When there’s a strong, open partnership between an employer and its temporary staffing agency, both parties can realize profits and cost savings. The goal for both sides is to determine the right value and form a relationship that makes it more cost effective to hire a staffing firm than it would be for the employer to perform those duties, says George Thomas, senior vice president of Everstaff.
“It is our job to make sure that the client understands all of the costs, liabilities and exposure that they defer when using a staffing agency for temporary and temporary-to-permanent placement,” he says.
Smart Business spoke with Thomas about how to maximize your savings by partnering with a staffing firm.
How does the cost relationship between a business and a staffing agency work?
There’s a common misperception that a company isn’t realizing savings when paying for the services of a staffing firm. Two significant costs are along the lines of direct and indirect liabilities. These are the insurances that the staffing company covers as part of payroll, including workers’ compensation and unemployment. There are also additional liabilities and sometimes very significant costs associated with workers’ compensation and unemployment claims, which are passed directly to the staffing firm.
The employer also gains significant savings through the indirect costs of marketing and recruiting. Businesses will ultimately spend more time, money and resources when recruiting seasonal and permanent staff due to the fact that most HR departments are smaller and too busy dealing with day-to-day employee issues to focus efforts on sourcing and recruiting candidates. This is where the staffing agency can use its expertise in recruiting and placement to sort through resumes, bring people in for interviews and ensure the employer gets an employee for the job who has both the hard and soft skills necessary to be successful. In addition, recruitment is becoming more costly today, with many employers requiring background checks and drug screenings, even for low-wage jobs.
How can using a staffing agency help with employee retention?
A lot of temporary staff turnover occurs in the first two to three weeks, especially in manufacturing. When a business doesn’t use a staffing firm, it incurs the front-end costs of recruiting — bringing people on board and training them — only to end up losing many of them in the first few weeks or months. When using a staffing agency, though you will lose productivity when there is turnover, you will not lose the up front costs associated with sourcing, screening and placement.
As far as retention, a good staffing firm will know the client and be involved in proper orientation, pre-employment screening and ‘after-placement’ coaching to reduce turnover. When the staffing firm plays a key role in the coaching of the temporary work force, retention always improves.
How can employers maximize cost savings through a staffing firm?
You and your staffing firm need to have a clear understanding about what resources you require for your type of business, where your gaps are in productivity and what your short- and long-term visions are to build a strong strategic partnership.
Next, you will want to make sure that the value proposition for you and the staffing service is such that both parties are happy and that the service can provide the resources you expect to be successful. Many times a company will go with the lowest price it can possibly get and then realize after a few months that the agency has moved its resources to more profitable accounts. Make sure the price is not only fair to you and your company, but also for the staffing firm.
Once you’re in a relationship with the staffing agency, you need to continue to work with it on developing the relationship. For example, in manufacturing, a staffing company may get feedback from temporary employees that a certain line has a potential danger or it may learn that there is turnover on a certain shift because of training issues, a particular supervisor, leadership style or operation tempo. Working together to minimize potential workers’ compensation and unemployment claims will help the staffing agency with its costs and minimize your productivity loss.
How should companies set pricing when using a staffing firm?
Don’t be afraid to ask the staffing company what the insurance burdens are for a particular state, realizing that those costs vary year to year. Understand that, depending on the department and the job the temporary employee will be filling, those burdens can differ even within a facility.
It’s up to the staffing company to inform you of the direct costs and insurance burdens, as well as the costs for payroll, recruiting, recruiting support and corporate overhead. Many times a company will assume that if the state and federal insurance burdens come out to 24 percent and the staffing agency markup is 41 percent than the difference is all profit for the firm, which is never the case. When everything is completely transparent, everyone knows where they stand and can find a fair price for each party.
You should always ask for the detailed breakout of burden from the staffing company so you can see exactly what the cost savings will be for you to use temporary staffing or temporary-to-permanent staff instead of expending the resources to do it yourself.
George Thomas is a senior vice president with Everstaff. Reach him at (216) 369-2566, ext. 104, or firstname.lastname@example.org.
Insights Recruiting & Staffing is brought to you by Everstaff
Smart Business spoke to Lisa M. Varga, CEO of Phoenix Energy Technologies, about what makes buildings “smart” and how business can benefit from them.
Smart buildings: A buzzword today, as energy efficiency rises to the top of operational agendas in the commercial sector. But what exactly is a smart building? I suppose it depends on whom you ask.
For an architect, the building’s active and passive designs, which give a sleek look while reducing energy usage, might be “smart.” An operations executive is likely to tout the high-tech systems that run a building when evaluating a building’s IQ. And, an ordinary occupant might think a building is pretty smart if it can turn the lights off when no one’s around or auto-flush the toilet.
So, who’s right? In this case, I would venture to say that the architect, operations executive and occupant each have a leg to stand on. However, taking a step back, one might also agree that each tends to focus on the trees, not the forest.
Phoenix Energy Technologies is in the business of creating smarter buildings. So, needless to say, this is a topic I’ve spent many years contemplating. And, while the definition of a smart building is in a perpetual state of evolution, from where I sit today, a smart building focuses on three capabilities:
Communication. Planning. Reaction.
A smart building can communicate. That’s right, the building can talk to you. This includes external communication that makes the building one node in a larger network of many buildings across an enterprise, along with the building’s data (collected by sensors and systems) being accessible for analysis and comparison. To take things a step further, in a smart building, you can talk to the building. In other words, communication flows freely both ways, enabling the building to receive messages and commands from external sources.
A smart building can plan. Planning means that you have some idea as to what’s coming; for smart buildings this means predictive analytics and modeling. For a building to be truly intelligent, it needs to forecast things like future demand based on inputs such as schedule and weather, and then plan for the most efficient ways to meet that load. If temperatures spike and a demand response event is called, buildings should also be ready to automatically execute a plan based on your company’s pre-defined business processes and strategies.
A smart building can react. This is critical when things don’t go according to the plan. If, for example, a critical HVAC component such as a rooftop unit or chiller goes offline, the building must adapt its optimization strategy to minimize energy consumption and cost without sacrificing occupancy comfort. When an electricity price spike occurs in the real-time energy market, the building should be smart enough to shed load during the spike to a later time, when prices are lower.
Smart buildings are not a grand, futuristic ideal. Rather, they are a reality, in the here and now. So I suppose the question becomes, will businesses do the “smart” thing and leverage the tools and technology available to smarten up their buildings?
Lisa M. Varga is CEO of Phoenix Energy Technologies. Reach her at (877) 340-8855 or email@example.com.