Total Staffing Costs

The number of temporary workers nationwide has risen more than 50 percent to 2.7 million — the most on record — since the recession ended in June 2009, the Labor Department reported.  There are a number of factors that could be contributing to the rise in temporary use including employers’ feelings of uncertainty about the economy and concerns about the costs of Obamacare, but many companies are using temporary workers to help manage costs.

According to a recent survey by Staffing Industry Analysts , 92% of contingent staffing buyers reported use of temporary workers saved them money.  Reported savings ranged between 9% and 17% of total expense.

To understand how these savings are realized, companies need to consider the total costs of staffing.  By using staffing services, companies will experience savings in withholding taxes, benefits costs, workers compensation premiums and overtime pay. Additional savings come in the form of saving on the employer’s time spent finding good employees. There are many hidden costs wrapped up in the hiring process and the amount of the employer’s time spent recruiting and hiring.  Consider the cost of time spent on the following staffing activities:

a. Preparing for interview

b. New hire planning

c. Preparing and placing ads and job posts

d. Preparing recruiting materials

e. Screening 1st round of applicants

f. Conducting phone interviews

g. Setting up, preparing and conducting 1st round of interviews

h. Selecting candidates for 2nd round of interviews

i. Setting up, preparing and conducting 2nd round of interviews

j. Selecting final candidates

k. Checking references

Plus, there is the cost of a bad hire .

The two key ways that companies use temporary workers can create additional cost savings.

• Temporary employees to cover seasonal production levels: by covering peaks in production levels with temporary workers, employers save the salary costs of staffing to peak levels year round.  Maintaining a full-time staff of permanent employees when production levels are low would be cost prohibitive for many employers.

• Using temporary employees to find the right candidates to hire: the ability to “try out” a candidate before making a commitment to permanent hire allows the company to verify necessary skills and gauge culture fit.  The costs of a bad hire can be numerous and unpredictable.

Companies should take some proactive steps to maximize the savings realized by using temporary services.  The first step is to analyze your workflow and determine the amount of steady work versus peak periods.  Don’t wait until a crisis point to contact a staffing agency.

Meet with your temporary service provider several weeks before your anticipated upturn.  Give them a tour of your facility and let them meet key hiring managers.  Review skill sets needed, hours of operation and other work related issues.  This will allow the agency to put together a plan for staffing your project, review current temporaries available and take steps to recruit additional workers if needed.  They will also be able to correctly explain the details of the work and your company’s expectations.

The second step you should take is to review your current permanent staff.  Are any employees nearing retirement or an extended period of time off? Plan ahead, and bring in a temporary worker to learn key processes from your current staff.  The  temp to hire process will give you an opportunity to have the right person in place when needed.

The use of temporary services is continuing to grow in popularity and when used correctly, can prove to be a cost saving strategy for employers. To learn more about temporary staffing options, click here .

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