Better Hiring Today

The American Staffing Association’s index measuring changes in temporary employment rose to a monthly reading of 75 in August from 71 in July (out of a baseline value of 100, which was pegged in June 2006). The index has risen for six consecutive weeks since the July 4 holiday, the first time it has risen for six weeks in a row since the fall of 2007.

It’s long been held that when staffing companies do well, permanent hiring follows 3-6 months later. I’m currently seeing a significant pickup in staffing needs at large and mid cap companies, both of whom have slashed payrolls to the bone and held off on just about every expenditure since late 2008. This ASA index reading validates the anecdotal evidence that’s showing up everywhere right now.

The question for you is, “Am I prepared for the rebound?” We’ll discuss that one next week.

Editor’s note: A special thanks to my readers as I took a hiatus from posting in August. We’re back in the saddle for what promises to be a much better 2nd half! Stay tuned!

Here in Chicago, where unemployment in June topped 11%, the market for full-time professional positions is very, very tight. Large employers here are very hesitant to increase permanent headcount, but are finding that their lean workforces aren’t keeping up with demand.

The solution? Hiring contractors.

Last week, I met with a large consumer products company to discuss their workforce plan for the next 12 months. In that meeting, their stated workforce strategy was to keep full-time hiring on hold, and to pursue hiring contractors for all roles, with the aim to convert them to full time employees within the next 6 months. That’s a significant change from their previous strategy, and, since most other large firms with whom I speak seem to be following a similar path, the implications for the workforce are several.

First, contract-based work “moves faster.” Instead of having to wait for cumbersome internal HR processes to produce a hireable employee, contract firms blitz the company with people who can literally begin work tomorrow. When the demand shift to contract-based workers, hiring cycles accelerate, which bodes well for reducing unemployment rolls.

Second, most contract assignments carry with them zero benefits like health insurance, vacation time, or a 401(k) plan. While getting back to work is good, the shift to a contract-based workforce doesn’t much help our national problems of too-little retirement savings and high levels of uninsured workers.

Finally, any increase in demand for contractors will drive employment in the recruitment industry. Contractors aren’t hired by HR representatives, they’re hired by professional recruiters who work for staffing companies. Along with this recently observed uptick in contractor demand, I’m also seeing requests for full-time recruiters climbing steadily at the large staffing shops.

Staffing industry pros know that an increase in demand for contractors means that full-time employment will pick up in the next 4-6 months. When that happens, we’ll see the unemployment numbers (a lagging indicator) begin to decline by mid-2010.

Is your company hiring contractors in lieu of full time employees? Sound off in the comments section.

While the unemployment rate in the Information Technology sector is faring better than in other job categories, it’s still not rosy.  A new survey out yesterday explains why.
Almost half (46%) of all information technology organizations plan to cut headcount this year, according to a survey of 200 IT executives released on Monday by Computer Economics, [...]

Leading online job board Careerbuilder.com mailed out their Q2 Employment Outlook this week, and although it’s about a month late (it’s mid-May, after all) there are some good nuggests of data that I’d like to share with you.
At at a high level, Careerbuilder’s survey reveals that US employers are “holding off on staff expansions in [...]