Temp Agencies and Alternative Staffing

Employers often supplement their permanent workforce by hiring contingent or temporary workers, often through temporary help employment agencies. Also known as part time or just-in-time workers, the contingent workforce is big and growing. It accounts for about 20% of all new jobs created in the United States.

Today’s contingent workforce isn’t limited to clerical or maintenance staff. In one year, almost 100,000 people found temporary work in engineering, science or management support occupations, for instance. And growing numbers of firms use temporary workers as short term chief financial officers, or even chief executive officers. It’s estimated that 60% of the total US temporary payroll is non-clerical and includes “CEO’s human resources directors, computer systems analysts, accountants, doctors, and nurses.

Benefits and Costs: Contingent staffing is on the rise for several reasons. Historically, of course, employers have always used “temps” to fill in for permanent employees who were out sick or on vacation. But today’s desire for ever higher productivity also contributes to temp workers’ growing popularity. Productivity is measured in terms of output per hour paid for, and temps are paid only when they’re working.

The benefits of contingent staffers don’t come without a price. They may be more productive and less expensive to recruit and train, but contingent workers from temporary agencies generally cost employers 20% to 50% more than comparable permanent workers (per hour per week), since the agency gets a fee. Furthermore, “people have a psychological reference point to their place of employment. Once you put them in the contingent category, you’re saying they’re expendable.

Employers can hire temp workers either through direct hires or through temporary staff agencies. Direct hiring involves simply hiring workers and placing them on the job. The employer usually pays these people directly. As it does all its employees, but classifies them separately from regular employees. The employer generally classifies these workers as casual, seasonal, or temporary employees, and often awards few if any benefits (such as pension benefits). The other approach is to retain a temp agency to supply the employees. This approach has many advantages. The agency handles all the recruiting, screening, and payroll administration for the temps, for instance. And, ideally as we’ll see, the temp employees remain employees of the temp agency alone, and simply provide their services to the client firm.

In order to make temp employment relationships as fruitful as possible, anyone employing temps should understand these temp employees’ main concerns. In one survey, six key concerns emerged. Temporary workers said they were:

(a) Treated by employers in a dehumanizing impersonal and ultimately discouraging way.
(b) Insecure about their employment and pessimistic about the future.
(c) Worried about their lack of insurance and pension benefits.
(d) Misled about their job assignments and in particular about whether temporary assignments were likely to become full time positions.
(e) “Underemployed” (particularly those trying to return to the full time labor market)
(f) In general angry toward the corporate world and its values; participants repeatedly expressed feelings of alienation feelings of alienation and disenchantment.

Finally, when working with temporary agencies, ensure that basic policies and procedures are in place, including:

Invoicing: Get a sample copy of the agency’s invoice. Make sure it fits your company’s needs.

Time sheets: With temps, the time sheet is not just a verification of hours worked. Once the worker’s supervisor signs it, it’s usually an agreement to pay the agency’s fees.

Temp-to-perm policy: What is the policy if the client wants to hire one of the agency’s temps as a permanent employee?

Recruitment of and benefits for temp employees: Find out how the agency plans to recruit employees and what sorts of benefits it pays.

Dress code: Specify the appropriate attire at each of your offices or plants.

Equal employment opportunity statement: Get a document from the agency stating that it is not discriminating when filling temp orders.

Job description information: Have a procedure whereby you can ensure the agency understands the job to be filled and the sort of person, in terms of skills and so forth, you want to fill it.

Temporary employees are examples of alternative staffing – basically, the use of non-traditional recruitment sources. The use of alternative staffing sources is widespread and growing; about one of ten US employees is employed in some type of alternative work arrangement. Other alternative staffing arrangements include “in-house temporary employees” (people employed directly by the company, but on an explicit short term basis), and “contract technical employees” (highly skilled workers like engineers, who are supplied for long term projects under contract from an outside technical services firm).