In January of 2009, more than 560,000
U.S. jobs were slashed. Companies in
nearly every industry have had to cut back
on labor costs, typically their most expensive
line item. But when remaining employees are
stretched to their limit, it soon becomes clear
to management that, even in a downsized
company, the work still needs to be performed by someone with the right skill set.
For many businesses, temporary employees
are the answer to cutting costs without hurting the bottom line.
“During this downturn, many large companies are turning to staffing firms for temporary workers,” says Rob Wilson, president of
Employco Group, a division of The Wilson
Companies. “They’re supplementing their
work force without the additional cost of
benefits and other expenses that go along
with permanent employees.”
Smart Business asked Wilson about the
advantages of working with a staffing firm to
bring in temporary workers in tough times.
Is now a good time to partner with a staffing
firm?
Absolutely. The market has changed and so
has the temporary staffing trend. For example, Carlisle Staffing, a division of The Wilson
Companies, does a fair amount of temporary
placement for myriad companies in the traditional sense of cyclical work; if a warehouse has an influx of goods and now needs
extra employees — that is a short-term fix.
But what we’ve been seeing quite a bit in this
economic environment are publicly traded
companies and other large privately held
national companies working with staffing
firms after layoffs. Once they save through
trimming wages and eliminating the vacation
time, holiday pay, sick time, health insurance
and 401(k) match expenses that go along
with those employees, they often find that
they have eliminated too many jobs to function efficiently. Savvy companies are turning
to staffing firms to fill the gap.
Besides the reduction in benefits expenses,
what are other advantages of using temporary staff?
You get a lot more flexibility with a temporary employee — do you need the person 30 hours a week or 50? You couldn’t really
do that with your employee base before.
When working with a staffing firm, if you
don’t like the person sent to you, you can
just call for a replacement and continue to
do so until you find the perfect match for the
position.
There are many quality people in this market who are willing to work for less than
their previous salary. In some cases, you
many end up hiring your old employees
back through the agency on a temporary
basis, but this time without the added costs
for vacation time or benefits. There is
always the option to rehire them back as
permanent employees when your company
is in the financial position to do so.
How else can staffing firms save time and
money?
Hiring an employee at $16 an hour from a
staffing firm with a 40 percent mark-up
would end up costing around $22.40 an hour
or $44,800 for a 50-week year at 40 hours a
week without paid holidays or vacation. If a
company were to hire that same employee
on its own, after adding in taxes, workers’
compensation premiums, FICA, health insurance and other employee costs, that
$16 becomes $19.20, which is $44,936 a year.
Even though it might appear to be more
cost-effective to hire the individual on your
own, consider the fact that you now also
have flexibility on the number of hours
worked per week. In such a competitive
market — the person who wanted $16 an
hour might work for $15 instead — temporary employees become part of a cost-effective strategy.
In addition, since the staffing firm handles
all the recruiting and interviewing, those
expenses can be eliminated and you are
provided with multiple candidates from
which you can select the most qualified.
Further, if a temp doesn’t report for work,
you can just call the agency for a same-day
replacement, which results in minimal lost
time. If you are pleased with the employee
but can’t afford to hire him or her until the
market recovers, chances are by then the
employee has been with you through the
agency long enough that the conversion fee
is either waived or very minimal.
Staffing firms will also handle I-9 immigration requirements as well as all other compliance issues. Where most firms only
require two forms of ID, reputable staffing
firms will require three forms of ID and
absorb all the costs associated with background checks and drug testing, if required
by the client.
Is there a downside of using temporary
employees?
Companies should make sure to check the
agency’s references and make sure it provides quality employees for their job assignments. A staffing firm should test all
prospective employees and, especially in
this marketplace, look for workers’ comp
fraud and other areas of potential fraud. In
the case of the workers’ comp claim, you
have to pay temp employees as if they were
full-time-like employees. So you want to
make sure the staffing firm has a good
recruiting department, and that it has proper insurance coverage.
ROB WILSON is president of The Wilson Companies, which handles human resources outsourcing, staffing and insurance for 400
small and medium-sized Midwest companies. Reach him at (630) 286-7345 or [email protected].
