The Talent War within the Staffing Industry which I had been writing about over the past year is now starting to happen!

As you read this article there is one point I want you to walk away remembering. In the next 5 years the staffing companies that will come out as being on top and dominant in the post recession recover period will be those who do the best at recruiting talented people to them, and do the best at creating a culture that retains people, limits turnover and offers little reason why people would even consider switching teams to a different company. Make no mistake, starting this year your competition and the Head Hunters they use will be calling your people attempting to recruit them!

During 2008/09 upwards of 50% of the people once in the staffing industry, were laid off and they are not coming back. This drained the talent pool down to 50%. Many smaller staffing companies went out of business because the banks took away their lines of credit so they could no longer finance payroll. Other mid size staffing companies closed many of their offices, or went out of business, or were acquired and disbanded. Today there are half the people left in the staffing industry, while there is also much less competition among the staffing companies who survived and remain.

At the same time most every staffing company in America is either in the hiring mode, or is thinking of hiring to rebuild in a post recession recovery period.  This sets the stage for a talent war to occur within the staffing industry, which I am already seeing signs of – while it will take 5 years of hiring entry level and training people for the staffing industry overall to replenish the talent pool of recruiters, sales reps and managers.

I want to share a very interesting, yet troubling observation.  In May of this year I purchased a job posting package with Monster.com.  I use job boards for two reasons. First, you never know when you will get lucky and receive resumes from truly talented staffing professionals.  Second, I often recruit people from outside of staffing and pre-train them for positions in sales & recruiting with my clients.  The theory is to convert them into having the equivalent of 1 to 2 years experience. In 2006 at the peak of the good economy with low unemployment, I would receive 800 to 1500 views to my job postings within 72 hours.  Now, during a period of high unemployment and many layoffs, you would think I would be getting higher results and receiving more resumes. However, now I am receiving less than 100 views within 72 hours. And since May 2010 I have not received one single resume from a qualified staffing professional in over 3 months of posting to various cities around the USA. And, I have only received a few resumes from people outside of staffing  such as basic B to B sales reps whom were worthy of training. I used to get 20 resumes per day, now I am lucky to get 3 to 5 per day.  And usually they are from people who are not even close to being a match.

In one case I inflated the salary, and inflated everything else about the job to where it should have attracted many responses.  I wanted to test the situation by creating a fake job that was soooo good and attractive, surely I would have received resumes from even the best people in staffing who were already employed. I did not get one single resume from a truly qualified and talented staffing professional.

Maybe such poor results are limited to the sales niche. Maybe in other niches such as accounting or administrative the job boards are still producing results.  But the sales niche is where staffing companies would find either experienced staffing professionals or people to hire entry level and train. If I am experiencing such bad results on job boards within the sales niche, so is every staffing company!

With a talent pool drained down by 50% while at the same time the job boards are not even producing basic people to train for sales and recruiting jobs, there is a very real problem that will continue to build and become more serious.

Adding more to the observation, as I call into staffing companies to expand my network of contacts, I am being told more and more that I am the second or 3rd recruiter to have recently called these people.  This means staffing companies are moving into such a hiring mode they are starting to pay fees to external head hunters in an effort to find people to hire for their own internal jobs.

A solution I have developed to the drained Talent Pool is Staffing University. Basically this means I can spend my time acting the same as an internal HR recruiter for a staffing company doing all the work necessary to find people from outside of staffing who have the right blend of personality and sales experience to be a good match as someone to hire and train. However, beyond what an internal HR recruiter can do, I have developed a thorough staffing 101 training program called Staffing University.  By providing this training to someone just coming into the interview process at your company, I can convert them into having the equivalent of one to two years experience, with no non-compete. This is a logical way for me to help staffing companies who want to hire people with 1 to 2 years of experience from a competitor but cannot because of a depleted talent pool, compensation limitations and other factors that hinder their hiring a person from another staffing company.

Coming out of the recession employers are hiring temps and contractors, while at the same time there is less competition in the staffing industry. I am also hearing that perm and direct hire is on the increase. Now that we have moved far enough away from 2009 to where most Leaders in staffing are looking forwards instead of backwards, almost every staffing company in America is now looking to hire, or thinking of hiring.  Some are looking to grow, others are looking to replace marginal Players and upgrade their talent.

Let’s all look back to 1999.  What happened at that time?  There was the Dot Com Bubble. At that time so many companies were hiring and starting up that staffing companies were hiring sales people and recruiters left and right.  There was such a demand for sales people, branch managers and recruiters that salaries started to escalate to where recruiters who were once paid a $35k salary found it easy to get $50k salaried positions with the same commission plans. The other thing that happened was with the high demand to hire against a shallow talent pool, Egos were inflated. I remember back at that time many people in staffing developed egos because they were living off a good economy where it was easier to make money and head hunters were calling them with other opportunities. When people develop egos they become more difficult to recruit, and often become troublesome after being hired.

I want to share another thought. I believe the high unemployment rate is artificially inflated.  I think many people got used to jobs that paid an inflated income in 2007 and 2008.When they got laid off, they thought they were still worth as much money as they used to earn so they have held out for a year or two waiting for another job to come along that pays just as much as they used to. Unfortunately they will find this not to be the case.  This same thing happened back in 2000 and 2001.  When the dot come bubble burst, many IT people were laid off who had been used to high salaries.  They would remain unemployed for long periods of time because they rejected any jobs that paid less than they were used to earning. It was not until a year or more later when their savings were exhausted that they would lower their standards and accept lower salaries. I think there is a fair about of this same thing going on now.  The unemployment rate is artificially high because many people are choosing to remain unemployed.

If you take the following observations and add them up, a picture of the next 5 years starts to become clear.

1 – There are about half the people left in staffing today that existed in 2008 = a reduced talent pool. This also means there is less competition among the remaining staffing companies.

2 – Employers are starting to hire temps, contractors and some direct hire.  This will create a demand for staffing business which will motivate staffing companies to start investing in rebuilding, hiring, opening new offices and rebuilding downsized offices.  This will create a demand to hire. The increased hiring activity will embolden people currently in staffing to inflate their egos and make them more difficult and expensive to recruit.

3 – Being the job boards are not producing even basic people to train for jobs in staffing, there is going to be increasing pressure as many staffing companies become aggressive at trying to recruit people from each other. More internal recruiters will be hired, and more external head hunters will be paid fees.  This means you can count on the fact your competition and the head hunters they use will be trying to recruit people out of your company! So you must be made aware that your people are going to be contacted more and move over the coming year or two. And, you must be made aware just how difficult it will become to find and hire the people you will need to rebuild your company in the post recession recovery period. Basically, I am suggesting you consider such facts and create plans to deal with these facts.

4 – A final lesson to share is if you are now aware that your competition and the head hunters they use will be trying to recruit your people, then you must do what you can to create a culture where your people simply would not want to leave because they enjoy working for your company so much that other companies cannot offer much of a reason to lure your people away to switch over to your competition.

I am going to talk about “culture and management style” for a moment and how this factors into WHY experienced staffing professionals will even consider jobs with other companies.  There are some staffing companies that are too lax, and do not provide much training or metrics for people to follow.  The lack of structure can make certain people feel uneasy because nobody has laid down a path to success for them to follow. I can recruit these people!  Other companies have gone overboard with metrics where they count every phone call, how long people were on the phones, have too many meetings, etc – they apply too negative of a management style in their attempts to push people into achieving the metrics.  This sucks all the fun out of the job and turns sales people and recruiters into glorified telemarketers. This management style will make 75% of the people in a company unhappy and are easy pickings for a recruiter like me to target and offer other jobs that are more professional and fun.

I have written about this before, but will touch on this again.  The 80/20 rule is very true in staffing.  80% of the branch managers out there are not qualified to be the coach or trainer of their own people.  That is a fact.  And, 80% of regional managers out there are no better.  Please do not take that as an insult because you may be among the top 20%.  But the honest truth is 80% of all managers in staffing are not very good at what they do.  Here is a classic example as to why:

Staffing is all about sales. Everything we do from selling to recruiting is all about sales and talking to other people, convincing them to do business with us, or convincing them to accept jobs with our clients.  So, staffing companies are Sales Organizations, they are not regular corporations.

Sales people need to be managed very differently from regular employees in a corporation.  Example:  A manager over an accounting or IT department is a very different type of person than someone who would be Leading a Sales Department.

Yet in staffing many managers are more like an HR or Accounting/IT manager where they manage by spreadsheets and numbers. Sales Managers should be more like a motivational Coach of a sports team, as opposed to a numbers crunching manager like you might see over a department in a manufacturing company.

Have you ever heard of Amway, or MLM companies?  These companies recruit average people into becoming independent sales representatives building their own small businesses under the parent company umbrella.  Very much like insurance or real estate.  I am not here to defend MLM, just to make a point. If you join one of these companies you will see and meet people who have very good public speaking skills just like Tony Robbins or Barack Obama.  These Speakers can help the average person visualize their dreams and goals, and motivate them to step outside their comfort zone and work harder to achieve goals than people recruited into the business ever thought possible of themselves.

Years ago, back in 1996, I joined an MLM company called Equinox.  Independent people like me would lease an office, buy maybe 20 desks, there would be a presentation and product display room, and we could run ads to recruit people to presentations who thought it was a regular job interview. 50% of the people would walk out of the presentations, but 50% would stay to learn more.  We were recruiting thousands of people to the company, and here is the important observation.  Many people who were BROKE, with No Money, would find a way to come up with money to buy into the company obtaining product kits, even coming up with money to rent a desk in the office, set up phones, and buy help wanted ads to start recruiting people. And, every 6 weeks there was a local seminar which was both for training, and to get people motivated. These seminars cost money to attend.

The seminars were recorded and the tapes of these seminars were sold to the people so they could listen to them over and over in their car when driving or at home.

Many outsiders thought of these seminars as being cultish, but that was not really the truth. You see, the Leaders realized the average person was bombarded with so much stress and personal problems, the negative energy in their lives would drown any positive energy they experienced when first signing up with the MLM company.  Without the seminars and constant motivational training, most people who started would quit because the good feelings they felt up front would be drowned as the negative energy in their lives took over once again.

In MLM, average people can be motivated into investing to get into the business, and motivated to leave their comfort zone and produce results they never thought possible.  Yet in staffing we can offer $40k salaries, commissions, benefits and we cannot even get good people to work for us! I think there is a lesson to learn from this.

If a person in MLM recruited and built an organization of 50,000 people in their downline group, maybe that person has something to teach us staffing industry managers!

What are the ingredients of successful MLM and how does this apply to the staffing industry?

The Managers are effective public speakers either on stage or in a small office. There is a positive energy around them.  They know how to help people visualize their dreams and show them how building the business step by step can help them achieve their dreams.    Compare that to what we normally see in staffing. How many managers do you know who even talk to people they hire about their dreams and goals, let alone work with them every week and month to achieve those dreams and goals?

In MLM the Leaders have figured out that most people have a lot of negative pressure in their lives.  So they make the time spent in the MLM business as FUN and Energized as possible.  The MLM becomes not only a career opportunity, it becomes an escape from the negative pressure most people experience in their lives.  The MLM companies create a positive culture buzzing with good energy.  And they keep fueling this energy with weekly meetings, monthly trainings, but they combination motivational leadership with factual training.  This is what keeps people believing in the direction they are headed.  You see, once a person fails to clearly see the path in front of them, it becomes a regular job where they come to work every day and become just like every other average employee. The lack of clarity and vision = mediocre performance!

If you think about it, what I am saying applies to any great sports team. The best Coaches do not yell and scream at their Players and threaten to fire them if they fail to meet certain numbers. They inspire the Players to rise up and give their 100%.

When I call people in staffing and talk to them, 90% of the time I hear that people are not very happy with this career and would gladly take a job outside of staffing if something decent were offered to them. For many people in the staffing industry their job is just a job. They are not excited or motivated like people in an MLM would be, yet staffing is no different from MLM.  Both are sales organizations.

MLM companies have figured out how to recruit, motivate and lead people to achieve greatness because they are targeting people to become 1099 independent contractors, while staffing companies behave more like a regular company hiring W2 salaried employees. It is not how people are paid, it is how they are Led and Managed. MLM companies understand how to build sales organizations while many staffing companies manage themselves more like a regular company with normal W2 structure and W2 salaried management styles.

I am not accusing your company of this, just sharing a wide spread observation of what I see as I talk to people from across the staffing industry.

A lesson to learn is staffing is the same as MLM, both are sales organizations, yet many staffing companies are managed more like a regular corporation where the people are managed no different from accountants or IT personnel. And, most managers in staffing are not capable of being the inspirational Leaders seen in MLM because they have more of a corporate manager personality.

When a person is hired into a staffing company and start their first day, after a few weeks of Feeling Good, things change to where life becomes very much the same as if the job was a salaried telemarketing call center position. Turnover is expected, and people need to make their calls or get fired and replaced by someone else.  I think it would be a good idea to learn from MLM and apply some of the inspirational and motivational practices because that is the only way to inspire people to work at their 100%, and maintain that level from them.  When people are managed like regular salaried employees, a regular employee mentality and work ethic is what follows.

Because of the management style seen at many staffing companies, they create their own high turnover which is going to become a very serious problem for them considering what I have shared in this article about job boards failing to produce results and the drained talent pool within the staffing industry

The main point is if people are properly managed they will make too much money for your competition to be able to afford to recruit them away from you, and your people will be too happy and loyal to even consider a job with your competition.  It all boils down to how your people think and feel about your business.  Do they wake up excited to come to work every day? Or, do they think of coming to your office as just another job?

Compensation and other reasons why a person will consider switching companies
This will be the topic of another newsletter in the near future.  However, I will share this.  It will become increasingly more difficult to “Head Hunt” experienced staffing professionals or sales people to train because most of the good candidates will be working and must be lured into switching companies.  The disconnect is most staffing companies are too used to temp, contract and supplemental staffing. So they are used to quick turn-around from job order to placement.  They often apply this same thinking to hiring their own people and become frustrated when things do not happen so quickly. I am here to tell you there is a HUGE difference between the type of recruiting a staffing company is used to when supporting regular employers vs. the type of recruiting that is essential to produce people a staffing company can hire for their internal jobs. I have demonstrated in this article that it’s nearly impossible to recruit truly experienced staffing professionals or sales people from any industry off the job boards. Cold call Head Hunting takes time, it takes time to lure a person into making the decision to quit their job to switch companies. Yet when I work with staffing companies often times the expect things to happen far too fast, which shows their thinking leans far too much towards temp and supplemental staffing and they do not understand the difference between what they do vs. what true head hunting is.

If you are interested in learning more about my observations regarding compensation and other reasons that affect why qualified people would actually quit their job to switch companies here in the staffing industry, send me an email and I will reply with a copy of the next article covering compensation and other factors.

Closing Comments:
The talent war I am speaking of is very real, and is going to get much worse in coming years.  Take what I have shared here very seriously.  You have to come up with clear and meaningful reasons WHY a person would want to work for your company as opposed to one of your competitors. And, you must clearly understand your competitors and the head hunters they pay fees to WILL be contacting your people. It would be wise to do what you can to make your people as happy and loyal as possible to offset this.

If you have not visited the Our Services Page on this Web site, I encourage you to do so as that will help you understand I am not a fee per hire contingency recruiter and operate under a different business model.

Best wishes

Dave Fogg

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