Peter Sheahan on the staffing industry and the next big opportunity
By Subadhra R. Sriram
As founder and CEO of ChangeLabs, a global consultancy firm that has helped many companies distinguish themselves from the pack, Peter Sheahan believes there’s an opportunity for staffing firms to get ahead in the talent game. But they need to get strategic rather than being dragged there by their clients. At the same time, he warns buyers of staffing services that if all they do is squeeze every last dollar from their staffing vendor, their vendors won’t be contributing to discussions on strategy.
In this interview with global editorial director, Subadhra R. Sriram, Peter Sheahan touches on agile resourcing models, diversity in the workplace, global companies, the talent revolution and much more. He also shares his latest insights as the keynote speaker in the 2014 Executive Forum on March 19th in San Diego.
Thoughts on Staffing
I’m a massive fan of the staffing industry. Organizations have been looking to optimize every part of the business for a very long time, and the last bastion of that was human capital. Staffing firms present a very unique solution opportunity for companies to make sure they’re being as effective as possible with not just who they resource with, but how they resource on a talent perspective.
Dynamic Resourcing Models
The business community’s needs are potentially evolving faster than some staffing firms’ ability to fulfill them. I think we’re looking for even more dynamic resourcing models. Also, we need to be able to provide talent solutions that aren’t just about extracting costs from the business, but are about adding new value by giving businesses access to talent they may not otherwise have been able to access or giving them access to a quality of talent they couldn’t afford full time, but need short-term to kick off a project or initiative.
I’m particularly excited about the future of agile resourcing on a talent perspective, but I do think there’s an opportunity for staffing firms — and a threat if they don’t — to make sure they’re getting ahead of that game rather than being dragged there by their clients.
What the talent revolution really means. Some people talk about the war for talent. I think the war for talent has been mistakenly linked only to supply and demand, whereas I think it’s as much a structural issue, where there’s a mismatch between business needs and available skill set. When I think of the talent revolution, I’m really thinking about how an organization accesses, acquires and gauges that talent, and how that needs to change rapidly in order to solve that structural issue. I think about platforms like Elance, which shouldn’t be new to most in the industry. I consider them not as commoditized environments, but as an area and a space where we can go for extremely complex skills and very high value talent.
That’s revolutionary to me because once upon a time, we believed if it wasn’t within our four walls, it didn’t exist. We believed that if we were going to outsource it, make sure we outsource the non-core activities. There is going to be a need for more agile partnership models to solve the talent problem, not just in low-cost commoditized skill sets, but in potentially high skill sets as well. So that’s the first thing I think of when I think of talent revolution.
Addressing diversity. The second thing I think of with regard to the talent revolution is where that talent exists and what that talent looks like. If you were to create the median profile of what talent looks like, it would be a 20-something Asian female. That would be a median-like group. But I don’t think culturally we do a great job of engaging talent of more diverse backgrounds.
A whole new way of working together. Most businesses are finding that the big opportunity for them now is global, but structurally, we’re not well set up to collaborate across boundaries. Look at GE with 60 percent of its business now being global. They see themselves as a global company, and with that comes a whole new way of working together, which I think is revolutionary and difficult to run. Besides needing new technology, we need a whole new set of management capabilities as well. It means we’ll have to be able to measure people on their output, and not on their input, because we’re not going to be able to see them every day.
So talent revolution is not just about winning the war, it’s not just about understanding whole new resourcing models for highly complex skills. It’s also about developing capability inside an organization to manage in that very complex environment.
Meaningful workplace. The fourth big thing in the talent revolution would be around brand and reputation. People increasingly want where they work to say something about them. The old cycle was: “I’ll come and work for you and I’ll give you my loyalty, and all you have to do in return is give me job security.” Now it’s about “I’ll come and work for you and I’ll do good work, but you better make me more employable when I leave, and working for you better say something powerful about me.”
I think this emergence of employment branding as an idea — properly positioning a business culturally and what it means to work there, and what sort of a corporate citizen they are — is going to be THE big thing moving forward, and it’s going to be harder to do than ever for two reasons. One, you’re going to be doing it with people who don’t even work for you. In the staffing industry, we’re going to be in a position where we are selling ourselves to these very complex skill sets that we’re going to increasingly engage for these more agile models. But two, we’re going to do it in the environment of transparency, where our behavior can’t be hidden any more. We’re going to be doing this in the open because that’s what technology’s doing.
Commodity vs. Strategy
Staffing firms have commoditized what they do. Staffing firms have no one to blame but themselves for being commoditized. I don’t see a lot of staffing firms truly interacting at a strategic level with their clients. If you’re going to continue to compete on price, then efficiency will remain important. And you’ve seen that in terms of the investments people are making in technology, in taking the very same technology that’s threatening client businesses and using it to better resource them and provide the assets. I would continue to be looking at any investing in technology, even the technology that right now you may be resisting.
What it means to be a strategic partner. But if you don’t want to be one of the commodity set of providers, then ask yourself what value you would actually have to create for your clients. You’re going to find yourself involved in increasingly more services than you may be have historically been involved in. The big guys like Adecco and ManpowerGroup have been starting to do a better job of this, and they perhaps historically have, but I think we’re going to see a need for these firms to not only provide the execution capability around ramping up and ramping down, but also provide the strategy setting process as well for that. And I wouldn’t be surprised to see some of these firms develop very significant consulting and leadership offerings as well.
Increase levels of intimacy with clients. I encourage staffing industry executives to consider how they could increase the levels of intimacy they have with their clients. If the client continues to see them as a commodity service offering, they’ll get pushed further and further down into procurement and further away from the strategic conversation. If I was running a staffing firm, I would be building content, insight and thought leadership, and a go-to-market strategy that embedded me further up the organization. Ask yourselves what content, what end type, what thought leadership and what good market model would elevate your firm back up the value chain closer to the line of business, and be seen in a more valuable light.
The Road Ahead
The next opportunity in staffing. You should be identifying those adjacent or more complex and more niche skillsets that you can start to play in that haven’t been over-commoditized. If you were to dissect the staffing industry over the last 10 years, my experience with staffing firms is that they’ve made more money on things like IT in the last few years than they have on the more traditional administrative and clerical roles that they may have had a history in. The reason IT was such a lucrative opportunity is it was niche and it was scaled. Eventually it will become highly commoditized, unless the supply and demand equation stays the same. So think about what other niche, what other adjacent opportunities represent the same opportunity that IT has. Is it R&D? Is it sales? Is it marketing skill sets? Where is that next piece?
Smart firms will start looking for the next frontier, which is going to be more complex, require much more insight, and is going to be a more services, intellect and knowledge-based value proposition.
Decide where you want to compete. If you want to keep playing a commodity space, it’ll all be out-scaled, it’ll all be about volume and it’ll all be about reducing and removing costs from the process. If that’s what you want to do, go for it. But don’t complain that you’re competing on price because you made the decision to compete on price. If you don’t want to compete on price, you’d better be looking at a more Adobe-style evolution (see sidebar below). Neither one is the best answer; it’s just whatever’s best for you and your business. If you want to compete on price, then it had better be about automation, cost reduction and price. If you want to compete on niche and complexity and get a higher margin, then you’d better be solving more complex problems for which there is less competition.
Looking ahead. Regardless, all staffing leaders should expect continual technology change. Some price pressure will continue until such time as both sides (buyers of staffing) and suppliers manage to get together and actually solve more complex problems. Also, both buyers and sellers need to get together and sell the value of continued models to the broader business because I think we could do more with continued and agile resourcing models, even more core parts of the business than we’ve done. Both sides are going to have to get together and sell that to heads of R&D, sales and marketing, and C-suites as well. Sell by telling the story of the value of what we do.
Subadhra R. Sriram is editorial director at Staffing Industry Analysts. She can be reached at email@example.com.
How Adobe Got Past Commoditization
When most people hear “Adobe” they think of Photoshop, but did you know that Adobe has a $5 billion division doing online marketing and social media analytics? At one point, Adobe went from the business of helping create pretty images to facilitating ecommerce. In short, they were becoming commoditized and needed to figure out how to make images play a more strategic role in driving sales in an online environment.
To do that, they needed to be able to measure what people do when they see what image, for how long and in what context, etc. So they went and bought two or three other companies that had deep expertise in analytics and created content management systems that dynamically change the content depending on which consumer’s visiting the ecommerce platform at what time. For example, if you go to REI’s website, and you’ve made 10 searches about Beaver Creek Vail in Breckenridge, they’ll show you ski apparel when you land on REI’s site. Adobe is facilitating that whole thing.