Staffing, Search Firms Turn Cautious, Citing Skills Shortage, Economy as Issues

Bullhorn report coverComing off a strong 2013, recruiting and staffing firms are turning more cautious this year, scaling back both their plans to add staff and open new branches.

“2013 was by almost all accounts a very good year for the staffing and recruiting industry,” says a report out this week from Bullhorn, a technology provider that serves the staffing and independent recruiting sectors. Revenue and placements increased last year the company notes in its fourth annual North American Staffing and Recruiting Trends Report.

“However,” cautions Bullhorn, “There are signs of a slowdown for 2014.” As evidence it cites:

  • a seven point drop in the percentage (75 percent now) of firms expecting to increase headcount this year, and
  • a more than 50 percent drop in the percentage of firms planning to open new offices (23 percent now vs. 48 percent last year).

Like their corporate counterparts, the 1,337 recruiters taking part in Bullhorn’s survey said the number one obstacle to success this year is the lack of qualified candidates. Close behind were economic conditions and competition.

However, this year, 71 percent of respondents cited the skills shortage, down from last year when that percentage was 76. In that same vein, 50 percent of the recruiters said time to fill improved last year; only 13 percent said it worsened.

Skills shortage Bullhorn 2013 reportHow that question is answered depends, of course, on what the sectors for which a recruiter sources and places candidates. And it depends on whether the position is temp, contract ,or perm. For example, 84 percent of the respondents said there’s a skills shortage in the transportation sector, yet the average fill time, even for permanent positions, is 12 days, the fastest of all the sectors.

Bullhorn called the skills rankings “somewhat peculiar,” observing that”Technology — which in previous years had a critical shortage of qualified talent is running in the middle of the pack this year.” Besides transportation, which came out on top, more recruiters said the shills shortages in pharma/biotech, utilities, entertainment, energy/chemical and industrial all were worse than for tech.

Filling job orders can be as quick as just a few hours for temp workers in restuarnats and hospitality and in construction, or as long as 39 days for permanent healthcare positions. On average it takes eight days to fill temp positions, but as many as 68 days for recruiters working on contingency. Even then, their average fill rate was only 39 percent. At 66 percent, retained search recruiters had the highest fill rate.

When a permanent position is filled, the average fee is $16,602.

One troubling result that employers who turn to staffing and search firms for help should note: nearly half the larger firms — those with 26 to 74 employees — get 70 percent or more of their revenue from a single client. Among all firms, 22 percent of respondents said half or more of their revenue comes from only one client.

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Time to fill temp - bullhornYet, when Bullhorn asked them what would happen if that one client were lost, only 6 percent said they’d go out of business. Says the report:

While several respondents at small, lower-midsize, and large firms felt at risk of shutting down if they lost their largest client, no respondents from upper-midsize firms (26-74 employees) felt vulnerable. Upper-midsize firms are most reliant on a single client, but are the least afraid of going under if they lose that client.

On the positive side, Bullhorn found that 72 percent of respondents make at least half their revenue from repeat client business. That, notes the technology vendor, “demonstrates the value of nurturing strong customer relationships and delivering sustainable results.”

Candidate sourcing methods have evolved substantially since Bullhorn’s first survey in 2011. While job board postings are still important and show resilience even as recruiters publicly scoff at the industry, social media is growing in importance, especially for permanent placements.

Bullhorn writes in this 2013 report,

Social media was the most successful source of quality candidates for permanent staffing firms — a major evolution since our 2011 Trends Report found social media to be the least successful sourcing method.

Contract and temp firms, because of their quick response time to job orders, rank social media much less favorably. They lean strongly to referrals and job boards for candidate sourcing.

One other interesting point. Bullhorn asked respondents to write in what they believe to be the single greatest quality of a successful recruiter. By a landslide, that trait is “persistence.”

John Zappe is the editor of and a contributing editor of John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.


13 Comments on “Staffing, Search Firms Turn Cautious, Citing Skills Shortage, Economy as Issues

  1. “Bullhorn asked respondents to write in what they believe to be the single greatest quality of a successful recruiter. By a landslide, that trait is “persistence.””

    That’s terrifying.

    Good recruiting is about relationship building and doing so in a way that doesn’t make you come across like a used car salesman – something that most staffing agencies are well known for (I have a very small shortlist of agencies where I trust their team to take care of my clients on jobs that I don’t manage myself). Good recruiting is about understanding the businesses, the hiring teams, and the candidates you serve.

    Skills shortage? Not even close. Considering the answers show complaints about skill shortages while relying on job ads instead of sourcing? Well duh. Agencies need to start hiring experienced recruiters or doing more than a quickie training – all too often they’re hiring sales types instead of client relations types to train into roles, and recruiting is not about sales, it’s about serving your clients from both the candidate and employer perspectives.

  2. Agree with Amiee

    Also, if the largest reason for concern, is a lack of candidates, then doesn’t this mean that either:

    1. Need to increase the skill of their recruiters
    2. Need to realize that the skills shortage means a greater reliance on them, thus, providing an opportunity to build good, long-term relations with clients.

  3. In my experience most skills shortages are self imposed, even with a mix of passive and active recruiting. I recall one particular client, located in a pretty specific region that was somewhat isolated from the rest of the state, making commute an issue. The area did have a healthy stock of people with the particular skill set they desired, though.

    However, when sourcing the client often rejected and/or simply did not provide feedback on candidates, and many candidates who were contacted were already under consideration, or had been rejected when presented by another agency, or had worked there in the past and could not get past their strict no re-hire policy.

    So they were facing a shortage of people with a particular skill, even though they’d seen a massive amount of resumes and done more than few interviews with people who had those very skills. It was self imposed, likely because of internal disorganization and poor management.

    And often I find it’s because of a disconnect with the reality of the labor pool in certain areas. If you engage several agencies and source passively and actively on your own, and 3-6 months down the line you’ve been through numerous interviews and reviewed countless resumes, short of relocating someone you’re likely looking at the pool of viable candidates for your area.

    And then of course there are the numerous obstacles that companies put in the way of hiring people, such as dysfunctional interview processes, ridiculous requirements that are so broad they include everyone, who has ever touched upon the discipline in question, but also allow anyone involved in the selection process to exclude anyone for not having 5-10% of non critical skills for the position.

    Stuff like that, compounded by the fact that most people demand the best but refuse to pay for the best, leads to terminal job requisitions for a lot of companies and the agencies they engage. In the end, I think companies, for various reasons economic and cultural, are too used to being in the driver’s seat and having their pick of candidates. When there’s a scarcity situation, they tend to founder, because processes are based on the idea that the best of the best should be flocking to them in droves, instead of being centered around attracting the best with things like a good work/life balance, compensation that’s at or above market, benefits that don’t cost the employee’s their first born children, and actual opportunities for advancement that will materialize.

    Culturally it’s the candidates who have always tried to get the job and been congratulated when they do get one. Very few companies put much effort into trying to get the candidate, because they think they’re ones in control, when in fact the relationship is a mutual one. Factors do tend to tilt things in favor of the employer most of the time, but when the seesaw tilts the other way is when their processes and value on the market as an employer really get tested.

  4. When there is a skills shortage, it’s so important when recruiting online that your message be extremely compelling to attract top talent. Way too many recruiters don’t get that concept for some reason. If anyone reading my comment would like a free analysis to make sure that their content is where it needs to be to win the talent war, go to:

  5. @ Aimee: Good to see you here, too.
    As the saying goes “If you have time to build relationships with candidates, you don’t have enough reqs. (Particularly true of temp and contractor hiring, as described above.
    (I also know that in cases of retained search, this isn’t the case…)

    @ Richard- Articulately and clearly said again.
    I’ve pointed out in the past that if an employer has an unfilled job there are basically two things they can do:
    1) Make the job more attractive (money, benies, QoWL, telecommuting, stock, free food, SOMETHING more than the marketing hype of deluded wannabe and has-been companies) to the people you want to hire
    2) If you can’t/won’t do that- settle for who you can get at the price (etc.) you’re willing to pay.

    I’ve also said on occasion:
    “If you’re in a situation where you have a position(s) that’s unfillable at ANY price etc. then not only are you *****, but you’ve ****** yourself, AND you’re an idiot for getting into that situation. Furthermore, if a 3PR without a non-refundable retainer works for a company like that through either neglecting upfront due-diligence or ignoring it, then THE SAME IS TRUE OF THEM. (Of course, sometimes you can’t always find out what’s really going on, but at least you should TRY.


  6. @ Keith,

    That’s where the ‘sales’ aspect of recruiting really ends up biting agencies in the rear end. Separating the sales from the recruiting is, I think, a good idea. But one of the side effects is that the sales people end up playing a numbers game of getting as many positions as possible to work on and not qualifying them as well as they should, nor really suffering immediate consequences for the opportunity cost of the recruiters hammering away on a position that isn’t going anywhere.

    Other than better communication between sales and recruiting, and someone with the ability to over ride each group’s preferences if necessary, I don’t know a good solution.

  7. John,

    Using Aimee’s word, I see something quite “terrifying” in the data of this survey:

    Average Fill Rate By Recruitment Type:

    Permanent: 44%
    Contingency: 39%
    Retained: 66%

    Does this mean what I take it to mean?

    That those Permanent Employment Agencies are not filling half of their Job Orders?

    That surveyed Contingency Search Firms are also not filling even half of the JO’s they take on from a client?

    And that Retained Search Firms are accepting retainers but are only filling just slightly more than half of the recruiting assignments they take on?

    As a contingency search consultant who also does retained search, I cannot think of anything more “terrifying” than to accept a partial payment(s) toward a search fee only to not complete the assignment.

    These percentages are extraordinary, do not speak well for our industry and would suggest why some of us are being broad-brushed with a negative reaction by corporate America.

    Does this explain why corporations are nowadays layering their HR Recruitment departments with multiple in-house recruiters?

    I thought they are doing it to save recruitment fee costs; this survey leads me to think it is because their req’s are not being filled by external recruiters.


  8. @Paul,

    It’s definitely a little horrifying on first glance. But there are a number of variables playing into these numbers that don’t look to be controlled. For one example, how many companies put out a job to multiple agencies when only one hire is made? Quite a few, in my experience. If the job gets filled by an agency, but it was put out to four and there was only one hire, only 25% of those agencies had a successful fill on that position.

    Multiple agencies chasing the same position is just one such variable. Another could be the position not being filled because the client decided to not move forward with the position for budget reasons, or other reasons, despite seeing qualified candidates.

    Those are two common things in our industry that would greatly affect these numbers. At a couple of my previous companies it was not unusual to engage a retained firm and pay the retainer, on the promise of greater quality candidates which was rarely delivered on, and then still not make a hire because the position itself was nixed.

  9. Richard,

    Thanks for your input,

    I am familiar with the scenarios as you describe them and in fact I’ve been apologizing to employers for the lack of quality response from my peers ever since I’ve been in Recruitment.

    Management that allows their recruitment staff to solicit contingency searches that they later drop in favor of a more appealing job order (with no notice to the employer they have pulled out of their promise to fill their vacancy) and unethical recruiters who receive retainers and do not complete the search assignment.

    It has always been a shame there has been no compelling standard for calling oneself a ‘recruiter’.

    And no, having ‘CPC’ or ‘SPHR’ after one’s name does not confirm competency in recruitment.

    Still, Richard, I am somewhat taken aback by these Bullhorn percentages.

    The business of ‘loading up’ on contingency search job orders with the intent of actually filling a minority of them is not unknown but these Retained Search numbers are somewhat shocking.

    Thank you again.

  10. I don’t find the retained search numbers too shocking, because the quality of the candidate isn’t the only, or sadly even the main factor driving the hiring decision. So, even assuming a retained search guarantees a good pool of say 1-3 candidates who can unquestionably perform well at the job, which based on my experience with retained firms is a stretch, you still have a bevy of hiring managers and other stakeholders who are involved in the decision and generally messing up the process.
    They do this because a bad hire or no hire isn’t going to adversely affect them, but they still have control over the outcome.

    Having been on both the agency and the corporate side, I’ve enjoyed a nice perspective, and I’ve seen people completely blow up a hire process for ridiculous reasons a lot of times. I’d even say the majority of times. I’ve even seen a business owner completely shut down a hire that everyone in the organization agreed was a good move because he didn’t like the recruiter, who in that case was retained. The position went unfilled, both the candidate and the recruiter were flummoxed by what happened, and yours truly spent a month trying to salvage the situation in the hopes of a change, to no avail.

    The reality of hiring is that most companies are small to medium sized businesses with little to no expertise in management, and systems and standards that are antiquated at best. Hell, at one of my last jobs, despite continuing falling time-to-hire metrics and increasing quality-of-hire metrics, the owner was obsessed with my haircut. No lie. I prefer a buzz cut and this wasn’t “professional” in his opinion, based I guess on his reading of GQ, and this fact was brought up an order of magnitude more times than the actual metrics which I felt it was my job to improve.

    When these are the people that internal recruiters and agencies are trying to serve, you probably shouldn’t be too surprised that things often don’t work out. In fact I’m more surprised when they do work out. The fact is people persist in stupid behavior long after it’s become apparent that it’s counterproductive to their goals. That’s how people work, for whatever odd reason. Maybe there’s an evolutionary explanation. But the end result is that any system that doesn’t take into account the fact that people often do irrational and outright moronic things won’t be successful.

    So, companies will release REQs to multiple agencies, not because they are malicious, but because they know their bosses are borderline insane, and their goal isn’t to harm agencies but to cover their own butts because they are anticipating multiple major screw ups in the hiring process before they’re finished. And, much like airlines overbook planes knowing some people won’t show up, agencies will continue to take and work REQs that they might not fill because they know that’s how the game is played on the corporate side, and there’s a chance their candidate could be the one that hits at the right time for a hire to actually work. And in the rare case that they find a client who is open, honest, and responsive, and makes regular hires, they hold on to that relationship with a death grip, and their stats then show many of their placements are at one source.

    So, not too surprising at all, in the end.

  11. Richard,

    Thanks for your note.

    I think I will contact Bullhorn and see if they can shed additional light on this.

    I’ve had my share of those personality stories, also, and as I said elsewhere, I one time almost had to pull out a pistol and shoot a candidate being interviewed by my client to prevent him from making the mistake of hiring him in spite of my counsel.

    Oddly, that same search for that near-impossible to please business owner -and partly as a consequence the longest search on my record- resulted in the final recruit I submitted still being on the job fourteen years later.

    And as for this:

    “But the end result is that any system that doesn’t take into account the fact that people often do irrational and outright moronic things won’t be successful.”

    I totally agree which is why I decline doing searches where I can see in advance I would have been dealing with loose cannons.

    Thanks again, Richard.

  12. “I totally agree which is why I decline doing searches where I can see in advance I would have been dealing with loose cannons.”

    A very good policy to follow. It’s good you finally got that position filled, but I often wonder if agencies ever truly look at ROI on individual REQ or even on the client level. 20K for a placement sounds nice until you look into the weeds and notice your recruiters spent so much time on it, you paid more than that to find the person.

  13. Hey, Richard…

    1. In the case of the search that took me ‘too long’ (Ack!), it was a high-profile position for an upscale company in an affluent neighborhood. Since I lived in that neighborhood, and I am/was somewhat high-profile there as a repeat customer, it was to my advantage to complete the search.

    (In fact, once the new GM was installed and it finally was known to the staff I was the reason for the new hire, I was thanked repeatedly since the crew then had a more pleasant interface with management than they had previous to the hire. Nothing like being a home town hero where one shops!)

    Also, even though I had duties other than recruitment at the time, I was able to execute the search in a manner that did not overly compete for my time vs. other client work. And where it did, it was determined at the time this particular client had the priority since once we’d bitten off the search, it would have affected us negatively in a profound manner had we not completed it.

    Had I been working for a larger company where I was not a principal, then yes, as you say, I would probably have been pressured to let go of this one somewhere during the process.

    (The fee was approximately $46K plus all expenses paid by the client which included an expense check being tendered along with the first third of the fee at the start of the search.)

    So it was good money but it took way too long. This was due partly because we had to find someone our ‘bah-humbug’ client would work with as well as there being a shortage of suitable candidates within driving distance.

    And the unique thing about this search was that due to the nature of the client company, it was possible to drive to companies and simply eye ball the potential recruit at each company instead of calling as is usually done. This actually cut down on the amount of time I needed to spend with potential recruits since I could walk in, look the person over and decide on the spot if the person would be in the running or not.

    So, in fact, being out on the road took up more time than anything else.

    2. I spoke with Ms. Vinda Souza, Senior Marketing Manager at Bullhorn regarding the Retained Search Fill Rate as per page nine.

    As you had said, there are a variety of reasons for the poor numbers (66%) and additionally, there was a text omission that might have mitigated my perception of this percentage:

    On page 8: “For primary recruitment type” was in the text but the graph description did not include the word, ‘primary’, meaning the percentage was also affected by the number of, for example, contingency searches the same retained search company did not complete, thus dragging down the retained search numbers.

    So I guess that’s a wrap.

    See you at the races, Richard.

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