Many so-called legacy companies are hungry for new sources of innovation as technological advances transform their industries. One way corporations are drawing new ideas into the fold is through the establishment of venture investing arms.
Troy, MI-based Kelly Services, which was founded in 1946, has contributed to the growth of the temporary worker industry over its 72-year history. Temping and the needs of employers have changed a lot in the past decade, and that’s partly why the company established the Kelly Innovation Fund earlier this year.
On Monday, the venture fund announced its inaugural equity investment, putting an undisclosed amount into San Francisco-based Kenzie Academy, a tech training program. (The total value of Kenzie’s funding round was $4.2 million.)
Teresa Carroll, executive vice president at Kelly Services, says the fund was established to invest in and partner with startups that support its investment thesis. (More on this in a minute.) The company offers startups in its portfolio access to its worldwide client and worker base, as well as its executives, she adds.
“We saw the rapid pace of innovation in the human capital industry,” Carroll explains. “We wanted to be a part of that innovation and learn from innovators.” She says many of the industry’s new developments revolve around talent acquisition and how to match workers to the appropriate jobs.
Specifically, the fund is focused on supporting startups and technologies that help workers to be more efficient through wearables and novel training programs; that help future generations transition into “the world of work”; that facilitate new workstyles, including independent contracting and “gig” work; and that enable better worker productivity through tools like artificial intelligence software and data analytics.
Kelly Services places temporary employees in all sectors, Carroll says, but it specializes in the life science, energy, automotive, and manufacturing industries—which are all undergoing technologically driven change. Carroll says the Kelly Innovation Fund’s leaders wanted to invest in Kenzie Academy because despite the tight labor market, the retirement of baby boomers and the dissipation of their institutional knowledge will leave a sizable hole in the workforce.
“There aren’t enough people to replace them,” Carroll says. “If [younger workers] can’t acquire skills through full-time work, we have to figure out how to build them. We also really liked Kenzie’s Midwest focus. It’s an underserved market for talent and skill development.”
Even though critics of gig work—the practice of hiring independent contractors and short-term workers instead of full-time employees—say it can be destabilizing to workers and was born more out of post-recession need than a desire for change, Carroll doesn’t see it that way. She says workers now have more control than they used to.
“The biggest change in the gig economy is the work itself,” she says. “We educate our customers to think of the work that needs to be done instead of what kind of worker they need. Work can be done virtually these days, so people are not as constrained by the fact that they have to go to a place. If they have high-demand skills in a low-supply area, they work how they want to work.”
With Intuit estimating that gig workers currently represent 34 percent of the workforce, increasing to 43 percent by 2020, it’s an issue that’s not likely to go away anytime soon.
Another workforce development trend affecting Kelly’s business is a national push toward programs that emphasize specialized skills training with heavy industry input. “Not everyone has to get a four-year degree and not everyone wants a white-collar job,” Carroll says. “We want multiple options for workers.”
Kelly Innovation Fund manager Yana Krivozus would love to close another deal or two before the end of the year, but the fund will only invest if Kelly can “provide value beyond its financial investment. For us, fit and our ability to add value is more important than the sheer number of investments closed.”
