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December 11, 2017

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Bad News About the Future of Staffing and Recruiting

Recruiting and staffing firms have entered a year that many believe will be a record in production. Everyone is hiring! Clients want to get more candidates!

But that red hot image of the future may in fact be a destructive fire on the horizon. Here is the dilemma, and it’s a double dilemma. I hate to sound like a pessimist, but I see so many firms that are not prepared for this impending doom.

First, the candidate pool for staffing and recruiting firms is shrinking. Most people in our industry believe that is a good thing. Why is it shrinking? It’s not just because of the demographic issues, such as retiring baby boomers and a void of talent that is ensuing. But the problematic issue for recruiting and staffing firms is that technology has made it easy for companies (our clients) to boost their hiring through social media. Many have added low cost internal recruiting departments, which means they can hire those who are “good enough” through the ability to easily and more swiftly capture that low hanging fruit. For many of you, your clients have now become your competitors.

That’s the first dilemma. And it’s a big issue.

This second dilemma compounds that issue and even exacerbates it. It’s the fact that, because there is a boost in recruiting firms and staffing agencies in terms of numbers and also in terms of activity, then the companies you hoped to get as clients will not perceive you as valuable since now you are a dime a dozen and seem to be just like all the rest. The batch of new staffing and recruiting firms all want to get business, so they are going to “buy” it by lowering rates and fees; they are training your prospective clients that your business, in spite of the need for it, has become a commodity. If you don’t believe me, count how many times you have heard that your rates or fees are higher than your competitors.

So both of these converging issues mean that 2016 might not be that robust year you were hoping for. Sorry.

But here’s the good news. Many of your competitors might not see the problem and might not know how to be prepared for dealing with it. Let me give you some tactical ideas that can still help you make this an amazing year.

1. Understand that the middle has disappeared. This is something I see when I visit and consult to staffing and recruiting companies and speak to them about the competitive landscape. The successful ones know that they need to adapt and change how they perceive their value in the market. It doesn’t have to be a big change, just a shift in your perspective. You will make money by either becoming a Tiffany’s or a Wal-Mart. Both are viable business models and both will make you successful.

2. Understand and articulate your uniqueness. “Staffing firms are all the same.” That’s what your clients think. Are they really that wrong? You have access to the same pool of candidates. You look the same. You charge the same. You do the same thing for them. What’s the difference? You can build in uniqueness by focusing on a certain niche or sub-niche. You can highlight that difference by articulating a message or a story that is relevant to your clients. You can highlight that difference by finding a common theme of specific value and tailoring your message to that theme.

3. Go for the brass ring, not the low hanging fruit. If you hold all the cards by focusing on placing candidates that everyone needs and nobody else has, then you have value and are in a position to charge higher rates and fees. I once consulted to the owner of an independent temp agency in south Florida who was depressed and exasperated from the rate pressure coming from larger competitors. I advised her to build value through specialization and differentiation. I gave her a strategy solution and advised her that, instead of focusing on all administrative areas, she needs to limit her activity to only placing degreed executive assistants who are bilingual on both a temp and perm basis. Her increased value in candidates, just from this minor shift in focus, resulted in price not being an issue. She was the only one in her area that had this focus on specific value in a fungible position, so she was not limited by industry and made more placements at much higher rates and fees. Her processes were easier and more replicable, thereby scalable as she added new employees. Her perceived and tangible value increased, as did her stature in the market. An ancillary benefit of this strategy was that it got her out of the HR department and into the corner office, which meant she could negotiate directly with the executive-level decision-maker whose commitment to those specific placements was much more emotional and personal.

4. Sharpen your skills. Add up your training budget for the past year (how much you have invested in training and development, such as books, seminars, online resources, coaching and consulting). Now, compare this number to what you paid for your college education. Most people might admit that they invested less than $1,000 a year in their own development, but for a college education, they spent tens of thousands in something that has no impact on their income. When you finally start playing to win by investing in yourself and your team, then you will discover ideas and reach new levels of performance.

These are simple ideas, but If you follow them, my prediction is that, at the end of this year, you will be celebrating your best year ever.

Copyright © 2016 Scott Love

Scott Love helps staffing and recruiting companies get more business from better clients, and at higher rates and fees. Over 4,500 staffing and recruiting firms from over 35 countries have invested in his systems. Visit his free training site to access his Staffing and Recruiting Podcast and other free tools that will help you sell more: www.StaffingSalesTraining.com.