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Top Industrial Staffing Challenges You Need To Read


Post-pandemic, each year brought some unprecedented challenges for industrial staffing firms. If 2022 went by steering through the sharpest decline in labor and fastest rebound, the struggle this year has been to maintain a good talent cycle. In addition, looming economic uncertainty has acted as a significant impediment to this highly competitive industry and has only further intensified the competition in the last few years.

Below, we delve into the pressing challenges faced by industrial staffing firms and provide innovative strategies to address them. Let's dive in!

Scouting Quality Talent 
Shrinking Talent Pools Reveal Persistent Mismatch in Supply and Demand 

It is 2023, but the competition for finding quality talent remains fierce for industrial staffing agencies. And the reasons are multiple for that – widening skill gap, then workers switching to non-traditional roles, retiring early, being picky about their assignments, some are joining start-ups, some are prioritizing family, and some want to take a break to study. Employers are still scrambling to fill positions, given the widespread shortage of talented candidates. A McKinsey study points out a fundamental mismatch between companies’ demand for talent and the number of workers willing to supply it. This phenomenon has also led to elevated labor costs as many organizations resort to panic hiring because the limited talent pools of staffing agencies cannot solve the underlying imbalance. 

Low Client Attraction & Retention Rate 
Focusing on Client Retention Amid Talent Shortage and Shifting Workforce Trends 

The long-term success of any industrial staffing agency relies on attracting new clients and retaining old ones. With talent shortage, intense competition, and a paradigm shift in the overall professional outlook of new-age workers, satisfying clients has become highly challenging for staffing firms. It has become imperative for staffing firms to measure their client retention rate timely. Although several factors come into play with that, the more clients a staffing company loses, the higher the chances it should re-evaluate its business strategy.   

Inflation and Recession  
Mounting Challenges Amid Economic Uncertainty

Earlier this year, Forbes highlighted that recession could put industrial staffing agencies into a bind. The threat of an economic downturn has loomed large over the minds of business leaders throughout the first quarter of 2023. Companies have tightened their budgets, which has led to reduced hiring and a slowdown in demand for staffing services. Additionally, job seekers have become more cautious about making career moves during uncertain economic times, which has impacted the supply of candidates for staffing agencies. The severity and duration of a recession can create challenges for industrial staffing agencies as they navigate through fluctuations in demand, talent availability, and client needs.

Competitive Job Market 
Navigating Budget Constraints and Maintaining Competitive Wage Scales 

In a competitive job market, candidates are often drawn to positions that offer higher pay and better benefits. If compensation is not on par with market rates or lacks attractive incentives, they may be tempted to seek better opportunities elsewhere, leading to high turnover rates. Also, industrial staffing firms often operate within tight budgetary constraints, especially if their clients have limited resources for staffing expenses. Hence, striking the right balance between competitive compensation for candidates and reasonable costs for clients is essential but can be a delicate juggling act for industrial staffing agencies. 

Widening Skill Gap 
Potential Skill Shortage Loom as Market and Technological Evolution Alter Talent Needs

Skill-based hiring is on the rise, but the widening skill gap is one of the significant challenges faced by many factories and industries worldwide. And several factors contribute to it, such as baby boomers opting for early retirement, talented millennials and Gen-Zs refraining from choosing manufacturing as a career option, companies needing more pathways to train employees internally, and external pathways being scarce.  

Since industrial staffing firms are responsible for finding and matching qualified candidates, the impact of this widening skill gap has affected them significantly. With the shortage of skilled workers, they struggle to find qualified candidates to fill job openings. This has led to longer recruitment cycles, high costs, and increased efforts in sourcing and screening candidates. 

Safety and Compliance  
Mitigating Business Risk Is No Walk in the Park 

Safety and compliance present significant challenges for industrial staffing firms due to the unique nature of their business and the industries they serve. Indeed, clients often have their safety protocols and compliance standards in place. Yet many industrial settings involve high-risk work environments, such as construction sites, manufacturing plants, and oil refineries. Placing workers in these environments requires careful consideration of their skills, qualifications, and safety training to prevent accidents and injuries. Failure to adhere to safety regulations and compliance standards can expose industrial staffing firms to legal liabilities and increased insurance costs. 

Now that we have discussed some of the challenges impacting the industrial staffing firms, lets dive into possible solutions to these challenges – 

Pay attention to Talent Cycle 
Unlock The Power of Positive Worker Experience 

In one of our blogs, we have shared that contractors who report strong talent experience throughout the staffing lifecycle are six times more likely to consider future opportunities with a particular industrial staffing agency. And that's true! One of the surefire ways to attract top talent is by providing a positive worker experience. Job seekers are more likely to choose staffing firms that prioritize worker satisfaction and well-being and are more likely to retain them as their career partners. Satisfied workers contribute to a strong brand image and deliver exceptional results, strengthening the staffing firm's relationships with its clients. For a positive talent cycle, you can implement strategies like: 

  • Maintain open and transparent communication with the workers 
  • Strive to match workers with positions that align with their skills, qualifications, and career goals 
  • Set clear expectations for job roles, responsibilities, and performance standards
  • Offer competitive pay rates and benefits to attract and retain top talent  
Build a winning team 
Go Above & Beyond to Serve the Client Market 
If you want to up your game and beat the competition, hire top talent. Look for individuals with relevant industry experience, strong skills, and a passion for the staffing business. Hiring the right people from the beginning sets the foundation for a winning team. Foster a strong company culture and empower your team to take ownership of the expertise they bring to the table. Communication plays a big role in attracting new clients and retaining old ones, so make sure that you establish clear and open channels of communication within the team. Encourage regular team meetings, one-on-one discussions, and feedback sessions. Invest in the growth of your team by training them well. And lastly, stay abreast of the new emerging trends in the market.   
Don’t Confine Yourself to One Mold 
Diversify Client Base to Thrive Amid Economic Challenges 

Fighting an economic downturn can be highly demanding for an organization. But if industrial staffing firms want to win this over, they should focus on diversifying their client base across various industries and sectors. This spreads the risk and ensures the firm is not overly dependent on a single market. Also, companies usually hesitate to commit to long-term hiring during a recession. In such a scenario, offering flexible staffing solutions, such as temporary or contract placements, may appeal more to businesses seeking to manage uncertainty. Another way staffing firms can fight recession is by strengthening their relationship with their clients. Focusing on excellent customer service, understanding clients' changing needs, and providing value-added services can lead to client loyalty and repeat business. 

Protect Your Business at All Costs 
Stay up-to-date with safety and compliance regulations  

Adhering to compliance regulations can be a tedious process. The reason is they are subjected to change, and industrial staffing firms must continually monitor and adapt to these changes. If you don’t want to get overwhelmed, hire experts or consultants to assist with compliance efforts. You can also outsource the compliance work instead of having it done by an in-house specialist. Another way could be staying constantly connected to organizations like American Staffing Association, which has dedicated resources for industry-related law and advocacy.  

Integrate Technology with the Staffing Process 
Embrace Automation for Greater Efficiency and Impactful Results 
Industrial staffing firms should adopt capabilities that offer effective hiring solutions and deliver impactful results. The best way to do that is by automating the system. Between candidates, clients, and credentialing teams, there are around 50-75 tasks that staffing firms shuffle between for every single assignment, which is usually spread across seven to ten systems. Technology integration can automate and streamline various stages of the hiring process, such as job posting, resume screening, applicant tracking, and candidate management. This will lead to faster and more efficient candidate sourcing and selection, saving time and resources. 
P.S. If you want to know more about how industrial staffing firms are adopting technology for quality hiring, read our blog on Industrial Staffing Trends. 
Prioritize Closing the Potential Skill Gap 
Upgrade Recruitment Strategies for Today's Talent Needs 

As clients keep altering their talent needs, you should be prepared and upgrade your recruitment strategies accordingly as a staffing firm. Our last blog discussed that hiring right is one of the best ways to close the skill gap. What we meant by right was to hire for potential instead of experience. Look for qualities like learning agility, adaptability, and resilience. Place slightly less emphasis on academic degrees, certifications, and experience. Another way is to conduct thorough skills assessments and test potential candidates to determine their skill levels accurately. You can also include behavioral evaluation in your staffing strategy. This technique is an excellent indicator of how a candidate would perform in a particular situation and offers a comprehensive view of a person. 

The running theme behind every challenge is constant evolution – be it economic, industrial, or workforce. The landscape is changing, the nature of business is changing, and so naturally, it becomes imperative for industrial staffing firms to adapt and tackle these challenges within the spectrum. Staffing firms that leverage the right solutions differentiate themselves from their competitors, help their clients do better business, and place more candidates into jobs they love. 

We are a solution-oriented staffing firm who can help you stand out – be it in your career or business. The best part is, we are always a click away. Contact us! 

PSS cannot and does not provide legal advice. It’s important to consult with qualified counsel before adopting any new policies. It’s also your responsibility to determine whether legal review of work product is necessary prior to implementation.