The temporary staffing industry is on the rise. A savvy Gulf Coast entrepreneur capitalized on the rebound.
Karen Rehn's entry into the Florida temporary staffing industry was nearly a short-term job.
The culprit, back in 2009 when Rehn bought HH Staffing, then a construction day-laborer firm in Bradenton, was the recession. It crushed the job market of course, and Rehn, who relocated to the Gulf Coast from Wisconsin to buy HH Staffing, was unsure the firm would survive.
Rehn's salvation was a Florida staple: tourists.
Rehn shrewdly, and quickly, shifted HH Staffing's focus, from construction to hotels and restaurants. Rehn not only found a host of temporary employees, she created an internal training program that schooled workers in everything from how to carry a tray to how to show gratitude. Says Rehn: “There was no one else out there doing that.”
Rehn's approach clearly resonated in the hospitality sector. The Hyatt Regency Sarasota and Ritz-Carlton, Sarasota, for instance, both downtown, were some of HH Staffing's first clients after the shift.
“We stepped back before we stepped forward and we reinvented the business,” says Rehn. “But what saved my butt was hospitality. It saved this company.”
That company, now based in Sarasota, is at the forefront of a substantial uptick in the nationwide temporary staffing sector. The industry is expected to grow 6% in 2014 to $137 billion, according to a report from Staffing Industry Analysts, a Mountain View, Calif.-based research firm. While that growth is flat from 2013 and down slightly from 2012, when it rose 7%, the industry is now close to an all-time high in total value, the firm reports.
HH Staffing is likewise on a growth tear — in sales, employees and locations. The firm has more than quadrupled revenues since 2009, for one, says Rehn, and is now in the multimillions in annual sales. Executives decline to release specific annual revenue figures. There are 12 internal employees, up from four when Rehn bought the company. The number of temps on assignment fluctuates, but has lately been in the several hundreds.
And Rehn, in one of her riskiest moves given the fragile economic recovery, followed the suggestions of some clients and opened offices in Clearwater, Orlando, and, most recently, Fort Lauderdale. The Clearwater location serves clients in Hillsborough, Pasco and Pinellas counties. All of the new offices were profitable within a few months, says HH Staffing Vice President and minority owner Stuart Kortie.
HH Staffing offers personnel in four employment categories. In addition to hospitality, that list includes office professional/accounting; property management/maintenance; and light industrial. Those categories are divided into individual jobs, from accountants to welders. HH staffing then matches employees with employers, kind of like a dating service.
“We are not the cheapest game in town,” says Rehn. “But we will always give clients quality temps.”
HH Staffing, like most temporary staffing firms, makes money off fees it charges clients. Employees don't pay HH Staffing a fee for job placement. The temps actually become HH Staffing employees who work at another business. HH Staffing pays the payroll taxes, insurance and workers' comp fees.
Rehn and Kortie jointly run the side of the business that targets the clients. A team of HH Staffing recruiters, meanwhile, scours resumes to find temporary employees.
The firm's core strategy, to offer clients a higher-end temporary employee, has produced mixed results. HH Staffing, says Rehn, does an extensive job weeding out low-performers. All candidates take drug tests, for example, and go through intensive skills assessments.
But Rehn expects clients to pay a premium for that service. That goes both for fees and the hourly wages HH Staffing negotiates with each client for a given project or assignment.
The average wage for HH Staffing employees in the field, in all industries, is around $12 an hour, says Rehn. That's increased from an average of around $7 an hour in 2009. “People have to get what they're worth,” says Rehn. “Temps shouldn't be treated like dirt.”
It's a noble thought, but it's also been costly. That's because several HH Staffing clients, or would-be clients, have balked at wages that surpass $10 an hour. Kortie says the company has lost several contracts, well into the six-figures total, for its refusal to budge on hourly wages.
Relinquishing business opportunities like that, says Kortie, is one of the toughest things to do at HH Staffing, especially in the moment the potential work comes in. But he believes the discipline pays off, especially to help distance the firm from competitors. “We work hard to find clients who treat people like assets,” he says, “not a commodity.”
Rehn honed that philosophy when she worked in sales for Remedy Staffing in Waukesha, Wis., west of Milwaukee, in the 1990s. She became one the top salespeople in the company, in fact, in a few years. Says Rehn: “It was the right fit for my personality.”
Rehn decided to go out on her own in 2003. She launched a mergers and acquisitions consulting firm that focused on the temporary staffing industry. That business was a success, too, but by the end of the 2000s Rehn sought a change of scenery, and climate.
She looked on the Gulf Coast and found HH Staffing, which was then Helping Hands Staffing Services. The firm had been in operation since 1988, but was struggling when Rehn bought it.
Rehn rebranded the company HH Staffing and, before the shift to hospitality, spent the first year networking, in person at local events and through social media. “I did everything I could to get my name out there,” Rehn says.
She also met Kortie, a Florida native who worked in the staffing industry in California for 14 years. The pair clicked, so much so that Rehn recently sold Kortie a stake in HH Staffing. They now have a 10-year succession plan, where Kortie will eventually have an opportunity to buy out Rehn. “He balances out my deficits,” Rehn says, “and I balance out his deficits.”
The duo also agrees on a growth strategy for 2014: Find new clients for existing offices and not open more locations. Rehn wants to absorb the fast growth before the firm takes on another new location. That strategy fits well with the long-range plan for HH Staffing, which is to put quality over quantity.
“I don't want to be the biggest and I don't need to make $15 million,” says Rehn. “I want to be the best.”
HH Staffing President Karen Rehn, in more than 20 years in the temporary staffing industry, has developed a list of must-dos for hiring new employees. Tips include: