‘Temps are nothing but a big expense’ – WRONG!
The first thought for most employers, particularly SMEs, when mentioning temporary resource is ‘It’s too expensive’.
This is completely understandable when you look at the hourly/daily rate an employer is charged versus the basic salary of an employer at a similar level of experience already in the business.
However, temporary resource should be looked at more in terms of situation versus value for money and ROI (return on investment) rather than solely initial outlay. Also, by comparing this hourly charge rate against just basic salary, you aren’t comparing like for like.
Firstly though, it must be said only recruit a temp when a temp is the right option for your situation. Although this article is in favour of the use of temporary resource, it is also right to point out that they aren’t always the most relevant or cost effective solution. For instance, if you have a long term need for an individual (six months or longer), it is normally more appropriate to recruit someone on a fixed term contract (i.e. directly onto your payroll for a set period of time) or a permanent employee.
Also, if you have anyone internally who may be possible, do everything possible to get them to cover, even if it’s a step up for them. There are two reasons for this: it’s cheaper and will motivate this internal person as they see a way to develop their skills. It’s also easier and cheaper to find cover for a ‘backfill’ then finding someone with specific skills for a project.
If you really do need a ‘temp’, what are the benefits?
- You can employ as many as you need for as long as you need them.
- Temps provide immediate cover to problems/ challenges that may arise out of the blue – sickness, holiday etc.
- You don’t have the administrative burden and costs or paying National Insurance and other employment costs.
- Employers can often bypass permanent recruitment headcount freezes put in place by parent companies/ PLC by recruiting a temp.
- You can bring specialist skills into a business to boost knowledge/ cover skills gaps when it’s needed.
- If a temp proves to be outstanding, you can offer permanent employment 100% sure of their ability.
- Temps often have a point to prove that they are good so can help to improve drive and motivation in a team.
The secret of understanding whether a temp is worth the expense is by understanding the value they will add or save for the business against the costs involved. Most employers compare the hourly cost of a temp to the basic salaries of permanent employees and complain they are very expensive. However, these people don’t add in numerous other hidden employment costs on the their permanent employees basic salaries. If they added in: National Insurance contributions, pension costs, any health/ life insurance costs, days holidays where the employee is being paid when not there, training costs, sick days, poor motivation/ office politics – they would find that the hourly cost of a temp is suddenly more comparable than they realise.
So if the costs aren’t too far apart, how can you ensure that you make the most of your temp to maximise their effectiveness (and therefore value)?
- Plan what you want the temp to do and have some form of job specification
- Work with managers in your business to understand the objectives
- Clearly set out these objectives to the temp when they start.
- Understand what barriers the temp may face in trying to do their job.
- Help remove these before they occur
- The quicker the temp can complete the work, the less you are paying
- Ensure the temp uses their main skills most of the time.
- Get the temp to do the important duties done first in case you decide your budget is less than you first thought and you need to finish the temp.
- Do not use a skilled temp to do mundane admin work which doesn’t maximise their skills – therefore wasting your money.
- Use the right people’s skills in the right places.
- Temps can help you to free up your skilled permanent staff to be more productive
- OR, temps can use their specialist skills to be productive and you can use your permanent staff to help and learn these skills from them so you keep the skills in your business for the future.
So, temporary resource is a valuable resource for any business when used correctly with the right planning and execution. Also, don’t forget to negotiate with your agency and get the lowest charge rate you can. Any agency should be willing to be transparent with their charge rates and how they are calculated. This will help you to understand what the temp is being paid and what the agency is making from the arrangement!