What changed in this filing

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Item 1. Business

2024-02-20 compared with 2023-02-16 · 54 added, 58 removed, 76 unchanged (60% of the section changed)

History and Development of Business

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.

Over the next 76 years, as work evolved, Kelly equipped people with skills to master new technologies as they emerged:

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

creating testing and training packages for breakthrough office programs;

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

With each advance, Kelly met the needs of the marketplace;

empowering our people to reach their personal goals and enabling our clients to access skilled talent to move their organizations forward.

As work has evolved so has Kelly's range of solutions, growing over the years to reflect the changing needs of employers 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 market 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 clients.

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

We are also a leading education staffing provider in the U.S., placing talent across the full education spectrum from early childhood education to higher education.

These services complement our expertise in professional office services, contact center and light industrial 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 employers 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 the United States, Kelly provides workforce solutions to a diverse group of local, regional and global clients in the Americas, Europe and the Asia-Pacific region across a variety of industries.

In 2022, we assigned more than 300,000 temporary employees to a variety of customers around the globe.

Description of Business Segments

Kelly is a talent solutions company organized into five specialty businesses, which are also our reportable segments, serving clients of all sizes across a variety of industries.

This structure enables us to focus on specialties with robust demand, promising growth opportunities and areas in which we excel at attracting and placing talent.

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

and Canada, including our KellyConnect and Skilled Professional Solutions products

• Science, Engineering & Technology ("SET") – delivers staffing, outcome-based and permanent placement services focused on science and clinical research, engineering, technology and telecommunications specialties predominantly in the U.S.

and Canada and includes our Softworld, NextGen and Global Technology Associates subsidiaries

• Education – delivers staffing, permanent placement and executive search services across the full education spectrum from early childhood to higher education in the U.S.

and includes Teachers On Call, Insight Workforce Solutions, Greenwood/Asher and Pediatric Therapeutic Services ("PTS")

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

• International – delivers staffing, RPO and permanent placement services in 14 countries in Europe, as well as services in Mexico delivered in accordance with changes in labor market regulations

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.

William Russell Kelly pioneered the staffing industry when he founded Kelly ® in 1946, and we’ve been reinventing it ever since.

Our inception helped usher in and embolden a workforce of women who kept the economy moving forward during World War II, opening doors and creating completely new opportunities.

Over the next 77 years, as work evolved, Kelly continued to equip people with the skills to master new technologies as they emerged and the opportunity to put them to work in ways that enriched their lives.

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

In 1996, Kelly established the industry’s first Managed Service Provider (MSP) program.

Three years later we launched specialized offerings in engineering, IT and education.

Strategic acquisitions over the years broadened our solution offerings and included the Ayers Group, Teachers on Call, Global Technology Associates (GTA), NextGen, Greenwood/Asher & Associates, Softworld, RocketPower and Pediatric Therapeutic Services (PTS).

Since 2020, we operate in five specialty business units – Kelly Education, Kelly Professional & Industrial, Kelly Science, Engineering & Technology, KellyOCG and Kelly International.

Business Objectives

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

As a destination for top talent and a strategic business partner for our clients, 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 enablers of their ongoing success.

We strive to empower businesses and talent to access limitless opportunities by enabling companies to recruit and manage skilled workers and help job seekers find great work.

As experts in hiring experts, we ensure companies have the people they need when and where they’re needed most.

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.

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While systemic change takes time, we continue to make progress with additional outreach, new alliances and partnerships and continued executive commitment.

We believe that delivering on these objectives will result in successful outcomes for customers and talent, and drive profitable growth for Kelly.

Description of Business Segments and Services

Kelly is a talent solutions company operating in five specialized business units, which are also our reportable segments.

This structure enables us to serve the specialized needs of both talent and customers while building deep industry connections.

• Professional & Industrial – delivers staffing, outcome-based and permanent placement services providing administrative, accounting and finance, light industrial and contact center staffing and other workforce solutions in the U.S.

and Canada, including our KellyConnect and Skilled Professional Solutions products

• Science, Engineering & Technology ("SET") – provides highly specialized skills to a variety of industries through staffing, outcome-based and permanent placement services.

SET is focused on science and clinical research, engineering, technology and telecommunications specialties predominantly in the U.S.

and Canada and includes Softworld, NextGen and GTA brands

• Education – delivers high quality education and therapy services talent through staffing, permanent placement and executive search services to Pre-K-12 school districts and education organizations across the U.S.

and includes Teachers On Call, Greenwood/Asher and PTS brands

• Outsourcing & Consulting Group ("Outsourcing & Consulting," "OCG") – provides global talent supply chain and workforce solutions, including Managed Service Provider ("MSP"), Recruitment Process Outsourcing ("RPO"), Payroll Process Outsourcing ("PPO") and executive coaching programs to customers on a global basis and includes our RocketPower brand

• International – delivers staffing, RPO and permanent placement services in 14 countries in Europe, as well as services in Mexico.

Our European staffing operations were sold on January 2, 2024

Business Operations

Geographic Breadth of Services

In 2023, together with our supplier partners, we placed more than 500,000 workers with a variety of customers around the globe.

Service Marks

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.

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

Seasonality and Economic Cycles

Our operating results have historically been affected by the cyclical response to both economic downturns and upswings.

Customers tend to use our services to supplement their existing workforce and generally hire permanent employees when long-term demand is expected to increase.

Customers use our services to supplement their existing workforce and generally hire permanent employees when long-term demand is expected to increase.

As a consequence, our revenue from services tends to increase when the economy grows.

During periods of increasing demand, we are generally able to improve our profitability and generate operating leverage.

Conversely, our revenue from services decreases when the economy declines and customer demand for our services also declines.

Our business also experiences seasonal fluctuations, particularly in our Education operating segment.

When demand drops, our operating profit is typically impacted unfavorably as we experience a deleveraging of our selling and administrative expense base which may not decline at the same pace as revenue.

Our business also experiences seasonal fluctuations each year, particularly in our Education operating segment.

Revenue in Education is generally lowest in the third quarter in line with schools’ summer break.

Working Capital

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 61 days as of January 1, 2023.

Our working capital requirements are primarily generated from our staffing businesses resulting from employee payroll which is generally paid weekly or monthly and customer accounts receivable which is generally outstanding for longer periods.

When we operate as a managed service provider, our payment terms to suppliers are generally in line with payment terms from customers, which does not result in a significant use of working capital.

Based on the nature of our business, accounts receivable is our most significant asset with days sales outstanding ("DSO") of 59 days as of December 31, 2023.

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

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In 2023, an estimated 55% of total company revenue was attributed to our largest 100 customers.

Our largest single customer accounted for approximately seven percent of total revenue in 2022.

Our largest single customer accounted for approximately six percent of total revenue in 2023.

Government Contracts

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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.

More information about our corporate sustainability initiatives is available in our C orporate Sustainability and ESG Report - Growing with Purpose report on kellyservices.com

Our services are subject to a variety of complex federal and state laws and regulations in the countries where we operate.

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Internal Employees

As of January 1, 2023, we employed approximately 4,800 staff members in the United States and an additional 2,700 in our international locations.

As of December 31, 2023, we employed approximately 3,700 staff members in the United States and an additional 2,500 in our international locations.

Kelly retention rates for high performing and high potential employees align with our comparable benchmark.

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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

with the skills necessary to achieve our strategic goals and create long-term value for our shareholders.

Our compensation programs are designed to attract, retain and reward talented individuals with 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.

Our programs provide fair and competitive opportunities that align employee and stockholder interests.

Our programs provide fair and

competitive opportunities that align employee and stockholder interests.

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

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For example, recent enhancements to our U.S.

benefits program include additional time off for significant life events, a financial advisor program, support programs for certain chronic health conditions and introduction of a well-being app globally.

benefits program include the addition of an advocacy/navigation partner to our medical plans and automatic enrollment in one of our 401(k) Plans.

In addition, pay and benefits programs for our international employees align with competitive local practices.

Inclusion and Diversity .

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

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

We are committed to fostering an inclusive and diverse workforce.

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

Additionally, for a fifth consecutive year, we’ve achieved a 100% rating from the Human Rights Campaign Foundation’s Corporate Equality Index for LGBTQ+ equality in the workplace.

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 high-performing talent.

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

We believe that 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 high-performing talent.

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

Kelly promotes employee development and internal career mobility to enable our team to achieve their full potential and to ensure we have the evolving workforce capabilities that the future demands.

Community Involvement .

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

Through our programs and initiatives, we seek to improve the quality of life of our employees, their families and the communities in which they live and serve.

Designed on the concept of social investment and nurturing shared values, 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.

In 2022, we achieved over 7,800 hours of volunteering (for the U.S.

and Canada), engaging over 1,000 employees.

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

Through our programs and initiatives, we are dedicated to enhancing the well-being of our employees, their families and the communities they call home.

Designed on the concept of social investment and nurturing shared values, our approach cultivates sustainable development capabilities for the future rather than aiding on isolated occasions.

We empower our employees to actively participate in causes they are passionate about and are in line with our sustainability strategy.

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

For more information on our diversity and inclusion and community involvement initiatives, please see our Sustainability Report - Growing with Purpose , which is available at kellyservices.com.

For more information on our diversity and inclusion and community involvement initiatives, please see our Corporate Sustainability and ESG Report - Growing with Purpose , which is available at www.

kellyservices.com.

In addition to our internal employees, Kelly recruits talent on behalf of our customers globally.

In 2023, we placed more than 500,000 individuals in positions with our customers.

Kelly remains the employer of record for our employees working at our customer locations.

This means that we retain responsibility for all assignments (including ensuring appropriate health and safety protocols in conjunction with our customers), wages, benefits, workers’ compensation insurance, and the employers’ share of applicable payroll taxes as well as the administration of the employee's share of these taxes.

When Kelly remains the employer of record for our employees working at our customer locations, we retain responsibility for all assignments (including ensuring appropriate health and safety protocols in conjunction with our customers), wages, benefits, workers’ compensation insurance, and the employer's 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.

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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.

We make available, free of charge, through our website, and by responding to requests addressed to our investor relations office, 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.

These reports are available as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.

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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