Recurring economic slowdowns, uncertain geo-political environment, and rising cost pressures across industries have a detrimental impact on the workforce.
The staffing and recruitment industry plays a key role in driving growth across sectors and ensuring that people continue to realize their dreams and achieve their career goals.
The industry continues to bridge the gap in the workforce supply chain, enabling businesses to thrive and talent to prosper. However, this time it must contend with newer challenges:
All this at a time when the cost per hire has shot up and workforce sentiment has gone down, with quiet quitting fast becoming a trend.
The staffing and recruitment industry bridges the gaps in the workforce supply chain, enabling businesses to thrive and talent to prosper.
Growth and transformation are just ahead of the next chicane
To emerge stronger, the staffing and recruitment industry can rely on a few learnings from the speed merchants at Formula racing.
For the staffing industry, the formation lap is analogous to building long-term candidate and client relationships, sustainable talent supply chains, and a robust digital foundation. In the staffing industry, which is a candidate-driven market, the importance of talent experience cannot be overemphasized. Winning in the world of work must begin with winning over the candidates. The focus should be on providing all candidates with an omnichannel experience. Staffing companies should also provide a seamless employee experience with integration across the phygital touch points. This requires an integrated digital transformation program across the front, middle, and back-office functions, touching all the business value streams and modernizing any legacy footprint.
First off-the-grid: Making the right start is crucial for even the most seasoned drivers. With a good start, even the car in pole position can be overtaken, and a significant gap established from the rest of the field.
The speed of hiring is of paramount importance to staffing companies. Nothing matters more than responding to clients fast and being the first among competitors to ensure a higher fill rate. After all, the business itself is based on the contingent fees model. The need of the hour is to augment recruiters with AI-enabled automation across the recruitment value chain. From efficient job order management for clients and contextual search to intelligent talent assessments and job fulfillment, the staffing business must adopt cognitive recruitment practices to reduce the time to hire.
Launching the attack mode: Formula racing introduced the attack mode, alternately referred to as drag reduction system (DRS), to temporarily boost the power and speed of the car to enable overtaking on the racetrack.
Established staffing companies need to bring out the attack mode to ward off the threat from emerging human cloud platforms and startups, the latter having an edge due to being digital natives without any legacy baggage. With the growing adoption of flexible work models, the global gig economy is expected to be more than $5 trillion, as per recent estimates from Staffing Industry Analysts (SIA). Platform play not only widens the traditional staffing market but also empowers clients and candidates with better operational and career outcomes, respectively. Defensive strategies leveraging existing relationships may work in the short term; however, winning in the long term requires taking on the platform players head-on, with a focus on new business models that benefit all the stakeholders.
Controlling from the cockpit: The cockpit of a racing car is equipped with real-time dashboards, a highly advanced steering wheel, an array of buttons to control different car functions, and paddles for changing gears.
Like the driver in a modern cockpit, recruiters and other key business stakeholders should have real-time visibility of the entire staffing business to enable timely and appropriate action. An enterprise-level data and analytics platform can go a long way in driving data-driven staffing operations. It can be leveraged to enhance growth by turbocharging the sales process and fulfillment engine. It can also enable data-driven demand fulfillment – from a proactive prediction of demand and prioritization of job orders to submittals and placements. Ultimately, it can provide a better means to control key financial metrics like days sales outstanding or DSO.
Managing the tire wear: Tires lose performance and racetrack grip due to thermal effects (overheating and underheating), adversely affecting the car’s performance on the track.
In racing cars, the tires degrade over the course of a race and must be managed diligently by the driver. Similarly, in the world of work, the operating model must be dynamically managed to stay in tune with a complex and uncertain environment. Most importantly, spiraling costs require switching to low-cost models through consolidation and shared services. Finance and recruitment operations can benefit the most by outsourcing to reliable partners who can bring intelligent process automation and business analytics to a hitherto traditional business.
Advancing to the chequered flag: Maintaining a consistent fast pace on the racing track while working closely with diverse teams and partners is key to reaching the black and white flag that marks the end of a race.
Reaching the chequered flag is an outcome of the successful amalgamation of efforts from diverse teams and partners, including the manufacturer, engine provider, tire supplier, racing team, technology integrator, etc. A racing car aiming for the chequered flag is a perfect example of an ecosystem in action. The staffing industry needs to leverage partner ecosystems in a similar way – to complement and augment its capabilities and explore new business models relevant to the future of work. With rapid skills obsolescence, traditional staffing businesses will continue to face challenges. Hence, leveraging adjacencies to build and launch new services and even products that focus on better outcomes for customers and candidates will help in reaching the chequered flag of future success. We are already witnessing cross-industry collaborations taking shape in the form of skilling and re-skilling alliances and total talent management offerings, including non-human talent.
Podium and beyond: Winning races and being competitive lap after lap on every track in the race calendar rewards the racing team with a place on the podium.
Finishing on the podium after a year-long season calls for continued agility, resilience, and constant innovation from the Formula racing teams. It’s not a one-off event but a culmination of a sustained endeavor. Staffing companies, too, need to imbibe a culture of enterprise agility and innovation across their service lines. Governance remains key to ensuring desired results from any digital initiative. Identifying the objectives and key results and driving a unified effort across the enterprise is a key success factor in the long term.
Road to successful execution
Traversing the complex staffing market in an uncertain macroeconomic environment is challenging.
The journey of growth and transformation should begin by reaffirming the organization’s purpose and why it exists. On the one hand, this purpose manifests itself in clients’ growth and profitability targets; on the other hand, it’s about realizing the dreams of the talent. The twin purposes eventually lead to building a prosperous society. However, this also requires navigating a meandering road for an industry at an inflection point. Let’s take a look at the key tenets for a successful journey:
Digital core: Faster adoption of cloud with a SaaS first approach, modernization of existing customer relationship management (CRM) and applicant tracking system (ATS), digitalization of middle office functions like time and attendance, contracting, billing, and so on, and consolidation of back-office systems are some of the initiatives that will help build a strong digital foundation to drive the business forward. With rapid and reliable migration to cloud, a leading European staffing customer reduced the time to market for IT solutions by 80%.
Elastic operating model: Machine-first operations with shared services provision for key value streams like job requisition, candidate onboarding, assignment management, and cash collection, along with harmonization of middle office processes and consolidation of finance and accounting processes across business units, will provide the necessary agility and resilience for businesses to scale. One of the largest US-based workforce solutions companies witnessed a 30% improvement in recruiter productivity by leveraging a machine-first model across recruitment operations.
Data currency: Recruiters need to get more out of the huge data corpus on hand. Data stewardship will need to be imbibed as an integral part of service delivery and digital governance to ensure better data quality across a unified enterprise data platform. The lack of such an initiative undermines business performance in general and costs businesses to the tune of $12.9 million annually.
Omnichannel experience: The staffing industry strives to offer exceptional client, talent, and employee experience with digital marketing, candidate and client engagement, and employee collaboration solutions, including phygital branches integrated across diverse touch points with all the key stakeholders. With a focus on candidate experience, a company improved its net promoter score (NPS) by 25% through digital marketing initiatives within a year.
Cognitive recruitment: A broader application of artificial intelligence and machine learning would include intelligent staffing automation, autonomous candidate and client engagement, and predictive and prescriptive insights for processes across the staffing value chain. With the deployment of an intelligent candidate screening solution, a company reduced the turnaround time by about 35%.
Platform play: The shift to talent platforms from temporary staffing and direct hire platforms to online work and crowdsourcing platforms is imperative, first to augment the traditional staffing business and, eventually, transitioning to new business models aligned to the preferences of the Gen-Z and demands of flexibility from clients. It is no surprise that the staffing platforms witnessed a record growth of 190% in 2021, as per Staffing Industry Analysts (SIA).
Innovation beyond boundaries: Workforce solutions beyond staffing that enable clients to meet their business objectives, including provision for non-human talent or digital workers, subscription-based models, data monetization, and staffing for the metaverse will ensure that the business is ready to tackle any disruptive threats emerging in the industry. More than half of industry leaders already plan to leverage ecosystems and drive innovation beyond industry boundaries for continued business success.