The Great Resignation: Threat or Opportunity for Staffing Companies?
Despite renewed pandemic uncertainty, continued supply chain disruptions, and rising inflation, the economic outlook is positive. Economists are projecting that strong consumer demand for goods will grow North American economies by 4% in 2022. Yet, a quickly developing problem is threatening productivity levels in all industries. A mass exodus of employees is diminishing workforces in companies across the nation as workers reevaluate wages, benefits, and life-work balance.
This exodus, commonly known as the Great Resignation, is creating a rich environment for the staffing industry to seek new business. However, staffing companies face the same threat of lost productivity. Unless staffing businesses are able to retain and recruit contingent workers, they may see significant slippage in their workforce, resulting in lost revenue and a diminishing ability to service new business opportunities. Conversely, staffing industry recruiters able to build a strong work pool during this period of mass resignations will be well poised to capitalize on this new trend and drive additional revenue in an economy starving for workers.
This article takes a brief look at the nature of the Great Resignation and offers a planned approach for staffing companies to convert its challenges from threats to new opportunities.
The Great Resignation
The news is filled with reports of the Great Resignation. Employee turnover rate has increased, and people are quitting their jobs at a record rate, the highest number since the 1980s. April 2021 was touted as ”breaking historical resignations in a single month.” At the time of writing this article, the U.S. Bureau of Labor Statistics posted their latest findings, reporting that 3% of Americans in the workforce, or 4.5 million of them, quit jobs in November.
People are quitting across all industries and career levels. Mercer’s “2021 Inside Employees’ Minds” report found that front-line, low-wage, minority, and lower-level employees are the groups most likely to leave their jobs. Resignation rates are also the highest among mid-career employees, with healthcare and technology leading the pack at close to a 5% increase year over year.
There are many reasons why people are quitting and contributing to the Great Resignation. Several factors appear to be influencing this decision, including family pressures, a general dissatisfaction with working conditions and burnout. The pandemic has caused workers to reevaluate their employment to better understand how, why, and what work they want to perform. In some cases, these exited jobs are so high in demand that contingent workers can quit a job that they are unhappy with and then more selectively choose their next role.
Overcoming the challenges of the Great Resignation
This explosive trend in job resignations has produced a highly competitive recruiting environment. More jobs are available than can be filled. Contingent workers are in high demand, and they know it. Open to working opportunities with other recruiters and companies, contingent workers have gained the upper hand in managing their employment options. Staffing companies that once managed a reliable pool of workers are now struggling to maintain a stable workforce. To overcome the challenges brought on by the Great Resignation, staffing businesses need to:
- Mitigate resignations.
- Recruit aggressively.
- Ensure reliable cash flow.
Mitigating resignations and recruiting aggressively are actions that can help build and maintain a strong contingent workforce. Ensuring reliable cash flow is necessary to support this activity.
Three initiatives to mitigate resignations
As noted above, the current labor market favors workers who are now forcing employers to think and act differently to retain their pool of employees. To mitigate resignations, staffing companies need to focus on three key initiatives:
- Quantify the problem
By defining problems properly, companies can better analyze and resolve situations. Converting employee resignations to a numerical value (turnover rate) allows staffing firms to monitor the scale of the problem and track results when taking corrective action. Use this formula to keep a pulse on this essential statistic. Simply identify your current rate and compare it to previous and future months to monitor your trends.
Turnover Rate = Number of Separations per Month ÷ Average Total Number of Employees
- Identify the causes
Having quantified the problem, the next step is to determine why workers are leaving. One of the easiest ways to do this is to maintain open lines of communication. Send check-in emails, make monthly phone calls or even send out an anonymous survey. Communicating with your workers can help you identify issues. Are your employment terms aligned with the market? Are you helping them grow? Remember that, like permanent employees, contingent workers have career plans. When staff aren’t happy, they leave.
- Develop a retention program
Once you’ve identified the issues, work toward a retention program that benefits both you and your workforce. One avenue can be negotiating increased per-hourly rates or bonus incentives; another can be to offer an upskilling program for your workers. Providing professional development training increases job satisfaction and positions your company as the source for the best candidates.
Recruiting in a highly competitive environment
Once you’ve mitigated the risk of losing workers, which likely included the development of an attractive employee package, the next course of action is to increase efforts to aggressively recruit new talent. The challenge is to figure out how to cut through the noise of the industry to find new people.
It’s an understatement to say that the Great Resignation has and will continue to impact the staffing industry. Digital tools like artificial intelligence and automation will be key elements of recruitment efforts. While automation is efficient, it is also impersonal. Carefully balance efficiency with the personal aspects of finding the right person for a role.
AI and automation
The role of AI is not to replace recruiters but help them to make better and quicker decisions when searching for strong candidates among a giant talent pool. AI algorithms can be used to search resumes for keywords and other factors that match those of successful past hires, to create a shortlist of candidates.
In a 2020 report, Sage found that 24% of businesses have started using AI for their talent acquisition, and that number increased in 2021. The benefits of using AI and automation are having access to a bigger talent pool, improving hiring quality, eliminating conscious and unconscious bias, and saving time on recruiting efforts.
Increasing the personal touch
Using AI and automation does not replace the personal touch — if used properly, it enhances it. Using technology for filtering lets recruiters focus on getting to know your best candidates, understanding their wants, and helping them achieve their goals. Use this information to form a deeper relationship with candidates as you ramp up recruiting efforts.
Reskilling and upskilling
Let your company be known for improving job opportunities. Provide time and resources for your workforce to learn new skills and stay up to date with the latest advancements within their area of expertise. Provide opportunities for short-term placements in more advanced roles. This will allow your workers to gain up-to-date experience in their chosen fields and motivate candidates to join your workforce. Upgrading your work pool with enhanced skills establishes your business as a reliable source for quality staffing services.
How to establish reliable funding?
To find success in the face of the Great Resignation, staffing companies need to provide more than just competitive wages and attractive employee benefits. To attract and retain good workers, they must offer incentives and work skill development programs. Most importantly, they need to reliably meet payroll without delay or issue. A delayed or inaccurate paycheck is enough reason for workers to seek job opportunities elsewhere. To meet these financial obligations, staffing companies require a flexible financial solution to ensure hassle free access, sufficient funding from payroll to payroll, and always-rapid access to the working capital needed.
Payroll funding is a tailor-made solution to this challenge. It is a specific form of invoice factoring — the practice of converting invoice receivables into immediate cash. When seeking an invoice factoring company to support your company’s payroll funding needs, choose a lender that has extensive experience in the staffing industry. A factoring company that understands your business will be far more flexible and expedient when reacting to changing, complex or urgent financial needs.
Gaining market share during the Great Resignation
In summary, the Great Resignation represents a major shift in workplace culture and a unique opportunity for the staffing industry. Workers are now becoming unsatisfied with wages and benefits that have gone relatively unchanged for decades. As the nation’s workforce seeks better compensation and working conditions, staffing firms need to respond with fair salaries, attractive benefits, advancement opportunities, and assurances of a regular paycheck.
The staffing industry’s most progressive companies will focus on improving employee well-being to build and retain a strong work pool. As an integral part of this, a robust financial strategy will ensure optimal, hassle-free, reliable payroll funding support: to help you keep on top of your payroll needs, and to help fund growth. In the end, staffing companies that successfully implement strong retention, recruiting and cash flow management practices will be best prepared to embrace the challenges of the Great Resignation, and convert them into significant revenue growth opportunities.
Since 2006, eCapital has been a trusted financial partner for thousands of small to mid-size companies in all stages of development. Our customer base continues to grow as our reputation for dedicated service and forward-thinking solutions to even the most complex situations endure. eCapital keeps pace with staffing agencies’ working capital requirements from startup to growth, through business transition and economic disruption with tailored services and personalized attention.
For more information about how invoice factoring supports staffing agencies through all stages of development, visit eCapital.com