October 7, 2020 – The impact of COVID-19 on staffing and recruitment companies has been profound but optimism and opportunity remains within the industry, according to a new survey of global staffing and recruitment professionals by Bullhorn. The Boston-based company provides cloud-based customer relationship management and operations solutions for the staffing industry.
“We’re cautiously optimistic that we are observing a gradual incline toward normalcy,” said the report’s author, Bob McHugh, a senior content marketing manager. “While respondents expect permanent changes to the industry, such as the rise of remote jobs, the sector is still fundamentally about people, and the top priorities for firms—improving client and candidate engagement—demonstrate that the path to success is through relationships.”
At the beginning of the year, Bullhorn surveyed thousands of global staffing and recruitment professionals about their challenges, priorities and predictions for the year ahead. “Heading into 2020, respondents expressed some concern about the future of the economy but were hugely optimistic about the outlook for their own business,” said the report. “Challenges and priorities centered on candidates: The talent shortage was the No. 1 challenge by a landslide, and candidate acquisition was the No. 1 priority. Leaders nearly unanimously agreed that technological innovation was the only way forward for staffing success.”
“Then everything changed,” said Bullhorn. “Over the course of several months, COVID-19 directly and indirectly altered the outlook of the staffing industry and the world at large in profound and in numerous ways. Many recruitment professionals are in a dramatically different situation than they were at the beginning of the year.”
More than 800 global respondents shared their thoughts of the state of the industry today, including what has changed and what hasn’t, how leaders and practitioners feel about their businesses and the economy, and where they are prioritizing their efforts.
“Understandably, much of the conversation around the COVID-19 impact has centered on its financial ramifications for the industry and the economy as a whole,” said Bullhorn. “While the findings certainly reflect economic hardship, a sizable number of respondents expressed some optimism about the future.”
The good news, according to the report, is that 30 percent of staffing and recruiting professionals say that their businesses are doing better than or as well as they were at this time last year. The bad news is that 28 percent of respondents reported that their bottom line was down by at least 30 percent. Forty-five percent of respondents specializing in hospitality and travel belong to this group. With regards to staffing type, permanent staffing agencies were far more likely than their contract and temporary staffing counterparts to report a major decrease in business (42 percent).
In fact, according to data from Hunt Scanlon Media, there has been a significant rise in client requests for interim talent solutions that date back to the start of the pandemic crisis. Higher education and life sciences are just two sectors enjoying increased calls for temporary leadership. “The need for great talent remains,” said CEO Scott A. Scanlon. “If anything, that need is only intensifying and accelerating. But the paradigm shift we are beginning to see is to new approaches, to more sophisticated models, and to much more efficient solutions that are more responsive than what we have on offer today. All of it is client driven.”
The sectors a staffing company serves has had a telling impact on its performance since the beginning of COVID-19, said the report. “Even the highest-performing sectors haven’t seen an increase in performance—just 15 percent of the top performing group, healthcare staffing professionals, reported higher performance than this time last year—but when it comes to avoiding losses, the sector a business serves matters.”
Healthcare and IT staffing agencies were the most likely to observe stable performance and the least likely to suffer dramatic losses, the report said. Thirty-two percent of the respondents said healthcare was faring better or the same, while 19 percent said things were worse by more than 30 percent. Likewise, IT/ technical was considered to be doing the same or better by 31 percent of the respondents. Seventeen percent considered it worse.
Hospitality staffing agencies were the most likely to suffer dramatic losses, said Bullhorn, while clerical and marketing agencies were the most likely to see a moderate dip in performance.
Leading Teams Through Times of Crisis
Stress can be a powerful motivator . . . or a negative inhibitor. In a new report, Phil Harkins of Prossimo Global Partners offers suggestions for how company leaders can help their teams leverage the challenges of a crisis to emerge more successful and stronger than before. It all starts with a reality check.
The sector an agency serves didn’t significantly impact their predictions for the future of their business or the economy, suggesting that even struggling agencies believe things will improve.
Staffing companies, like many other businesses, have had to reduce the number of internal employees as a result of COVID-19, but just how commonplace are these cuts? Almost half of businesses have conducted layoffs. A total of 48 percent of respondents said their company has reduced internal employees, including furloughs. Forty-two percent did not experience a reduction. And three percent said their companies planned to cut staff in the next few months.
A Positive Outlook
“Interestingly, permanent placement agencies are the most likely to have retained all staff (49 percent, compared to 40 percent of temp and contract agencies) even though they are also the most likely to have seen a decrease in performance,” said the report.
“The majority of respondents believe that we’ve moved past the peak of COVID-19’s economic disruption, and that the economy will improve this year, and roughly one-quarter expect things to pick up in the next three months,” said Bullhorn. “Business performance during the pandemic had no impact on this outlook; respondents who have seen an improvement in revenue and those who were hit the hardest were equally likely to expect the economy to improve.”
Few respondents predicted a sustained recession or depression, according to Bullhorn. Just nine percent expected the recovery process to start in the second half of 2021 or later.
While it is clear that recruitment professionals have had to tweak how they approach their businesses, not everything has changed. “Going into 2020, staffing professionals said that managing candidate and client relationships were the top areas they needed to focus on, and they remain top priorities now,” said Bullhorn. When asked their top priority for the rest of 2020, 45 percent of respondents said “improving management of client relationships.” Thirty-six percent said “engaging candidates/ improving the candidate experience.”
So, what has changed? “Controlling spend (36 percent) and optimizing remote work (34 percent) are now top of mind for respondents, while neither goal registered as top priorities going into the year,” said Bullhorn. “One-fifth of respondents also reported that they’re reassessing their business model. Agencies are entertaining a large number of options when it comes to reimaging their business model, from the sectors they serve to the services they offer. In particular, agencies have reported a growing demand for consultancy services, as employers look to staffing agencies for guidance in navigating the current landscape.”
Customer relationships are the top priority for respondents, said Bullhorn, but to win and retain clients, agencies are forced to navigate a broad range of obstacles. Eighty-one percent of respondents said that the top customer-related challenges they have face since the onset of the COVID-19 crisis has been “reduction in job reqs.” Fifty-five percent cited increased difficulty in winning new customers. And 38 percent pointed to lack of communication from clients.
“While the financial health of staffing businesses and their clients loom large, notably, the most severe consequences of hardship—clients failing to make payments and agencies losing the resources to maintain client relationships—land on the bottom of customer-related challenges,” said Bullhorn.
“Although most agencies aren’t reporting a huge loss of clients, they are seeing job orders from existing clients shrink in volume,” said the report. “But volume isn’t the only problem; a third of respondents say the job reqs they do receive are more challenging than in the past. Making matters worse, respondents report more communication issues from clients, likely as employers deal with other COVID-related priorities.”
Private Equity Firm Takes Majority Stake in Bullhorn
Executive recruiting leaders have increasingly embraced digital transformation, reexamining how their businesses, as well client companies, should operate to drive deeper candidate relationships, improve margins, and compete effectively as the talent acquisition landscape fundamentally changes. But it has been a slow process to switch models and platforms. Part of the reason: lack of expansion capital.
To that end, Stone Point Capital, a private equity firm based in Greenwich, Conn., has taken a majority stake in Bullhorn, a provider of software to recruiting firms, to power the next phase of the company’s growth. The hope is the investment will speed up the staffing and recruiting industry’s embrace of digital transformation. Terms of the transaction were not announced. Stone Point Capital will have a representative on the company’s board. Insight Partners and Genstar will remain investors in the Bullhorn business.
Agencies, meanwhile, are responding to the new landscape by investing in and utilizing recruitment technology, both in predictable and less obvious ways. “Unsurprisingly, video interviewing and video conferencing solutions have seen the largest spike in activity, with a near-universal (91 percent) adoption uptick by staffing and recruitment companies,” said Bullhorn. “Video conferencing also falls into a larger trend: agencies are increasingly leveraging tools that facilitate communication and relationship-building with candidates, clients, and internal teams. VoIP (25 percent) and SMS (24 percent) reflect this new emphasis on flexible modes of communication.”
The other technology solutions to see a rise in adoption may reflect a renewed need to make better use of limited resources. “More than a quarter of agencies have ramped up their use of analytics since the rise of COVID-19, presumably to better understand their performance and make smart decisions about where to invest future resources,” said the report. “Respondents also reported an increase in the use of automation and AI. With a thinner margin for error than in the past, automating time-consuming manual tasks and freeing up time and resources has never been more important.”
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media