SI Review: March 2012

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Research Report: Target Practice

Target Practice

Analysis to help companies identify growth areas

By Dan Begley-Groth

For the average staffing executive, identifying promising metropolitan markets for potential expansion can feel like throwing darts at a map of the U.S. — blindfolded. Except in addition to choosing a location, he or she must also identify an industry segment, which would be like throwing labeled darts at a map of the U.S. that is attached to a spinning roulette wheel — still blindfolded.

To help you avoid that dangerous fate, Staffing Industry Analysts has just released its first-ever disaggregation of the U.S. staffing market, broken down by size within each metro area and skill segment. This can be used in conjunction with our “Geographic Opportunities Atlas,” which provides current and historic total employment, temp employment, temp penetration rate, temp revenue and temp establishments by state, metro area and county.

On Target

Obviously our analysts didn’t break into the finance departments of every staffing firm in the country to obtain precise market size data (our legal department frowned on that idea); instead, we combined metro-level data from the U.S. Bureau of Labor Statistics with Staffing Industry Analysts’ estimates for the total U.S. market size of each industry segment. This generated ballpark estimates for each industry segment within each city.

Staffing firms can act on this data in numerous ways. One strategy would be to target the largest markets within each segment — if there’s about a billion dollars’ worth of IT temp work happening in Washington every year, there’s probably room on the bandwagon for one more staffing firm. However, data-savvy executives might also want to consider everything that comprises an area’s temp staffing revenue — total employment, average wage and temp penetration rate — in addition to the bottom line.

Those trying to put a thousand people to work next week would most likely target the areas with the highest total employment. Conversely, those trying to squeeze as much as possible out of their small handful of highly skilled professionals might prioritize wage rate above all else. For example, there are 73,000 lawyers in New York, but their wages are more than $20,000 per year higher across the country in Madera, Calif. There are 175,000 IT professionals in Washington, but they get paid $16,000 per year more over in San Jose, Calif.

Adoption Rates

Additionally, the temp penetration rate within a city should be considered. Is the Greenville-Maudlin-Easley, S.C., area and its 5.72 percent temp penetration rate an ideal market for temps, or is that market oversaturated? What about Santa Fe, N.M.? Does a 0.23 percent temp penetration rate mean there are dreary-looking signs hanging from places of business reading “No temps allowed,” or are they starving for a contingent workforce? To get to the bottom of this type of quandary, you could reference our Geographic Opportunities Atlas. If an area has had a historically low penetration rate, it’s most likely a grim environment for temps. But if an area has a low, but increasing penetration rate, maybe it’s time to pursue that region before the competition. Likewise, a high volume of temp establishments can mean an area is either in high demand for temps, or oversaturated. Historic data will show which direction a specific area is trending.

And finally, if considering employment, temp employment, temp penetration, temp establishments and temp payroll together seems a bit intimidating, we have combined and distilled the data from our Geographic Opportunities Atlas for each state, metro area and county into an opportunity metric score, ranking each respective area type against the rest based on both current data and five-year trends.

Of course, there is much more to making a business decision than blindly obeying large spreadsheets of data. If that was all it took, a laptop could be the CEO of Wal-Mart. Instead, we hope staffing firms will use this data in conjunction with the business intelligence they already have to quantify some of those hunches about attractive markets, and in turn grow their business. Or, if nothing else, to prevent some eye injuries caused by CEOs throwing darts while blindfolded.

Dan Begley-Groth is a Research Analyst with Staffing Industry Analysts. He can be reached at dbegleygroth@staffingindustry.com.  

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