It's no secret to the staffing industry that trust is the cornerstone of all good business. Our clients trust us to send them good people. Our employees trust us to find them better jobs.
So what happens when someone else finds a more efficient way to create that trust? Or what if they compete with legit staffing companies unlawfully and without our cost structure?
A couple months ago, Staffing Talk columnist Scott Morefield wrote about 'Black Hat' staffing agencies and how they sully our industry's reputation and make for an uneven playing field. But our platform threats come from both legit and illegit players.
Take the dating sites, for example. Match, Tinder, OkCupid and the like are all engaged in a trust-building type service similar to staffing, and they are getting funded with billions in venture capital of the likes that the staffing industry has never seen.
This is not something completely new. Dating and porn sites have always been at the forefront of adopting technological innovation to get business. But the capital now behind them is huge and game-changing.
A far bigger threat comes from the so-called 'sharing-economy'. We've been talking about this a lot at Staffing Talk, especially the most popular of such services, Uber, and whether they are operating under and unfair advantage of classifying their workers as contractors instead of employees. From the perspective of a W2 employer like a staffing agency, Uber is the ultimate yet glorified black-hatter.
Steve Horowitz of the Foundation for Economic Freedom captured the threat (or hope, depending on your perspective):
The fundamental problem of markets is the need to establish trust among strangers. In a wonderful and unappreciated book called In the Company of Strangers, Paul Seabright explores this formulation in great depth. He argues that for markets to work more fully, we need various institutions that allow strangers to be less suspicious of one another. We need to turn them into “honorary friends,” or in my own preferred version, “honorary kin.”
For most of human history, we lived in small, kin-based bands, where the people we interacted with were all people we knew personally. Our minds have evolved to know how to deal with such situations after millennia of living that way. The modern world, however, requires that we interact with people we do not know personally — but treat them as if we do.
The fundamental problem of markets is the need to establish trust among strangers.
Think about having someone come to your house to repair an appliance. A person you do not know and who you have never seen before is asking for access to your house. You allow them in. What gives you the confidence to do that? Presumably that person arrived in a vehicle with a company name on it (say, Sears) and is wearing a uniform that also reflects that organization’s identity.
We know that the profit motive of the market provides an incentive for firms to hire reliable people, and we use the brand name, the uniform, and other markers to ascertain this stranger’s trustworthiness. If someone knocked on your door after getting out of a regular passenger car, with no uniform on, maybe not at the time you contracted for, you’d be very hesitant to let that person in.
This trust business is getting more complicated every day. How is it affecting your staffing business?