Why Outsourcing Your Hiring and Staffing Needs Makes Sense
One of the most frequent questions I get is: “Why should my company outsource my hiring or use a staffing agency”. An organization’s staff is likely its biggest expense and asset. Most importantly, the number of people working at a company, their skill sets, their cumulative cost to the company, and their ambition and motivation all combine to create the single most important variable in the success or failure of any enterprise. A company that can get the right people in the right positions at the right time and at the right price has a tremendous advantage over less astute competitors. The U.S. Department of Labor agrees: “Employers that have flexibility in adjusting labor requirements to meet product and service demands have a competitive edge over those with less flexible human resources policies.”
So, then begs the question. “When should an organization consider utilizing a service?” According to the American Staffing Association (ASA), there are two principal reasons why companies utilize these services:
Flexibility – 9 out of 10 respondents listed this as their #1 reason. Right now, under difficult/uncertain economic times it makes it even more important as companies try to meet the up and down demands from clients. They often times don’t know what is coming the next week – even sometimes the next day. Most companies are having to run very lean.
Access to Talent – 8 out of 10 respondents say staffing agencies are a good way to find `permanent’ employees and 3 out of 4 rank the quality of employees from services as good or better than their own employees. You would think right now with unemployment being high – great people would be easy to find. There are more people available, but many companies have taken the chance to clean house and have let poor performers go. Now getting through the haystack of applications to find the “A” player is very difficult. Staffing companies have the ability to pre-screen and test to find the right employee needed.
So, then I usually get asked “How do organizations benefit from the use of staffing services?” Not only can staffing firms help HR professionals and hiring managers fill positions with qualified candidates fast, they can avoid the cumbersome process of setting up payroll and benefits for new workers and assignments can be terminated at any time. In fact, without the services of staffing firms, it would be nearly impossible for many organizations to staff up for short-term projects or find temporary replacements for employees who are sick or on vacation. The red tape alone would make it extremely difficult, and access to a ready pool of workers would be a continual challenge. Here is what I consider the biggest benefits:
- Matching labor expense to revenue generation by converting labor (likely your biggest expense), from a fixed cost to a variable cost. Staff at your lowest level need, not your highest and utilize flexible staffing strategies to meet demand increases
- Reducing the cost of hiring. Maintain your focus and productivity. Keep your key people focused on their key activities so the business doesn’t stall while you are trying to recruit, screen and select a new employee. Using a service eliminates advertising cost that may produce no result or produce so many applicants that you don’t have a process for dealing with the response.
- Taking advantage of a staffing firm’s HR capabilities. Eliminate the time, effort and costs of payroll administration, government reporting, etc. They are used to dealing with having to find good people quickly and the issues that come along with it.
- Improve the quality of your people. You can easily reduce the risk of hiring mistakes. Get the help of people who recruit, screen and select people all the time. Spend time only with people who have proven worth it through staffing services screening and selection process (fish from a stocked pond). If you run an ad, what makes you think the right person will respond to that specific ad? See what people are capable of before you employ them directly – “Try before you buy”. If mistakes are made (and since we’re dealing with people that will happen), a staffing service can deal with the issues and get you back up and running quicker (besides, they deal with the “dirty work” too).
- Averting costs associated with burnout of your core employees. Don’t take `lean thinking’ to the point of stressing your employees and creating problems with quality, productivity, absenteeism and turnover. Eliminate overtime – and why pay the most when productivity is the least (injury, burnout, etc.)
- Limiting benefits expense (20-25% of base pay) and lower unemployment claims. Next year Indiana is going to sock us all with higher unemployment costs.
At the end of the day – finding and keeping good people is the key to a successful organization. Its not an easy task. Cost is an important piece. I hope this helps you as you decide if it makes sense to get help.
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