Staffing at its roots is an entrepreneurial industry. Some of the most successful staffing companies can point to strong leadership, aggressive execution, and ambitious production personnel as keys to their success. It is an industry defined at many levels by its shear will to succeed, and through the nineties that seemed to be enough. Over the last decade, we have seen massive changes in the competitive forces that impact the industry. These changes have allowed buyers to become increasingly sophisticated on how they engage and manage their relationships with staffing vendors. Buyers are leveraging technology to enable programs that closely manage both processes and pricing, driving the staffing firm’s operational costs up while at the same time squeezing gross margin profitability. To preserve bottom line profits staffing firms responded with a focus on increasing the “productivity” of the recruiting and sales organizations to achieve activity metrics that were simply not possible even five years ago. Operational improvements are a continued necessity to survive in the staffing business, and can briefly give a company a competitive advantage. However, is it enough to outperform the competition long term? The short answer is no. A longer answer can be found by reading an … Read More
Most staffing managers will admit that even though business continues to grow, that growth is not a cause for unbridled optimism. The staffing industry faces headwinds that are driven from multiple forces beyond its direct control. Clients continue to ask for more while paying less; new regulations and stronger enforcement of existing regulations increase the cost of doing business; and the changing face of technology challenges how we must leverage the talent pool, which is the very essence of our service. Complicating all of this is an economic recovery that is tenuous at best. All these factors mandate that staffing companies develop strong managers who can rise above the inertia of the status quo and develop and implement high-impact operational improvements to ensure long-term sustainability.
In speaking with staffing companies across the country one thing is clear. Job order numbers are increasing and placements are starting to follow. This is welcome news; however, many executives see a rapidly evolving industry fueling concerns about the long term prospects for growth independent of the state of the economy. This article will discuss three of Michael Porter’s five competitive forces that are having the biggest impact on the future of our industry; Bargaining Power of Buyers, and the Threat of Substitutes and Rivalry among competitors. Understanding these forces will provide insight on how your company should respond strategically to a rapidly changing marketplace. The increasing bargaining power of buyers has been a challenge for staffing firms ever since the beginning of the millennium. The pressure on IT to produce greater ROI to justify its existence has led many buyers to transform their staff augmentation model away from differentiation based on relationships and customer service and towards a focus on program compliance and performance. Many firms blame the advent of the VMS for this transformation, when in reality VMS is only a symptom of the natural evolution between buyer and vendor as an industry matures. It is only natural … Read More