A Boutique Staffing Agency

Staffing agency misses corporate clients, relies on part-timer applications

by Daniella Grossman
Feb 24, 2009

Since Taz Wilson first opened the doors of her Chicago staffing agency in July 2007, she has seen the demand for her business’s services change completely. She built AltaStaff LLC on strong referrals, a 100 percent employee retention rate, and a robust benefits package for temporary employees retained on her own payroll, but her agency’s reputation cannot overcome the dwindling need for companies to recruit full-time workers.

Initially, most of AltaStaff LLC’s business came from such “direct-hire services” for growing corporations.

“Now, I would say 100 percent of our recruiting requests are temporary, or temporary-to-hire,” said Wilson, president and founder of AltaStaff LLC, located at 53 W. Jackson Blvd. in the Loop.

The decline in employee recruitment has been abrupt and widespread throughout the staffing industry.

“Since the end of the third quarter of last year, most businesses have just stopped hiring,” said Steve Berchem, vice president of the American Staffing Association. “In the normal staffing cycle of a year, numbers
start to grow in the summer and peak in late November. Last year, we started to see declines after the Fourth of July, then came late September. After the Lehman bankruptcy, it just plummeted.”

In the fourth quarter of 2008, an average of 2.46 million people were temporarily employed in the U.S. on any given day. This figure was a 19.5 percent drop from 3.06 million temporary employees the year earlier, according to the American Staffing Association, and the most dramatic year-over-year decline in the 16 years that the organization has conducted its monthly survey.

Fewer people hired means less revenue for Wilson and the industry as a whole. While Wilson declined to divulge AltaStaff’s most recent financial figures, she did say that the company’s revenue and profit margins have significantly decreased since the summer of 2008.

In the fourth quarter, temporary help revenue totaled $16.8 billion, a 10.5 percent decline from $18.7 billion the year earlier, according to the American Staffing Association. For the full year, temporary help sales fell 3.8 percent to $70.7 billion, down from $73.5 billion in 2007. Last year marked the first year of revenue decline since 2002, following the most recent economic recession

Meanwhile, the AltaStaff office has been “flooded with applications.” The newest wave of candidates reaching out to staffing agencies—full-time or temporary, depending on what they can get—is more educated, qualified and competitive as job opportunities are fewer.

“The group of people looking for jobs changed dramatically in terms of the level of education and the interest in our type of jobs,” said Wilson, who places 75 percent of her job-seeking clients in administrative positions. “We have people with master’s degrees, with doctorates, coming to us looking for interim work. They really are looking for work so they can continue their search in their field or passion.”

While AltaStaff offers career counseling, professional development training and full benefits to its temporary
employees, who are technically on the agency’s payroll once they secure work, contract workers like Laura Hancock have turned to staffing agencies as a necessity more than a calculated career move.

Hancock has worked as a receptionist at the National Nurses Organizing Committee for the past four weeks. She graduated from college in 2005 with degrees in architecture and environmental science, and then went
straight to work for a small architecture firm in Indianapolis. When she moved to Chicago in December, though, Hancock said her professional options were limited.

“The architecture market is so bad now, no one’s building anything,” Hancock said. “Because of all our
expenses—my husband and I still own a house in Indianapolis—I needed something as soon as possible.” She turned to four staffing agencies for help, and it took her two months to find the current position through AltaStaff.

“I don’t know if it’s necessarily an asset, working this job,” Hancock said.” I guess it keeps me alert, but I have one more architecture test to take in a couple of weeks and eventually I want my own firm. I probably won’t get that through the temp firm.”

Wilson had planned to hire two sales-oriented staff members in 2009 before last quarter, but has decided to maintain the office’s current size while spending less money on marketing materials and outsourcing skills
trainings to other companies. For her, the agency’s main value-added to employees and employers are the benefits, which she refuses to cut this year.

“We put the revenue dollars that would have been dedicated towards creating a larger office, for example, and shifted them towards retaining associates and having a full benefits package,” Wilson said. “Our shift has focused to less to sales and less to new business clients, to really focusing on maintaining and taking care of our clients and our [candidates] because we want to retain them in those jobs.”

Benefits like medical and dental insurance, 401(k) and paid vacation time make up 20 to 30 percent of her company’s costs per job candidate, according to Wilson, and the overall cost for those benefits has increased by about 25 percent in the past year.

For employer clients like Peter Landau, president of Chicago’s Harmony Technologies Inc., AltaStaff’s robust candidate benefits roll over to the employers. Landau went to AltaStaff eight months ago to recruit help for his one-man business and currently has two temporary employees working in his office.

“It’s been a big time-saver for me, to have temporary employees,” Landau said. “Taz has taken care of a lot of the details and put forth some really good candidates.”

“Now it’s not about how many people can we put on staff…it’s, how can we work together to get more business for you, which will mutually benefit both of us,” Wilson said. “If you can create a company that takes those employees and makes them feel a part of it, you’re going to get a return in loyalty, referrals and accountability on both sides. I hope that the market shifts this way, because I think that’s where agencies
need to go.”

Eventually, Wilson wants to see her company grow to two offices in Chicago, and expand into the suburban market, by 2010. AltaStaff Vice President Dennis Beck is optimistic that, as the natural business cycle develops, the company will be able to weather the unemployment storm.

“As business eventually improves, it will be easier to add temporary staff to company rosters,” Beck said.
“Staffing is procyclic, so it moves in the same direction as the economy. The companies that work with that cycle, rather than fight it, are better prepared to create a more valuable team.”

 Original Article: http://news.medill.northwestern.edu/chicago/news.aspx?id=118117