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Getting creative to combat talent shortage

Brought to you by Staffing Industry Analysts Inc.

June 2006

From valets to colleges, it’s a battle for workers
You’d think a customer service representative job would be an easy one to fill for a staffing agency: After all, such positions usually don’t require an advanced degree and at most require a couple years’ experience. But ask Joanie Ruge if she can find enough candidates to meet customers’ demands, and the answer is no.

“There is a shortage in customer service positions, in manufacturing, in many different sectors at all levels of positions,” the Adecco North America senior VP said. “The talent pool is really starting to shrink.”

Whether it’s experienced Unix systems administrators, dot-net developers or warehouse workers, staffing agencies across the country are reporting that they are in a battle to find people. Shortages of candidates to fill positions are being felt in many regions, making the hiring landscape look a lot like the frantic days of the late 1990s.

“The dot-com days were a little more drastic and it will be interesting to see if we get to that point,” Ruge, who is Mideast region manager, said. “It certainly seems like we’re headed there.”

Staffing managers are growing concerned, despite the fact that there’s plenty of business for their agencies. As employers who used to have their pick of a growing labor force, they’re now having to be creative to entice workers to consider a temporary or contract job. And they are having to pay more in what’s becoming a buyer’s market.

A combination of factors is creating a worker shortage: A U.S. unemployment rate that has remained below 5% for more than a year, a growing economy, an aging population, a slowing birth rate, more technically demanding jobs and huge turnover in the workforce all are adding up to a coming labor shortage. Some say by as early as 2010 there won’t be enough workers available to staff the nation’s jobs, which may be a simplistic calculation based on limited Bureau of Labor Statistics data. But even without a close look at labor force projections, it’s probably safe to say that not every job will have a qualified person to fill it.

“We’re seeing the same things all companies are seeing,” said Brendan Courtney, VP of Spherion Professional Services in Baltimore. “The economy is expanding and the workforce is shrinking.”

The pendulum has swung back just as demand for contingent workers is strong. Temporary worker employment has been rising steadily the past two years and is now 2.6 million, compared to 2.3 million in 2003. “All our customers want to utilize contingent workers more often due to their inherent flexibility,” Courtney said.

Technological advancements
But jobs in his branches are going unfilled because what customers want isn’t matching up with what workers have. “Technology is more of an impact – we need to find more specific skills sets,” Courtney said. “Before you needed [to know] only a couple of software programs if you were an accountant. Now you need many specific accounting skills.”

Pay rates are up more than 10%, Courtney said, and branches are seeing candidates playing one agency against another. “In the time between someone accepts a position and goes to work, he may get another offer. You have to be sure you can backfill.”

Marjie Peterson’s company, Macrostaff Projects in Bellevue WA, provides information technology specialists and contractors in the $50 to $60 an hour pay range. Business is up 30% since the beginning of the year, but certain job candidates, such as dot-net developers and business analysts, are scarce. She says it isn’t like the boom times of 1999 when technology was flourishing, “but it doesn’t look like it will end anytime quickly.”

A hurricane has created even more shortages of people for staffing companies in Louisiana. Julie Dicharry, a manager for Spherion Staffing in Baton Rouge, said many former workers are not returning to New Orleans after Hurricane Katrina, having relocated elsewhere. Even data entry clerks and administrative assistants are hard to find, she said, and they are competing with fast-food restaurants, which are paying more.

“Pay is a big issue,” she said. “Our pay scale went from $6.50 to $8, to $8 to $12 at entry level. In New Orleans you could go to work at Burger King or Popeye’s Chicken for $10 an hour.”

Coping
Dicharry added that staffing agencies also are competing with the Federal Emergency Management Agency for workers. “People with minimal skills are making an extraordinary amount of money to do FEMA work,” she said. “To attract them for traditional jobs you can’t compete.”

Branches in Baton Rouge and New Orleans are paying bonuses to their employees who refer friends. For example, for a direct-hire referral, the employee gets a percentage of the fee, usually about $100. They also are educating clients on how to convert temporary employees to permanent status: “Otherwise she could work for me today and Adecco tomorrow,” Dicharry said.

At the Adecco branches she supervises, Joanie Ruge said account reps are talking with customers about how they might attract applicants. “They’re looking at flexibility, thinking outside the box,” she said. For example, customers are being asked if they would consider a working mother for 30 hours a week instead of 40. And recruiters are going to colleges and placement offices to find candidates.

In Las Vegas, where there is a growing workforce but not one that is highly skilled, one branch manager said she is always on the lookout for potential workers – and is not above stealing them away from hospitality jobs. For instance, Elaine Karl of the Manpower Inc. franchise said she’ll ask parking valets if they’re happy with their current position.

Courtney, at Spherion Professional, said some employees are getting retention bonuses if they complete an assignment. And the company offers skills training, resume writing and coaching for anyone who wants to sign up, even before they’re placed. Spherion also has created five recruiting offices for the entire company, filled with 600 recruiters who help branches find workers.

Peterson, of Macrostaff, also uses an outside recruiter, in this case one overseas in India. “She takes the job requisition from us and posts it and does searches,” Peterson said. “It takes one step out of what we do.”

She added that job boards remain a tool her recruiters use, but “it’s a matter of speed. Typically everyone else is there too and often a candidate is approached several times.”

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