The employment and staffing sector is feeling the impacts of labor shortages and increased labor costs.
At Spherion Staffing, the company reduced required quotas by 25 percent after hearing from franchisees that they were worried about meeting their quotas.
The company makes an effort to listen to its franchisees to drive unit sales and help eliminate stressors they’re facing.
“We really try to pay attention to what was stressing our franchisees, and listen. Not be tone deaf, not just push performance,” she said. “Many times, people just push performance instead of understanding what challenges franchisees were experiencing and identifying ways that we can address their needs and help support them.”
But there’s not a one size fits all approach, President Kathy George said.
“We started with the ones who are really invested. The ones that they’re struggling to do everything possible, they’re investing, they’re out there, they’re selling and they’re still not growing,” she said. “Really analyzing their market and helping them with creating an individual growth plan.”
Sales at Spherion, No. 159 on the Top 400 list, decreased by nearly a quarter, from $554 million to $426 million. But Spherion, owned by Randstad Holding, is getting creative.
“Our industry is evolving, and much faster than we had seen in the past,” George said. “One of the things we’re able to do is leverage the resources of the global parent company.”
The company hosts weekly calls to share best practices among franchisees.
The employment and staffing sector of the Top 400 list, which encompasses five brands, brought in $5.2 billion last year, a 10 percent decrease, or about $579 million less than 2022. Unit growth is about even.
Every company in the category saw negative sales growth in 2023. Those brands are AtWork Group (down 4.6 percent), Express Employment Professionals (down 8 percent), PrideStaff (down 16.2 percent), Nextaff (down 30.6 percent) and Spherion.
Spherion’s sales can be attributed to local relationships. George said franchisee sales growth outpaced company-owned stores “because they were in their communities. … They were meeting with their clients face to face.”
The initial investment required to buy a Spherion franchise ranges from $214,325 to $342,575.
Other business service franchises
The business services category as a whole did $7.9 billion, down 2 percent.
No. 156 Murphy Business & Financial Corp. grew sales by 14.1 percent and jumped 19 spots on the list. The brand faced some troubles last year related to inflation, and CEO Thomas Coba said that trend may continue.
“The country has had 11 interest rate increases in 18 months,” Coba said. “That’s alarming for potential buyers who are thinking about using some form of financing to help buy the business that they want to buy. Those are our clients.”
No. 225 Goosehead Insurers Group has the most units in the business service category, at 1,169. Unit count decreased by 256 units, or about 18%. Sales, on the other hand, went up 23.9 percent to $233 million. Keystone Insurers Group increased sales by nearly 26 percent to $918 million.
On the sales and marketing side, The Alternative Board led the subcategory in terms of sales growth, with a 14.5 percent increase to $44 million.