Winston Churchill’s famous quote, “Never let a good crisis go to waste,” is perhaps truer than ever as we reach the halfway mark of 2022. And that’s saying a lot, considering everything we’ve experienced as a nation and a world.
The hope was that by now we would have returned to some sort of “normal,” but in fact we’re far from it by just about every measure. The staffing industry is experiencing significant turmoil. And what we do in the coming weeks to tackle these collective challenges will, in many ways, determine how successful our companies — and industry — will be in the coming years.
The process of getting to solutions begins with acknowledging and accepting certain realities. For example, hybrid or completely remote work is here to stay, while people switching jobs many times during their career will continue. In fact, many people just aren’t interested in the old ways of working.
It’s a phenomenon affecting everyone from small businesses all the way up to major corporations. I recently visited one of the nation’s largest companies. They opened a beautiful new headquarters building in early 2020, and it’s essentially sat empty since. Work is still getting done, of course, just not where it used to.
At the same time, we’re still seeing a lot of hiring across multiple industries and positions. However, there are signs this trend will start to decline as a number of converging factors could cause the economy overall to come to a halt. Challenges such as ongoing supply chain disruptions, a volatile stock market, rising prices, wage inflation and decreasing consumer sentiment all suggest we could be in for a rough go during the third and especially fourth quarter.
So, whether we’re actually in a crisis or not, every staffing business needs to make sure it doesn’t waste the opportunities presented by this most unusual moment in time. Now’s the time to assess where your individual business is today, where you want it to be tomorrow and what you need to do to get there.
A good starting point is to identify the many incremental expenses you incur so you can get them under control. One way to do that is by asking customers to share at least a portion of the costs for services that bring them excellent value.
Many large customers, for example, use vendor management systems and managed service providers at a cost to the staffing companies that typically ranges from two to four-and-a-half percent for each employee a staffing company places. Pricing discounts can reduce the amount a staffing company gets paid per employee by another three to six percent. It all adds up to staffing companies getting paid less, reducing profitability — resources that the staffing company could put into technology, salaries or other investments that enhance the services we provide and results we deliver to customers.
Additionally, background checks and drug tests are a necessity across the board, and for good reason. But should staffing firms bear the entire cost? Cyber-insurance is similarly necessary for any business but particularly a staffing company given the nature of our data.
Similarly, now’s the perfect time for staffing firms to really assess the revenue side of their business. Is the industry ready to take a hard look at pricing and become more aggressive? Customers want a lot — and rightly so — but when customers continue to drive more ancillary costs to staffing companies, extend the length of payment terms and otherwise make it difficult for firms to receive sufficient compensation in a timely fashion for the services they provide, it hinders companies’ abilities to continuously improve and innovate.
My experience has been that the best approach to dealing with increasing expenses is to be direct with customers: have conversations about the actual costs associated with services and capabilities they want and propose a fee structure or increase that is fair. Making deals that are good for your firm has never been more important because customer demands and expectations have never been higher.
As an industry, we have a unique opportunity to get together, rally around some common themes and make some changes that are probably long overdue. Let’s not waste it.