7 Lessons for Staffing Firms – from Others’ Experience | DCR Workforce Blog

7 Lessons for Staffing Firms – from Others’ Experience

lessons staffingHistory was my bête-noire in school days mainly because I hated all the rote memory it required; until I recognized its true usefulness. As George Santayana said, “those who do not remember the past are condemned to repeat it.’ If you are a staffing agency looking to expand your business you may be reaching out to companies and their Managed Services Providers (MSP) in an effort to be included on their suppliers list.  If you find that you are getting lots of polite responses, but no actual results, then it makes sense to learn from the experiences of others.

The staffing firms that are most successful in gaining new clients have learned the following lessons:

  1. Companies are risk averse. Having a big client bringing in most of the revenue may seem like assurance and security – but could put you out of business should the client decide to walk away. When assessing you as a potential supplier, companies feel comfortable knowing that your largest client represents between 10 to 20 per cent of the total revenue. They are looking for assurance that your company is stable, and they are not potentially facing a situation in which a vendor has placed valuable contractors on assignment, and then goes out of business, leaving the client at risk. There is nothing actually new here – this is also an age-old piece of wisdom which tells us not to keep all our eggs in one basket.  While it is always difficult for a young company to expand its client base, it’s a necessity.
  2. Companies are looking for vendors with successful track records.  It is important to focus one’s efforts on a specific segment and build a reputation in the market for high standards and quality of performance. Such specialization helps to get more recognition, publicity and establishes trust and creates customer confidence.
  3. You need to smooth out the wrinkles created by a volatile economy.  While focus on a specific segment may help one to be established as a niche player, industries also go through cycles and what goes up usually comes down. Concentrating all their efforts on a single industry or segment has affected many a staffing firm’s fortunes negatively. Just as we avoid investing all efforts in a single client (or a handful of clients) we must avoid concentrating on a narrowly defined segment, or pay the price.  Pursue opportunities to apply your core competencies to additional areas, expanding your target market.
  4. Quality always ultimately wins out over lowest price.  Many staffing agencies, particularly start-ups, attempt to compete on price.  To do so, they often employ offshoring, centralized sourcing teams, or other methods aimed at keeping costs down.  This may not always prove to be of great benefit to your purposes if the quality of output is impaired. It could also affect the security and confidentiality of your information and bring a great deal of distrust and ill will your way. How will you control these operations, avoiding performance issues and cost overruns?
  5. Diversity matters. Even if companies have not explicitly established diversity goals, you will find that most companies are interested in working with small and diverse suppliers. Be sure to emphasize your qualifications in these areas. As importantly, tell your prospective client about efforts you make to promote other diverse companies.
  6. Evaluate the complete business opportunity. In early discussions with the prospective client, develop a clear understanding of the scope of the opportunity.  How many contractors with skills you can source are used annually?  How has that number changed over the past few years, and is it expected to grow or contract in the future? If a tiered distribution system is used for requisitions, what would you have to do to move to a higher tier?  How often is each supplier’s performance evaluated? Does the company plan to expand its program to cover additional locations or divisions, and would you automatically be included as a supplier?
  7. Befriend the MSP. Many suppliers make the mistake of viewing the MSP as a threat, getting between the hiring manager and the staffing agency.  Worse, in supplier-funded models the agencies pay an administrative fee to the MSPs for each position filled.  When a positive relationship is established between MSP and supplier, the agency benefits from briefings on upcoming projects that will require hiring surges, access to requisitions beyond those offered by a specific hiring manager, coaching on the types of candidates preferred by the client, and reduced administrative costs gained from using the MSP’s vendor management system.  Of course, these benefits are only truly gained if the MSP is not also serving as a staffing supplier!

Remember that lessons learned from observing the successes and mistakes of others makes it possible for you to avoid distractions and focus your business development efforts on areas that have proven to directly lead to new opportunities.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.