Figure 1. Source: www.climatechange-theneweconomy.com/cop23-series-can-wave-tidal-energy-help-combat-climate-change/

In the last article, we analyzed two themes for the Macroeconomics of the U.S. Staffing Industry (SI),

a) Introducing Economy Singularities/ Its Impact on SI, and,

b) What Do Inflation, and Interest Rates Have in Common with SI.

Now, we'll turn to the third one, being:

c) How Global Economic Trends Shape the SI Potential.

The United States, being the finance and technology "powerhouse" of the world, also boasts the most propulsive staffing industry, with roughly 1/3 of global revenues of SI coming from the U.S.

With this in mind, it'd be hard to mention theme c) without going into the context of the U.S.

So, let's begin with c) How Global Economic Trends Shape the SI Potential.

How Global Economic Trends Shape the SI Potential

Demographic trends, technology-wise, and in the context of globalized trade, have always been present in history, albeit in a slow manner. Today's world "shifts" rather quickly, and companies, and by extension SI, need to catch up quickly if they wish to "survive," and, well, "thrive."

The United States, with its flexible economy and predictable and firm rule of law, has seldom been "left behind" the trends. On the contrary, the U.S. more often than not led the "trends." This can be replicated on the SI.

But let's see what and which trends will shape the SI of the U.S., and globally.

These are three.

i) Globalization and International Trade

Globalization and international trade in the past years left many opportunities and prospective business to the staffing industries, but primarily the United States, since the aforementioned has the biggest share of global SI revenues.

There are three moving parts that constitute the globalization and international trade trend... cross-border staffing, compliance and regulation, and market diversification.

Cross-border staffing is characterized by three key factors, expatriate staffing, offshore staffing, and management of a global workforce.

Expatriate Staffing indicates that the growing need for relocating and addressing the increasing expatriate population, can be met through the tools of staffing firms. The SI firms that specialize in this kind of staffing are, by extension at an advantage, because they utilize this trend to find the right talent for increasing demand of local companies.

Similar to expatriate staffing, is offshore staffing, albeit dealing with locations where costs of labor are much less than in the domicile country. In order for companies to transition "smoothly" to other plants overseas and open local subsidiaries, a prudent and informed approach is needed to ensure the aforementioned comply with laws and regulations in third countries. SI or the "niche" specialized in this kind of challenge, can make this effort go optimally, and create a seamless transitional step.

Finally, wrapping up, managing a global workforce implies integrating many moving "parts," from knowing and adapting to local laws, to understanding foreign country work culture, and coordinating across many times zones. Staffing firms that recognize and address this SWOT "matrix," can reap many benefits in this business model, all the while optimizing for good outcomes of enterprises operating worldwide.

Considering the U.S. has the largest expatriate base in the world, and is likewise biggest investor "overseas," having a robust SI "at your disposal," can work wonders for companies wishing to engage in international trade and "ride" the trends.

ii) Demographic Change

Developed countries are experiencing an ever-increasing aging cohort because of cultural differences between aforementioned, and emerging economies. In developed countries, families tend to be smaller, and couples seldom plan to have more than 2 children. This trend, while convenient on a family basis, unfortunately does not hold sustainable prospects for a growing economy, and a highly demanding pension system. Hence, these developed economies are attracting and welcoming foreign workers, but this yields its own challenges altogether.

At the same time, a large cohort of young people, who cannot be ignored on the labor market, are entering the job market, and ever-changing job conditions are precipitating engagement, training, and development, prior and during the work.

Finally, since a large minority in some developed economies, and large numbers in others, are coming from third countries, a prudent approach in integration of this new labor force into the economy, and by extension into companies, is a necessary "must."

The United States, while not exclusively, but surely majorly, is experiencing these trends, and thankfully, the SI here helps.

Addressing the aging workforce problem or challenge, if you will, requires a three-step approach to the aforementioned.

First, identifying 1) shortage of younger workers, then 2) recognizing and addressing the demand for experienced professionals, and finally, 3) knowledge transfer and succession planning, ensuring the continuation of expertise as the older workers retire.

As we talked about expatriates previously, a new challenge arises regarding aforementioned and domestic young work cohort: how to attract talent. In the U.S. the versatile staffing industry has experience in this kind of obstacles that companies, large or small, face. Hence, new strategies and evolving recognition of job expectations are constantly being developed to overcome the obstacles and fulfill the demand by mentioned enterprises.

While having and retaining young workers is very important, recognizing a demand and need for experienced professionals is seldom overshadowed. That's because, although younger employees being often tech-savvy, they lack the patience, the knowledge, and the experience that, well, experienced workers can provide.

So, building on that, as senior work professionals retire, it's essential that a knowledge and insights transfer to younger generation cohort is intact, regardless of the changing landscape, business or demographic-wise.

Attracting, retaining, offering more than satisfying work conditions, and incentivizing older and experienced professionals to work at the companies and to transfer knowledge as they retire, is a huge challenge for staffing firms, albeit being a big opportunity.

In other words, staffing firms in the U.S. devise flexible and desirable working plans for experienced professionals, while working on succession plans to maintain a coherent company culture and leadership knowledge ready for implementation by middle-market, and larger enterprise companies.

iii) Technological Advancements

The final trend we singled out, influencing the SI worldwide, with an emphasis on the United States, is technological change or advancements.

Automation, artificial intelligence, and digital transformation, among others, are drastically changing the name of the "game" in the global, and by extension the U.S. workplace. While improving efficiency and yielding optimal results per company, they also necessitate a change in the nature of work as well as learning of new skills, continually.

Let's focus on three main disruptive forces brought about technology.

First of all, evolving skill sets are something which has become the "norm" in the past two and half decades, however these are in today's day and age an omnipresent term that cannot be ignored. A high demand, to say the least, for tech-savvy individuals operating complex algorithms or leveraging the use of AI to, say, streamline work processes, necessitates that these individuals can keep up with these challenges.

The SI in the U.S. has recognized this reality, and is increasingly recruiting and training candidates with these new skill sets. This is important because unlike the public schooling system which is seldom quick to adapt due to slow regulatory change, the private sector staffing firms are agile enough to recognize, see, and adapt to new work demands, evolving tech-savvy employees being on the forefront.

The COVID legacy has left us with hybrid and remote work becoming a present reality, and workers demanding such as they enter the prospective vacancies. This, effectively, alters how companies manage and hire staff, and translates into cooperation with the SI in order to offer various solutions to benefit these novel working arrangements.

It's well known that tech companies are at the forefront of, well, technology, and implementing new changes in their corporate cultures. At the same time, the technology sector, extending beyond the Silicon Valley to other parts of the U.S., will have staffing firms as indispensable partners in overcoming these challenges.

Connecting hybrid and remote work to evolving skill sets results in the growing need for prospective employees to be able to "handle" automation in the workplace. In effect, employees succeed in learning new and gaining knowledge, while companies arrive at optimal solutions for the usual higher costs problems. Again, staffing industry in the U.S., agile enough and specialized in changing work conditions, can mitigate the discrepancy between new technologies such as automation, and the knowledge / skill gap of prospective workers.

Conclusion

Navigating globalization and international trade, demographic shifts, and technological change, will be demanding, to say the least, for countries, economies, companies, and by extension, the staffing industry.

A key differentiator between successes, and reaping the benefits, on one hand, and missing out on opportunities on the other, will be an ever-present agile approach, and likewise a recognition by the respective countries' governments that cooperation between enterprises on one hand and aforementioned on the other, will yield more than optimal results for the whole.

If regulations can be made more flexible, if enterprises, big or small, are ready to be open to change, then a disruptive effect will happen in the staffing industry worldwide, but in this case in the U.S., will be inevitable.

It'll be interesting to see what the future brings. A thing is certain, the aforementioned will bring uncertainties, and stakeholders will "survive" and "thrive," if they embrace change.

Redmount is a middle-market-oriented merchant bank with an advisory and investment platform built to serve the distinct needs of successful entrepreneurs, business leaders, and stewards of family wealth who value having a direct relationship with an experienced partner.