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As we move into the second half of 2024, the recent turmoil in the staffing industry likely continue through the remainder of the year.
A trend contributing to the state of the category represents the continuation of a fundamental shift in the employment market over the past four years: fewer people actively participating in the traditional employment market. Whether because of the ongoing strength of the gig economy or other reasons, more jobs exist than people to fill them.
At the same time, we see several factors unique to this year affecting our industry. To a lesser degree, these include an increase in vendor consolidation efforts by customers and a decrease in contract flexibility by suppliers and other business partners.
Perhaps the most notable condition driving the state of the staffing industry is the ongoing uncertainty about the economy — seemingly heightened in an election year — and the resulting mixed sentiment among consumers and companies about economic conditions and associated implications. Recent surveys and reports offer insights.
For example, 56% of Americans think the US is in a recession according to a poll from Harris/The Guardian released in May. The consumer confidence index from The Conference Board, meanwhile, showed that consumer confidence was up in May after declining for three consecutive months — with the survey also indicating that more than two-thirds of consumers believe a recession in the next year is “somewhat likely” or “very likely.” At the same time, just 35% of CEOs surveyed in April by The Conference Board thought a recession was likely in the next 12 to 18 months.
PREMIUM CONTENT: Industrial Staffing Growth Assessment: May 2024 Update
In an economic and employment environment marked by uncertainty, a downward projection in business results becomes difficult to avoid for many staffing firms. Here again, recent data proves instructive.
According to a recent SIA | Bullhorn Staffing Indicator, “year-to-date, the median year over year growth rate is -13% for Commercial staffing, -11% for Professional staffing. By comparison, last year’s median Y/Y growth rate was -11% for Commercial staffing and -6% for Professional staffing.”
The same report goes on to note that, “The year-over-year decline in the indicator is directionally in line with the decline in temporary help employment as reported in the Bureau of Labor Statistics’ monthly Employment Situation reports. The May 2024 US Jobs Report … estimates that employment in the temporary help services industry fell by -6% in April 2024, on a Y/Y basis.”
Sharing the information above hopefully serves to remind us of the challenges we might face at our companies are often more common than we might think — and are often grounded in macrolevel conditions. That means that staffing company leaders need to find solutions at the microlevel. For our firm, we have prioritized these three areas to focus our efforts:
Customer acquisition. At this point in the year, we have a good handle on what to expect revenue-wise from existing clients. That means the surest way to ensure success during this moment in time is by bringing in new customers and generating additional income this calendar year. To make this happen, we’re coaching, training and adding more senior sales professionals that can assess a customer’s needs and provide more custom and tailored solutions.
Fiscal management. An integral component of successfully managing your company’s finances is communication. That means regularly talking with lenders about the state of the business, consulting with vendors and landlords about modifying contracts and leases, contacting customers immediately when payments become overdue and sharing regular updates with employees about the company’s financial performance.
Employee optimization. Achieving the goals above requires having the right people in the right roles. To optimize employee performance, consider steps such as increasing salaries or providing real-time bonuses for outstanding performance and offering the flexibility they need to best do their jobs. Conversely, don’t let poor performance linger. Times like these make it more important than ever to frequently assess employee results versus job expectations.
As you think about the most important aspects of your company to focus on today, assume that at least part of that list will change between now and the end of the year. During this period of turmoil and transition in our industry, the ability to quickly adjust and adapt your business goals based on constantly evolving conditions is more essential than ever.