SI Review: June 2013


Beyond the Daily

Trends That Matter

We include developments from the Staffing Industry Daily News and The Staffing Stream to help you focus on emerging movements that could shape your business for the better.

Sunny Outlook

April showers brought more confidence in the U.S. economy and hiring.

Ninety percent of U.S. executives viewed the global economy as either stable or improving, according to Ernst & Young’s April 2013 capital confidence barometer. That’s up significantly from the 72 percent who thought so in October 2012.

Hiring plans have also improved, with 47 percent of the respondents saying they expect to hire talent or create jobs, up from 32 percent in October 2012. Plans for workforce reductions reached a two-year low at 6 percent.

Meanwhile, 53 percent of U.S. employers plan to hire recent college graduates in 2013, according to a study from and

‘Unconscionable’ Covenant

A North Carolina appeals court slapped down a staffing firm’s noncompete agreement.

After losing contingent workers to a competitor, North Carolina staffing firm owner Omar El-Kaissi required his remaining temps to agree not to work the same jobs through his competitors, the Triangle Business Journal reported. When more contingents switched firms, El-Kaissi sued the owner of the other staffing provider, Charles Phelps. In a 3-0 decision in April, the North Carolina Court of Appeals called the agreements with the temps “unconscionable,” in part because they wouldn’t be taking skills they learned from El-Kaissi and his company.

“The agreement is merely an attempt to stifle lawful competition between businesses,” Judge Robert Hunter wrote for the panel. “It unfairly hinders the ability of plaintiff’s former employees to earn a living.”

What makes a firm attractive?

In the absence of extreme perks, here’s what an employer can do to attract great talent.

Money, work/life balance and location top the list of what workers consider when choosing an employer, according to new Randstad US research on employer branding.

When asked for the top criteria when choosing an employer, the top responses were: salary and benefits (66 percent); work/life balance (43 percent); convenient location (40 percent); career progression opportunities (39 percent); financial health (32 percent); and flexible work schedule (32 percent).

The research surveyed a national sample of 7,000 students, employed and unemployed workers between the ages of 18 and 65.

Fight the Discount

Why volume discounting doesn’t make sense in selling talent.

It’s been a while since I studied economics in college, but what I do remember is that when the supply of a desired commodity goes down, the price goes up. We are in the digital staffing space, and our talent pool of mobile application developers, SEO specialists, web marketing managers and UX designers are scarce. Even though the talent is in short supply [much of corporate-America] still expect[s] to take discounts with stated volumes.

In my opinion, [the U.S. staffing industry’s 1.8 percent penetration rate] does not justify volume discounts — that calls for premium pricing. … Regardless, large clients will continue to look for these and any other ways to save money. We need to ensure the agreements don’t hurt us in the process. … Encourage your managers to negotiate fair terms for staffing. They should use a basic economic model that is appropriate for the talent you are supplying.

— Source: “Why Volume Discounts in Staffing?” The Staffing Stream, by Joe Gambino, owner, Profiles.

Going ESOP?

Employee stock ownership is a viable option to selling your staffing firm.

An Employee Stock Ownership Plan (ESOP) can be an attractive liquidity option to a traditional M&A process. ESOPs have risen in popularity in recent years. Here are some benefits.

Selling shareholders can avoid paying capital gains taxes on proceeds from a sale through a 1042 rollover and invest proceeds in Qualified Replacement Property (QRP).

ESOP companies may be exempt from state and federal income tax if the company is an S-Corp and 100 percent owned by the ESOP.

An ESOP provides management employees with funding alternatives. Employees are allocated stock on an annual basis as a portion of their overall compensation; this stock vests over time as the loan is paid down.

— Source: “Understanding an Employee Stock Ownership Plan,” by Alan Bugler, vice president, Childs Advisory Partners.


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