Problems Faced by Temporary Staffing Agencies

Temporary staffing agencies must meet all EEOC guidelines.

Temporary staffing agencies provide solutions to their client's personnel problems by providing a short-term work force that consists of skilled workers available at a moment's notice. There are many factors that affect a staffing company's success, including employee work ethics, the staffing company's reputation, ethical issues, competition and the economy.

No-Shows

One of the most challenging aspects of running a temporary staffing agency is employees failing to arrive on the job site. Commonly referred to as "no-shows," this is the fastest way to lose a top client. Temporary staffing agencies can attract employees with a weak work ethic. No-shows are most common on short-term assignments that provide no opportunity for a permanent or long-term position. The key to minimizing no-shows it to build a strong team of employees that can be counted on, regardless of the length of the assignment.

Reputation

A temporary staffing company is only as good as the temporary employees it sends to its clients. Many agencies focus on volume rather than high quality employees. Unfortunately, bad news spreads rapidly and a few simple hiring mistakes can cause a major road block for future business growth. If a difficult employee creates a situation on a job site, prompt and professional attention to the situation is the best way to protect the staffing agency's reputation.

Ethics

Some clients will have unethical requests, such as not hiring minority or disabled employees. It is a staffing company's legal and ethical responsibility to meet all Equal Employment Opportunity Commission requirements. These unfortunate and common requests are not only unethical, but also illegal. Other staffing companies may be willing to take the chance by hiding unethical practices. It is always best to leave these types of clients to your competition, regardless of the potential profits.

Competition

Areas that have a high concentration of potential clients also tend to have a large number of temporary staffing agencies. This type of competition can be fierce, and a common strategy many staffing agencies use is significant underbidding. While there may be the occasional client that feels negotiating a lower-than-standard fee is worthwhile due to volume, this practice should be avoided as it lowers the profit margins throughout the entire market over time. Setting minimum fees and standing by that price may cost a staffing company a few low paying clients. However, the clients that do pay a reasonable fee are the companies the staffing agency should strive to serve.

Economy

Many industries are greatly affected by fluctuation in the economy. An example of this is the construction industry, which is directly tied to the housing industry. When the economy is suffering, the demand for new homes declines. This has a trickle-down effect that will leave a temporary staffing agency that only works in construction with no assignments for their employees. Diversifying the staffing agency's specialties is the best way to protect the bottom line. With industry diversity, a staffing company can shift employees from a slow moving industry to one that is actively needing a temporary workforce. For example, construction workers without available assignments due to lack of new home construction often can be placed in warehouse or manufacturing positions.

References

• The U.S. Equal Employment Opportunity Commission: Application of the ADA to Contingent Workers Placed by Temporary Agencies and Other Staffing Firms