6 Ways Temp Agencies Benefit Your Bottom Line
If you are a CEO, CFO or HR Manager, you have probably experienced first-hand the trials and tribulations associated with finding suitable candidates and training them for their new positions.
Most likely, you also know this process costs money, a lot of money actually.
A report by the Institute for Research on Labor and Employment at UC, Berkley, estimated that turnover in certain management positions can cost around 150 percent of that person’s salary. Although lower-skill positions cost less to fill, the 150 percent replacement rate may still hold true for any type of position. Temp agencies, however, take care of all the headaches associated with finding (and retaining) the right candidates to make your company soar.
The hiring and firing process also entails other, not-so-obvious, but significant costs nonetheless:
- higher unemployment costs
- time devoted to keeping employee records
- changes in payroll
- loss of intellectual property
By entrusting reputable temp agencies to do the recruiting and interviewing, you can certainly cut costs and pass the burden on to the specialists. Furthermore, since temp workers are technically employed by the temp agency and not your company.
You may also take advantage of cutting-down on overall costs for payroll taxes, worker’s compensation insurance, and benefits. If, at some point, you come across a talent that you must keep, you have the option of hiring them after a specified time frame.
Here are 6 ways temp agencies can benefit your business:
1. Flexibility in an unstable economy
Some companies may need to adjust their staff during high or low seasons. However, hiring and firing permanent staff can be time-consuming and detrimental to employees’ morale. Temp agencies provide the ability to bring more workers or scale back the workforce in response to business demands. Temporary staffing can also provide quick fixes for sudden turnovers, long-term leaves, and special projects, providing the company with flexibility in these situations. Business owners or managers who hire a temp agency have the peace of mind of relying on a dedicated team of specialists.
2. A smoothly running machine
In every company, short- to medium-term absence happen frequently due to maternity and paternity leaves, sickness and other scenarios. By utilizing temp agencies to fill these vacancies, managers contribute to a smooth-running business operation by maintaining production and services uninterrupted when employees are temporarily absent. This allows company productivity to go about uninterrupted, while it might have otherwise caused to operate below capacity.
3. Summon the specialists
Some temporary agency workers are commonly used for specialist skills not typically available among employees. In this scenario, it would be likely to find highly-skilled temp agency workers who bring skills that complement those of permanent employees. It might result unprofitable to recruit or retain certain groups of workers on permanent contracts, whereas their implementation may be cost-effective on a temporary basis.
4. A little healthy competition
In truth, temp agency workers are potential substitutes for existing employees. Therefore, permanent employees may feel their job security threatened by the presence of temp agency employees. This may act as an incentive to improve everyone’s performance.
5. Increase productivity
Temp workers may also complement employees’ skills by ‘buffering’ employees, allowing them to concentrate more efficiently on core activities. Firms may increase their average productivity by concentrating on core activities where they have a competitive advantage, and outsourcing tasks where they operate less efficiently. Employers may also use temp agency workers as a pool from which to draw any future employees. In this case, the contracted temp agency can help manage the risk of making permanent offers by screening said workers to guarantee proper matches.
6. Hidden costs of human resources
Many managers do not consider how costly unemployment claims can actually be when they are running a new business. After employees are consistently let go, unemployment claims can affect the company’s bottom line. Temporary staffing is an excellent solution for this, since the temporary employee cannot file an unemployment claim against the company if it is decided they are not the right fit and let go.
A respectable and reliable temp agency will work hard to find worthy talent. Simply hand over your list of qualifications to your temp agency and their hiring manager will search for the best candidates. They will release you of the burden of recruiting the candidates with the skill sets you specifically need, giving you more time to handle other more important tasks.