At a time when 90% of organizations are reported to be undergoing some form of digital transformation, it’s important for staffing firms to take a step back and analyze their operational readiness to take on new processes or invest in new technologies.
In part one of this blog series, we looked at how our current AI moment presents a unique opportunity for staffing firms: a second chance to institute organizational changes that set them up for years to come while learning from the missteps of the past. When executed correctly, staffing firms can uncover newfound efficiencies, build more profitable organizations, and invest smartly in the right technologies (or maybe more importantly, make the most of the technologies they’re already paying for).
With talent pools thinning and client expectations rising, staffing firms need to do everything in their power to run as efficiently and free of errors as possible. Every opportunity counts.
In order to take advantage of this second digital transformation, firms need to understand and address organizational drift and institute the proper processes and procedures to create sound workflows that will enable them to unlock technologies like automation and AI.
What is Organizational Drift?
Put simply, organizational drift is the slow slipping of standards over time. Oftentimes it goes unnoticed; team members develop their own shortcuts or “hacks”, processes aren’t documented or clearly delineated, and as times change, as staff churns, processes go unchecked, and “work as imagined” becomes misaligned with “work as done.”
This gap widens quietly over time until it begins impacting placement speed, data integrity, client experience, and ultimately, profitability.
If this sounds familiar, you’re not alone. A recent 10-year research study concluded that 73% of organizations show drift symptoms. But just because it’s a common pitfall doesn’t mean it can’t be fixed; and the organizations that address drift now will be on much steadier footing going forward.
How Does Organizational Drift Present Itself in Staffing?
Staffing isn’t uniquely immune to drift. In fact, because of the siloed nature of teams within staffing organizations, drift can impact different parts of a staffing firm in many different ways, creating multiple points of misalignment as months or years progress. Let’s explore some of the ways in which organizational drift can impact staffing.
Candidate Intake: A staffing firm’s talent pool is its lifeblood. The ability to be able to match a worker with an open role as quickly as possible is how staffing firms win business and continue to grow. Gradually, however, in the name of expedience or due to inconsistent training, candidates may not be entered into the ATS in a way that makes them easily discoverable. Having a robust candidate pool also includes a full understanding of the candidates themselves: certifications they have, availabilities, relevant experience, even current contact information is all crucial.
Client Intake: If staffing is matching available talent to open positions, it’s equally essential that client information is entered with that same attention to detail. Having updated contact information, job data, role requirements, billing information, and so much more are essential for identifying opportunities and keeping a healthy sales pipeline.
Contract Terms and Standards: In a fast-moving industry like staffing, it can be difficult to keep sales and account management teams aligned to overall performance metrics for the firm. As a result, salespeople may be sacrificing margins within the contracting process, weighing volume over profitability. Having a misaligned sales team can lead to prioritizing the most clients over the right clients.
Learn more about how to maximize your margins by downloading our free guide here
Time Management: In execution, the most important thing for which a staffing firm is responsible is making sure talent is paid on time. Established processes for time management are essential to keep payments accurate and as scheduled. A recent study showed that 54% of workers would consider leaving a job over repeated payroll issues; so it’s clear that missed or inconsistent payments can have a dramatic impact on a firm’s talent pipeline.
Why is Organizational Drift Such a Big Deal?
The implications of drift within staffing are far reaching. For each one of the examples above, there are both financial and corporate culture ramifications of drift. When looked at in isolation, individual instances of organizational drift may not be that insidious; a misaligned process for immediately entering a new hire into an ATS may not have major implications. But each of these cases snowball and can have significant effects on a business.
As mentioned above, failure to keep client and talent data robust and up to date can mean missed opportunities for a quick placement.
Issues with payroll is one of the more catastrophic problems for staffing firms, because without reliable payment it’s difficult to retain talent. The same study cited earlier also reveals that 45% of workers say financial stress impacts their job performance; missed or late payments have a major effect on a worker’s wellbeing.
Misaligned processes in time management are more than just a retention concern as well. When you look at the cost and frequency of payroll errors, those numbers can really harm a company’s bottom line.
With the average payroll error costing an estimated $291 to correct, and the average business seeing nearly 15 payroll corrections per pay period, companies can be losing tens of thousands of dollars each year on errors. Granted, not every payroll error is the result of organizational drift, but user error or shortcuts in process can definitely contribute to those numbers.
For sales and account management teams, drift can wreak havoc on the firm’s margins and overall financial health. Not only can lower standards mean taking on contracts that don’t clear baseline margins for profitability, but they can also mean taking on more risk.
Particularly in slow markets, sales teams may be less inclined to do due diligence on certain aspects of a prospective client’s business. For example, a prospect might have a history of late payment, or they may operate facilities that don’t meet safety standards. Ignoring these factors may seem justified since they mean business on the books, but this slipping of standards goes against best practices and standard operating procedures (SOPs).
There are other, long-term effects of organizational drift as well. Not having proper processes in place can lead to slower onboarding for new hires. If the onboarding process is misaligned to overall company goals it can lead to churn or poor expectation setting for employees.
Additionally, a major component of organizational drift is data governance and the standards to which organizations maintain their databases. Modern tools like AI and automation rely on sound, organized data to provide optimal results. As they say, “garbage in, garbage out”; without a properly organized data set or processes that encourage lax data governance, investments in these modern tools may be a waste. Or, at the very least, use of these tools may be unreliable or fail to yield optimal results.
According to Gartner, 63% of organizations say they lack, or are unsure they have, the data management systems needed to support AI. In fact, many companies are likely to abandon AI projects that rely on “non-AI-ready” data.
How You Can Tell Organizational Drift is Happening When You’re In It
What makes drift such a problem for staffing firms is it doesn’t announce itself loudly or clearly. There is rarely a smoking gun that signals drift, but there are some hallmarks of how it can appear.
- Consistent Rework: In everything from data entry to payroll corrections, if work needs to be redone across the organization, that’s a sign that standards have drifted or are inconsistent from one worker or one team to the next.
- A Lack of SOPs or SOPs That Teams Don’t Follow: SOPs are the way to correct course when processes begin drifting (spoiler alert for part three of this series). If you notice that your organization has insufficient documentation for how processes should go, or if there are a number of SOPs that nobody understands or references, that can be another tell-tale sign of drift.
- Slipping Metrics in Key Areas: Monitoring KPIs is crucial for understanding how a staffing firm is operating and succeeding. Tracking key metrics like time to fill can give leadership a good sense of how the team is working, but it doesn’t necessarily tell the full story.
Let’s look at a real-world example. An organization has an ATS that serves as their central record of all order data, but drift has caused recruiters to stray from SOPs. An order comes in and is promptly written on a whiteboard or added to a spreadsheet external to the ATS. Only when the order is filled is it added into the system of record. On paper, it may look like orders are being filled within 24 hours at a 100% rate, but everyone knows that’s not really the case; the orders that don’t get filled simply don’t get entered. Understanding what metrics should look like versus what might be too good to be true is another important distinction to diagnosing drift.
- Growing Exception Queues: When standard processes fail, tasks require additional attention to earn approval. These exceptions are a system’s way of saying, “I can’t proceed without more information.” Ballooning exception queues can happen in time entry and approval, candidate and client onboarding, compliance audits and year-end processing, and many more friction points. Exception queues generally signal faulty processes, poor training, and drift.
How You Can Combat Organizational Drift
Now that we’ve talked about the symptoms and manifestations of organizational drift and the imperative to correct it before it gets worse, in part three we’ll discuss ways to address drift and what companies stand to gain when they do.