Wise Use of Temporary Employees

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In an ever-changing market, you might need to consider temporary staff. Done right, a few well-chosen folks could not only pull you through a busy time, but also become prescreened permanent staff.

OVERVIEW [top]

You may need to hire temporary employees when you're up against a deadline or managing a flood of orders. Yet you sense it's bad business to plug holes with outsiders who have no vested interest in your company's success.

What's more, you doubt temps possess the skills, training and motivation of your permanent staff, and you suspect that short-term workers lack the initiative, diligence or commitment that you need to grow.

Still, you must be flexible in an ever-changing market. If you hire temps wisely and treat them properly, they can help you simplify payroll, cut costs, avoid labor shortages and even boost your recruiting. The best temps can become ideal candidates for permanent positions.

In this Quick-Read you will learn:

  • How to determine whether to use temps.
  • How to manage temps so that they produce optimal results.
  • How to use a staffing agency as a recruiting tool.

SOLUTION [top]

Nothing annoys an entrepreneur more than waste. You may be thinking that some of your employees are clocking too much downtime and not putting forth maximum effort and output. But don't blindly replace them with temps. Always take with a grain of salt claims by temp agencies that their workers are better than permanent hires.

One personnel firm asserts, "temporary employees are 30% more productive than regular employees … because of complacency of regular employees and the desire and need of the temporary employee to work." In truth, the way you manage employees — temporary or permanent — will largely drive their productivity.

Temps are ideally suited to handle entry-level tasks that don't involve advanced training, such as processing customer orders, data entry and filing. Employers often use temps when opening new offices, experimenting with new services or products, or handling a sudden surge in business.

Here are advantages of hiring temps:

Saves costs and time. If employee benefits represent 30%-40% of your payroll costs, then using temps should save money. Plus, if you enlist a personnel agency to match temporary workers with your needs, you don't need to write and place advertisements, sift through resumes and conduct rounds of interviews.

Experimentation. As your business grows, you may not know when you have generated enough work to justify a full-time position. Tracking the productivity of temps can help you gauge your long-term employment needs without locking you in to permanent hires.

Control. Many emerging-growth entrepreneurs favor outsourcing as a way to stay lean and nimble, but that can lead to dependence on costly independent contractors. With temps, you can exercise more daily supervision over the individual's work.

Recruiting. A short-term relationship allows both you and the temp to test the waters and evaluate the merits of a permanent match. Most agencies allow you to "buy" a temp for a fee and offer a regular position, thereby avoiding the situation of having to fire new hires that don't meet expectations.

Security for core workers. If labor needs fluctuate, use of temps avoids painful layoffs.

Also consider the disadvantages of temps:

Loss of team culture. Fast-growth businesses need workers who believe in the firm's mission and work together seamlessly to deliver exceptional results. Using too many temps can spark internal jealousies, thus derailing teamwork and hurting morale. For example, temps might covet the benefits that permanent employees receive.

Training gaps. Even if an agency assures you that a temp will meet your qualifications, you may get a dud. Error rates and backlogs can soar if you assign key jobs to poorly trained workers. Training temp after temp for the same job can become expensive.

Legal hassles. On one hand, hiring temps may free you from complying with certain employment laws. On the other, bringing in contingent workers exposes you to another set of problems, such as correctly classifying temps, independent contractors and employees. Courts and the IRS are defining the differences more sharply, so you must understand and follow the rules to ensure legal compliance.

Be aware that "permatemps" — those who stay in assignments for six months or longer — may be entitled to the same benefits as regular employees, based on recent court decisions. If they do the same type of work as your permanent employees but for lower pay and benefits, you may risk fines and legal trouble.

REAL-LIFE EXAMPLE [top]

At Case Logic Inc., a fast-growing, 157-employee firm that sells storage products, about 20% of the workers are temps. The Longmont, Colo.-based company's production department is 50% temps, and the only way to get a regular position there is to serve as a temp first, according to Sandra Lawson, the firm's HR specialist. Most temps strive to excel so that the firm hires them permanently.

"When people call about jobs, we refer them to our staffing agency," she says. The agency conducts pre-employment testing, such as confirming that applicants can lift 50 pounds, and handles training and orientation.

For Lawson, using temps helps her avoid layoffs. "Christmas is intense here," she says. "Our staff can double in one month, thanks to temps, but by December 25, we lose some people."

Case Logic uses two staffing agencies — one for its production department and one for shipping and receiving. When Case Logic hires a temp, it pays the appropriate agency a fee. That makes it easier to negotiate a good contract with each agency.

"As we get bigger, each agency gets more business from us," says Lawson. "But we pit them against each other to get better terms."

DO IT [top]

  1. Define a temp's duties in advance. When engaging a staffing agency, go beyond job titles to identify the actual tasks the temp must do. For example, instead of requesting an "office aide," say you need someone to answer phones and do word processing.

  2. If you use the same temps for more than six months, consult an attorney about legal compliance issues.

  3. When negotiating a contract with a staffing agency, make the agreement between your company and the agency, not between you and the temporary employee. Include a provision that protects you from liability for a temp's actions.

  4. Tell temps how you'll measure their performance, just as you set standards for regular employees. Then monitor their performance, support their efforts to improve and provide incentives.

  5. Involve your permanent employees in the hiring of temps by seeking their input on workflow and ask how they think temps can prove cost-effective.

  6. Prepare an orientation sheet for temps that provides answers to frequently asked questions, such as, "What does this company do?" and "What work rules should I know about?" Or consider having one of your regular employees "mentor" the temp — making introductions, answering questions and showing the temp around the office. Temps who feel like part of the team tend t o be more productive.

  7. Have temps sign confidentiality agreements before they start. Protect intellectual property by limiting their access to proprietary data.

RESOURCES [top]

Books

Temporary Sanity: Managing Today's Flexible Workforce by Shannon VanNostrand and Marsha Brekke (SOCAA, 1997).


Internet Sites

Net-Temps Search for staffing agencies nationwide.

Contingent Workforce. Steel Hector Davis International, 1997. Legal compliance issues for contingent worker employers.

Contingent Workers in Small and Large Firms, Part B of "Labor Shortages, Needs and Related Issues in Small and Large Businesses." Joel Popkin and Company/U.S. Small Business Administration, 1999. Demographic trends among temporary workers.

"Permatemps Contretemps," by Ron Lieber. Fast Company (August 2000): 198-208+. Microsoft's experience with a lawsuit over their use of temporary and contract workers.


Associations

American Staffing Association; (703) 253-2020

National Association of Personnel Services; (703) 684-0180


Article Contributors

Writer: Morey Stettner

Real-Life Example cited is Rush Personnel

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