Filling an Employment Need
Guy Nickelson hadn't been working at Staffmark in Lansing, Ill., for more than a few months, when he received a phone call from Deborah Peterlin, a salesperson at the firm, who wanted to take him to dinner.
"She actually ended up calling me for our first date. I got a kick out of that," recalls Nickelson.
During dinner, Nickelson and Peterlin found something in common: a distaste for the staffing agency business model. "We had the same mindset," says Nickelson. "Larger companies are forced to do things in big contracts that do not help the customer and do not help the bottom line. And neither one of us understood why someone would costs themselves money and not provide a worthy service to a client."
But rather than just complain, Nickelson and Peterlin decided they could do better. So in 1999, the former Staffmark employees opened Sedona Staffing Services in Frankfort, Ill.. Rather than focusing on volume, Sedona turned its attention to screening its customers and the thousands of temporary employees in its database, which Nickelson felt his former employer--and the industry as a whole--failed to do adequately. "If you do a heck of a lot of screening up front, then you see less turnover in clientele and you have to replace less people," Nickelson says.
The Sedona model seems to be working. Since its inception, Sedona has grown to three offices and 19 employees. In 2004, the company topped $11.7 million sales, an 88% increase from the year before. And the founders are doing well, too. In September, Nickelson and Peterlin will celebrate their fifth wedding anniversary.
Sedona's success, however, cannot be attributed solely to Nickelson's and Peterlin's vision. Since 1993, the cost of employee benefits has increased 34%, according to the Labor Department. Theresa John, an accounting professor at New York University, estimates that companies pay as much as 40% above wages for taxes, health insurance and retirement benefits. Because of these large costs, companies are reluctant to hire full- time employees, thus spurring employment service firms like Sedona. "I think very large companies and mom and pops alike, don't want to get hit with these costs, so they turn to staffing agencies to do the hiring for them," Nickelson says.
Without tort reform, which could lower medical insurance costs, and if unemployment taxes continue to climb, like they have since the last recession, the employment services will continue to boom, says Nickelson.
"We are going to be continued to be utilized as a big part of the economy for easily the next 15 to 20 years," Nickelson adds.