In today’s data-driven era, staffing firms monitor their key performance indicators internally. But many staffing firms are unsure about where to focus their efforts or where they lack efficiency compared to others in the industry, despite the fact that using business intelligence and analytics is a major trend in the business world.

And the first thing to do, whether it’s to increase gross margin, improve the efficiency of internal staff, or scale the performance of recruiters, is to benchmark their metrics against others in the industry. And that’s where Staffing Industry Analysts’ benchmarking program comes in.

This practice of benchmarking dates to the 1970s when Xerox Corp. lost most of its market share to its competitors and started to implement quality standards and a process to compare its operations with those of its competitors, marking the birth of benchmarking — now one of the major trends in the business world.

Not only does it help staffing firms compare their performance against other participating staffing firms, it also leads to innovation and quantifiable performance improvement.

The Tool

Staffing Industry Benchmarking Consortium, also known as SIBC, is published twice annually for firms to compare their competitiveness against others in terms of key metrics such as gross margin, operating costs, pay rates, bill rates, markup, and even internal employee and recruiter metrics. The metrics are also covered by company size and by skill segment.

But once you have the data, how do you use it? Here are five steps to improve your business.

  1. Identify the baseline. Depending on your firm’s strategy, focus on metrics that are important to measure your success for that strategy. Participate in the SIBC’s data collection because summary statistics in this report are based on data from all participating firms.
  2. Compare with SIBC metrics. Once you know the metrics, identify where your firm stands on these metrics by comparing your own performance to the median and aggregate values in the report. For instance, EBITDA as a percent of revenue is a good measure of a firm’s profitability. The median value for gross margin as a percentage of revenue for staffing firms for the second half of 2018 is 26.7%.
    Examine the 75th and 25th percentile values, which indicate the top and bottom performers. If your firm is above the 75th percentile for revenue, profit, or productivity metric, it is likely performing very well, whereas for metrics such as costs or turnover, falling below the 25th percentile values indicate stronger performance than that of your peers.
  3. The SIBC for the second half of 2018 reports median EBITDA as 4.5% of the total revenue.
  4. Investigate causes. Identify areas where your organization’s rates are low and investigate thoroughly why your metrics are lower than those of others. Look closely for underlying causes by checking metrics like the following:
    • Revenue growth vs. operating expenses. Along with soaring revenue growth, curtailing operating costs is important for profitability. According to the Staffing Industry Benchmarking report, small firms incur a higher operating cost than large and midsize firms. Implement expense management strategies to prevent profit drain, improve cash flow which leads to business growth.
    • Internal employee productivity. What’s the turnover rate in your firm? Do you know your top performers? Can you measure revenue per internal staff? Measure these metrics in your firm and benchmark with SIBC. Appreciating your top performers to make them continue to excel while training those who are falling behind are key steps to improve employee productivity and higher retention.
    • Branch metrics. If you have multiple branches, use the benchmarks to identify the top-performing branches and share their best practices with the underperforming offices.
    • Recruiting efficiency. Look for inefficiencies in recruiting and automate by using recruitment process outsourcing and technologies to integrate various front- and back-office functions, such as applicant tracking and payrolling software.
  5. Develop a plan. Begin with a focus on improving performance in one or two metrics such as operating expenses or employee turnover rate.
  6. Implement and measure. Participating regularly in the SIBC will help with ongoing measurement and quantifying your company’s improvement annually with the other firms in the industry, which is critical to any improvement effort.

The SIBC tool is based on standard empirical methods without any bias, developed by a neutral and independent research organization for measuring the financial and operational metrics of staffing companies. It is a must-have for US staffing industry. To participate in this free program, email SIA at sibc (at) staffingindustry (dot) com; the next survey is expected to take place in August.