CWS 3.0: July 23, 2014

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Tide has turned: Competition heats up for the best staffing providers and talent

In Staffing Industry Analysts’ recent July 2014 Staffing Industry Report Webinar, our analysts inventoried an array of bullish economic factors that point to an already solid employment market that is trending in an even stronger direction. Overall employment is up 1.8 percent year-over-year, job openings volume continues to grow, and direct hire and executive search are showing signs of bullish growth. Temporary employment remains steady with 8.1 percent year-over-year growth.

These are all important and positive signs for the macro economy, but does that equate to a growing competition for staffing providers’ attention and their top quality contingent talent? Certainly staffing providers will have choices in how and where to deploy their best talent in a growing and robust economy. In some cases staffing providers’ deployment decisions potentially will be strategic — and certainly will be tactical at the recruiter commission level.

Consequently, it is necessary to review your program’s competitiveness, and specifically, responsiveness/satisfaction levels with your staffing providers, engagement managers and contingent worker stakeholders. Are there unsatisfactory elements of your program that might cause providers to deploy their best and most profitable talent to other organizations?

CW pricing will inevitably move with the natural supply and demand ratios found in the macro and local markets. Keeping a sharp eye on pricing trends in a transitioning economy is a basic block and tackling requirement of program management. But if your pricing levels are managed competently/competitively, then the core competition for the best provider’s attention and best talent will be waged with other program policies and elements.

If the current trends in the employment marketplace hold, the best providers will have choices — even within the restricted/managed provider lists incorporated in a professionally managed program. Although not widely used at this point, some staffing organizations do use scorecards to guide participation levels in marketplace programs. These scorecards, and more informal judgments, define the attractiveness of CW program policies, operating structures and potential for a fair, profitable CW engagement.

This is not a clarion call to raise bill rates and deconstruct policies that currently manage the CW practice in one’s organization. But a transitioning economy gives the choices to the staffing provider community — and they will make strategic decisions that benefit their organizations’ mission.

It might be instructive to inventory what considerations staffing providers review when they make decisions on whether they should maintain the relationship going forward and how bset to service them.

Client risk. How risky is it to service this program? Are there contractual terms such as indemnity or voluminous SLAs that create an unreasonable level of risk and burden for the provider? How realistic are the business volume forecasts? Are there co-employment policies that unnecessarily inhibit CW engagement service? What kind of ongoing visibility/ “direct contact” to engagement managers’ talent requirements is supported?

Cost to deliver. Does the client have the resources and mindset to service the account appropriately? Are they providing the right types of recruiter incentives needed to source and fill the difficult talent/high skill jobs? Is the program’s sourcing process appropriate for the type of CW talent required?

Client attitude to candidate availability. — Does the client expect the staffing provider to have a bench of candidates or access to a ready supply of talent or do the jobs needed to be sourced out of whole cloth in a competitive environment? Does the CW program promote the provider’s vetted, silver medalists for alternative opportunities?

Brand and industry. Does the company brand represent a marquee client to the provider or is it an industry that the staffing firm has a special affinity to or interest in penetrating? Then maybe it’s worth going the extra mile.

Strategic vs. tactical. Does the staffing service offering fit into the supplier’s core capability strategy? For example, while the tactical sourcing of candidates may be similar for a forklift driver as it is for a geo scientist, the talent sourcing opportunity may not fit in the core strategy/business focus of the staffing provider. Is then worth the provider’s while to service a particular program?

Gross margin. What other factors may affect the supplier’s gross margin? Is it inappropriately expensive to do business with a program that is inefficient and burdensome?

Many programs are adding responsiveness and satisfaction monitoring of staffing providers, engagement managers and the actual contingent workers engaged in their organizations. Now is the time to leverage these monitoring methodologies to see if the growing economy and improving employment marketplace is changing the decisions your stakeholders are making in terms of service attention and deployment of quality talent to your program.