Walmart doesn’t dominate the markets they are in solely because of product quality, store ambiance, or even customer service. They dominate primarily because nobody can consistently beat them on price, something they put a great deal of emphasis on. That's the same thing many staffing companies choose to focus on as well.
How do they do it? Why, economies of scale, of course! Economies of scale, according to Wikipedia, are “the cost advantages that enterprises obtain due to size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.”
We do this and we do it well
Simply put, Walmart has so much buying power, they can negotiate lower vendor prices than anyone else, and their product line is so varied that they can even afford to take losses on some products. Not only do they gain market share this way, they also get people in their stores to buy other, more profitable items. After all, does anyone really ever leave a Walmart with just one thing?
The thing is, this is how most businesses are able to stay in business. They specialize in one thing, whether it’s a service of some sort or a gazillion low-priced plastic doodads straight off the barge from China, and get so productive and efficient at it that they are able to make or sell it cheaper than anyone else possibly could.
Like it or not, economies of scale are an economic reality that makes the world go ‘round. They allow us to have access to more products and services at lower prices than we would otherwise.
The staffing business
In the employment world, particularly the staffing industry, economies of scale also rule the day.
I recently talked to a hiring manager who told me it costs them roughly $800-$1,000 every time they need to hire a single employee.
Some companies can do it for less, and some probably even spend more, but I can promise you that staffing agencies can not only do it better and faster, but they can also do it for a lot less money.
How? Why, economies of scale, of course!
Imagine you are a client with a job to fill. Before we even get into spending new money for the job orders we receive, our database alone encompasses more people than one client could possibly screen through in a lifetime, and it’s searchable.
Since we fill so many different jobs from so many different clients, we have paid accounts with Monster, CareerBuilder, ZipRecruiter, Indeed, Snag-A-Job, and more, all of which we can utilize to help fill not just your job, but the others we get as well.
We have name recognition in our local communities as a place to go to find employment. Unless you spend several hundred dollars buying a newspaper ad, jobless people aren’t going to know your company needs a warehouse laborer.
But, like a bird who flies south for the winter, or a screaming kid who wants to just find his mommy after he falls off his bike, people out of work just ‘know’ to come to us, and we welcome them with open arms.
When a client comes to us with a job order, we may treat them like they are the only client, and theirs is the only job order we have. And that’s a good thing, both for us and for them!
People are cycling through our offices every day, being screened for any number of jobs we have on our board. Maybe the person we interviewed yesterday and didn’t choose for another client is just the perfect fit for you.
Finally, our staffers do one thing and one thing alone, all day, every day – screen, interview, and place people.
And most of us have been doing this for a very, very long time, which means we don’t just know the ropes, we can spot a lie from a mile away.
We’re not perfect – far from it – but we are pretty doggone good at what we do and, thanks to those wonderful economies of scale, we can probably do it better, faster, and cheaper than you. Like Walmart.