With leading firms projecting revenue increases of 10% to 15% through a mix of organic growth and strategic acquisitions, industrial staffing has reaffirmed its position as the industry’s biggest segment in 2019.
But despite the good news, this is no time for complacency.
Data from The Manufacturing Institute and Society for Human Resource Management reveals why staffing leaders need to ditch outdated, industrial-age thinking: There are currently more than 500,000 manufacturing vacancies in the US and 27% of workers plan to retire over the next 10 years.
What’s worse, some staffing clients have been slow to recognize changes in the industrial labor market, notes Tom Landry, president of Allegiance Staffing.
“They continue to expect overnight delivery at low cost due to the ‘Amazon effect,’” he says.
Here’s an inside look at the so-called Amazon effect and other major forces of change across the industrial staffing landscape, and why sustaining growth calls for new ways of conducting business.
The Amazon Effect
After years of $10 pay rates and an excess labor supply, staffing clients got used to bringing on more people or using overtime to get their products out the door, Landry says. Some staffing clients have fallen into an unsustainable practice known as “headcount creep.”
As a case in point, Landry described a cell phone repair company that was using 310 people to do the work of 250 — until he showed them the math.
“They weren’t calculating the true cost of labor or turnover,” he says.
“They were spending a lot more than they thought they were because they were focused on headcount instead of labor efficiency and output.”
The good news is that some clients can be educated into embracing a new way of thinking. For example, TrueBlue is using predictive hiring models and data analysis to demonstrate how modifying shift schedules to accommodate part-time workers can expand the talent pool and help control costs, explains Jonathan Means, president of TrueBlue’s People- Management division.
“To guard against unexpected talent shortfalls, we’re giving clients greater visibility into our candidate pipeline down to shift and line levels,” Means says.
Representatives from BelFlex Staffing Network have started attending client planning meetings in the hopes of convincing old-school hiring managers that when it comes to solutions, one size no longer fits all.
“We need clients who are open to creative ideas,” notes BelFlex President Tim Mueller.
In some markets, workers with in-demand skills have to be recruited away from competitors, making recruitment process outsourcing or direct hire a better solution than traditional temporary staffing for long-term positions.
“We’ve trained our clients to act the way they do,” Landry admits. “The problem is fixable but it’s going to take some doing.”
More Business, Fewer Clients
What happens when a staffing firm has more orders than it can fill? Fast-growing industrial firms are finding success from working more strategically with fewer clients and with more intention.
Historically, staffing execs have been hesitant to accept the notion that having fewer customers is a healthy way to sustain growth. But recruiting talent in today’s market requires a substantial financial commitment, collective effort and a true collaborative partnership.
In fact, the need to be closer to the customer has been the death knell of the transactional vendor-supplier relationship.
“We can’t get people fast enough,” explains Bob Baer, COO at BelFlex. “Based on the economics of the deal and the specific market conditions, we may be forced to turn away business, because failing to deliver can ruin your reputation.”
Increasingly, the number of clients a staffing firm services has nothing to do with sales prowess; rather, it is dictated by the market’s talent supply.
Candidates Want Careers, Not Jobs
Regardless of status, today’s candidates — even for temporary placements — want more than a paycheck. They expect a fulfilling career and a great place to work — and they don’t have to compromise.
Meeting their heightened expectations requires new models and approaches.
“We’ve adapted to the needs of candidates by focusing on career planning and showing them how an opportunity will advance their career and earning power two to three years down the road,” Baer explains.
Even temporary workers thoroughly research a company’s reputation and work environment before making a commitment. In some cases, staffing firms are offering onsite training as well as sign-on and completion bonuses to entice workers into accepting two- to three-month assignments, while shrewd clients are creating specific landing pages that cater to the career interests of contingent industrial workers.
Industrial staffing firms can’t just swoop into a market and expect to recruit 200 to 400 people. Staffing up for a company’s peak period now takes months of planning, relationship building and communication with candidates, Means says.
“You have to maintain a steady presence in the geography using a blend of social media and shoe leather,” he adds.
To that end, industrial staffing leaders are replacing traditional brick-and-mortar branches with digital recruiting strategies and recruiting centers. Forget cost per hire. Dedicated social media managers engage candidates with a steady flow of interesting content and job opportunities and measure success with cost-perclick or starts-per-click.
“We’re replacing paperwork with technology so our recruiters can spend more time talking with candidates,” Landry adds. “You can’t take the people out of the people business.”
Skill Development and Second Chances
Today, even picker/packers and forklift drivers need some degree of technology and computer skills. From light manufacturing to thirdparty logistics and e-commerce order fulfillment, the demand for tech-savvy blue-collar workers is far outstripping supply.
Many staffing firms are tackling the problem head-on by developing customized training curriculums in conjunction with community colleges, industry associations and other local employers.
State-of-the-art programs provide valuable certifications and college credits as well.
For example, BelFlex offers a free, 10-week logistics training course in Northern Kentucky called LIFT (Logistics, Inventory Management, Facilities Management and Transportation) in conjunction with the Freestore Foodbank and Gateway Community and Technical College. So far, the firm has placed 95% of program graduates. The company also sponsors a junior mentoring program that is designed to provide high school students with the skills and confidence needed to pursue their education and career goals after graduation.
But perhaps the biggest paradigm shift in industrial recruitment has been the willingness of staffing firms and their clients to hire people with criminal records. Struggling to find enough workers, many hiring managers have let go of long-held biases and agreed to give people convicted of nonviolent offenses a second chance … and they haven’t been disappointed.
“Many of the workers who come through these programs end up being the best workers in the plant,” Means says.
The main goal of client education in a B2B service is to shorten the time to value, according to Aashish Dhamdhere, Skilljar’s VP of marketing.
An effective strategy should address these issues:
- What does the path to value look like for the client?
- What do they need to know to get there?
- What’s the best way to convey the information?
“Chop up the journey into small pieces and teach clients how to use your service to its optimum level by creating videos, quizzes, platforms and tools for managing costs and talent,” Dhamdhere says.