While automation has replaced many jobs in America, there still seems to be an increasing demand for gray and blue-collar production jobs.
Staffing Agencies have been the primary channel through which employers obtain this kind of a 3rd party workforce. However, in today’s labor market, agencies are having challenges meeting client demands with traditional methods of sourcing candidates. This has put a strain on relationships that have been traditionally reliable and forced some clients to look for new agency relationships. But will they find much of a difference when they change?
Many switch agencies only to find the same challenge. Three factors continue to provide stress on the staffing relationships.
Strong Economy = Demand Increasing
Government Policy = Reducing supply
Gig Economy = Turnover
This has HR departments, staffing agencies, employment technology companies, and recruiters busier than any time in recent history.
Clients can either accept the smaller workforce, try and get more out of their agency, or simply use more agencies. This dependency on an agency or a small number of agencies is called “Market Concentration”. When the Agency channel stops producing desired results, a host of challenges in market concentrations come to light. The issues include a lack of data, loss of control, and ultimately increase costs.
The low unemployment rate and the abundance of unfilled positions don’t appear to be changing anytime soon. Competition for workers is going to get more intense. Innovations such as restaurants using Uber or Lyft are great examples of how American business must respond to keep pace with the new labor marketplace.
With necessity being the mother of invention, we can expect to see some very unique solutions replacing the old methods. Will staffing agencies be able to change with the speed of the market or will they be replaced with a new solution?
Michael A. DiManno