By Leslie Stevens-Huffman, Staffing Industry Analyst
It’s been business as usual in the staffing industry since the recovery began in 2009, as companies enjoyed the customary rebound in staffing services. But the industry has recovered only about half of what it lost, which was about a third of its workforce.
A convergence of four macro trends is responsible for the slowdown and this disruptive quartet may wield enough power to transform the entire industry before the year is over.
“The staffing industry is like a sports team that had to go on a winning streak just to get back to 500,” notes Tom Erb, president of Tallann Resources, an Ohio-based consulting firm. “But this time, many of the changes are permanent so owners will have to develop new strategies and exert greater effort to get back to the top.”
We give you the four trends.
No. 1: Structural Changes
There’s no doubt that fear, uncertainty and tepid economic growth are keeping employers from rehiring regular employees. Instead, 34.3 percent of the 2,000 employers recently surveyed by McKinsey Global Institute say they plan to use more temporary and contract workers over the next five years. But staffing owners can’t afford to read the headlines and rest on their laurels, because the short-term economic conditions are not conducive to growth and most employers lack a plan or viable strategy to achieve their flexible workforce goals.
“The economy is structurally changing in ways that favor the staffing industry in the long-term,” says Steve Berchem vice president and analyst for the American Staffing Association. “But all the data suggests that short-term growth will be hard to come by, especially in 2012.”
Dan Campbell, CEO and owner of Atlanta-based Hire Dynamics, says that staffing firms offer clients consulting services, education and strategic workforce planning if they want to capitalize on the economic conditions that are pushing clients toward the use of contingent staffing. He also notes that the industry’s current training programs are inadequate for today’s environment, because they tend to focus on tactics like closing the sale or presenting candidates instead of finding hidden problems and developing strategic solutions.
If staffing firms don’t step up to the plate and assist customers with strategic planning, they risk losing them to competitors or even [managed service providers], since providers plan to aggressively market outsourced contingent workforce management services to midsize companies this year, after saturating the large employer segment.
Historically, the staffing industry has performed well during times of economic expansion and job growth, but the University of Michigan predicts gross domestic product growth of just 2.5 percent and limited job creation in 2012, with the national unemployment rate declining slightly to 8.8 percent.
And just in case you’re looking for more economic challenges, unemployment taxes will probably rise.
Finally, the U.S. Supreme Court is expected to rule on healthcare reform by June, which could force staffing owners to deal with the biggest game-changer of them all in the second half of the year.
Read the entire Staffing Industry Analyst article.