Business The History of Staffing: Part II
As a follow-up to last month’s article, as I mentioned I have been in the staffing industry for over 35 years and presently manage a data company “PeopleTicker.” We provide Human Resources and procurement departments with compensation data for both employees and contractors (contingent labor).
The evolution of the staffing industry has been so much fun to be part of, from the days of shotgun cold calling into random departments to today’s sniper social media driven exact candidate recruitment; this industry has seen it all.
During the mid 1980s, Ronald Reagan was President and the nation was building, building, building. Whether it was pipe design folks at a nuclear plant, large petrochemical projects, or even preparing for the firing of the air traffic controllers and almost returning them back to work as contractors (Mr. Reagan squashed the idea); staffing was booming. Recruiters and staffing agencies worked diligently at selling directly to the hiring managers vs the purchasing department. Back door placements were the only way to go. We were gunslingers, providing talented people to companies that were hungry to hire and where managers were anxious to meet their deadlines. Most managers couldn’t wait for a corporate process to fill their openings, they needed people quickly.
I worked on so many of these projects, such as the F-14, STEALTH BOMBER, B-1B PROGRAMS, and helicopter projects with both Sikorsky and Agusta in Italy. It all began as an opportunity to recruit and place folks. Now when I look back I am so thankful to have such wonderful memories of some of the world’s most exciting projects. We recruited telecom in the midst of the telecom wars with the AT&T breakup, placing folks at New York Telephone, NYNEX, and Bell Atlantic which evolved into Verizon and Sprint today. Whether we were placing people or fishing for people from MCI or WorldCom it didn’t really matter, we were flying, wheeling and dealing to get ahead. Even though contingent labor made up a rather small portion of the overall labor force in the United States, this industry was hot and getting hotter at every turn.
Eventually, the process slowed as companies began to focus on their out of control spend. This evolved into hiring strong procurement folks to manage the process who, before generating a purchase order based on the rate quoted, found out the labor rate of the candidate, mark-up of the vendor and finally the bill rate; all negotiated for hard savings. Procurement disputed that as long as the manager bought directly from the staffing firms their hands were tied when trying to negotiate final bill rates and they were right. “The rogue buyer.” On the other hand, the hiring manager community has argued, rightfully so; they have projects to deliver and need urgency to staff these projects.
Soon procurement divisions were hesitant to issue purchase orders without prior knowledge of openings and in many cases took over the process of sourcing the necessary contractor with the staffing firm. At times, Human Resources was also involved but for the most part HR managed the hiring for permanent talent for their company, while procurement obtained the necessary contractors through purchase orders. While the process never quite left the hiring manager, procurement maintained their involvement in the entire transaction with the progression of larger procurement departments creating RFPs and selecting groups of vendors approved to place contractors. For staffing firms, these client transitions effected the selling process as that changed too. The sales driven “walking the halls” visiting the hiring manager approach moved towards a focus on selling to the procurement team in hopes of becoming an “approved vendor.” Even the terminology changed to reflect this new type of worker. The terms “supplemental Labor,” “contract labor” and “staff aug” replaced the job shopper title. Just as the term “staffing firm” or “staffing supplier” replaced temp agency.
By the late-1980s, the Vendor-On-Premises (VOP) concept began to gain popularity. After being awarded an exclusive, long-term agreement, one staffing firm would be selected to provide an on-site coordinator to manage all temporary recruiting needs. The designated VOP would source ALL jobs and be the sole supplier of temporary employees. This model was short lived and by the mid-90s large client company buyers of contingent labor looked for a more effective solution/process and for a new way to reduce contingent labor costs, which had now become a multi-billion dollar problem. The staffing industry was resilient and responded with a new multi-billion-dollar solution.
Please come back next month to learn more about the evolution of the staffing industry and how we solved the client’s needs. In the next History of Staffing chapter; we look at the latest industry solutions focused on satisfying the procurement departments processes while addressing HR’s needs and the hiring manager community.
By Joe Musacchio