As we turned into a new year and decade in 2020, we have heard continued concerns reflecting economic uncertainty- in fact, in our own recent GRID (Global Recruiting Insights and Data) survey of staffing professionals, 64 percent listed economic uncertainty as a top challenge for this year, while 45 percent expect a recession, a number that rose from the previous year. If a slowdown, or even a recession, does occur, one predictable effect on the recruiting industry is that employers will cut back on temporary hiring, and many staffing companies, in turn, will focus on cutting spending and staff.
However tempting it may be to cut costs across the board and clamp down on investment, now is the right time to invest, particularly in technology, to position your firm for success. The question staffing companies must ask themselves is: what kind of company do we want to be coming out of a recession?
The answer, of course, is a competitive company that is leading their industry category. Interestingly, 71 percent of our GRID survey respondents expect revenue to increase in 2020, regardless of reservations about the economy. Lean times bring with them an opportunity to move ahead by investing when the competition stands still or even moves backward, and come out as the leaders when the dust clears.
Economic downturns can reveal vulnerabilities in companies, but can also give them a chance to seize this leadership. Researchers, publishing in the Harvard Business Review, found that just after the recession in 2010, only nine percent of the 4,700 companies they examined exited that downturn with high growth. These companies seized the chance to make large-scale changes in their operations, rather than simply slashing costs; they distinguished themselves by investing during the downturn, and chief among these investments was technology.
Technological advancement does not slow down with the economy, and this continuing innovation enabled companies then, as it does now, to invest in digital transformation. Such investment for staffing firms improves processes including sourcing and tracking talent, automating communications, and advanced data analysis, to name just a few. The result for that nine percent who chose to invest was automated processes, and increased operational efficiency and cost savings, making them more agile and innovative. This led to accelerated growth far ahead of companies who did not invest.
Are staffing firms investing in technology now? Some are. Going back to our GRID research, more than half of the respondents agreed on the need to embrace digital transformation. That said, only 26 percent named digital transformation as one of their top priorities for 2020, and an alarming 41 percent reported little or no adoption of their firm’s current staffing technology. Even in a sustained good economy, the opportunity to become a leader by investing in technology exists.
Regardless of the macroeconomic conditions as 2020 continues, the underlying message is that there is an opportunity to lead by navigating technological change through investment and adoption; and for staffing firms who want to lead the industry, that opportunity to stand out increases if a downturn does arrive.