Temps, They're Not What They Used To Be

Cover Story

January 31— February 6, 2001

…Temporary staffing firms can even provide what Shane Jones, president and founder of Ace Personnel in Overland Park, calls single-source staffing. "Employer's," he explained, "can place a single phone call to us and we'll deliver everybody they need. We can even provide the management. We've got three or four client companies that at all times have our mangers on site doing supervision."

According to Jones, he started his temporary staffing firm in 1989 after witnessing incredible growth in the industry from his position with a national industry from his position with a national staffing firm.

He was running a janitorial business on the side at the time and decided he could find success owning a temp business as well, through the use of a tool that some of the large firms, surprisingly, weren't yet taking advantage of - computers.

"I financed the business with some credit cards and took out a loan on my 1984 Chevy," Jones recalled. "We grew fairly rapidly, but our growth was limited in the early years until we could secure some bank financing. It was probably about 1993 that we secured a line of credit with a bank in Olathe…and after that we just grew really fast. But the last two years we have been trying to build infrastructure and take advantage of this hot economy."

According to Jones, Ace Personnel over the last decade has augmented its infrastructure to include four locations in the Kansas City area in addition to the computerized database it began with "right out of the chute." Through that database the company maintains records on the hundreds of temporary employees it places in true temporary positions, such as seasonal jobs, and temp-to-hire positions. Over the past several years, with the area's unemployment rate staying under 3 percent, the benchmark of a full-employment market, the use of temporary positions as an avenue to full-time work has become increasingly prevalent.

"Today we might employ 400 to 500 people on a given day," Jones said. "But we also have 100 to 500 percent turnover over the course of a year, which is why we are processing about 2,500 W-2s right now.

According to the American Staffing Association based in Alexandria, VA., the number of temporary workers employed by U.S. staffing companies has grown an average of 2.9 million per day, or around 2 percent of the entire workforce. About 7,000 U.S. temporary staffing firms have been in business a year or more, according to the ASA, and those firms place workers in jobs ranging from ditch diggers to CEOs. Adecco, with offices in Overland Park and headquarters in Switzerland, is the world's largest temporary and permanent staffing firm with more than $11 billion in annual revenues. In the U.S., the politically incorrect name Manpower Inc. leads the way with more than $9 billion in annual revenues, followed by Kelly Services with more than $4 billion. The fastest growth in the $64 billion U.S. temporary staffing industry is occurring in the placement of professional and technical employees.

Demand Leveling

Ace Personnel's niche is filling entry-level light-industrial and clerical positions in departments where client companies have traditionally experienced high turnover. Jones said. That niche and the burgeoning regional and national economies allowed his firm to grow dramatically during the '90's, during which Ace twice was honored by Inc. Magazine as one of the nation's 500 fastest growing companies (in 1994 and 1995), Jones said. But after that wild ride, he said, he has seen demand leveling off.

"My industry experienced wild growth in the '80's and '90's as more companies realized they could outsource this function at a lesser cost," Jones said. "It gave companies the chance to try out an employee without going through the hassle of dealing with the government as it relates to bringing somebody onto the payroll, lining them up with benefits and then, if it doesn't work out, processing all the paperwork to take them off of their payroll."

Temporary staffing firms, Jones explained, pay the employee's salary, taxes and benefits, saving the client company the costs of performing those human resources functions. The staffing firms also bear the costs of advertising and otherwise recruiting the temps, interviewing them and, in many cases, training them, Jones added. And they also spare client companies the cost of rising unemployment taxes.

"Sometimes we have clients who have a seasonal need where they might use 100 individuals for six months and then they lay them all off," Jones explained. "There's a savings (in using temps) because their unemployment isn't charged. And our unemployment isn't charged because we take those 100 people and put them in another facility.

But while staffing firms are working to become increasingly valuable to clients - Ace Personnel, for instance, has developed a program to minimize turnover and to reduce workers comp claims through improved safety training - the temporary staffing explosion ended with the 20th century, Jones said.

"My industry grew very rapidly throughout the '80's and '90's because every day a new company was outsourcing this function for the very first time," he said. "Now, over 95 percent of companies use staffing sources at one time or another, and most companies have been outsourcing this for 10 or 20 years. So we don't have the newcomers coming into the marketplace that we had before. Now it's more of a maintenance mode."

As the temporary staffing industry has matured, the term "temp" - like its early predecessor, "Kelly Girl" - has become outdated, some in the field say.

"I hate the word 'temps'," Jones said. "We like to say that our competitors have temporary employees; we have 'flexible associates'."…

…Among the groups that have stepped in to fill temporary and temp-to-hire positions, local staffing firms report, is the growing local Hispanic population.

"Today, everybody that we hire to our inside office staff is bilingual, English-Spanish," Jones of Ace Personnel said, "because a significant portion of our work force doesn't speak English, they're first-generation Hispanic immigrants. It was a logistics nightmare when we only had one person in the office who could speak Spanish. So now everybody that we hire is bilingual. I'm not quite there, but I'm listening to tapes in my car, so I'm getting closer."…