Staffing services expect strong fourth quarter

Hiring expected to pick up as recession wanes

The summer months have shown record-breaking surges and declines in stock prices, making predicting future economic performance a hap-hazard guessing game at best. Looking toward broad economic trends, including the markets, used to be a predominate factor influencing the mood for hiring. Unfortunately, today’s indicators are pointing every which way, making the current hiring mood one of caution.

There is a cautious optimism among member firms of the Association of Canadian Search, Employment & Staffing Services (ACSESS) that staffing will pick up in the fourth quarter this year or by early 2003. Recruitment and hiring will eventually return to the forefront of HR responsibilities — it’s just a question of when. In the interim, there are a number of things business managers and hiring authorities can do.

“Recent quarterly reports from two of the bellwether staffing firms lead us to believe that conditions have probably stabilized and staffing volumes in the U.S. are starting to show tentative signs of improvement in some segments,” said Joshua Rosen, a financial markets analyst with Credit Suisse-First Bank. This is significant because the temporary staffing industry is seen as a leading indicator of future economic performance.

In the last three post-recession recoveries, Canadians have learned how critical it is not to be overzealous when it comes to hiring new employees. Downturns often last longer than predictions, making cautious behaviour a wise approach. For this reason, temporary staffing can be an effective way to hedge against the uncertainties of the future. No one ever failed because they delayed their hiring investments by a few weeks or months, but thousands have gone broke by over hiring and overspending.

A temp-to-perm hiring strategy offers the ideal cautious approach to rebuilding a workforce. Many companies use this approach in all types of economies, not just post-recession recovery times. By hiring employees on a temporary basis in the range of 90 days, for example, the employer essentially buys time to build confidence in both the general principle of hiring and the specific person.

In these times, when the weatherman is apt to be more accurate than the business analyst, here are some additional tips to consider:

Negotiate a free conversion period with a staffing firm for temp-to-perm hiring. Most staffing services will allow you to hire temporary employees after they have invested a certain amount of time on assignment with your company. A 13-week no-fee conversion is common for most administrative and light industrial temp assignments. Bilingual positions tend to have a longer conversion period, while larger clients with higher volumes of business can sometimes negotiate a temp-to-perm period for a shorter time period. Keep in mind that you are in a stronger negotiating position to make your deal before the temporary assignment starts.

Seek guarantees during negotiations. Most agencies and staffing firms offer a guarantee of 30 to 180 days, depending upon the seniority of the position and candidate. Use down cycles to negotiate a longer guarantee period. If the employee doesn’t work out during the guarantee period, you can request a replacement search at no charge.

Secure temporary help service agreements based upon markup percentages, rather than static bill rates. Fixed bill rates lock you and your staffing firm into wages that might not be right for the changing economy and current labour supply. An agreement based upon a percentage markup enables you and your staffing service to make dynamic wage changes and enhances your control when setting skill, experience and seniority standards.

Consider using agency contractors for information technology positions. IT solutions shift at an exceptional rate. Investing in permanent IT employees carries the burden of ongoing training, certification and re-education. You can minimize risk and improve your ability to respond quickly to changing technologies and the fickle IT marketplace by using an IT services firm or IT contractors from a staffing service.

Typically, light industrial temporary help markets rebound first during economic recovery, followed by temporary administrative help. Direct hire agencies offering contingency fee arrangements often recover next, before retained search agencies. A good indicator that the economy is in a sustained recovery is when executive search firms fill their books with senior level management and executive search assignments.

If you’re looking for reliable economic indicators, keep an eye on stock performance of the large, publicly traded staffing firms. But, not to be “too granular,” there is “limited visibility” and a “reluctance to provide forward looking guidance.”

Steve Jones is national president of the Association of Canadian Search, Employment & Staffing Services (ACSESS) and president of The People Bank. He can be reached at [email protected]

Latest stories