Diversity-owned staffing firms remain an important part of the workforce solutions ecosystem with minority and women business owners serving in all parts of the industry, bringing their unique talents and outlooks to move staffing forward.

Diversity-owned staffing firms also bring their own advantages to the table. “It gives clients or customers a different network. You’re likely to be able to work with individuals you haven’t worked with before,” says DeLibra Wesley, CEO and co-founder of National Recruiting Consultants, a Dallas based women- and minority-owned provider of special education professionals based in Dallas.

Diversity also promotes innovation; typically, the more diverse a company is, the more innovative it is, she adds. Additionally, using diverse suppliers underscores clients’ commitment to economic growth within underdeveloped communities.

“I think the majority of the time, everybody wants to do what is right,” Wesley says. “When you look at numbers, it just makes sense to do this.” Although challenges remain, demand for diversity staffing suppliers remains firmly in place.

Creating a “program for diversity suppliers” ranked as the most popular strategy used by enterprise organizations for managing suppliers — beating out strategies including statement of work in contingent workforce programs and direct sourcing of contingent workers. The data comes from Staffing Industry Analysts’ “Workforce Solutions Buyer Survey 2022” report. It also found that 69% of large firms had a program for diversity suppliers in place, and 25% planned to seriously explore putting one in place within the next two years.

Putting in place programs to encourage candidate diversity was also popular, with 59% of large client firms having such a program in place and 36% planning to seriously look at such a program in the next two years.

Still a Thing

Wesley says large school districts she works with, such as those in Dallas and Houston, do encourage diversity-owned companies to apply for their business. “In my niche, it’s definitely a thing,” she says.

However, something that Wesley says surprised her is that her firm’s diversity story also attracts workers.

People are becoming more intentional about where they spend their money and where they work, she explains. They are asking if those firms match their values. Wesley’s company was founded by three moms — herself and two other women who serve as presidents. All have a connection to education, and two of the three founders have experience with special education in raising their own children.

“The more I get our story out on social media, the less we have to go out and hunt for candidates,” Wesley says. National Recruiting Consultants gets 95% of candidates either from referrals or social media. Candidate Equation

Ranjini Poddar, co-founder and CEO of Artech LLC — a women- and minority-owned IT and engineering/design staffing firm headquartered in Morristown, New Jersey — says client companies are not only interested in diverse suppliers but in diverse candidates as well.

That interest in diverse candidates became especially pronounced after the summer of 2020, which saw the murder of George Floyd and protests across the US put a spotlight on diversity overall.

“That summer increased the focus on diverse suppliers but also created interest in diverse contingent workers,” Poddar says. “That had not been much of a focus to clients prior to that summer, but that summer created that awareness.”

One challenge is that while staffing firms can present more diverse candidates, they cannot control whom the clients select, she says. Looking at the percentage of diverse candidates presented versus the percentage of diverse candidates that are ultimately hired, there is often a bit of drop-off. It becomes a question of how closely a company is aligning its overall strategy to ground-level operations.

Also of concern are the skills gap and the limited labor pool, especially for high-level engineering and IT roles, Poddar says. However, flexibility will help fill those roles. For example, would a client accept a person with six years of experience in Java instead of 10 years?

And while diversity-owned staffing firms come with their own advantages, they also face the same issues all staffing firms are facing, such as the softening economic environment and the need to meet client demands. “Ultimately, we look to compete on our merits and perform and deliver just as, or more, effectively than nondiverse suppliers,” Poddar says.

‘Diversity Attraction’

Rickey Green, CEO of Power Personnel, a San Jose, California-based healthcare staffing firm, says it similarly.

Diversity “is another tool in our shed to gain access to client opportunities. It doesn’t get you contracts; it gets you to the table,” he says. It’s quality that leads to long-term relationships between staffing firms and clients. And while many highlight diversity-owned staffing firms’ appeal to diverse candidates, Green calls it “diversity attraction.”

It starts with his internal team, which is more than 80% ethnically diverse. “We learn from each other, we’re more creative, we’re sharper,” he says.

And that edge not only helps clients — it helps attract diverse candidates. Internal diversity brings together people who can show compassion and empathy and work with diverse staff. As a result, 70% of Power Personnel’s external workers are ethnically diverse as well. Another key to success is when all parties are serious about diversity, equity and inclusion.

“The biggest challenge is finding stakeholders that really believe in DE&I and are interested in really taking action on it,” Green says.

These are client firms that are intentional about diversity. They aren’t just talking the talk; they are walking the walk, willing to communicate with diversity firms and offer support so that all sides are successful.

Although there are very large diversity-owned firms in the ecosystem, diversity-owned staffing firms typically are smaller.

As such, they face challenges when competing against the larger companies, such as keeping up with technology, working within markup and other challenges faced by all firms.

Smaller diversity-owned staffing firms might make the case with their clients to permit larger markups. For example, a 35% markup can be difficult for smaller firms to work with. Being permitted a 42% or 45% markup would go a longer way to ensure smaller diversity firms remain in the mix, Green says. Another strategy clients might be persuaded to consider: Let smaller, diversity-owned firms know in advance of upcoming orders, enabling them to prepare candidates ahead of time so they can submit them on day one. In all cases, communication is key. “Communication creates mutual opportunities so we can succeed,” Green says.

A benefit to clients of using smaller, diversity-owned staffing firms is that local agencies get local candidates and have long-term relationships with those candidates, and candidates placed have a higher chance of staying around. Smaller firms can also be more focused.

Green recalls a story where a medical assistant was struggling in a placement at a San Francisco Bay Area healthcare system, and the client was ready to put the person on its “do not return” list. Green says Power Personnel brought the medical assistant back to its office and talked about the challenges this person was facing. The person returned to the healthcare system and ultimately was hired by the client directly — and that person is still there five years later.

The Greater Mission

The need to compete effectively was echoed by Gabriel Griess, founder and CEO at Excel Medical Staffing, a veteran-owned healthcare staffing firm based in Grapevine, Texas.

Being veteran-owned is “definitely a point of interest, a point to open some doors, but that’s about where it ends,” Griess says. “Obviously, it’s our responsibility to perform and deliver on the needs of the client.” Nearly 50% of Excel Medical’s staff are veterans.

One thing veterans bring to the table is that during their time in uniform, they served something greater than themselves, he says. In the military, they served the mission. In staffing, that mission is serving the needs of the client or clinician.

The mission is more important than a single person, including the firm’s founder, Griess continues. A veteran isn’t afraid to speak up when something is out of alignment with the company values or will hurt the mission. Diversity-owned firms are also able to apply for a diversity certification; that process in itself increases awareness of the need to support all groups and seek to partner with other diversity categories, he says. “I think being a diverse firm has us approach challenges a little differently.”

The Long Haul

Marcus Sawyerr, who formerly was global head of digital partnerships at The Adecco Group and CEO of freelancer platform Yoss, is founder and CEO of EQ Community, a recruitment platform that provides diverse candidates to staffing firms.

Sawyerr says when EQ Community started three years ago, there was a big push for more diversity, especially in the wake of the killing of George Floyd and the movements taking place around that time. But there have been changes since then.

“What I am seeing now is the companies that are requesting diverse talent are definitely the ones that are in it for the long haul,” Sawyerr says. They realized that if they have a diverse workforce, it’s better for business in the longer term. A factor playing a role in diversity is the headcount reduction seen at some firms, especially large technology firms. A lot of diversity roles have evaporated during the layoffs, he says. One reason is the diversity teams have been siloed and are being seen as cost centers.

Another concern: Diversity initiatives at large companies, in some cases, haven’t been fulfilled. While firms pledged money to support diversity, there hasn’t always been follow-through. Sawyerr says more checks and balances in this area could help. Still, the companies that were pursuing DE&I before it became popular are continuing with their programs. Sawyerr says he sees diversity continuing to be important and becoming more so in the future as the population overall becomes more diverse.

“As time goes by, there will be natural growth in the market based on the new generation of leaders that come into play,” he says.

Thinking Differently

Having diversity-owned firms as part of a supply chain brings a different talent to the table, says Artech’s Poddar. As a leader who is herself diverse, Poddar says her team is more diverse, which in turn leads to engagement with diverse candidates in a different, more empathetic manner. “We just think about diversity differently, and that echoes in the work we do on a daily basis,” she says.

The 2023 Diversity-Owned Staffign Firms list will be published in June.