Career advice, insights & tips for HR professionals
A flexible workforce 19/08/2010
With the coalition government’s commitment to extend flexible working for better work-life balance, HR professionals need to know the value of a temporary workforce to help create a more flexible working environment. With major priorities of keeping costs and head count down, how can temporary workers help weather the employment storm?
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- Weathering the economic recovery
- Increase flexibility
- Reducing costs & risk & saving time
- Managing skill shortages
- Efficient recruitment process
- Temporary vs. permanent workers
- Preparing for the recovery
- Efficiency goals & the four core factors
Weathering the economic recovery
Personnel costs, such as healthcare, insurance, taxes and Benefits, are soaring at a time when companies are under even greater pressure to perform. Everyone's being asked to do more with less, and human resources departments are no exception.
Though an economic recovery appears to be just over the horizon, it isn't here yet. So companies are forced to maintain or even exceed productivity levels without adding full-time staff to the bottom line.
A tailored, strategic approach to temporary staffing can help reduce overheads, manage operating costs and improve organizational performance by reducing risk, increasing flexibility and saving time. Here's how temporary agency workers can improve core business activity.
The use of temporary agency workers has grown hugely over the last decade driven by the increasing need for a flexible workforce to meet ‘just in time’ business models and also, in many sectors, by a demand from workers themselves for a more flexible lifestyle.
A flexible work resource is now central to the workforce management strategy of most organizations and employers have long recognised the contribution that using temporary staff can make to the achievement of organisational goals and targets.
Hiring help as needed lets companies respond to market demands quickly without adding to full-time staff. By letting temporary employees handle non-core business functions allows regular staff to concentrate on core competencies.
During a hiring freeze, using a staffing company can help handle the workload without increasing your direct hire headcount.
Reducing costs & risk & saving time
Because temporary labour work for recruitment agencies, the businesses they serve are not responsible for paying their Benefits or handling their unemployment claims; although this may change with the implementation of the Agency Workers Regulations in 2011.
- Temporary employees can provide the help needed for special projects or peak workloads without increasing fixed payroll costs.
- Overtime labour costs may be reduced by more than 20% by letting temporary employees work the extra hours.
- Most recruitment agencies offer a temporary-to-hire option so that businesses may try out new employees.
- Using temporary help during peak periods relieves stress and prevents burnout among core employees, which can reduce absenteeism and worker's compensation claims in the long run.
- Hiring extra employees when needed, to smooth fluctuations in workload, helps avoid layoffs by keeping core staff as lean as possible.
Managing skill shortages
Despite high unemployment, there are certain skills that are always in short supply. There may also be short-term shortages in skills, where staff are not available to meet the service levels required or during the time that a permanent role is being filled, which could be some months.
Where it's critical that a task should be completed to a set standard and time, perhaps
for legislative or practical reasons, the use of temporary workers is often the most cost effective solution.
Skills shortages often occur in local or regional labour markets. The use of temporary and contract staffing facilitates the movement of workers from areas of availability to areas of shortage.
Efficient recruitment process
An important first step in achieving an optimum recruitment model is to establish an efficient recruitment process that takes a request from the hiring manager through to the supplier and worker as seamlessly as possible. Ideally, workforce planning should integrate the effective management of temporary and permanent recruitment. A typical ‘best practice’ approach would be:
- Management identifies a long-term or short-term resource need; this may arise during a planning exercise or in response to an event within the team.
- This need is reviewed with HR colleagues, usually supported by a profile of the tasks and outputs concerned with an assessment of the potential solutions (which may include management of the work through extended hours in the current team).
- Checks are then made to identify whether existing staff could be used (e.g through secondment or re-deployment) perhaps as part of an individual’s development.
- If no solution is found, the search is widened to the external labour market, accessed through established supply channels.
Temporary vs. permanent workers
Facing the ups and downs of labour requirements due to, say, fluctuating demand, firms can adjust the hours of permanent workers. When firms face a demand increase, they may ask their current permanent employees to work extra hours, rewarding them with a higher overtime hourly wage. However, firms can adjust labour hours only so far without increasing the number of workers.
Adjusting the number of permanent employees incurs some costs to the firm. Hiring costs include those for advertising, screening, processing documents for new employees, and training; also, on the-job training may disrupt previously trained workers' production. Firing costs could include mandated or voluntary severance payments.
Preparing for the recovery
After several years of layoffs, cut backs and keeping the company workforce as lean as possible, we are finally poised to embrace an economic comeback. Though inevitable, it has not arrived yet. So how do you keep things moving in the interim?
Keep temporary staffing in mind. Hiring temporary workers boosts your productivity without raising your Benefits costs. It allows you to keep full-time staff at a level you can afford. And it gives you flexibility to meet market demands quickly, especially as those demands propel your company into the new recovery.
Efficiency goals & the four core factors
Procurement and purchasing opportunities must be fully explored. Collaborative arrangements, frameworks and shared buying arrangements allow suppliers, like recruitment agencies, to offer their best terms. Sophisticated processes can be set up to optimise controls and the management of flexibility.
Once set up, such frameworks must be maintained effectively. Anecdotal evidence suggests that there is ‘leakage’ around some current frameworks as a result of hiring managers failing to comply. Where Purchasing teams lack the technology to track such activity the Benefits are soon lost, as costs rise.
The drivers of efficiency in recruitment and staffing are transparency, visibility, accuracy of management information and analysis. Temporary recruitment agencies are able to generate and deliver reports and analysis that give employers these Benefits, with no further investment required.
Efficiency is also a matter of delivering the right skills and capabilities, at the right time. Matching skills, competencies and personalities to a role is a complex task in itself. Using agencies gives the employer access to a resource with in-depth experience in this task within the cost of filling the role.
As organisations look to meet efficiency targets in the next few years, they will find recruitment agencies their willing partners. The Challenge is to deliver services to the UK population with a more efficient use of resources, both human and financial.
Regardless of the speed of economic recovery, greater efficiency will be essential. For improvement to be achieved, transitions must be made using change programmes, demanding greater flexibility, not less, in the workforce.
Matthew Sanders, CEO, de Poel
Matthew founded de Poel in partnership with Michael Campbell in 2001. Matthew has held senior management positions within high street multinational recruitment agencies and has managed numerous blue chip accounts over the years.