It’s safe to say that it’s a difficult time to run a staffing firm.
Between ongoing economic uncertainty, ripple effects of the pandemic and decreased labor participation, staffing leaders are facing an unprecedented set of challenges. Over the past few years, we’ve contended with a massive talent shortage that is not going away anytime soon. And recently, we’ve seen a slight decline in job orders.
But the news isn’t all bad. It simply means your organization needs to be smart about how it responds.
The fastest-growing staffing companies see these as warning signs, reminders that they haven’t had to sell their services in the past two to three years, and indications that they need to grow their relationships with existing accounts. Even amid the ongoing talent shortage, we can’t focus on talent alone. In today’s market, your staffing firm should boost its lead generation, marketing and sales efforts to drive more business through the door.
Business development teams need to follow a structured plan, so the slight decline doesn’t turn into an avalanche and negatively impact the business.
Behind the Curtain
At PrideStaff, we have adopted a name for the historic talent shortage: the sansdemic, or period “without people”. Originally coined by Lightcast, a provider of labor market data, this term refers to the growing talent drought projected to worsen throughout this century.
Simply put, there are more open jobs than people qualified or willing to fill them. But why?
The current talent shortage is caused by several factors. First, the unemployment rate is currently low, meaning fewer people are actively looking for work. Labor participation is also at an all-time low, with many people choosing not to work. Baby boomers are retiring at record levels and there’s degree disparity — a gap between degreed and non-degreed job openings and talent. Additionally, people with college degrees don’t want to take jobs in which they don’t use their education.
And the talent shortage isn’t going away if the low birth rate is any indication: The American birth rate fell for the sixth consecutive year in 2020, according to the CDC.
Meanwhile, many clients are cutting back on hiring as they brace for a potential recession and grapple with increased inflation and expenses. Your clients are worried about the future: They’re focused on saving, not spending.
Additionally, wage pressure isn’t going to be alleviated any time soon. There is a disconnect between buyers’ expectations and what we are seeing in the market, and while there may be slight relief in wages, they are unlikely to drop to pre-sansdemic levels.
We’re also seeing some staffing firms setting markups that are unsustainably low. Such an approach only boosts orders in the short term. What happens when recruiting costs go up? You can’t simply increase your bill rates without upsetting clients.
So, how should staffing firms navigate these challenges? By turning to sales — specifically, lead generation.
Time to Sell
Since the pandemic, staffing firms haven’t had to concentrate on selling, but it’s vital that we get back to outbound activities if we want to grow.
Your sales representatives need to follow a proven, structured process that is reinforced at every stage. They should know your firm’s key points of differentiation to sell clients on the relationship, not just the business metrics. Sales reps should have specific KPIs they need to hit in order to measure progress and success.
And it’s worth repeating: Don’t take bad orders just to get orders. Taking a position with an unsustainable markup puts your company at risk, erodes the market and devalues our industry as a whole. Resist the temptation and focus on long-term growth.
We’ll be dealing with the sansdemic for some time. Adapting and focusing on lead generation, not just talent, is the key to future success. Don’t neglect your marketing and sales when you need them most.