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Recruiting Software Blog Staffing Insights: John Vanderkin, President of Employers Overload (Part 2)

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The staffing and recruiting industry is operating in the midst of an uncertain time.

The steady, yet not thriving, economy, federal government actions (or inactions), and the introduction of the Affordable Care Act have all made an impact on the industry. As result, recruiters are working hard to use the latest in staffing software and recruiting software, designed to provide the right solutions to employers and workers. Industry professionals are focusing their attention on adapting to the changing needs of employers during an uncertain economic and legislative environment.

John Vanderkin, President of Employers Overload, an innovative workforce staffing company, spoke with us about the impact the ACA and the federal government shutdown has had on the recruiting industry and what we can expect to see in the future.

Current employment market looks positive

The November jobs report from the U.S. Department of Labor details that total nonfarm payroll employment rose by 203,000 in September 2013. This is positive news. In addition, the unemployment rate dropped three tenths of a percent to 7.0 percent.

“The current employment market is picking up. We are seeing more hiring in the manufacturing and distribution industries as well as more opportunities in general clerical and administrative positions. This increase is certainly not a robust return to previous hiring levels but it is an encouraging sign that we hope will continue to accelerate,” said Vanderkin.

The potential repercussions of the ACA on the staffing industry?

As the Obama Administration works the kinks out of the deployment of the ACA, many employers are trying to adapt their recruiting software and processes to implement the necessary changes. The staffing industry is simultaneously trying to better prepare for the potential repercussions of the ACA (read the Bond White Paper on staffing industry perceptions of the ACA).

“The staffing industry should not become an avenue for companies to try and avoid the ACA requirements, but the ACA creates some opportunities for the staffing industry if companies adopt the use of certain staffing industry services. Used properly, the staffing industry can help a company minimize some of the impacts of ACA,” said Vanderkin. “Utilizing temporary employees for short- term business growth or projects can alleviate the tracking and notification requirements that a company needs to follow for ACA. Using temp-to-hire services to fill permanent positions can help to reduce turnover and avoid more costly ACA administration tasks until the company is sure that a candidate will really be a good fit for the organization.”

He went on to say that “the ACA has also created numerous challenges for the staffing industry. The increased costs associated with longer term temporary project placements, administration and tracking of the ACA requirements as well as educating the staff and candidates of the staffing company are just a few of these challenges. As staffing organizations recognize the increased costs of administrating and paying for the ACA, they will need to determine how to pass those costs along to their clients in a fair and reasonable fashion.”

Working with partners to prepare for the ACA

Staffing and recruiting professionals may have to advance their use of new recruiting software technology solutions to better prepare for the implementation of the ACA – especially as the various deadlines come into play. Vanderkin told us that his organization is focusing on educating key members of the company to take point on various ACA-related responsibilities and projects.

“We have done a tremendous amount of work to prepare for this change. We have spent a great deal of time educating key members of our staff, we continue to meet with customers and businesses within our service areas to educate them about the ACA and its effect on staffing, we are working closely with our software vendor, Bond International, to enhance our applicant tracking system so we can meet the requirements of ACA and we are continually working to answer questions by our candidates and employees on how the ACA will affect and support them,” said Vanderkin. “Keeping abreast of the changing ACA regulations is an important task of a staffing vendor and we provide this service and support to our customers to ensure that they have the latest information to base their hiring decisions upon.”

By implementing strategic tools, recruiters will be better able to meet the needs of clients. Comprehensive tools like staffing and recruiting software that boost productivity and efficiency in the office are the key to better preparing for the potential upheaval that the ACA will create.

Governmental budgeting issues and its impact on staffing

The 16-day partial federal government shutdown in October certainly made an impact on the rest of the economy and public opinion. Even as lawmakers now (in mid-December) work to pass a two-year budget agreement that may provide some stability, there is still much uncertainty on the impact of any budget agreement on the economy.

“I think any government uncertainty is bad for economic growth and unfortunately we have had a long run of government indecision to contend with. This uncertainty has had a very big effect on hiring and overall economic growth. The government shutdown in October had an effect on this overall issue but in and of itself, it will not have a major impact on hiring across the broader American business community,” said Vanderkin.

Looking forward, continued improvement in employment figures demonstrate a pickup in business demand for staffing as sales increase. This need is reinforced by continued business uncertainty, in that there is still a reluctance to hire more FTE’s until a reasonable level of economic stability is reached.

Recruiting Software Blog Staffing Insights: John Vanderkin, President of Employers Overload (Part 1)

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To this day, staffing and recruiting professionals, and the general public, are still feeling the effects of the recession.

The employment market has been steadily, if slowly, improving, yet the lingering taste of a recession is still there. As a result, recruiters are using the latest technological developments, like staffing software and recruiting software solutions, to provide relief and to leverage the current job market.

John Vanderkin, President of Employers Overload, an innovative workforce staffing company, spoke with us about the impact the recession has had on the recruiting industry and what trends we can expect to see in the future.

Staffing and recruiting industry impacted by the recession

It’s undeniable that the recession had an impact on the staffing and recruiting industry. After all, when your business is finding jobs for qualified professionals, and employers are slowing hiring, it’s a tough time. However, not all of the effects of the recession were necessarily negative, according to Vanderkin.

“Yes, the recession had a significant impact, both good and bad, on the staffing industry. As the recession began, companies were forced to reduce their workforce and often the first to go were the contingent employees. This had an obvious effect on the staffing industry as well as those contingent employees,” he said.

Vanderkin went on to say that “on the positive side, it created opportunities for a well-run staffing organization to provide strategic consultative support to those companies that could still benefit from a contingent workforce. A good staffing vendor was able to help their client identify how temporary project employees could improve their bottom line and help them address short-term increases to their business while not creating a significant impact to their ongoing labor costs. In many instances, the staffing industry was able to help companies who have never used temporary employees understand and utilize this resource. While these opportunities did not replace the losses from the recession, they created opportunities to minimize some of the impact and to grow the overall staffing client base.”

Employment trends created by the recession

For the staffing and recruiting industry, some firms found some surprising reoccurring trends. According to Vanderkin, the unusual job market conditions and new attitude prevalent in the nation created a unique situation for staffing professionals.

“The biggest trend that we noticed in 2009 and 2010 was the difficulty in getting job seekers to accept available positions rather than staying on long-term unemployment benefits. Through our sales efforts we were able to secure many short- and long-term temporary positions. but many of the candidates we spoke with decided to remain on their unemployment benefits instead of having to go back to work. We ultimately found the workers that we needed for these positions. but recruiting and placement took much more effort than the high unemployment rate should have generated,” said Vanderkin.

On the other side of the employment equation, many employers decided to reduce the number of full-time opportunities they would make available and instead relied on a part-time workforce. In addition to paring down the number of full-time workers on staff, it wasn’t unusual for companies to begin to demand that professionals have a greater number of skills under their belt so that they could take on more diverse roles.

“With a reduced workforce many companies adopted a multi-position mindset for their existing workforce. This meant that an employee that used to perform 1-2 major roles was now performing 3-4 different roles so the company could still meet their business demands. As business increased, these companies maintained their multi-position approach, making their hiring requirements much more demanding for the job seeker. A job seeker who used to be a multi-metal welder now had to be able to operate milling equipment, learn to program a CNC machine, drive a forklift and/or be able to interact with customers regarding their specific job order. The days of being a 1-2 skill employee were beginning to diminish,” said Vanderkin.

How employment trends impacted the staffing industry

The employment market will always have an impact on the staffing and recruiting industry. However, the recession of the early 2000s had one of the more lasting impacts the industry has ever seen, and the resulting changes are expected to stick around. As the industry has found innovative ways to streamline work, besides utilizing recruiting software for better management, agencies continue to make changes to operations.

“Staffing companies made significant changes. One of the most prevalent was cutting prices. Many staffing companies would approach companies with offers of significant price reductions while promising higher and more costly screening and selection criteria than what the company was currently utilizing. While this seems like a good thing for the consumer, it created two significant challenges; 1) the staffing company increased their supply costs and 2) the staffing company found it much more difficult to find suitable candidates who could meet the new more stringent criteria, which raised their recruiting costs. In the end, the staffing company wasn’t making a reasonable income for the services they provided and what were once qualified candidates now struggle to get back to work because they cannot meet the new hiring criteria.”

Vanderkin went on to say that “we have seen a serious development occur as we meet with many of the customers who accepted these lower rates. Their quality of candidate has gone down which affected their production costs and many of the skills, background, drug screen and E-Verify screening they thought they were being provided, were being skipped by their current staffing vendor. Our organization has been able to find innovative ways to help many of these clients establish reasonable hiring requirements, maintain lower labor costs and have an audit path to ensure that they receive the screening that they are paying for.”

“Many of the trends from the recession were fleeting and have worked their way out of the process. I believe the multi-position mindset adopted by most companies will continue to be the new norm. The aggressive pricing strategies by some staffing companies cannot continue long term and still allow that company to fully meet the clients hiring requirements. I believe this trend will work itself out over the next 1-2 years but pricing that meets the value of service provided by reputable staffing companies might never reach previous levels.”

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Our interview with John Vanderkin of Employers Overload continues next week, as he comments on the current state of the staffing and recruiting industry, the impact of the Affordable Care Act (Obamacare), and other government actions.

5 Ways Health Reform Can Benefit Your Staffing Agency

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Health ReformThere have been countless articles on healthcare reform and how it impacts your staffing agency.  Reading through each of these posts can leave the waters a bit murkier in terms of exactly what the impact is going to be.

What we do know is that healthcare reform isn’t going anywhere with the reelection of President Obama.  Starting in January 2014, employers will have to offer qualified health insurance to full-time employees or pay penalties, estimated at $2K per employee.  Staffing agencies currently are not fully exempt from these penalties.

This healthcare legislation has resulted in significant discussion regarding the potential negative impact to staffing agencies, even as the ASA has successfully fought for a ‘look back’ period, which lessens penalties.

While much of the discussion regarding potentially negative side effects is valid, there are some definitive benefits that are arising for the staffing industry. 5 such benefits appear below.

5 Crystallizing Benefits

1. Temporary hiring boom likely to continue: many temporary segments are forecasted to peak in 2013. Right or wrong, temporary non-full time employees look more attractive to employers since they may not be on the hook for as high of potential health costs (operative phrase at this point being ‘may not’.)  While there is no definitive way to say whether this will truly result in lower health costs – the perception that it will lead many employers to be more comfortable with hiring contingent workers.

2. Healthcare staffing poised to improve:  it’s not inherently apparent the specific positions health care reform will create.  However, with an estimated 3 percent increase in provided healthcare, there is no denying that the demand for workers within the industry will increase.  The increase in demand is a welcome sign for staffing agencies servicing the healthcare industry.

3. Easier to attract and retain better candidates:  staffing agencies that offer healthcare coverage to employees “maintain a competitive edge in the marketplace as it pertains to recruiting and retaining employees.”  As demand increases and qualified employees become scarce, offering insurance could be the catalyst staffing firms need to thrive in a new era of healthcare.

4. Time to decide: The most impact from the Affordable Care Act will be felt starting January 1st, 2014, which affords staffing agencies a little over a year to decide which road to take.  Having time to decide on the correct course of action provides staffing firms the ability to research additional information about the law and weigh their options.

5. Staffing firms control the message to their clients: staffing firms that decide to offer health insurance to their employees and clearly communicate that fact to their clients may see an advantage over competitors that seem to be passing costs on to clients.

While healthcare reform is met with mixed emotions, significant opportunities exist for staffing agencies – both in managing any potential negative impact and better understanding the positive impact.  Now is the time for staffing firms to fully immerse themselves into this new world, decide on a strategy, and execute.

For more on how health reform will impact your staffing agency, I invite you to attend the upcoming webinar, Health Care Reform: What You Need to Know, being hosted by Bond US on Thursday, December 13th.

How Will The Election Impact The Staffing & Recruiting Industry?

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I’m not going to get into the debate over which presidential candidate is better for the country – or even which is better for the staffing and recruiting industry.  But, I will discuss some ways in which political forces have been impacting the jobs market – and the likelihood that the effects of these forces will continue well beyond November 6th.

A Strong Temporary Workforce

With so much uncertainty in how the election might impact the economy, companies are seemingly even more cautious about bringing on full-time employees.  Astonishingly, this trend is climbing up the ranks of executives, too.

The simple fact is that contingent and temporary employees have become a prevalent norm in the hiring industry. Since September 2008, in fact, 88% of companies have hired temporary workers. Temporary and contract employment has grown 26.6%, since the beginning of 2012 according to the ASA’s September Staffing Index Monthly Report.

Another political force impacting the staffing and recruiting industries is the Affordable Care Act.  Some experts believe this could reduce fraudulent worker’s compensation claims because workers would have better healthcare coverage.  The savings experienced from the Affordable Care Act would be passed on to the companies hiring temp workers because they would have less reason to use workers’ compensation.  Aside from payroll, worker’s compensation is the biggest expense facing companies.

Finally, there is the election itself directly impacting the temporary workforce. Contingent workers in cities all over the country have been hired to test the ballot machines and man the polls on Election Day. Second the campaigns themselves are huge employers of hundreds, even thousands of contingent workers. Once the election is done, most will probably have to find new temporary work, regardless of whether their candidate won.

Will the Trend Continue?

Staffing Industry Analysts suggest that temporary employee demand in certain segments will reach historic highs in 2013.  Additionally, with the sluggish growth the economy has been experiencing and the holiday hiring season ramping up, I think it’s safe to say temporary workers will be in high demand for companies of all shapes and sizes through the end of the year.  And this is all rather independent of who wins the election.

Regardless of who wins the election – the truth is this.  As the economy recovers, contingent and temporary employees are those that are brought on first – prior to the recovery in full time hiring.  And whether we have four more years of Obama, or the first four of Romney, our economy will likely be perpetually recovering – at least for the next several years.  How long the staffing and recruiting industry remains such a fertile field depends solely on how quickly either candidate moves our economy from ‘recovery’ to ‘recovered.’

Our recruiting software solutions can help you recruiting or staffing agency regardless of our economic state.  To learn how, request a demo.