I was talking to a highly intelligent, esteemed peer; Brent (in case he reads this) in the staffing industry the other day, and we were discussing one of my favorite topics, contingent workforce strategy. He had a challenge with a particular client in getting them to see how using temp labor is a very solid, cost effective approach; particularly the “cost effective part.” Some of their concerns on temp labor; “but they are more expensive,” “they don’t have the same loyalty to our company our employees do,” “they won’t fit in our culture as they don’t understand it the way an employee does.”
He asked me for some talk points to share with his client to help come to an agreeable solution in utilizing temp workers for their overall workforce strategy. That gave me the perfect topic for this week’s article.
Here is our new reality; after one of the largest recessions in US history, we are in the middle of a talent war and roughly 33% of the average total workforce is temp workers and that number is climbing. Given a company’s success depends on getting critical talent; quickly, efficiently and cost effectively, how can you not consider temp workers as part of your overall workforce strategy?
There are myriad options for procuring temp workers; Independent contractors, online staffing platform communities, staffing providers, Statement of Work Outsourcing. For now we will focus on Staffing Providers and client benefits to using them as part of their overall workforce strategy. Some key benefits:
Cost Effective – The Staffing Providers foot the bill for healthcare costs (which will continue to climb over the next several years), unemployment insurance, Social Security, incentives and bonus’, professional development, recruitment.
The premium for perm talent is roughly an additional 50-70% of the salary. Here are typical costs for a $50,000 a year employee:
- Hiring Costs: $2,500 – $5,000
- Benefits: $13,000 (includes healthcare and retirement)
- Paid Time off $5,000
- Employment Costs and Taxes $5,000 – $7,500
- Total annual costs of employment – $80,500
Temp labor solutions (augmenting existing staff or full outsourced labor solutions) are often less expensive not only monetarily, but mitigate lost productivity and revenue due to worker shortages during peak periods. With the flexible nature of temp labor, you have the ability to run lean; ramp up and ramp down quickly with market demand, without incurring the challenges and costs associated with perm employee lay-offs.
High Quality Productive Workforce – Staffing Providers typically have teams that are highly skilled in sourcing, vetting, and qualifying temp workers across the spectrum of labor categories. They have an extensive network of personal and online networks to source the worker. They have current technical and behavioral testing strategies; online and in person. The worker is vetted with internal resources that are highly skilled in identifying strengths and weaknesses. All of this to identify the right worker for their clients, quickly and efficiently. They have internal KPI/SLA’s they track to, regarding quality, negative turnover, successful fill rates. Any performance issues are addressed and resolved with the Staffing Provider through defined paths and protocol for issue management.
Dedicated and Committed – Staffing Providers invest in their worker; they provide incentives, training, ensure their skills are current so they continue to be marketable. This also ensures the workers they provide to their clients are focused, happy, and dedicated; meeting all deliverables and requirements. Client cultural norms and specifics, in collaboration with the client’s HR team, can be socialized during the onboarding process. Many companies are collaborating with Staffing Providers, Contingent Workforce Program Managers, etc. to provide orientation training to ensure the workers are properly indoctrinated into the company they are hired for.
In light of the “new normal” in current labor trends and market demand, utilizing temp labor as part of a company’s overall workforce strategy is just, well…..smart. When companies share their business strategy and workforce needs with valued staffing partners, it enables them to quickly source, vet, and provide the high quality workers that will generate profit and growth.
Terri Gallagher is the President/CEO of Gallagher and Consultants; She can be contacted at firstname.lastname@example.org