It has been three years since the recession was officially declared to have ended in mid-2009. However, even with that declaration, the national unemployment rate remains at more than 8 percent and full-time hiring is sluggish at best. There has been an increase in hiring during the years since 2010, but it has not been enough to replace all the jobs lost during the downturn.
“There is so much uncertainty surrounding such things as the cost of health care, taxes, foreign markets and the availability of capital, which has left many companies afraid to make full-time offers of employment,” says Melissa Hulsey, president and CEO of The Ashton Group. “The cost savings and increased flexibility offered by a contingent work force make this a silver lining in this economy.”
Smart Business spoke with Hulsey about using temporary employees to keep up production until market conditions stabilize.
What are some trends you’re seeing in the marketplace?
Small businesses — those with fewer than 50 employees — are reporting more growth and confidence than their larger competitors, and there has been a rise in salaries as recruiting and retaining skilled talent has become more competitive. However, the other side of the coin is voluntary turnover has risen as talented employees leave their jobs to look for better opportunities in the marketplace.
Additionally, because of the prevailing uncertainty in the economy, over the past several years there has been a steady rise in the use of contingent labor that is far outpacing full-time opportunities during the same time period. Historically this has been a leading indictor that full-time jobs also will increase in the future in as few as three to six months. However, that has not been the case recently. This new trend suggests that employers need additional labor to meet production demand but are not willing to make a long-term commitment to employees. Also the ratio of Americans actually working compared with those available to work recently has hit its lowest level since 1981.
How can contingent or temporary workers help companies keep up with production?
The use of a contingent work force allows production demands to be met without any strings attached. For example, all of the burdens associated with the hiring process, such as screening, initial interviews, payroll expenses, taxes, insurance and unemployment are the responsibility of the staffing firm. For the employer, it means a job can be filled quickly and efficiently to align its work force with its production needs.
How can staffing companies help an employer reduce its time-to-hire?
Staffing companies are in the business of placing candidates into jobs, so they are constantly recruiting and screening new applicants. In addition, most staffing firms have well-qualified individuals who they have worked with previously who can be available for new assignments. By having a pool of candidates who are pre-screened and ready for work it can significantly reduce the time it takes to have a position filled.
What cost savings can be realized by utilizing contingent or temporary workers?
On average, it costs $7,000 to hire and train one new employee. Many upfront costs such as recruiting, advertising, screening applicants, verifying credentials and initial interviews can be eliminated by utilizing contingent labor. In the long run, savings on health insurance, retirement and PTO can result in significant savings over hiring full-time workers using in-house resources. In addition, temporary labor can ebb and flow with production demands, further increasing savings and avoiding the blow to morale caused by laying off full-time employees when production has to be tapered off.
How much training should a company expect to put into a temporary or contingent worker?
When companies hire contingent workers, they need to train them for the job at hand. To make the most of the cost and time savings temporary labor offers, companies should streamline the training process for these individuals by defining exactly what they want their contingent staff to accomplish during a shift and train them with that end result in mind. Other than training for the specific job, address housekeeping issues with all temporary employees on the first day. Information on items such as parking, use and upkeep of the break rooms and bathrooms, and even where they can grab a bite to eat close by will not only make the new person more feel comfortable but save time as well.
How can a company ensure it’s getting the right worker for the job?
There are several key steps to ensure a temporary employee is a good fit with your company. The first is to choose the right staffing partner to work with. Choose a service provider that understands the needs of your organization, as well as one that makes it easy to establish an ongoing dialogue. The next step is to clearly define what you want to accomplish.
From there, a job description and position requirements can be written. The more detail you provide to the agency, the better its ability to qualify the best candidates for the opening. Job descriptions for your full-time positions also can serve as an excellent guide for your ‘part-time’ jobs.
Melissa Hulsey is president and CEO of The Ashton Group. Reach her at (770) 419-1776 or email@example.com.
Insights Staffing is brought to you by Ashton
The ability to attract, hire and retain talent remains a top concern for chief executive officers worldwide. While we experienced significant layoffs and cutbacks during the recession, talent and skill shortages are still very apparent. Companies need to be creative and expeditious in their search for talent. This has increased the prevalence of flexible labor and contingent workers.
Contingent labor is a growing expense on global operating statements. The ability to expertly manage, control and extract maximum value from this expense can be critical to a company’s competitive positioning. Vendor management technology continues to be an effective way to better manage contingent labor. VMS, paired with an outsourcing partner or managed service provider (MSP), enables companies to obtain visibility into this complex spend category, creating a framework to more easily develop, implement and manage a competitive sourcing program. This puts the current supply chain under scrutiny and expands the supply chain to attract and retain best in class suppliers.
“Many companies simply use the same suppliers without ever looking at whether they could do better,” says Laurie Bradley, president of ASG Renaissance. “VMS allows you better data visibility and a standardized service platform to enable controls, checks and balances. Once the data is aggregated and easily accessible customized reports can be generated to better manage budgets and project expenditures through growth periods.”
Smart Business spoke with Bradley about how VMS can help standardize your contingent hiring and potentially lower your costs.
What companies are ideal candidates for VMS?
VMS is software as a service and does not require a huge capital outlay, so it is affordable to even smaller users of contingent labor. It requires time and training to install and deploy, so companies with expenditures in excess of $15 million should consider it. It is ideal for those with multiple locations and can be effective across multiple currencies. It aggregates all spend points and enables users to examine usage, cost, performance and labor trends.
Most companies that undertake this process are surprised at how much they are spending on contingent labor because there is typically not one line item identifying contingency spending. Generally, every office and plant is doing things differently. In times of recession and rapid growth, contingent users can become very creative in how they get the talent they need in spite of a hiring freeze.
How can a company get started on the process?
First, do your homework. Consider skill classifications and the types of contingent expenditures to include. This may cover temporary workers, contract workers, independent contractors and outsourced services. Due diligence should include discussions with human resources, facility managers and executives.
Once you understand what you’re spending, you’ll likely see there are pockets everywhere. Then the question becomes, how efficient is the current state? Are you getting the best value for dollars spent and can you quantify your return on investment to include the quality of your current service providers? Is there consistency and fairness in the pricing model?
Identify your suppliers. Are there benefits to leveraging business with a smaller supply chain? If you have 100 suppliers and can reduce to 50, giving each the opportunity for more business, could you negotiate better pricing? Until you know what you’re spending, it’s hard to have those conversations.
How do you begin to get your arms around it?
Start with line items where it’s clear there are contingent dollars in temporary help. You might have 300 engineers at six facilities, and you’re paying some $36 an hour and others $48 because the company has never put a full service request out for competitive bids. When you put it together, all of those little pockets add up to very significant spending.
Where do you start to standardize spending?
Many times, an MSP is selected by the company to operate and manage the VMS application on behalf of the company. The MSP institutes rate cards for job classifications and selects a supply base. Sometimes agencies that have supplied a company for years don’t make that cut. Most MSPs encourage the customer to onboard all suppliers. Then you can systematically see where you can save money.
It can be a challenge when you start rationalizing the supply base. When tenured suppliers for price or quality reasons no longer fit the contingency staffing model, they may be eliminated. This requires a well-planned communication strategy so hiring managers understand the benefits of the new process. In addition to a learning curve on technology, they now have to deal with changes in their supplier pool.
How can companies present VMS to current suppliers?
Two biggest benefits to the supply chain: access to more orders and faster payment terms. Suppliers compete on a level playing field with access to more orders, and standardized quality and performance metrics help drive out nonperforming participants.
Who should be involved in the process?
It typically starts at the purchasing level with involvement from human resources. IT also plays a critical role as system integration is a key component of success.
How can VMS benefit businesses?
The technology of VMS, with a vendor-neutral MSP, helps companies better manage contingency labor expenditures on a standardized platform. It helps suppliers gain greater access to client requirements and provides an easy way to transmit, record and manage the lifecycle of talent. Vendor neutrality reassures suppliers they are not in competition with the MSP for staffing, breeding trust and fostering a collaborative work environment. This ensures talent requests are broadcast across a diverse supply base and ensures suppliers meet client-specific quality, performance and price guidelines.
Laurie Bradley is president of ASG Renaissance. Reach her at (248) 477-5321 or firstname.lastname@example.org.
Insights Staffing is brought to you by ASG Renaissance