From Commodity to Consultant: Four mistakes that drag the staffing industry's reputation down, and how to overcome them.

  By Theresa Morgan  |    Tuesday June 27, 2012

Category: Recruiting


There's not a manager or owner of a staffing company who likes the idea of being a "commodity," an expendable service that can be tossed aside when budgets get cut. But the industry as a whole has not done a great job to overcome that reputation. Consider this from a recent study commissioned by the American Staffing Association: "Even though three quarters [of clients] say the industry does a good job of matching employees to jobs, poor matching was the most prominent complaint." (Staffing Success Magazine, May-June 2005).

Twenty-five percent of staffing customers – a full quarter of them –do not think the industry does a good job matching employees to jobs. Wait – isn't that a staffing company's chief purpose? If poor matching is customers' biggest complaint, then how does the industry expect to earn more respect as a partner in helping clients make strategic business decisions around hiring and staffing?

What is it that causes staffing companies to sometimes miss the target on delivering quality associates – the one thing they're here for – and how can staffing companies elevate their status from commodity to strategic partner? Here are some of the mistakes the industry tends to make, and how to overcome them. And by overcoming them, not only will the industry benefit from a better reputation, it could help put a halt to margin erosion as customers become more willing to pay for value.

Mistake #1: Trying to be all things to all people.
Here's where most staffing companies fall into the commodity trap, and this is the reason customers complain about poor matching services: they won't say "no" to ANYTHING.

It goes against the service-oriented nature of most staffing professionals to say "no." "We can't possibly turn away business – my customer will go somewhere else!" They shouldn't think of it as turning away business; they should think of it as solidifying their reputation for the strengths they offer.

Can one staffing company possibly fill all the possible job positions with laser-like precision? For most, the answer is "no." Depending on the concentration of industries in a market and the background and strengths of the staff, a staffing company is going to have its "sweet spot" of business. The trick is for that company to maximize that sweet spot; it needs to claim it as its own specialty and prove, through repeatedly making great placements in this job category, that they "own" this part of staffing. Very quickly, this company will become known for its ability to do certain job placements very, very well.

But this goes hand-in-hand with resisting the temptation to fill an order that doesn't fall into that sweet spot. Saying "yes" to filling business that isn't a firm's core competency is akin to saying "yes" to working harder for a less desirable result. It takes that staffing company away from what it does best and it increases the risk of making a bad placement. A bad placement can cost customers real dollars in lost productivity that they can never get back – the impact is huge.

Customers will respect a staffing partner for admitting when a request falls outside of its comfort zone, and the staffing company continues to build a reputation for high quality in the job categories within it. And a staffing company that's maximizing its reputation for placing a certain kind of employee well won't have to turn much business away as they become known for – and sought out to provide – placements in their sweet spot.

Mistake #2: Not realizing that competitors can help drive revenue.
When a staffing company declines to take on an order it knows it will have trouble filling, it's best to refer the customer to a source that can. Being involved in the industry trade organizations and getting to know the other staffing professionals in the community is the only way to identify a good fit. Forming alliances with competitors by agreeing to refer certain kinds of positions their way if they return the favor helps the industry as a whole: its implication to the community's staffing users is "this is an industry with my best interests at heart – they work cooperatively to quickly get me the best talent for my business." Individually, the companies become known for their talents with filling certain kinds of jobs, and when that happens, margins increase because the industry stops competing on price, but rather on the value each company uniquely provides.

Mistake #3: Getting comfortable in the role of being a fill-in provider.
Staffing companies have to change their image from being a fill-in provider – just finding a warm body to replace a vacationing employee – to becoming an essential part of a client's staffing plan. They have to become customers' true screening partners, promoting their service as an alternative to the risk of adding someone to the payroll.

If asked, a staffing customer will probably say she knows what it costs her company to recruit, screen and hire an employee. Staffing professionals should don their consultant hats and lead their clients through the discovery process of exactly what recruiting and hiring entails. Does she add in the value of her time and the time of her employees when determining what it costs to hire an employee? Does she consider what critical business functions grind to a halt when she takes focus away from her company to replace or add an employee to the payroll? What are her costs to run ads with job boards and newspapers; is she getting the volume discounts that staffing companies enjoy? Does she have her own proprietary job board like many staffing companies do? Does she have a staff of recruiters who continually mine the Internet for resumes, attend job fairs and create job-seeking events?

When customers try to hire a new employee, they start from scratch. They don't have full databases of possible candidates to call – they have to search for them. Staffing partners can begin the search a lot further into the process because their business is recruiting because they have full databases to mine.

When customers start to understand all that goes into the business of recruiting and hiring, they begin to see the value the staffing industry brings. But they won't wake up in the middle of the night with this epiphany – it is up to the staffing experts to educate them.

Mistake #4: Overlooking the fact that temporary employees are ambassadors.
The temporary employees that staffing companies place on assignment probably have more contact with customers than the staff ever will. How they are treated will surely get back to the customer.

It's a simple formula: temporaries that are treated well by their staffing companies will do a good job and stick around. Giving temporary employees opportunities for training, offering them benefits and retirement plans, and recognizing the good work they do through rewards helps staffing firms retain the best available temporary talent. Customers know this, and when they learn that the staffing company that they use treats its temporary employees well, they know that firm can produce the best quality talent. And customers that seek quality are willing to pay a premium for it.

The staffing industry has much to offer, and the professionals in this industry are fortunate to be exposed to a variety of different industries and companies. Therefore, the staffing pros have a tremendous amount of capital intelligence to share. Enter the room not as an expendable resource to be used and tossed aside. Enter the room as a provider of value that helps companies mitigate risk and reduce cost.

Staffing companies should position themselves as invaluable employment consultants for their customers. They should identify what they're best at, and do only that. They should draw on the support and expertise of their peers in competitive businesses and offer the same. And they should treat their temporary employees like gold, realizing that they are the face of the staffing company they represent. Only in these ways will the staffing industry shed the reputation for being simply a commodity and be recognized as an essential business partner.


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