Staffing, across all professions and skills, has always been a competitive field. But growing rates of VMS (vendor management systems) solutions at large- and mid-size businesses have given a new kind of dread to the phrase “cut-throat competition.”

I have had several staffing clients in the technology and finance and accounting sectors come to me in need of VMS advice. They want to know how to avoid slashing rates to the brink of profitability just to stay in the competition for new business. What I tell them is this: The VMS trend is here to stay so it’s time to decide. Do you want to remain a staffing vendor or are you ready to evolve into a valued solutions partner?

Many staffing businesses are finding success by simplifying their approach, eliminating consultative work and fulfilling talent requirements within the confines of VMS pipelines and procurement-style staffing. And why shouldn’t they? The contingent staffing market is strong, and it’s growing. Human Resource Executive Online recently profiled the rapid growth of the contingent workforce and cited a 2007 Staffing Industry Analysts study, which predicts that in just two years 10% of the U.S. workforce will be contingent talent.

The staffing industry has also rapidly evolved along with the growing contingent workforce. This past May, workforce expert Doug Berg shared with BusinessWeek how traditional staffing segments (clerical and technical) as well as new segments (such as medical and legal) are fueling contingent workforce expansion. As more highly skilled professionals join the ranks of contingent workers, many staffing firms have broadened their services to support more complex recruitment and workforce management needs. Some staffing firms are now both talent and service providers, offering services that can include project-based solutions, managed services, outsourcing, offshoring, training, human resource consulting and more.

The reality of VMS has created a crossroads for staffing firms who have evolved into combined service and talent providers. The rates and the standardized procurement-style fulfillment approach that VMS customers demand do not reflect the value-added service offerings these businesses provide. However, in the marketplace and to their own teams (recruiters and sales staff), they are often still seen as staffing providers who belong in the procurement supply chain rather than as solution providers that partner with senior-level decision makers and board-level executives.

For businesses that are determined to maintain their higher-end services and solutions, redefining their marketplace image from the inside out is critical to escaping the margin squeeze. If clients, partners and internal teams still see your business as a contingent talent provider, they will keep your business tethered to traditional staffing and today’s low-margin VMS opportunities. But if your business is able to communicate and demonstrate value to business leaders and decision makers, it will hurdle over and beyond the procurement role to remain a trusted consultant and value-added provider.

“Great,” some businesses might say. “We will update the Web site, create a new brochure and bam: we have a new image.” Unfortunately and at the same time fortunately, it’s not so easy. It’s unfortunate that retooling a business’ image is hard because it does require time and investment at a time when competition is stiff and businesses are already fighting tough margin pressure. However, it’s fortunate that not any business can just change some words and implement a new design to quickly become a high-value solution provider.

Building a new marketplace image requires significant business and marketing changes. Below I have created a general outline of the major steps that must be taken when redefining a staffing organization as a business solutions provider. In between these major milestones are numerous internal and external changes that must occur in order to successfully shed the staffing image and redefine a company.

Five Critical Stages of Staffing Image Transformation

1. The Business Assessment - Ensuring solutions are what you are providing and can provide.
Staffing is now different from solutions and the VMS model is making that a reality. You cannot become a solutions provider by creating a new name for staffing services. It’s important to begin an image change by taking an honest look at the services you provide today, what your business is capable of, what your business is best at and how you want to change. It is at this stage of top-to-bottom assessment of existing business operations and future-state goals that allows businesses to truly decide whether they belong in the staffing or solutions arena.

2. The Message Conversion - Retooling business messaging from the inside out.
To be seen as a solutions provider you must talk like one, which requires a comprehensive assessment and update of a business’ entire messaging platform—from internal messages (mission statements) to external messages (how you explain your strategy, services, and VALUE).

3. The Talent Evolution - Changing the way you sell and maybe who sells.
You don’t sell solutions to the same people you sell staffing to and you don’t take the same sales approach. Solutions sales start at higher entry points in organizations and require a different foundation of knowledge. For many businesses, becoming a solutions business requires the addition of new sales talent, and for all businesses it requires a serious approach to training, which is the subsequent stage discussed below.

4. The Compensation Upgrade – Manage the business and your sales team the way you want to be perceived.
You cannot run a solutions business but reward your sales team on headcount as a staffing firm would. A company must retool compensation plans to ensure they clearly line up with both business and vision goals. If sales teams aren’t rewarded for selling solutions, they will not sell solutions.

5. The Training Push – Training the whole gang.
It’s amazing how many businesses offer solutions, but their internal teams still talk like they work for staffing companies. Transitioning into solutions services requires strong training for staff members at all levels and areas of a business.

6. The Ongoing Campaign – Getting the solutions message out through various marketing and communications mediums.
Redefining an image requires a long, ongoing campaign leveraging both traditional marketing (advertising, Internet, sales literature, etc.) and proactive communications (speaking engagements, hosting events, publishing studies, writing articles and more).

I look forward to discussing and debating these stages of image transformation and the challenges of moving up the service provider value chain with you here on the ClearEdge Blog.

Leslie Vickrey
President & Founder
ClearEdge Marketing

This entry was posted on Wednesday, August 1st, 2007 at 4:15 pm and is filed under Business & Marketing Strategy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.