What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-02-18 compared with 2020-02-13 · 99 added, 90 removed, 26 unchanged (88% of the section changed)

History and Development of Business

Founded by William R.

Kelly in 1946, Kelly Services ® pioneered an industry that connects people to work in ways that enrich their lives.

At our inception we helped usher in and embolden a workforce of women, opening doors and creating opportunities where none had existed.

As work evolved we equipped people with the skills to master the technologies of the day:

Founded by William Russell Kelly in 1946, Kelly Services ® pioneered an industry that connects people to work in ways that enrich their lives.

Our inception helped usher in and embolden a workforce of women, opening doors and creating completely new opportunities.

As work evolved, Kelly equipped people with skills to master the technologies of the day:

launching the first-of-its-kind online learning center for scientists;

creating testing and training packages for new office programs;

and launching skill builders to align with new light industrial protocols.

With each advance we have empowered people to meet the needs of a changing marketplace, and enabled companies to access skilled talent that can move their businesses forward.

As work has evolved so has our range of solutions, growing over the years to reflect the changing needs of our customers and the changing nature of work itself.

We have progressed from a traditional office staffing company into a workforce solutions leader delivering expertise in a portfolio of specialty services.

We rank as one of the world’s largest scientific and clinical staffing providers and place talent at all levels in engineering, IT and finance.

creating testing and training packages for breakthrough office programs;

and launching skill builders that aligned with new light industrial protocols.

With each advance, Kelly empowered people to meet the needs of the marketplace, and enabled companies to access skilled talent to move their businesses forward.

As work has evolved so has Kelly's range of solutions, growing over the years to reflect the changing needs of businesses and the desires and lifestyles of talent.

We have progressed from a traditional office staffing business to a creative, insightful and agile talent company delivering expertise in a portfolio of specialty services.

In line with customer demand, we are increasingly delivering a variety of outcome-based services in which we provide specialized talent and operational management of functions and departments on behalf of our customers.

We rank as one of the world’s largest scientific and clinical staffing providers and place talent at various levels in engineering, IT and finance.

We are also the leading provider in the K-12 educational staffing market in the U.S., while also providing talent in early childhood education, non-instructional roles and adjunct professors.

These services complement our expertise in professional office services, contact center, light industrial and electronic assembly staffing.

As work has evolved and talent management has become more complex, we have also developed innovative solutions to help many of the world’s largest companies plan for and manage their workforce through outsourcing, consulting, recruitment, talent advisory, career transition and supplier management services.

As work has evolved and talent management has become more complex, we have also developed innovative solutions to help many of the world’s largest companies plan for and manage their workforce through recruitment outsourcing, payroll processing, talent advisory, career transition and supplier management services.

Geographic Breadth of Services

Headquartered in Troy, Michigan, Kelly provides workforce solutions to a diversified group of customers in three regions:

the Americas ;

Europe, the Middle East , and Africa (“EMEA”) ;

and Asia Pacific (“APAC”) .

Our customer base spans a variety of industries and includes 90 percent of the Fortune 100™ companies.

In 2019, we assigned approximately 440,000 temporary employees to a variety of customers around the globe.

Headquartered in the United States, Kelly provides workforce solutions to a diverse group of customers in the Americas, Europe and the Asia-Pacific regions.

Our customer base spans a variety of industries and includes 75 of the Fortune 100™ companies.

In 2020, we assigned nearly 370,000 temporary employees to a variety of customers around the globe.

Description of Business Segments

Our operations are divided into three business segments:

Americas Staffing , Global Talent Solutions ( “GTS” ) and International Staffing .

In July 2016, we expanded our joint venture with Persol Holdings (formerly Temp Holdings) to form PersolKelly Asia Pacific (the “JV”) and moved our APAC staffing operations into the JV.

We provide staffing solutions through our branch networks, on-site staff and virtual teams in our Americas and International operations.

In addition to staffing solutions, we also provide a suite of innovative talent fulfillment and outcome-based solutions through our GTS segment, which delivers integrated talent management solutions to meet customer needs across the entire spectrum of talent categories.

Using talent supply chain strategies, GTS helps customers design, execute, and manage workforce programs that enable them to connect with talent across all work styles (full-time, independent contractor, temporary, etc.) and gain access to a vast network of qualified service providers.

Americas Staffing

Our Americas Staffing segment represents the Company’s branch-delivered staffing business in the U.S., Puerto Rico, Canada, Mexico and Brazil.

This segment delivers temporary staffing, as well as direct-hire placement services, in a number of specialty staffing services, including:

Office , providing trained employees for data entry, clerical and administrative support roles across numerous industries;

Education , supplying schools nationwide with instructional and non-instructional employees;

Marketing , providing support staff for seminars, sales and trade shows;

Electronic Assembly , providing assemblers, quality control inspectors and technicians;

Light Industrial , placing maintenance workers, material handlers and assemblers;

Science , providing all levels of scientists and scientific and clinical research workforce solutions;

Engineering , supplying engineering professionals across all disciplines, including 5G, aeronautical, chemical, civil/structural, electrical/instrumentation, environmental, industrial, mechanical, petroleum, pharmaceutical, quality and telecommunications;

Information Technology , placing IT specialists across all disciplines;

and Finance and Accounting , serving the needs of corporate finance departments,

accounting firms and financial institutions with all levels of financial professionals.

We also offer direct-hire placement services across all of these specialties.

International Staffing

Our International Staffing segment represents the Company’s branch-delivered staffing business in the EMEA region.

International Staffing provides a similar range of staffing services as described for our Americas Staffing segment above, including:

Office, Engineering, Finance and Accounting, IT and Science.

Additional service areas include:

Catering and Hospitality , providing chefs, porters and hospitality representatives;

and Industrial, supplying manual workers to semi-skilled professionals in a variety of trade, non-trade and operational positions.

Our GTS segment combines the delivery structure of the Company’s outsourcing and consulting group and centrally delivered staffing business.

It reflects the trend of customers towards the adoption of holistic talent supply chain solutions which combine contingent labor, full-time hiring and outsourced services.

Services in this segment include:

Centrally delivered staffing for large accounts;

Contingent Workforce Outsourcing (“CWO”) , delivering contingent labor to customers using a managed service provider model;

Recruitment Process Outsourcing (“RPO”) , offering end-to-end talent acquisition solutions, including customized recruitment projects;

Business Process Outsourcing (“BPO”) , offering full staffing and operational management of non-core functions or departments;

Payroll Process Outsourcing (“PPO”) , providing centralized payroll processing solutions for our customers, and KellyConnect , offering contact center staffing solutions which focus on delivering talent to a customer’s call center operations.

This segment also provides career transition/outplacement services and talent advisory services.

Financial information regarding our industry segments is included in the Segment Disclosures footnote in the notes to our consolidated financial statements presented in Part II, Item 8 of this report.

Kelly is a specialty talent solutions company serving customers of all sizes in a variety of industries.

In 2020, Kelly implemented a new operating model and realigned its business into five specialty business units which are also our reportable segments.

• Professional & Industrial – delivers staffing, outcome-based and direct-hire services focused on office, professional, light industrial and contact center specialties in the U.S.

and Canada, including our KellyConnect product

• Science, Engineering & Technology – delivers staffing, outcome-based and direct-hire services focused on science and clinical research, engineering, information technology and telecommunications specialties predominately in the U.S.

and Canada and includes our NextGen and Global Technology Associates subsidiaries

• Education – delivers staffing, direct-hire and executive search services to the K-12, early childhood and higher education markets in the U.S., and includes several acquisitions:

Teachers On Call, Insight Workforce Solutions and Greenwood/Asher & Associates

• Outsourcing & Consulting – delivers Managed Service Provider ("MSP"), Recruitment Process Outsourcing ("RPO"), Payroll Process Outsourcing ("PPO") and Talent Advisory Services to customers on a global basis

• International – delivers staffing and direct-hire services in 15 countries in Europe, as well as Mexico

In addition, we provide staffing services to customers in the Asia-Pacific region through PersolKelly Pte.

Ltd., our joint venture with Persol Asia Pacific Pte.

Ltd., a wholly owned subsidiary of Persol Holdings, a leading provider of HR solutions in Japan.

Kelly’s new operating structure enables the Company to focus on specialties with robust demand, promising growth opportunities, and areas in which Kelly excels in attracting and placing talent.

Financial information regarding our reportable segments is included in the Segment Disclosures footnote in the notes to our consolidated financial statements presented in Part II, Item 8 of this report.

Business Objectives

Kelly’s philosophy as a talent company is rooted in the conviction that our business makes a difference on a daily basis—in the lives of our employees and talent networks, for our customers, in the local communities we serve and in the broader economy.

We aspire to be a destination for top talent and a strategic business partner for our customers.

Our solutions are designed to connect with talent across targeted specialties and a variety of flexible work styles, and to offer customers access to workforce solutions that can be customized as they seek to operate more efficient and competitive organizations.

To achieve these goals, we continue to adopt forward-looking technologies and innovative business practices that can drive success in a dynamic market.

With more than one-third of the world’s workforce now participating as independent workers, more companies are adopting strategies that recognize contingent labor, consultants and project-based work as keys to their ongoing success.

We continue to refine our core competencies to help them connect with talent and realize their business objectives.

Kelly offers world-class staffing on a temporary and direct placement basis, as well as a comprehensive array of outsourcing, consulting and talent advisory services.

Kelly continues to target areas of investment and expertise to solve our customers’ workforce challenges and create opportunity for talent in the changing marketplace.

By connecting our customers with qualified talent in an ever-evolving world of work, Kelly has a positive impact on the people, businesses and communities we serve.

As a destination for top talent and a strategic business partner for our customers, we continue to adopt innovative business practices and forward-looking technologies that drive success in a dynamic market.

With more than one-third of the world’s workforce now participating as independent workers, we help companies adopt strategies that recognize and utilize contingent labor, consultants and project-based work as tools to their ongoing success.

We’re also using our position in the middle of the talent supply and demand equation to challenge outdated barriers that hold back far too many people from attaining meaningful work, supporting their families and contributing to the economy.

In 2020, Kelly launched its Equity@Work platform, which seeks to upend systemic barriers to employment and make the U.S.

labor market more equitable and accessible for more people.

Business Operations

Service Marks

We own numerous service marks that are registered with the United States Patent and Trademark Office, the European Union Community Trademark Office and numerous individual country trademark offices.

Our quarterly operating results are affected by the seasonality of our customers’ businesses.

With the exception of our education business, demand for staffing services historically has been lower during the first quarter, and typically increases during the remainder of the year.

We own numerous service marks that are registered with the United States Patent and Trademark Office, the European Union Intellectual Property Office and numerous individual country trademark offices.

Our quarterly operating results are affected by the seasonality of our customers’ businesses which impact the demand for our services.

With the exception of our Education operating segment, demand for our services historically has been lower during the first quarter, and typically increases during the remainder of the year.

Our Education operating segment generally has its lowest revenue in the third quarter in line with schools’ summer break.

Working Capital

Our working capital requirements are primarily generated from employee payroll and customer accounts receivable.

Since receipts from customers generally lag payroll to temporary employees, working capital requirements increase substantially in periods of growth.

Conversely, when economic activity slows, working capital requirements may substantially decrease.

Our working capital requirements are primarily generated from employee payroll which is generally paid weekly or monthly and customer accounts receivable which is generally outstanding for longer periods, with days sales outstanding ("DSO") of 64 days as of January 3, 2021.

Since receipts from customers lag payroll payments to temporary employees, working capital requirements increase and operating cash flows decrease substantially in periods of growth.

Conversely, when economic activity slows, working capital requirements may substantially decrease and operating cash flows increase.

Such increases dissipate over time if the economic downturn continues for an extended period.

Kelly’s client portfolio spans companies of all sizes, ranging from local and mid-sized businesses to the Fortune 500.

In 2020, an estimated 53% of total company revenue was attributed to our largest 100 customers.

Our largest single customer accounted for approximately six percent of total revenue in 2019.

Our largest single customer accounted for approximately five percent of total revenue in 2020.

Government Contracts

Although we conduct business under various federal, state, and local government contracts, no single one accounts for more than three percent of total Company revenue in 2019.

Although we conduct business under various federal, state, and local government contracts, no one contract represents more than four percent of total company revenue in 2020.

The worldwide workforce solutions industry is competitive and highly fragmented.

In the United States, we compete with other firms that operate nationally, and with thousands of smaller companies that compete in varying degrees at local levels.

Additionally, several similar staffing companies compete globally.

In the United States, we compete with other firms that operate nationally and offer a breadth of service similar to ours, and with thousands of smaller regional or specialized companies that compete in varying degrees.

Outside the United States, we face similar competition.

In 2020, our largest competitors were Randstad, Adecco Group, ManpowerGroup Inc., Recruit Holdings and Allegis Group.

Key factors that influence our success are quality of service, price and breadth of service.

Quality of service is highly dependent on the availability of qualified, competent talent, and our ability to recruit, screen, train, retain and manage a pool of employees who match the skills required by particular customers.

During an economic downturn, we must balance competitive pricing pressures with the need to retain a qualified workforce.

Price competition in the staffing industry is intense, particularly for office clerical and light industrial personnel, and pricing pressure from customers and competitors continues to be significant.

Breadth of service, or ability to manage staffing suppliers, has become more critical as customers seek a single supplier to manage all their staffing needs.

Key factors that influence our success are quality of service, price and breadth of service, including our ability to manage staffing suppliers.

Quality of service is highly dependent on the availability of qualified, competent talent, and our ability to promptly and effectively recruit, screen, train, retain and manage a pool of employees who match the skills required by our customers.

We must balance competitive pricing pressures, which may intensify during an economic downturn, with the need to attract and retain a qualified workforce.

Price competition in the staffing industry is intense, particularly for education, office clerical and light industrial personnel, and pricing pressure from customers and competitors continues to be significant.

The ability to manage staffing suppliers has become more critical as customers seek a single supplier to manage all of their demand for contingent talent.

Kelly’s talent supply chain management approach seeks to address this requirement for our larger customers, enabling us to deliver talent wherever and whenever they need it around the world.

Corporate Sustainability

As a leading specialty talent and workforce solutions provider, we connect people with employment opportunities and make a difference in the communities in which we live and work.

Given the worldwide span of our workers, clients, suppliers, and partners, we recognize the global reach of our business practices and our public accountability.

We will continue to advocate on behalf of the global workforce, improve our workplaces, contribute to the communities we serve, and ensure our actions are socially, ethically, and environmentally responsible.

However, as a service business, we are not materially impacted by federal, state, or local laws that regulate the discharge of materials into the environment.

We employ approximately 1,000 people at our corporate headquarters in Troy, Michigan, and approximately 6,700 staff members in our U.S.

and international network of branch offices.

In 2019, we recruited approximately 440,000 temporary employees on behalf of customers around the globe.

While services may be provided inside the facilities of customers, we remain the employer of record for our temporary employees.

We retain responsibility for employee assignments, including workers’ compensation insurance, the employer’s share of all applicable payroll taxes and the administration of the employee’s share of these taxes.

We offer access to various health and other benefit programs to our employees.

Kelly is committed to the highest standards of corporate citizenship.

Given the worldwide reach of our workers, clients, suppliers, and partners, we recognize the global impact of our business practices and the importance of public accountability.

We continue to advocate on behalf of the global workforce, improve our workplaces, contribute to the communities we serve, and ensure our actions are socially, ethically, and environmentally responsible.

Our services are subject to a variety of complex federal and state laws and regulations.

We continuously monitor legislation and regulatory changes for their potential effect on our business.

We invest in technology and process improvements to implement required changes while minimizing the impact on our operating efficiency and effectiveness.

Regulatory cost increases are passed through to our clients to the fullest extent possible.

As a service business, we are not materially impacted by federal, state, or local laws that regulate the discharge of materials into the environment.

Human Capital

We are a talent solutions company dedicated to connecting people to work in ways that enrich their lives and our employees are critical to achieving this noble purpose.

In order to compete and succeed in our highly competitive and rapidly evolving market, it is crucial that we attract and retain experienced internal employees, as well as talent to work for our customers.

As part of these efforts, we strive to offer competitive total rewards programs, foster an inclusive and diverse environment, and give employees the opportunity to give back to their communities and make a social impact.

First and foremost, the success of our business is fundamentally connected to the well-being of our people.

Accordingly, we are committed to the health, safety and wellness of our employees and talent.

In response to the COVID-19 pandemic, we implemented significant operating environment changes that we determined were in the best interest of our employees and talent, as well as the communities in which we operate, and which comply with government regulations.

This includes having the vast majority of our internal employees work from home, while implementing additional safety measures for employees and talent continuing critical on-site work.

Internal Employees

As of January 3, 2021, we employed approximately 1,000 staff members at our corporate headquarters in Troy, Michigan, approximately 3,300 staff members in other locations in the United States and an additional 2,800 in our international locations.

While our retention of employees improved year over year, it still lags our comparable external benchmarks.

Our retention rates for employees identified as High Performing and High Potential align with our comparable external benchmark.

Compensation and Benefits.

Kelly is committed to providing competitive, equitable and fiscally responsible total rewards programs to our employees.

Our compensation programs are designed to attract, retain and reward talented individuals who possess the skills necessary to achieve our strategic goals and create long-term value for our shareholders.

We provide employees with competitive compensation opportunities, with strong pay for performance linkages that include a mix of base salary, short-term incentives and, in the case of our more senior employees, long-term equity awards.

We believe that our programs provide fair and competitive opportunities that align employee and stockholder interests.

In addition to cash and equity compensation, we also offer employees competitive benefits such as life and health (medical, dental and vision) insurance, paid time off, wellness benefits, and defined contribution retirement plans.

Pay and benefits programs provided to our international employees are in line with competitive local practice.

Inclusion and Diversity .

Since 1947, our founder fought to increase access to work for women and we’ve long been an outspoken advocate for the value temporary and independent workers bring to the workplace.

We are committed to fostering an inclusive and diverse workforce.

For example, a significant majority of Kelly's U.S.

workforce is female, including a majority of director and above roles.

We believe an inclusive environment with diverse teams creates a workplace that is conducive to producing more creative solutions, results in better, more innovative products and services and presents Kelly as a workplace leader, aiding our ability to attract and retain key talent.

We are focused on fostering a culture of belonging, where everyone feels welcomed and respected and can thrive as we work together.

Community Involvement .

We consider sustainability to be a guiding principle in strengthening the relationship with our global workforce, suppliers and customers.

Through our programs and initiatives, we seek to contribute to improving the quality of life of our employees, their families, as well as the communities in which they operate.

Designed on the concept of social investment, our approach ensures the creation of future development capacities instead of aiding on isolated occasions.

We support initiatives where our employees can actively engage in the causes they believe in that are also connected to our sustainability strategy.

Through our Equity@Work platform, we are living our commitment to ensure equitable access to work and growth for all by creating alliances with like-minded companies, policy groups and institutions to positively impact the way companies hire, advance and help more people thrive.

For more information on our diversity and inclusion and community involvement initiatives, please see our Corporate Responsibility report which is available at kellyservices.com .

In addition to our internal employees, Kelly recruits talent on behalf of our customers on a global basis.

In 2020, we placed nearly 370,000 individuals in positions with our customers.

In all of these instances, Kelly remains the employer of record for all talent working at our customer locations.

This means that we retain responsibility for all assignments, wages, benefits, workers’ compensation insurance, and the employers’ share of applicable payroll taxes as well as the administration of the employees' share of these taxes.

We also offer our Kelly talent access to competitive health and benefit programs while they are working with us.

Foreign Operations

2 unchanged sentences

We electronically file our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports with the Securities and Exchange Commission (“SEC”).

The public may read and copy any of the reports that are filed with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549.

The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

The SEC also maintains an Internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically.

The SEC maintains an Internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically.

We make available, free of charge, through our website, and by responding to requests addressed to our senior vice president of investor relations, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business