Nissen Staffing: As economy improves, strategic staffing can give employers a better handle on labor

For Immediate Release, January 24, 2005
Contact: Shelly Flaten-Moore, 262-853-0196

Employers who want to more fully capitalize on the improving economy should consider engaging in strategic staffing – a process that could give them a competitive edge and lead to a stronger bottom line.

Economic forecasters predict continued growth this year, building upon the resurgence reported in 2004. Wisconsin companies involved in manufacturing and other industries reported healthy job growth over the last several months.

The economic recovery is good news, but it puts a strain on hiring at a time when other factors have emerged to tighten the labor market, says Scott Nissen, president of Nissen Staffing Continuum in Waukesha. In southeastern Wisconsin, demographic changes will lead to fewer available workers, and 9-11 related visa restrictions are stemming the influx of skilled workers from other countries.

Analysts see pent-up demand and favorable economic conditions that will lead to more hiring. One nationwide survey showed that nearly a quarter of US employers plan to hire in the first part of the new year. Hiring increases also are projected by the state Department of Revenue and the U.S. Department of Labor.

While the growth in the Gross Domestic Product in 2005 is expected to be lower than that of 2004, growth of three to four percent is still expected, aligned with a reduction in unemployment.

Overall, employers may find it harder to fill staff rosters this year – especially if they are looking for top talent, Nissen said.

A better economy equals better opportunities for workers. So not only will it be harder to attract top talent, it will also be harder to keep top talent as recruiting firms work harder to lure such workers for their client companies.

Workforce planning can address both the immediate hiring situation and the long-term outlook, Nissen said. And such planning not only can reduce staffing challenges, it can also improve the bottom line, he said.

“Average workforce costs constitute up to 35 percent of a company’s operational budget,” he said. “With contingent workforce planning, five to 10 percent of those fixed labor costs can become variable costs, reducing overall outlay.”

Savings can be realized by reducing permanent staff levels and via reduced hiring, administrative and termination costs.

To realize the savings, companies must become proactive in workforce planning, understanding their industries’ work cycles, and then act on those cycles by raising or reducing staff levels according to the plan. Reducing permanent staff levels to those necessary to maintain basic operations can be done via attrition, layoffs or strategic redeployment methods.

“If you have a better handle on business cycles, you can more effectively respond to economic changes, industry shifts and internal workforce changes,” Nissen said.

Staffing companies such as Nissen Staffing Continuum are helping their clients through the process, performing needs analyses and working to gain a full understanding of client company operational models, cultures and standards.

“We seek to gain a thorough understanding of our clients’ businesses,” Nissen said. “From there we can help them develop a workforce strategy – one that will serve them when labor demands are high and when the need for labor curtails.”

The staffing plan should not only cover when staff levels should rise or fall but, also, what skills will be needed.

Companies that engage in workforce planning not only will realize cost savings from the transfer of fixed costs to variables, they should also see an improvement in workforce quality because the planning alleviates hasty hiring and layoffs.

And with the tightening labor market, hasty hiring could become even more costly as the demand for top talent increases, Nissen said.

The use of contingent workers can help a company retain its top talent by alleviating pressures related to increased business and by allowing companies to use their key people in the most useful and rewarding work areas, with contingent workers helping out on more routine, task-oriented duties, he added. Redeploying key employees to crucial functions and projects can boost employee dedication and, thus, employee retention.

Similarly, workforce planning can alleviate loss of productivity caused by the trauma of hasty layoffs. If the plan is well developed and understood throughout the company, changes in workforce levels will be seen as part of the business process rather than as actions against employees. Through the ups and downs of business cycles, core staff will retain a sense of job security.

Workforce planning isn’t just about the workforce, Nissen says. It’s really about the entire company, and thus should be included in a company’s overall business plan.

“Considering that labor can be the No. 1 or No. 2 cost for a business, a staffing strategy should be a key part of any business plan,” Nissen says. “The right staffing levels with the right people can be crucial to the success of a business plan.”

If your business plan calls for growth and you want to better capitalize on the improving economy, a workforce strategy may be an important step to realize that growth.