NorthBay biz reports on the fragile state of local staffing companies and finds them using their downtime to implement new strategies and prepare for the economy’s eventual upswing.
Expanding your networks
Sonoma-based Nelson (which includes the hiring and recruitment companies Nelson Staffing, Nelson & Associates, Nelson Technology and Nelson Legal, and which boasts offices throughout Northern California) saw a revenue decline from a high of $389 million in 2007—the highest in the company’s 39-year history—to $312 million in 2008.
“We started trying to reduce expenses in January [2008] because we saw the recession coming,” says Craig Nelson, executive vice president. “We saw it in our volume—both in our temporary workers, as well as our direct placement business. From January through September, it was kind of a steady decline and it was easy to keep up with a reduction in expenses. But then in September, when the financial markets imploded, hiring basically became frozen because everyone panicked. And that was the case from pretty much October 2008 through March 2009. Things just basically froze. Even on the temporary side, companies weren’t bringing people on board, they were reducing costs in whatever way they could because no one knew what was going to happen with the economy.”
Hopefully an indicator of the economy as a whole, Nelson Staffing has started to see revenues stabilize. So while it’s too soon to say the economy has started to turn around, it at least appears to have stopped from shrinking further.
“It’s significantly better than the months of October through March where everything was kind of frozen,” says Nelson. “We’re at the point now where we’ve stabilized. In other words, we’re not losing temporaries out on assignment. We’ve seen an increase in demand, especially in the clerical, production and technology sides, but that increase in demand has been enough to replace the people who are coming off assignment. So we’re no longer shrinking. We’re always the leading indicator both down and up, because the first people to be let go and to be hired are temporaries. We’re starting to see a little bit of that, but it’s not huge. It’s nothing we’re getting excited about, but it does give us a sense that things are no longer going to contract.”
Nelson, like other successful companies, is viewing this downturn as an opportunity to strengthen its core competencies, reduce ancillary costs and determine other areas where the company can add value.
“Our company sees this as an opportunity to stay close to our current clients and try to add value to our prospects—even to companies we may not currently do business with,” says Nelson. “One thing we did is offer free postings to any company [with the exception of a competitor] that wants to post jobs on our job board. So you can post your jobs free on our job board and have the candidates go directly to you. One, it’s helping our clients and prospects, and two, it’s helping all those unemployed people out there. It’s just one more tool that adds more opportunities on our job board than would otherwise be there.”
Nelson Staffing, to help position itself as a staffing leader for the inevitable upturn, also recently offered two free seminars in the Bay Area, with presentations on topics including current legal issues, a management program using goals and controls to measure your organization, and a presentation on personality profiling to ensure you’re hiring the right people. In addition, in 2009, Nelson has hosted a number of networking events in its branches throughout the Bay Area, for both clients and candidates. (Nelson & Associates is running a program in the North Bay, and through the end of 2009, 5 percent of profits from them will be divided among three local charities.)
“Probably about half the people [at a recent East Bay networking event] were former clients currently looking for jobs,” says Nelson. “So it was an opportunity for them to network and meet people, talk to our recruiters and just stay out there and stay active in their job search. We’re just doing as much as we can to help people be successful in finding a job. Part of it’s obviously altruistic, and part of it’s also long-term branding, because we want to be known as the partner who sticks with people because that’s who we are—we’ve been here 39 years.”
Updating skills and training
Similarly, Napa-based Alkar Human Resources, a staffing company that’s focused on temporary, direct hire, and temp-to-hire services in Sonoma, Napa and Solano counties for 24 years, only started to see a significant downturn in business in late 2008, after several highly successful years. As late as first quarter 2008, the company exceeded its revenue goals.
“We didn’t see any significant drop in business until December 2008,” explains Lauri Law, executive vice president. “We exceeded our goals in the first quarter of 2008, so we thought we were off to a great start. Then business started declining in the second quarter, and by the fourth quarter, we were feeling the effects of the overall economy.”
While the company is still currently feeling the financial pinch, it’s resolved to move forward without laying off any employees and is maximizing the downtime as much as possible by creating new strategies and services, and enhancing its commitment to superior customer service.
“We took the mindset of, ‘We’re going to hit the ground running,’ because we want to be on the forefront when this turns around,” says Law. “We know by experience, temporary services are the first to start reaping the rewards because when [employers] need people fast, they start hiring through us.
“We focused our energy on more marketing and advertising, creating a new brochure, coming up with really creative, low-cost ideas and getting the message out there. We’re stressing proactive customer service and using this time to develop business partnerships with our clients—gaining their trust and respect. What we’ve seen and heard is that everyone’s cutting back and stopping what they’re doing—and we don’t believe in that. We’re doing the complete opposite. We’re using the time to maximize everything we’re doing now.”
Alkar has maximized value for current clients by conducting other services such as safety trainings, consulting on human resource-related matters, and undergoing certification for workers compensation risk [The Workers’ Compensation Risk Certification (WRC) program recognizes a staffing firm’s best practices in worker safety and risk management].
“We received a new certificate this year called the Workers Compensation Risk Certification,” says Law. “It’s a great certification to have, and that alone is a selling tool for us. We invested in this because we want to be able to tell our clients, ‘We’re risk certified, which means doing business with us means you’re working with a staffing firm that operates at the highest levels of safety and risk management, and we want to protect your bottom line, too.’ We also trained our entire staff this year as Certified Staffing Professionals (CSP), which pertains to all the federal and California labor laws, employment law principles and ethical practices pertaining to the staffing industry. We let our clients know, “All of our staffing consultants are certified—they know the laws, principles and ethical practices and how to assist you with what’s right and wrong.’”
On the candidate side, Alkar is seeking to help displaced workers refine and augment their skills, by offering tutorial programs in var-ious computer applications that can even be completed from home.
“We invested in a program where all of our applicants can take online tutorials for free on all the MS Office programs,” explains Law. “We wanted to help candidates enhance their skills so they’re more successful and marketable. An applicant will come in and take an Excel test and say, ‘I’m really terrible at Excel.’ But I’ll tell them, ‘Let’s see what you know and then I’m going to give you some training for free so you can improve your skills.’ They can go home and start with the basics or learn the advanced features. So we do that for our applicants and then we sell that skill to our clients! If we have an applicant that needs Word or Excel for a specific job, we’ll train the person so he or she is up to speed. Clients actually love it so much they let them do it at work!”
Tapping into talent
Companies closely related to staffing have also been hit hard by the economic downturn, as witnessed by the HR Matrix, a Santa Rosa-based full spectrum management firm specializing in human resources, organization development and employee recruitment. While the firm had a quick growth period since its inception three and a half years ago, it’s started seeing more and more requests for economy-driven services such as help with restructuring and outplacement services for laid-off workers.
“We’ve noticed some of our clients are innovative and strategic in how they position their business. They’ve taken advantage of this downtime to restructure or reposition themselves, and they’re working with us on the organization development side,” says Brenda Gilchrist, managing partner and co-founder. “The smart firms are the ones that are still engaging and making sure they’re positioned well so that when they’re in the upswing, they’re ahead of the game compared to, maybe, their competitors who haven’t done that. Unfortunately, some of our clients used us to help them with their restructuring, including layoffs. So we’ve been there to guide them through what type of layoff—or if it’s necessary—and then help them through that process, including offering some outplacement.”
These changes in both our local and global economy gave Gilchrist the idea of offering a service to help displaced workers stay in our community—a factor that affects us all. “In addition to my role as a business owner and working with various businesses in our community, I’m involved with a couple community programs where I support economic vitality within the North Bay,” says Gilchrist. “One is the economic vitality committee through the Santa Rosa Chamber. Its initiative is to create high-value jobs within Santa Rosa.
“As I started reading the newspapers and talking to some of my HR colleagues who were dealing with massive layoffs, I started to get concerned about the economic impact this was going to have. My concern was the trickle-down effect. If they can’t find employment and we can’t keep the high-value talent here, they might leave our area. If they leave, they leave homes, dentists, physicians, and they stop shopping in our community. I wanted to be proactive in trying to retain some talent before they left the area.”
With that mindset, the new HR Matrix Talent Network—a job angel network created by Gilchrist for displaced workers—was conceived and developed. In this new talent mapping program that uses an online applicant tracking system located at http://thehrmatrix.jobscore.com, candidates can submit their résumé online and employers can source candidates directly. This win-win solution helps companies find talent while letting displaced workers remain in our community.
“The way it logistically works is, candidates can go in and add their résumé to an automated applicant tracking system,” explains Gilchrist. “Those résumés drop into a database that HR Matrix can view. If I happen to see someone who has talent I can match with an employer—even one that may not be looking right now but may consider that type of technical expertise—then I’ll at least be able to connect those two. There’s no guarantee, but at least it’s one other program to see if we can match people.
“In the other part of the program, employers can go in and create their own JobScore account through the applicant tracking system, and can find résumés that have been added without even having to contact HR Matrix. I envisioned it as becoming a centralized community effort backed by business and supported by our community so we can really start to get some momentum around matching the talent of displaced workers with employers to keep those employees in this area.”
The HR Matrix has also been active in offering presentations to educate employers on using creative options to keep talent in lieu of laying off employees. Sometimes companies will have a hasty, knee-jerk reaction when cost cuts become necessary, versus really analyzing the true costs of some of those decisions.
“I recently did a presentation on how employers can be a little more creative in reducing costs versus reducing people,” says Gilchrist. “I really want to encourage people to think of other options in lieu of layoffs. As we’re working with clients, we’ll say, ‘Have you considered [as one example] offering a sabbatical for someone who always wanted to do that? Maybe this is the time to have that person do that instead of laying them off.’ But there’s definitely some other ways employers can be more creative versus having someone become a displaced worker.
“If someone really does a cost benefit analysis on a layoff, it’s really interesting what those numbers sometimes turn out to be. Conduct a cost benefit analysis on what it costs for severance, outplacement if they offer it, and medical insurance—there’s a new tax now on employers who have to pay for coverage under COBRA. If you add up all those costs plus the time that it took to actually find that talent in the first place, and then consider how much time it might take to bring that intellectual capital back to the organization later, sometimes it actually costs you more than just keeping that person on board until you see the upswing.”
Better days are coming
While most in the staffing industry say that the downturn, while it seems to have at least stabilized, will continue in the near future, they’re nevertheless optimistic—as evidenced by their proactive effort now to boost services, step up their marketing efforts and maximize their extra time on delivering superior customer service.
“I think the reality is, we’re going to see the temp business grow slowly over the next 18 months, and then we’re going to see an explosion in the contingent workforce as people realize there’s a lot of flexibility in it, and companies want to have the flexibility of hiring people and then not having to fire them but just say ‘your assignment is done,’” says Nelson.
“So we see kind of a slow growth followed by a boom. I think direct placement, or unemployment as a whole, is going to be really tough throughout 2010. It’s going to go down in 2010, but I think it’s going to be relatively high until 2011. But I think our company is well-positioned to take advantage of that growth in the temporary business.”
Laurie Law from Alkar agrees, but sees things happening sooner. “Based on our sources and the research we’ve done through our clients and other entities,” says Law, “we feel strongly that we’ll be busy by the end of 2009. Not just because we’re guessing, but because we’re talking to clients and really trying to get a realistic feel. We’re preparing ourselves by implementing new processes and marketing strategies.”
That’s a lesson many companies can learn from during this downturn in the economy—use your extra time wisely by augmenting marketing efforts, offering that added service to current clients, focusing on core competencies and taking the time to train and certify staff—all items that most companies have difficulty finding the time for during a strong economy. As they say, there’s no better time than the present.
