The Benefits of Temporary Staffing in a Tough Economy ... and the Coming Recovery

Source: www.findarticles.com

Women In Business
Today's struggling economy continues to force businesses and organizations to make tough choices concerning one of their biggest operating expenses and one of their greatest assets - their employees.

Personnel costs, such as healthcare, insurance, taxes and benefits, are soaring at a time when companies are under even greater pressure to perform. Everyone's being asked to do more with less, and human resources departments are no exception.

The mandate continues to be "stay lean." Though an economic recovery appears to be just over the horizon, it isn't here yet. So companies are forced to maintain or even exceed productivity levels without adding full-time staff to the bottom line.

How can you manage increasing staffing costs, maintain productivity while keeping staff to a minimum, and prepare for the coming recovery? The answer is strategic staffing.

First, the bad news
According to March 2002 figures from the U.S. Department of Labor Bureau of Labor Statistics, benefit costs represented, on average, 27.2% of total compensation costs for employees.

• Legally required benefits, such as Social Security, unemployment insurance and worker's compensation, accounted for the lion's share of these total compensation costs - 8.3%.
• Other insurance costs, such as healthcare and life insurance premiums, accounted for another 6.4%. Industry experts warn of rising rates among all types of business insurance. Triggered by the events of September 11, widespread corporate scandal and volatile economic conditions, companies are facing double-digit increases in everything from healthcare premiums and unemployment coverage to worker's compensation and liability insurance.
• A Kaiser Family Foundation study found that health insurance premiums rose 12.7% between 2001 and 2002, the highest increase since 1990 and the third year in a row of double-digit increases.
• Mercer Human Resources Consulting predicted an average 12-15% increase in 2003 healthcare premiums. New York-based Segal Co. predicts increases from 14.4% for HMOs and PPOs to 16.3% for fee-forservice plans.
• Healthcare coverage costs for California's public employees went up 25% for HMOs and 20% for more traditional health plans in 2002.
• Worker's compensation policies nationwide rose 10% or more in 2002.
• Unemployment taxes are predicted to rise, as growing numbers of out-of-work Americans put a strain on the unemployment insurance trust funds in many states. According to The Frick Company, many states' funds are in danger of falling into the red, prompting several to raise unemployment tax rates and request federal loans.

How strategic staffing can help
A tailored, strategic approach to temporary staffing can help reduce overhead, manage operating costs and improve organizational performance by reducing risk, increasing flexibility and saving time. Here's how:

Reduce costs

• Temporary employees can provide the help needed for special projects or peak workloads without increasing fixed payroll costs.
• Overtime labor costs may be reduced by more than 20% by letting temporary employees work the extra hours.
• Because temporary employees work for the staffing company, the businesses they serve are not responsible for paying their benefits or handling their unemployment claims.

Reduce risk

• Most staffing companies offer a temporary-to-hire option so that businesses may try out new employees.
• Using temporary help during peak periods relieves stress and prevents burnout among core employees, which can reduce absenteeism worker's compensation claims in the long run.
• Hiring extra employees as needed to smooth fluctuations in workload helps avoid layoffs by keeping core staff as lean as possible.

Increase flexibility

• Hiring help as needed lets companies respond to market demands quickly without adding to full-time staff.
• Letting temporary employees handle non-core business functions allows regular staff to concentrate on core competencies.
• During a hiring freeze, using a staffing company can help handle the workload without increasing your direct hire headcount.

Save time
Using temporary employees saves time in a number of ways:

• The staffing company performs all the advertising, screening, interviewing, testing and reference checking needed to attract and qualify potential employees. All the business has to do is select them for hire.
• Because they are pre-screened for the necesary skills, less training is necessary before associates can begin work.
• The staffing company takes care of the temporary associates' payroll processing and benefits administration - and can often perform these services for a company's regular full-time staff as well.

Preparing for the recovery
After several years of layoffs, cut backs and keeping the company workforce as lean as possible, we are finally poised to embrace an economic comeback. Though inevitable, it has not arrived yet. So how do you keep things moving in the interim?

Keep temporary staffing in mind. Hiring temporary workers boosts your productivity without raising your benefits costs. It allows you to keep full-time staff at a level you can afford. And it gives you flexibility to meet market demands quickly, especially as those demands propel your company into the new recovery.