SI Review: Autumn 2014 European Issue

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Research Report: Make Your Case

Staffing agencies in need of better powers of persuasion

By John Nurthen

Every year, Staffing Industry Analysts surveys buyers of contingent labour to get a better understanding of their needs and also to gauge their views on the services they receive from their suppliers.

The 2014 survey reflects the opinions of respondents from almost 100 companies operating in Europe with 1,000 or more employees. Twenty-two percent of respondents worked for companies employing more than 100,000 people.

Growing Ranks

Contingent workforce buyers seem to have quite a positive outlook regarding their future use of contingent labour. The median average proportion of their workforce that is contingent today is 10 percent, but they believe it will grow to 15 percent in two years and 20 percent in 10 years. Such projected growth is indicative of both business optimism and the appreciation for the merits of a flexible workforce.

Digging a bit deeper, however, the results can look rather less positive from the perspective of a staffing agency. The term contingent is used to describe a number of limited tenure work arrangements. While it does include temporary agency workers, the term also includes other non-traditional workers such as interns, seasonal workers, freelancers, internal temp pool workers, and statement of work (SOW) consultants.

When we asked employers about the specific types of contingent worker they thought would be needed 10 years from now, the leading category by far was SOW. When it came to the use of temporary agency workers, the number expecting to either moderately or significantly increase their use was 33 percent compared to 28 percent who wanted to decrease their use of temps. Most (38 percent) expected to have the same proportion of temporary agency workers in 10 years’ time.

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So should staffing firms be preparing for 10 years of stagnation? No, because there’s always a gap between what people want and expect and the actual outcome. However, what the data does signify is that staffing firms need to make a much more compelling argument in favour of the use of temporary agency workers over other forms of flexible labour.

Poor showing. Making the case for more temporary agency workers might be tricky because many buyers are less than enthusiastic about their staffing supplier’s ability to meet their needs. We asked buyers ‘How likely are you to recommend your primary staffing supplier to a friend or colleague?’ in order to calculate a ‘net promoter score’ or ‘NPS’ for the suppliers.

The NPS is based on the perspective that every company’s customers can be divided into three categories:

  • Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others.
  • Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
  • Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.

To calculate the NPS, subtract the percentage of customers who are Detractors from the percent of Promoters. The result for primary staffing suppliers was -25 — not exactly a ringing endorsement. In fact, staffing firms were only marginally more popular than job boards (-27) and they fell far short of VMS providers (+2).

Selection. So what is it that leads a buyer to select a staffing company in the first place? When we asked buyers for their top three considerations when choosing a staffing supplier, quality was the primary consideration — both that of the workers being supplied and the service. Some might be surprised that cost came out as only the third most important consideration, just ahead of speed.

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What these results suggest is that there is business to win for any staffing company that can muster enough powerful arguments to persuade their customers of two simple facts:

  • that temporary workers are the best option for improving workforce flexibility, and
  • that they can best their competitors in terms of sourcing better quality talent and offering a superior standard of service delivery.

While it may sound simple and rather obvious, our 2014 buyer survey results suggest that the European staffing industry is currently failing on both counts.

Further insights from Staffing Industry Analysts’ 2014 Contingent Workforce Buyer Survey are available to research subscribers at www.staffingindustry.com.

John Nurthen is executive director, global research, at Staffing Industry Analysts. He can be reached at jnurthen@staffingindustry.com.