What’s Next? The Lean and Agile Staffing Firm

Staffing businesses are — like financial service or retail businesses — service intermediaries that add value (to two or more parties to a transaction) through specialization, best-practices, on-going innovation and sometimes scale (in effect, getting done what individual persons or businesses can’t get done — at least not as quickly, effectively and/or economically). Staffing firms are a very special type of service intermediary, they are work arrangement intermediaries — which enable work to happen by finding talent matches and providing an operational and legal framework for the hiring client and the talent to get together and get work done and paid for.

As has been the case for the financial services and retail industries, for staffing firms, technology — the right technology, used in the right ways — is (and is going to be) a critical driver of success. There will be other critical factors (processes, organization, people, skills), but technology will be the main capability that enables us to reshape all those other things to get staffing done more flexibly, more precisely, more quickly and more efficiently.

A staffing business will have to find ways to continue to function as a high-performing, talent intermediary (a specialist in understanding talent needs, understanding talent, attracting talent, finding talent, engaging talent, assessing filtering and selecting talent, brokering talent, getting talent configured and working, etc.).

So the role of the staffing or recruiting firm will remain the same in principle. But how those functions or objectives get fulfilled will change. It appears there are going to be very different processes (i.e., social recruiting), different tools (i.e. technology, such as analytical/social sourcing, digital candidate engagement, etc.), and different organizational models (less “brick and mortar”).

If we look at the financial structure of most staffing firms today, we see something interesting. According to some limited data collected by SIA in early 2013, the sampled staffing firms’ spend on technology was typically less than 1 percent of gross revenue, while spend on facilities was generally three times as much! Spend for staffing firm personnel tended to be around 10 percent to 15 percent of gross revenue. All spending areas were growing at more or less the same rates!

Interestingly, while increasing use of technology — the right technology, used appropriately — can certainly have the effect of reducing facilities footprints and potentially personnel costs, such a practice may not be the case for the majority of staffing firms.

Technology is often implemented in an incremental fashion (invest “in such and such” to achieve this specific outcome — like find more candidates, faster, via job board or social media). But it is not clear how many staffing firms are looking at technology more strategically, over a several year time frame, to, say, dramatically reduce facilities foot print and/or reduce clerical and even recruiting personnel. The means of doing so are there today, but figuring out what to do and how is a challenge for most.

New collaborative research and planning models may be necessary for smaller to midsize staffing firms to assimilate and analyze all the technology decisions that will need to be made (and move beyond incremental decisions). By working together and pooling resources in research and planning consortiums (perhaps made up non-competing staffing firms), it may be possible to achieve a level of analysis and planning that any one firm could not achieve on its own. Leaning in on and demanding more from key technology solution providers (like ATS/CRM suppliers) in helping to map the digital future for staffing firms may also further these aims.

By 2020, 50 percent of the U.S. Workforce will be millennials. Those who were born in 1996, the end of the generation — digital natives — are now 17, and within five more will be looking for life-sustaining work. They are going to shape the work place, including staffing organizations. Just don’t hire millennials as cheap labor; bring them in as new DNA, a way to transform, grow, develop and evolve — more quickly.

If you haven’t started talking about how, five years from now, your staffing business is going to be more structurally lean and agile (based on different configurations of technology, facilities, and personnel) you are probably not too late. But you’d better start the conversation very quickly and find new ways to analyze and plan your business future. In the future, unlike over the past 25 years, size may be less important for being success as a staffing firm — but being really smart, lean, and agile will be critical to evolve, survive and thrive. 


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bv 07/21/2013 01:07 am

investment potential in micro-cap staffing company that is unknown, undervalued and could easily be a takeover candidate within the next 6-12 months. CCNI does around 100 million in rev and last year earned .03 or currently trading @ 8X trailing 2012. This year rev should easily continue to grow when you consider the staffing industry growth prospects because of new hiring format and Obamacare disaster. This company has become lean and mean by reducing overhead, G&A, maginal business and reduced the cost of debt.
We believe that CCNI will earn .08 for 2013. The current share price is only .24- market cap of $14 million. The 3rd q is the best then nd2,4th and 1st. This is a really cheap stock that deserve to be .80 to 1.00 -300-400% higher than the current price. fully reporting
trading @ 3X est. PE of 2013 and has buyout writen all over it!
financial newsletter been in business from 1984 recently did a story on the company -- visit www.saadvisory.com and review the July 15th email alert

Andrew Karpie 07/16/2013 01:59 am

Mike, thank you for the validation of the perspective. I'd be interested to hear more details about the planning consortiums you are seeing emerging. Andrew

API Healthcare

Mike Wejrowski 07/15/2013 02:38 pm

Great article, Andrew. Staffing agencies should continually strive to be smart, lean and agile. I agree there is power in numbers and in the idea of planning consortiums. We are already seeing "pockets" of agencies that are working together to collectively grow their businesses while serving their healthcare community. Agencies and healthcare facilities that leverage smart technology and lean processes today will be in a better position to respond to the upcoming changes in healthcare.

Andrew Karpie 07/10/2013 05:27 pm

Phil, Thanks for the comments. I am very interested to know what characteristics would benchmark the most technology-advanced staffing businesses. I think these characteristics would have to include not only the technology in place, but also the technology being looked at seriously, a strong "process management" orientation, and the capabilities for discovering and implementing the best fitting technologies to support processes and drive business models (all of which will be evolving between now and 2020.

Bond International Software

Phil McCutchen 07/10/2013 03:42 pm

Spot on, Andrew! As a follower of the industry for more than 20 years, your data points match up with what my own research has shown. While the majority of staffing and recruiting firms lag other service-oriented businesses in their implementation of technology, a few -- usually leaders in their niche --have embraced the potential that new or upgraded technology offers. These firms are reaping the profits associated with better management of their margins, their sales and recruiting processes, and their administrative overhead. More importantly, they are, as you've noted, preparing their businesses for the influx of new, digitally-savvy staff and talent.

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