The State of Staffing 2023: Recruitment Trends, Challenges and Solutions

The Trends and Business Initiatives Staffing and Recruiting Firms Need to Know for 2023

To be successful in the current job climate, recruiters must develop a deep understanding of today’s job seekers’ mindset. Matching candidates with the right job openings isn’t just about matching hard skills; recruiters must consider soft skills and what candidates want from their next employer.

Unemployment stayed relatively low and steady throughout 2022 and it continues. According to Statista, the unadjusted unemployment rate in the United States stood at 3.6 per cent in March 2023.

In January, CNBC reported that hiring would slow in 2023, but jobseekers still hold the power. It’s a tight market, but there are plenty of roles for recruiters to fill.

Trends dominating the staffing industry this year include:

After an exponential growth year in 2021, staffing industry growth stabilized in 2022, returning to pre-2021 levels. For 2023, staffing leaders expect their growth rates to be like 2022, with more than half (56%) predicting double-digit growth.

There is some uncertainty about the economy and if there will be a recession. When asked how the economy will impact their business this year, leaders in recruitment were evenly divided between positive, negative, and unsure.

This also varied by sector. For example, recruiters in the IT and healthcare fields reported positive expectations for 2023, while those recruiting for the construction and industrial sectors were more pessimistic.

Overall, there is a general positivity that talent will continue to be a driving need, and leaders of recruiting agencies are optimistic that good recruiting can win out all the while there is a candidate shortage.

This optimism is reflected in growth projections, with most respondents across all verticals expecting to see moderate to fast growth over 2023.

So, how can recruiting agencies ensure that predicted growth trajectories are achieved, or that slow growth or no growth projections can be outperformed?

Operationally, recruiters must continue to focus on strategies that will boost growth. With economic uncertainty a key theme, staying agile is imperative. Now more than ever, agencies must be adaptable and able to pivot quickly.

It’s no longer enough for recruiters to post jobs up and wait. The utilization of tech is critical. While the survey reported several perceived challenges around tech, it also showed that staffing agencies have been adopting new tech at a rapid pace.

Automation in staffing can keep teams efficient and lean and help recruiting staff improve their engagement with candidates rather than getting bogged down with the day-to-day. Automating day-to-day tasks reduces the time to hire and improves the quality of hire, both essential in today’s competitive landscape. In recruitment, speed and accuracy are the name of the game. Tech is crucial to innovation and growth.

The benefits of using Tracker’s recruiting software include the following:

Read more on recruitment automation ®

Growth and success depend on effective communications and candidate engagement strategies.

In today’s market, sourcing the best candidates and keeping them interested through the hiring pipeline is tough. So here are a few tips to improve candidate engagement:

Read more about how tech can improve your human candidate engagement ®

This year’s survey found that recruiting new talent and finding new business is getting more difficult. Survey respondents also rated their lead sources for both new candidates and new clients as less effective than in the past.

Finding qualified candidates and getting candidates to respond were reported as the top two recruiting challenges. In addition, both fast- and slow-growth agencies are experiencing more difficulty compared to last year on every activity assessed in the survey.

Additional recruiting challenges included finding great recruiters and training recruiters on software and workflows. Read more about the essential skills of successful recruiters ®

Recruiting agencies must find new ways to be creative, including leveraging growth through tech. The survey found that ATSs and recruiting automation systems are the top solutions agencies plan to implement.

To illustrate the power of applicant tracking, here’s how Tracker’s ATS helps to solve some of the critical challenges staffing agencies face today.

In recruitment, building solid relationships with candidates is vital. Automation frees up recruiters’ time so they can focus on nurturing connections. Tracker automates tasks like updating candidate status and availability, gathering and updating resumes, sending notifications and updates, collecting compliance data and job preferences, sending event-triggered surveys, updating lead status, and more.

Tracker’s Sourcing and Job Board features also help to build better candidate pipelines and increase job posting reach. For example, Tracker’s Auto Match and Watchdogs put recruiters on the front foot, sourcing relevant candidates and matching them to open jobs with zero-touch.

The three most significant opportunities revealed in the survey were:

1. Technology and automation
2. Building relationships with candidates and clients
3. Expanding into new markets

Building relationships and expanding into new markets are both hugely important opportunities, but both depend on getting tech and automation right.

Referrals and LinkedIn were reported as the most effective sources for finding new candidates across all agencies. Referrals were also rated as the top source for finding new clients.

Agencies should therefore be considering their Net Promoter Score (NPS). The NPS for agencies dropped from an industry average of 75 last year to 58 this year, making this year’s scores closer to 2020. The biggest declines were for fast- and moderate-growth agencies.

Candidate NPS (cNPS) provides vital evaluation. Remember, rejected candidates are the ones that will reveal the most about what you need to do to improve in your candidate journey.

The environment for digital transformation and tech upgrades in recruitment is ripe, with agencies looking to spend more on tech in the coming year. ATSs and recruiting automation systems are the top solutions they plan to implement.

Fast-growth agencies are significantly more likely to view technology as a competitive advantage and be early adopters. For example, fast-growth agencies are more likely to use chatbots, automated referral management (ARM) platforms, and talent management systems.

Survey respondents rated all technologies more valuable compared to last year. Though with so many options available, respondents also said that finding and implementing the right tools is getting more complex.

The three top technology-related challenges staffing agencies are facing right now:

1. Selecting the right tools for digital transformation
2. Choosing the right sourcing tools
3. Integrating staffing technology

Most valuable technology

Key findings:

Key Performance Indicators

The Ideal Recruiter

Agencies also rely on the skills of their people. The two top attributes of an ideal recruiter were identified as being:

• relationship-oriented
• goal-oriented 

Interestingly, respondents from fast-growth companies were more likely to prioritize relationships over goals. For slow-growth companies, the pattern was reversed.

This leads us nicely to why we built Tracker.

 The idea for Tracker came into being when we were looking for the best possible software to run our own recruitment company efficiently and profitably.

We couldn’t find it, so we built Tracker!

We aimed to develop a platform with ‘Relationships First’ at its core. Our vision grew from this idea – to help recruitment and staffing firms grow their businesses by using Tracker to build better relationships and run their operations more effectively.

Many tedious and time-consuming hiring tasks, such as background checks, candidate screening, applicant tracking, and managing and scheduling the interview process, can be automated by Tracker, enabling recruiters to get on with some of the deeper ‘relationship-building’ work. The ideal recruiter needs the right environment to thrive.

Networking is vital for recruiters, especially since this year’s survey found that almost all sources for finding new candidates and clients were rated less effective than last year.

Respondents voted the best conferences to attend as:

• ASA Staffing World
• SIA Executive Forum

The most valuable resources were voted as:

• Staffing Industry Analysts
• American Staffing Association
• Staffing Hub

Top recommendations and advice for new agency owners included:

• Be open to learning and trying new things
• Understand your processes before you automate
• Be adaptable and flexible
• Work with clients who see talent as an investment, not an expense
• Be patient, the staffing industry is constantly changing

Tracker’s ATS & CRM are designed to address the challenges faced by recruiting agencies head-on. Our full suite of automation tools rocket boosts your activity and gets you better results. Tracker ensures you optimize and streamline your communications, processes, and outcomes. And our highly developed reporting and analytics functionality gives you all the insights you need to ride the wave of success and stay ahead of the competition.

We won’t break the bank or your processes. See the power of Tracker for yourself. Book a Demo.