Wednesday, August 15, 2012

What is a staffing firm?

I spend a lot of my time describing what I do to people who don’t understand the staffing industry.  When I first opened my insurance agency back in 2008, friends, family, and co-workers all gave me blank looks when I would say that we focus solely on providing insurance to staffing firms.  They would then ask what exactly a staffing firm does and my answer would typically be, “they provide temporary employees to businesses that need workers, but don’t want to hire their own employee”.  While this is technically right, I have developed a much better description for what every staffing firm hopes to do.

Staffing firms are actually providing their clients with a product.  That product is typically sold one hour of quality work at a time.  In this economy, there are millions of businesses that need a few hours of work done, but don’t have the need for another full time employee.  They turn to a staffing firm that can provide them with the best quality of work at the best price. 

Staffing firms obviously have a huge resource of candidates looking to work every day.  In order to increase sales volume, many staffing firms drop their mark-up rates to keep clients.  When the profit margin is lower for a client, they automatically start getting the candidates that provide a less productive hour of work.  All staffing firms promise the best candidates to all of their clients, but you can’t argue with economics.  Why would anyone sell a product at a discounted price if they knew someone else understood the value and was willing to pay for it?  Clients paying higher mark-up rates for temporary labor will certainly receive better and more productive temporary employees.

My experience working with the staffing industry as an insurance consultant has proven time and again that the most profitable firms (I have seen the financials to prove it) focus on educating their clients about their costs and holding their heads (and markup rates) high in the face of competition.  There is no doubt that some staffing firms quote lowball rates, but they are also making the smallest amount of profit on the payroll. 
At the end of the day, staffing firms that want to make more money need to stop serving clients that are not profitable and get a reasonable profit from every placement.  Taxes, Insurance Costs, Unemployment, and other expenses are all rising, so the cost of providing an hour of work should rise too.

Visit today to learn how we are helping staffing firms make more money from the pitfalls of Workers Compensation, Health Care Law Reform, and More.

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