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Turning Talent Data into Revenue Growth - Four Staffing Metrics That Drive Talent Revenue
35 Plays18 days ago
Most staffing operations are swimming in data but starving for insight. They track placements, maybe margins, and call it a day, while having little idea which candidate sources produce long-term value or which workers actually drive profitable growth.
In this episode of Avionté: Digital Edge, host Chris Ryan sits down with Dan Mori, CEO of Staffing Mastery and Staffing Dashboard, to break down four analytics use cases that directly connect talent data to revenue – not just activity – translating analytics into practical actions staffing leaders can execute to drive more ROI from their talent database.
From measuring the lifetime value of talent to identifying which recruiting channels deserve more investment, to understanding which talent sources drive better results, and more, this episode helps agencies make smarter investments, improve both customer and recruiter success, and stop guessing while revenue slips through the cracks.
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Transcript
Tracking Talent Metrics
00:00:00
Speaker
Most staffing firms track placements, a few track margins, but almost nobody tracks the lifetime value of talent or knows which candidate sources actually drive profit versus just filling seats.
00:00:13
Speaker
Today on Aviante Digital Edge, Dan Mori, the CEO of Staffing Mastery and Staffing Dashboard breaks down four analytics use cases that connect talent data to revenue growth.
Connecting Talent and Revenue
00:00:24
Speaker
If you're running a staffing operation and you're not measuring these things, you're flying blind. Let's fix that.
00:00:36
Speaker
Welcome to Aviante Digital Edge, I'm Chris Ryan. Dan Morey wears a lot of hats, CEO, coach, sales expert, entrepreneur, but whatever the role, he's a consistent and forceful voice for this industry.
00:00:50
Speaker
What I appreciate about Dan is that he never lets theory get too far from practice. He'll go deep on analytics and business strategy, but he always brings it back to execution.
00:01:01
Speaker
What do you actually do on Monday morning? Dan, welcome to Digital Edge. Chris, it's great to be back. I appreciate you inviting me to chat today. And I'm really excited about this topic because it connects what we do in this industry to the money.
00:01:15
Speaker
Okay, well, I have to ask you about that. So we know that you're the architect or one of the architects, certainly of Staffing Sales Summit, and you've built your reputation around revenue growth and sales strategy and winning new business.
00:01:29
Speaker
But now you want to talk about talent analytics, talent lifetime value, source of talent ah ROI. So Dan, we need to know, have you given up on sales and revenue growth?
Delivering High-Quality Service
00:01:40
Speaker
Oh man, no, absolutely not. I still am very much sales and revenue growth driven. That's really why I do all that I do. But let's be honest, the number one thing that any agency can do, Chris, to improve sales is have a great product, deliver a high quality service. And really what I think we're going talk about today is how does an agency know where their highest quality value is that they can offer to their clients? So I think if you get today right, sales becomes a whole lot easier.
00:02:09
Speaker
ah So are you telling me that talent economics is actually measuring the strength of your product? You can actually drive sales growth from it? 100%. Absolutely. If you think about it, in the most fundamental building blocks, the talent that we place is the value that we provide to our clients.
00:02:25
Speaker
The better the value, the more money that our clients are going to pay us for it and the more money we make. So the more that we know the economics of talent, the more value we can deliver to our clients and the more we can grow our revenue. So they're 100% connected.
00:02:38
Speaker
Okay, so let's get into this. Let's look at four use cases that actually connect talent data to revenue growth.
Optimizing Talent Monetization
00:02:45
Speaker
Let's start with something that sounds obvious, but almost nobody measures, and that's the lifetime value of talent.
00:02:51
Speaker
And at the outset, I want to say we talk about treating candidates like human beings, and we should. But there's also a business reality. You need systems that optimize the monetization of your candidate pool.
00:03:04
Speaker
So as a staffing owner or an expert in the people business, how do you reconcile these two things? First, I love that you called out that we need to treat our candidates like human beings. This is very much a human driven industry and the agencies that recognize that their candidates are people and they really build those relationships within a human centric way far outpace the others. So we should always treat our candidates like humans and nothing that we say after this is meant to objectify or take away from that sentiment.
00:03:32
Speaker
But you are right, Chris. There is a business reality that we have to focus on. We're in business to make money and with no money, there's no mission. So how I reconcile those two things is I look at the talent that's in my database or in my talent pipeline that I'm bringing into my database on a regular basis as the value.
00:03:51
Speaker
Obviously, that's the raw materials that I have to work with and identify who are the best candidates that I can place at my clients. But that's really where the value comes from. So I have to realize what is the most efficient way to find the most valuable talent in my database and in my talent pipeline so I can get it in front of my client faster than my competitors.
Talent Management Strategies
00:04:11
Speaker
And if I have those systems in place and I know what the highest value talent is, going to be better at that. And that again will help me grow my revenue and margins. So is this any different than a football team that's figuring out its pipeline of talent or a baseball team that has AA and single-A minor league teams and they're constantly bringing the talent in?
00:04:31
Speaker
I don't think so. In fact, I'm a huge fan of Moneyball. I love that movie. I love the storyline. I like the concepts behind it. So I don't think it's that much different. If you really understand your talent, and more importantly, if you understand what type of your talent generates the highest return,
00:04:48
Speaker
I think that you can scale your agency faster because you're making more money or a higher return per placement than other agencies. And that's going to give you the fuel to grow your agency, just like growing a successful sports team. So I think it's very similar, k Chris.
00:05:02
Speaker
Okay, well, let's walk through this. I'm running a staffing firm and I take the trouble of actually calculating the lifetime value by candidate or by candidate segment.
00:05:13
Speaker
So I have this information. What decisions does that unlock? What can I do with those numbers that I couldn't do before? So there's a lot you can actually do if you understand the lifetime value of the candidate. Now, just for the audience sake, I want to break this in. The lifetime value as we're talking about today is really how much gross margin does a candidate generate for you over the candidate's lifetime. This is whether it's one placement, one assignment, or if you're a redeployment agency where you might send them out on multiple contracts.
00:05:41
Speaker
It's if you have a candidate at your disposal and they're going to work for you and generate margin that creates the lifetime value of that candidate. So If you understand two things, and we're going to go deep into a couple of these, but we'll start with the first one is the segment. How did you get that candidate into your database?
00:05:56
Speaker
If I were to ask you the simple question, Chris, if you have pipeline source A and pipeline source B, and you know
Leveraging Lifetime Value Analysis
00:06:03
Speaker
that pipeline source A generates a higher value candidate that's going to produce more lifetime value, wouldn't you want to know that?
00:06:11
Speaker
That does make sense. But now I'm curious if you can do this analysis for W2 staffing, maybe you can do it for certain kinds of project-based work or a statement of work.
00:06:21
Speaker
But what happens when you're doing a temp to hire or a different business model? Does that capture lifetime value by design? It does. And I think those are just two different business models. If you are the agency that really focuses on temp to hire where your candidates are getting converted at your clients,
00:06:38
Speaker
I think you need to understand what your lifetime value is and that it is inherently capped. This will help you understand that if your lifetime value is lower because of your business model, you're going to have to be a little bit tighter in your sourcing spend and the amount of money you're willing to spend to get that candidate into your talent and pool.
00:06:55
Speaker
You're going to have to have tight control over how much money you're willing to spend to vet that candidate and get them through the recruiting process and placed in there, including all the money you're spending on your recruiting team to nurture those relationships. So knowing what that lifetime value is, it gives you a better guardrails to spend wisely so you can actually maximize the ah ROI. And then on the flip side, if you are an agency where you actually focus on bringing talent in and you place them on contract after contract and you have great redeployment rates,
00:07:24
Speaker
your lifetime value is going to be higher. What's really cool is you don't always have to reinvest in sourcing costs because they're already there, but this will let you know that maybe you've got a little bit more budget to nurture those relationships or invest in tools that will help you cultivate that database and build a highly engaged database that you can continue to redeploy. So regardless of your business model, if you understand the lifetime value of talent, it's going to help you understand your expense guardrails. So you're putting yourself in a position to optimize your ROI.
00:07:53
Speaker
So you might actually choose to spend less with certain job boards if you discover they're producing a lot of candidates, but those candidates don't generate a lot of ah ROI or the customer satisfaction strategy with that talent is less. Is that right?
00:08:07
Speaker
Oh, 100%. And I'm glad you called that out because obviously, you know, we've had a lot of conversations. You know my feeling about job boards in this industry. I think they're a necessary evil. But if you measure the lifetime value of candidate, down to the job board source or all your various sourcing sources or where you get your talent from, and you also can tie it to customer satisfaction metrics, you're going to know which candidate source provides the best value to your client.
00:08:34
Speaker
And any smart business owner, if you know which candidate source provides the most value to your client, you're going to invest more in that source and less in the others. So it will actually help you optimize your candidate sourcing strategy as well, which trust me, your recruiters will appreciate So does that help with pricing as well? I mean, can you go to an employer and say, you know what? We have provably better talent than anyone else.
00:08:57
Speaker
Here's some data to show that, but we're going to charge you a little bit more for that quality of service. So I'm going to go a little bit contrarian here because I think it gives an agency options because in our industry, there are a lot of different business models. There's a lot of different go-to-market strategies. Some try to be the low cost provider.
00:09:14
Speaker
Some try to be the high quality premium provider. Regardless of which way you want to price your services, knowing this information is going to help you deliver on that more. And here's what I mean by that. If you want to be the lowest price staffing agency out there, and that's your business model or that's your strategy, well, if you know how much value each candidate generates, now you can get more precise in what you're willing to invest and only be investing resources in the best producing candidate sources or job boards or whatever, and limit how much money you're spending, which is going to preserve as much margin as possible.
00:09:47
Speaker
Because again, if you want to be the lowest price competitor out there, you got to be really good at controlling your expenses and make sure you preserve margin to run your business. On the flip side, if you're going to say, Hey, I want to be a premium and I want to charge more.
00:10:00
Speaker
Now what you do is you use the quality metrics, that quality data, the customer satisfaction data. And then you can have that conversation with your customer and say, the reason that I charge this amount is because we deliver this premium value.
00:10:13
Speaker
And then you can use those metrics to justify the price. So regardless of which way you want to go, these metrics will support pricing models. So what I hear you saying is that knowing lifetime value of your talent doesn't necessarily change your business model.
00:10:26
Speaker
It doesn't change the way you sell, but it does give you a lot more confidence to support the way you sell. So you can do what you do best, only you have better information and you have a competitive edge over other agencies.
00:10:41
Speaker
Yeah. So it will change slightly the way that you sell and not in a material business model way, but in a polished way, a more confident way, because you're going to know what you're selling and why you're selling.
00:10:53
Speaker
And you're going to know a tighter band of pricing range that you can actually negotiate within to make sure that the economics of the agencies are going to be supported. So I think it's actually going to give you better confidence to sell your service.
00:11:04
Speaker
versus just reacting to the market and what market pricing is. Because a lot of times salespeople get crushed because the buyer will say, hey, your competitor down the street is offering it for 20 something percent or 30 something percent or something ludicrous.
00:11:18
Speaker
And the salesperson doesn't really know where to go. They don't know the underpinned economics of why their price is what it is. And they don't have the performance data to back it up. So knowing that information does give the salesperson the confidence to justify their prices and hold firm.
Talent Sourcing Challenges
00:11:33
Speaker
So they don't cave under that sort of market pressure or buyer pressure. Got it. Okay, Dan, so we've talked about lifetime value of talent. Can we make this a little bit more concrete?
00:11:43
Speaker
If I'm a staffing agency and I'm trying to get at this, What kinds of reports are going to help me to understand talent, lifetime value, and actually put it to work to drive growth or to define my business? Yeah, I think that's an important question for our listeners out here.
00:12:01
Speaker
so let me just tell you what I do, because this is way it's going be as most real world as possible. So when I want to understand the lifetime value of the talent in my database, there's a couple different reports I'm going review to get this number. The first one, I'm always going to be pulling a GM by candidate.
00:12:15
Speaker
I'm going see when you look at the gross margin by the actual candidate name and which candidates produce what gross margin, that's going to be great because you can do that by any period of time for as long as you've had the data in your system. So that's going to be a really good one.
00:12:28
Speaker
I also like to add in the candidate assignment history because now I can actually start to see the lifetime value subdivided per assignment. And once I understand those two reports, I can get a really good example of redeployment rates like we've talked about.
00:12:44
Speaker
And I can also get a good example of how much ROI did I get per assignment. And what's really cool that you and I've talked about other times is that you can start to see the ROI per assignment go up on the redeployed assignments. Once you actually cover the cost of recruiting through your first assignments, and that's really an important one. So that's physically how I go and pull the reports to get the lifetime value and value per assignment.
00:13:07
Speaker
Got it. So let's talk a little bit more about sources of talent. And I've heard you say on more than one occasion that many employers are asking, why do I need you? i can go to the same job boards that staffing agency can go to.
00:13:21
Speaker
And yet you've also said that most agencies fill 70% of their assignments from job boards. And you've even said job boards are the fast food of talent sourcing.
00:13:31
Speaker
They're convenient, but not necessarily good for you. So make the case a little further. And you know what? If they're not going to job boards, where are we going to find the people? So there's a lot to unpack here. And you're right. I do believe job boards, they are still a necessary part of the candidate sourcing model. They are.
00:13:50
Speaker
They're a necessary evil, but I want to be very, very clear. Job boards are comprised of the most active job seekers on the market, meaning that when you as an agency bring them into your database, it's not only your database they're going into. They're going to be the most highly competed for candidate out there because they're going into everybody's database, your competition of staffing agencies, your clients' databases. And if you're only relying on job boards, then your client is right.
00:14:16
Speaker
What do they need you for? So you have to be aware of that. And then the downstream effect of that is when you place these candidates, they're still likely getting calls and job opportunities from all these other databases that they ended up in or all these other applications that they applied to.
00:14:29
Speaker
Oh, and by the way, when you put them in your database, the resume is still sitting on the job board. So they're still going to be getting more offers and things like that. And that's why these candidates are the least likely to complete their assignment.
00:14:40
Speaker
They're the most likely to turn over quicker. The data supports this. This is not just Dan riffing here. The data will show you that candidates sourced from job boards had the higher turnover rates, the lower assignment duration rates.
00:14:52
Speaker
And I think that's actually fueling some of the quality issues that we have, especially when you look at the data that came out, I think it was last year within the last 12 to 18 months that showed that number 70% of assignments came from job boards sourced within 30 days. So you have to be aware of that and make sure that you're not being over concentrated into your job boards, fueling your database. So you have to look at other sources.
00:15:15
Speaker
My favorite source overall, for many reasons is referrals. I've seen this time and time again. If you ever go and have an amazing experience anywhere and you ask the person, hey, how'd you get this job?
00:15:26
Speaker
Odds are somebody referred them into that job. They fill positions quicker. They generate more lifetime value as clients. They're more likely to convert. Their assignments are longer. So I really think that the employee referral is an under tapped gold mine as far as candidate
Building Referral Programs
00:15:42
Speaker
sourcing.
00:15:42
Speaker
Yeah, interesting. Sometimes I think if you're a staffing agency and you're talking to somebody from a job board, you could be plan B or plan C or plan D on that job seeker's goal.
00:15:53
Speaker
It sounds a little bit like dating, ironically, where a referral, you're much more likely to be plan A. One of the things that's interesting about referrals, though, is everybody says, oh, I love referrals. Referrals are good, like, duh.
00:16:07
Speaker
But then when you talk to agencies, you often see that they don't go out of their way to build an organization that is good at generating referrals. to Talk to us a little bit about that.
00:16:18
Speaker
Yeah, I see it the same way. And I'm just going to be point blank and blunt. The agencies that don't go out of their way to build out strong employee referral talent pipelines are avoiding it because it's harder. It's not as convenient as... as posting your job on a job board. When you think about the fact that there's tools now, I know Aviante has these, that you can take the job description right out of the software, push it right to a bunch of job boards. Like that is so easy. That's an amazing automation. It's so streamlined and people flow in it's like, oh, that's great, right?
00:16:50
Speaker
easy and we're a society based on convenience. Employee referrals, it's not quite that easy. So first and foremost, you got to be referable, right? So you actually have to put in a culture in your organization that treats the candidates like human beings, like you and I talked about at the top of the show here, that makes your organization want to be referable to where there's some emotional equity where that's like, Hey, you know what? Yeah, I went through them. I got a job.
00:17:13
Speaker
I'm willing to refer this agency to my friends and family. So you got to be referable and that's a whole culture thing and that's its own effort. And then after that, you have to have a well-designed program.
00:17:24
Speaker
How are you actually going to create this program that monetizes employee referrals? How are you going to decide what your economics are that you can afford to so you're not overspending referral fees? but you're not underspending to where it's no longer attractive to fund that funnel.
00:17:37
Speaker
And that's where knowing the economics will help you decide how much can you actually do. So building the program is another thing. And then probably the hardest part that I've seen agencies that get that far is the automation of it.
00:17:48
Speaker
You have to have some tool to supercharge this entire process, but you don't want to automate too early. If you don't have a good program in place, automation will fail you. So you have to build it in that kind of three-part order, become referable, build a solid program, and then automate it.
00:18:03
Speaker
And because that takes work, people avoid it. And that's a shame because when you start to avoid that, you're literally cutting off the most valuable candidate source that you can possibly get. So let's talk a little bit more about measurement in this process, because presumably these are three important steps, but without metrics, you don't really know how well you're doing. So if I'm measuring the source of talent ROI correctly, what exactly should I be tracking?
00:18:29
Speaker
And I'll throw you a little curveball here. A lot of staffing agencies that I see when they're trying to measure the ah ROI of source of talent, they often have way too many categories. A staffing agency owner will say, I want to have five different kinds of referrals and they may split out every single job board. So literally you can have a hodgepodge of different categories. How many different categories should you be tracking?
00:18:54
Speaker
And what would you typically recommend for staffing agency? So as far as how I set mine up, what I like to do is I look at broad categories and then I will subcategorize if there's enough substance beneath it. So employee referrals is one category that I want to measure ROI against.
00:19:10
Speaker
Job boards is one category that I want to measure ah ROI against. However, there are multiple job boards out there. I know most people rely on Indeed and then maybe do a lesser set ZipRecruiter. And then if you get into your niche verticals, you might use things like Dice or other platforms. So I do actually like to subcategorize those ones out within the job boards. And I think the job boards do a nice job of presenting you the data to be able to do this paired with your ATS data.
00:19:36
Speaker
So that's another one. One that I really like that I don't even want to go into today because it's even more work than the employee referrals but actually website traffic.
E-commerce in Talent Sourcing
00:19:45
Speaker
There's a lot of things that we can learn from the e-commerce industry to basically be able to drive ads to get people to come directly to our website and circumvent job boards or circumvent these other areas and then be able to use website development to bring them into an application funnel.
00:20:00
Speaker
So that's another category that I definitely like to look at. However, those are my categories, but the ah ROI piece, what I look at is this. I would love to be able to have a great metric that puts all the OPEX into recruiting and sourcing.
00:20:13
Speaker
I think that gets too convoluted and it's too complex. So what I say is how much are you directly spending in this entire channel? So how much did you directly spend on all of your employee referrals, right? All of your referral bonuses. If you have an automation tool out there, what are you paying for that?
00:20:29
Speaker
And then just divide that into the total gross margin generated from that source. Same thing with job boards. If you're looking at Indeed and you spent $3 a candidate and you brought in 100,000 candidates and it costs you $300,000, how much gross margin did you generate from candidates placed specifically from Indeed divided across that 300,000?
00:20:50
Speaker
So that's how I like to measure it. And i like to put it all into one nice dashboard that will just show me where am I getting the best ROI? on those candidates. And then I also like to merit against the lifetime value piece.
00:21:02
Speaker
So you can see that. So any thoughts about the process of measuring redeployment? Because one of the aspects of redeployment, which is so interesting, is that sometimes recruiters will hoard their own talent where other companies essentially will mine their existing talent database extremely effectively.
00:21:20
Speaker
Some might even have talent marketplaces or use mobile tools, something near and dear to what we do at Aviante. Any thoughts around the analytics based on redeployment? Yeah, first and foremost, I will say that if you're an agency out there and you've not even really looked at your redeployment rates or how to optimize redeployment, you definitely should.
00:21:39
Speaker
This is an area where most agencies are leaving money and talent on the table. So I would definitely look at that. If you're primarily in a business model where you are doing temp to hire conversions and your talent is placed one time and it gets converted in.
00:21:55
Speaker
then maybe redeployment is gonna be incredibly low, but you should still track it because you might get into a situation where there's a client that only wants contract labor and you happen to have that labor in your database.
00:22:07
Speaker
So it might open up sort of a different business channel, so you should be tracking it. And what I love about redeployment rate, because it actually tells you something It tells you how engaged is your database. And it also tells you how likely are your recruiters to go to your database first versus just posting on a job board, bringing in new talent and placing the freshest talent. So I think tracking redeployment rates, it's powerful. It's just something that should be measured.
Role and Skill Profitability
00:22:31
Speaker
Got it. So let's talk a little bit now about another case study that you talked about with us earlier, which is role and skill profitability. Which roles and skills actually make money and why is this hard for most staffing agencies?
00:22:46
Speaker
So the number one reason that it's hard for most staffing agencies to quantify the value down to a gross margin level to a role or a skill is just lack of data. Maybe they don't have good data in their system. Maybe it's not set up right, or it could be a data fluency issue. That's the number one reason.
00:23:04
Speaker
The good news is that's completely outside of a system not supporting it, but outside of that, it's within their control, right? Data fluency can be learned. These things can get set up. So if you get this into place, you're going to be able to do something that I absolutely love, love, love.
00:23:18
Speaker
The second reason, and I'm gonna tell you the love thing in a second, but the second reason that agencies don't do this is because they sort of look at it backwards. They look at order fulfillment almost like a restaurant. And I'm not trying to say if salespeople are recruiters or order takers, but just bear with me on this one.
00:23:32
Speaker
We get an order and then they start looking through their database for the people that fill the job criteria and they try to come up with the best match possible. That's the way that most agencies have done this for the existence of the industry.
00:23:43
Speaker
However, if you think about the restaurant, restaurants don't actually do that. A restaurant will tell you all of the ingredients that they have available packaged nicely in meals on a menu and you pick from that. And then you send that order back and then they fulfill exactly what you were asking for.
00:23:56
Speaker
So I like that analogy because we as staffing agencies, if we know which ingredients, the talent, right, or the skills that produce the best value are, We can offer that to our clients very specifically and say, hey, we do really well with civil engineers or we do really well with CAD designers or whatever it might be. If you know that, then you can actually go out and sell that, get more of those orders, bring more of those orders back to your recruiters. And now you're not trying to fill any order with the needle in the haystack that might be in your database. You're going to be filling orders that are going to match the talent in your database.
00:24:32
Speaker
It almost sounds like if you understand gross margin by role or skill, you actually have a better opportunity to understand which customers you should be selling to. You would develop a better client profile. Is that your thought?
00:24:45
Speaker
That is 100% my thought. And that is something I've been teaching on a lot this past year is how do you actually create that ideal client profile? And then what is your unique value proposition? Because those two things have to be uniquely aligned in order to really convey that value and be able to communicate it.
00:25:02
Speaker
So if you truly look at who is my ideal client profile, go look at the clients right now today that you have the best success with. Success meaning the highest relative satisfaction, the highest level of gross margin per fill, all of those things and say, okay, what's unique about them?
00:25:18
Speaker
You're going to be able to drill that down into what roles am I filling that's producing this success? What skills do they have in those roles that produce the value there? If you look at that, that will start to shape your unique value proposition and know the value of your database.
00:25:34
Speaker
And then you can point your salespeople, go get clients that need people like this, that need these roles or need people with these skills. So if you can understand the gross margin per role, or even better, the gross margin by skill set,
00:25:48
Speaker
That's going better shape your entire UVP messaging, your sales process, and it's going to set your recruiters up for an easier fill. Okay, and you said the word UVP, and for listeners, define it for us.
00:25:59
Speaker
I appreciate you calling me out on of my Army-style acronym. So UVP, Unique Value Proposition. This is the value that you offer to your clients, or more specifically, this is the value that your clients pay you for.
00:26:10
Speaker
that is unique to you. And that's why I also talk about building out a strong database that is not going to be easily reachable or replicated anywhere else, because that means it's unique to you and it's going more valuable to your clients. So UVP is the value that you offer to your clients.
00:26:26
Speaker
So starting from the top, and let's make this really concrete. If I'm an agency owner and I understand which filled roles are most profitable, what do I do differently? And i think what you've said is you use that information to define your most profitable clients and targets, to better target your sales and revenue efforts, and to more sharply create a unique value proposition or UVP for your agency. Is that what you're saying?
00:26:54
Speaker
Yeah, it's worth repeating in my own words, even though you said it so beautifully, is that if you truly understand the most valuable candidates in your database based on the roles that they fill or the skills that they have, you will be able to better point your salespeople to go get more clients that need those roles and those skill sets that are going to be more likely to pay you for them, creating better economics.
00:27:16
Speaker
And then what also happens is it gives direction to your recruiting team to say, hey, Go recruit more people that are in these roles or possess these skills. And it creates this flywheel effect to where now we're actually addressing the market based on our strength, based on the value that we provide to the market, not just reacting to the demands of the market and trying to figure it out on the back end through sourcing through job boards.
00:27:38
Speaker
So it gives us direction and purpose. And trust me, if you keep doing this, it will strengthen the flywheel.
Enhancing Performance with AI
00:27:44
Speaker
Your database gets more concentrated, your value metrics go up, your sales will go up, and your revenue and margins will grow.
00:27:50
Speaker
So let's talk a little bit more about what you call automated performance feedback loops. This is something that you've been experimenting with for a while, and you ran a system called progressive staffing that collected 30-, 60-, and 90-day performance data and then tied it back to candidate selection criteria, and then you used that data to improve future placements.
00:28:14
Speaker
So tell us a little bit more about this. Yeah, I love that. So we had a client very early on in my staffing journey that we would send amazing candidates to. And the client would be like, they're not great candidates. And we'd be like, what are you talking about? They hit all the criteria. They do all this. And we got in a little bit of a mental battle, of this argument with a client trying to tell them why they were wrong. the The candidates we were sending were better for them than the candidates that they wanted. which is ludicrous when I hear those words coming out of my mouth that I was arguing with the client about what they wanted.
00:28:43
Speaker
That being said, we decided to put it to a test. We're going to test an array of candidates and then we're going to place them and we're going to track how well they do at 30, 60, 90 days and which ones you actually hire on because if they're performing better at 30, 60, 90 and they're getting hired on, spoiler alert, that's what the client actually wants.
00:28:58
Speaker
So we did this and we went in with the assumption, going to jump into a warehouse example here to make it real. It was a picker packer role. And we went in with the assumption that somebody that would score a perfect score in the quickest amount of time on this picker packer assessment test would be the best candidate.
00:29:14
Speaker
And that's what we were sending before. And the test, if I remember, I think like the best scores would be like a hundred percent in six minutes. If you could do that, amazing. So we would send this. And we tracked this for 30, 60, 90. We actually ran this program for six months as a beta just to collect all the feedback. And what we actually learned is that the people that scored 100% in six minutes were not the best candidate. They actually got bored.
00:29:39
Speaker
They got frustrated. Because they were so good at their job, they sort of looked down on the other people being why aren't you as good as me at this job attitude? What we found is the people that actually scored a 97 in seven to 11 minute range, somewhere in there,
00:29:53
Speaker
They tended to be the best candidates at 30, 60, 90 days and at conversion. And once we did the post placement audit to find out why, it's because the people that didn't score perfect on the assessment had this innate sense that they had room for improvement. So they were more open to constructive feedback.
00:30:09
Speaker
In that time range, we realized that they were actually taking a little bit more time to be deliberate and intentional with data specific or a detail oriented position. So they had more care to it. They weren't just blowing through it, relying purely on talent.
00:30:21
Speaker
And they ended up being the best candidates. And as we dialed that in, our placements got better and better and better. Our headcount grew with that client and we scaled. Interesting. So there's a lot that an industrial psychologist could unpack here, but in the Picker-Packer test, it sounds like somebody who could score 100% might not have been as high on conscientiousness in a Big Five survey, for example.
00:30:43
Speaker
What it says to me is that maybe the initial test was partly flawed, but the only way you would know is if you went through 30-, 60-, 90-day evaluation process to revalidate your job criteria.
00:30:55
Speaker
That's exactly it. You got to basically test your assumptions on the back end, verify the results, and then keep doing what's working really well and stop doing what's not. Yeah. So the system that you developed, you also told me you scrapped it because it was kind of a pain. I mean, it was a little too manual. You couldn't really scale it. But in the age of and automation, could it be brought back? I mean, what would it look like today if you were to do that?
00:31:18
Speaker
You're right. We did because it was very manually intensive. It just did not scale across all of our clients. It slowed us down. So we did have to stop. Even though the results were good, it just was slow and we wanted to grow fast.
Client Feedback and Retention
00:31:28
Speaker
In the look of AI and automation, I think this could actually be brought back in and a major way. It's been on our roadmap for a little while. it doesn't hit the top three priorities, but we keep discussing it saying, hey, the tools are out there now with the different automations.
00:31:41
Speaker
But I do know of a company in the Pacific Northwest that's actually doing this. They've actually built this out now. I guess they're packaged it as performance management to say, hey, you're going to give us this feedback. Here's how you're going to do it.
00:31:52
Speaker
And then every time you give us this feedback, it sharpens our candidate profile that we send to you. And the client loved it. They thought that, hey, this is a unique value to you. We've never heard this from other agencies. And they're actually doing it. And they are using their Naviante customer. So they're using the tools that they have at their disposal to be able to do this, to track placement data, 30, 60, 90 and conversions based on the input criteria of the job. And their placements are growing. So it is possible to do this today.
00:32:21
Speaker
Yeah. So a feedback loop, just like everything else, is potentially a tool to grow revenue. It almost sounds like when you build analytics and insight into the product you're delivering, it becomes an important part of your sales toolkit and the way you approach growing revenue.
00:32:38
Speaker
Absolutely. And I don't know who, if it was Drucker or who coined this term back in the day, you probably know this, this is more of your world, but it's voice of the customer. That's really what you're doing. The number one reason that businesses fail is because people build something that customers don't want.
00:32:52
Speaker
And if we keep... doing the thing that I was doing initially, arguing with clients about what they should want, business will continue to struggle or eventually go out of business. But if you keep asking the customer what they want from an agency and they keep getting their feedback in a way that is not invasive, it's not going slow down, anything like that, it's not disrupted of the process, but it's additive. If you do that, then you're going to be able to continually refine the value that you give to your clients. and you will retain your clients more. I have to push back on you a little bit there. We want to say the customer is always right and never argue with the customer.
00:33:24
Speaker
But some percentage of staffing agencies have customers who want high quality talent at no cost or at low cost, or they have expectations that the cost of their workforce should look much the way it did 10 years ago. So when you think about the ah ROI of talent, which is something that we have talked about, there are some employers who are asking for a lot of volume.
00:33:48
Speaker
And as an agency, you might want to serve them, but there's very little profitability in the placements. How do you discuss that with a customer? and What do you say? You can't tell them they're wrong, but what do you tell them?
00:34:01
Speaker
I love that question. So what I tell them when I'm faced with a situation where a client is telling me they have high quality expectations, low pricing expectations, and they want me to act fast too. They want the talent they want. and they probably are going to say, hey, be competitive in your pricing.
00:34:15
Speaker
I'm going to let them know that those things don't really coexist. I'm going to let them know that we are excellent at what we do. And I'm going to communicate very clearly on what I'm great at. And if I'm great at providing highly skilled, high quality talent to my clients,
00:34:31
Speaker
I'm going to let them know that and say, hey, this is what it is, but this is the cost to get this talent. If you're looking toward budget talent or discounted talent, there are agencies out there that are more affordable, but they're going to provide you liquidation level talent because of how they're set up.
00:34:47
Speaker
And I just try to create a clear distinction between what a quality agency is and charges and what a low kind of discount budget agency charges and what they're going to get for it. And yeah have a secret sauce behind it if you're curious.
00:35:00
Speaker
Well, you know, I'm curious. One of the first things I do when I hire salespeople or when I take on clients and I'm training them on how to understand the economics of this is I teach them the correlation between gross margin or gross profit and markup.
00:35:13
Speaker
And I compare it against talent availability. So I use this example. If you have two different warehouses, both the same, they both need the same exact type of worker. They pay the same exact price, the whole nine, 40 hours a week. All that's the same.
00:35:24
Speaker
However, one warehouse says, we want 20 people from you. And the other warehouses, we want 11. And the warehouse that wants 20, nearly twice the volume, they say, because we're volume, we're going to ask for you to discount your prices. And we want a 35% markup.
00:35:39
Speaker
Most agencies be like, you know what? That's volume. i'm going to make it up on volume. i'm going to do that. But the other warehouse, warehouse B that only needs 11 people, they're not a volume shop. So they say, I'm willing to pay 50%. So these two examples right here, correct.
00:35:51
Speaker
Chris, which warehouse do you think produces more gross margin per week in those two? One with 20 employees out working or one with 11? I guess the point being that 11 high quality people at the right margin is going to earn you a lot more money because in the long run, you're probably going to keep that customer for a lot longer and you're going to keep that talent for a lot longer.
00:36:13
Speaker
And you're exactly right. The warehouse with 11 people will generate more gross margin because it's a higher markup. Even though 50 to 35 sounds stark, it will actually produce significantly more, almost 2x gross margin.
00:36:25
Speaker
Now, I will ask a recruiter, will you have an easier time filling a 20-person order or an 11-person order? They're going to say, well, 11, right? so now think about this. I have a warehouse that's willing to pay me more for my service because they value me as a partner.
00:36:38
Speaker
They're giving me less headcount order that's going to be easier to fill. I got a better chance of going 11 out of 11 on this. If I only go 11 out of 11 on the other one on a 20 person order, I'm going to have a pretty upset customer. So now I have a poor satisfaction and low margin.
00:36:52
Speaker
That's poor ROI. That's bad business. So because I understand the economics of it going into it, when a customer asks me for high quality and high volume and low pricing, I understand the math and I understand that it doesn't work. I know what the definition of good for my agency is and I'm comfortable walking away.
Leadership and Continuous Improvement
00:37:07
Speaker
Okay, Dan, so we're coming to the end of our segment. We've covered a lot of ground, talent, lifetime value, source of talent, ah ROI, role profitability, performance feedback loops.
00:37:18
Speaker
If someone's listening and they say, where do I start? Make this concrete for me. What do you say? So I'm going to pretend as if someone's saying, where do I start? I'm going to pretend they don't have any of this. So do not try to boil the ocean.
00:37:31
Speaker
You will get overwhelmed. So I would start by creating a segmentation of where my candidates are coming from. Just try to get a source code in there so you can see these candidates come from a job board. These candidates come from employee referrals. Just start there and then pull a gross margin report and see by source how much gross margin are you actually generating per source. If you start there, you're going have a pretty good understanding of maybe not lifetime value unless you have good historic data, but you'll have an understanding of value of talent per source.
00:38:01
Speaker
And that's going to inform you in a lot of ways. I think that's probably the best place to start is understanding how much value you're getting out of each one of your candidate sources. Got it. Final question for you. What separates the agencies that actually implement and go through with these neat programs versus those who say, oh, sounds great, but nothing ever changes?
00:38:22
Speaker
Boy, that's a great question. In my experience and observation, the agencies that are separated between the ones that actually implement this stuff and they try to get better, the kind of Kaizen continuous improvement versus the ones that are okay with mediocrity or stagnation is the conviction and clarity of the leader of the organization.
00:38:39
Speaker
If the leader understands that for them to stay relevant, they have to keep evolving and they have to keep developing their people and keep equipping their people with better tools to support the human workflows. And they actually stay on that and they continually are curious about their business and they keep wanting to reinvent themselves, but not just the Baskin Robbins, what's the new flavor of the month, but they say, hey, this is what going to do to be valuable for our agency to provide the value to our clients.
00:39:05
Speaker
I think if they connect those dots and they stay committed to that process and they see it through, those are the ones that continually grow. and I think that becomes part of their DNA as an agency and they just keep moving forward. Excellent.
00:39:16
Speaker
Dan Morey, CEO of Staffing Mastery, thanks for joining us on the Digital Edge. For our listeners, if you're not measuring these things, you're leaving money on the table. The data exists, the tools exist.
00:39:29
Speaker
The question is whether you're willing to look at what the numbers are telling you. And as Dan has made clear today, this isn't just about efficiency, it's about growth. The agencies that know their talent economics, can price smarter, sell with confidence, and target the businesses that actually make the money.
00:39:48
Speaker
Thank you to all of our listeners. You can subscribe to our podcast on Spotify, Apple, as well as several other programs. And if you'd like to learn more about Aviante, please visit us at aviante.com.
00:40:00
Speaker
This is Chris Ryan. Until next time.