SI Review: May 2011

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Research Report: Diversity staffing firms

A Priority for Some

Interested buyers to increase use of diversity staffing firms

Good news for woman- and minority-owned staffing firms: About half of staffing buyers say they give some preferential treatment to those companies. However, interest in diversity staffing suppliers hasn't expanded over the past several years.

The 2010 Contingent Buyer Survey by Staffing Industry Analysts found 52 percent of staffing buyers planned to increase use of woman- and minority-owned (WMBE) staffing firms. That compares with 53 percent who said the same in both the 2008 and 2009 surveys of buyers.

The 2010 survey was conducted in October and November 2010 and includes respondents from 251 large companies with 1,000 or more employees.

"Although we don't see particular interest in diversity staffing firms widening, about half of buyers have been and continue to be serious about giving diversity staffing firms an edge," says Jon Osborne, vice president of research at Staffing Industry Analysts. "Large buyers and those in more technologically oriented industries seem to be the most interested."

Anecdotal evidence also suggests interest remains in using diversity staffing firms, but that interest is not necessarily expanding.

At Doherty Staffing Solutions, an Edina, Minn.-based commercial staffing firm, CEO Valerie Doherty says business has picked up in general, and it appears interest in WMBE staffing firms has held steady. Doherty Staffing Solutions is certified by the Women's Business Enterprise National Council.

"We're seeing probably a very similar level to what we've experienced in the past," Doherty says. "There has always been a certain number of companies that are interested."

Jim Humrichouse, president of Dallas-based IT staffing firm Pinnacle Technical Resources, says staffing buyers don't have less of an interest in WMBE firms from what he has seen. But it's difficult to say there is more of an interest.

"I think we see healthy demand, but I think we've seen healthy demand in the past as well," says Humrichouse, whose firm was named a national supplier of the year by the National Minority Supplier Development Council.

Humrichouse says it may be that WMBE staffing firms have become better over time, taking the opportunity they were given to become more competitive. That could be a reason why the majority of buyers (although not an expanding majority) plans to increase their use of diversity staffing firms.

Are WMBE firms more competitive? There has not been research on how growth rates of WMBE staffing firms compare to that of staffing firms in general. However, out of 44 staffing firms on Staffing Industry Analysts' 2010 list of fastest-growing staffing firms, more than half, 23, were also on the 2010 list of diversity staffing firms.

Pinnacle ranked No. 9 on Staffing Industry Analysts' list of fastest-growing staffing firms.

Another diversity staffing firm on the list was Troy, Mich.-based Populus Group. Populus doesn't focus on being a diversity firm when pursuing deals; it focuses on being a great company that just happens to be minority-owned.

The level of interest in diversity staffing spend among major players has been consistently high, Populus Group President Robert Herrera says. The larger, tier 1, companies -- such as key automotive, financial and telecommunications firms -- have a keen interest in diversity spend, he says. But there hasn't been a great deal of interest among tier 2 firms that supply to the tier 1 industry leaders.

"We are starting to see that awareness," Herrera says. "It still doesn't equal by any means what the industry leaders are doing as it pertains to capturing and measuring diversity spend."

The National Minority Supplier Development Council, its respective state councils and supplier diversity executives deserve credit for their efforts to increase interest among tier 2 suppliers, Herrera says.

Skills, Industries

Staffing Industry Analysts' survey of buyers also found that larger companies with 10,000 or more employees tended to be more interested in increasing their use of WMBE staffing suppliers than smaller companies.

Among skills, buyers of IT skills were among the most interested in increasing their use of WMBE staffing suppliers, according to Staffing Industry Analysts' buyers survey. In addition, buyers in the energy/chemical and pharma/biotech industries were the most interested in increasing their use of WMBEs.

However, certification is a key for staffing firms pursuing buyers who spend on diversity staffing.

Certification can come from a government agency or a private certification body such as the National Minority Supplier Development Council, Women's Business Enterprise National Council or the National Women Business Owners Corp.

"From a cost-benefit standpoint, there's no reason not to do it ... Certification never hurts you," says Pinnacle's Humrichouse. "Most large organizations are going to want certifications ... Typically, the bigger the buyer, the more they care about this."

Doherty also says it's helpful to be certified. "We're very proud of that certification," she says.

"It's not by any means the deciding factor, nor should it be," Doherty says. "It should still come down to who is the best provider of services."

                                                                                                                                                                                                                                      

Craig Johnson is managing editor of SI Review. He can be reached at cjohnson@staffingindustry.com. For more information on the place and search report, contact memberservices@staffingindustry.com

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