horizon, but in the big picture, we are seeing staffing landing in 2020 as the center of a dynamic, flexible, technologically and work/life-enabled ecosystem.

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