Employers, especially those needing seasonal employees, are in a hurry to get people hired. It seems cheaper, after all, to call an agency, pay the employee $15 an hour and the agency another $5 an hour.
You get your hire quickly without having to handle expensive HR functions. And, if you’re lucky, the good workers will stay on.
Except it doesn’t always work out that way. According to the American Staffing Association, only 35 percent of employees hired temp are offered positions. And of those, 66 percent accept the position. I can tell you from personal experience as a recruiting professional, turnover from hiring from the temp pool can be staggering, with many of them not even making it to the 30 day mark for employment.
Ninety-day temp jobs don’t attract the right candidate. According to the American Staffing Association, only half of the 14 million people temping full-time in this country are doing it in hopes of being offered a position. They often use temp work as a way to remain flexible or as a way to fill in some money while they are in between circumstances.
This generally doesn’t fit the profile of the kind of person you would prefer to hire permanently, whether that is for a higher-end position, or for a physical job on the factory floor — especially in jobs where the demands are high and the work is physical, like warehousing work or logistics. It is incredibly important to find those people who are as loyal as they are hard working.
Temporary workers aren’t vetted as thoroughly as a permanent worker would be. When you hire a person under a typical process for a permanent employee, there are internal standards and benchmarks that are set that protect your company. A detailed job description is written. Ideal qualities and skills for the potential candidate are identified. Interviewees are ranked and assessed, usually multiple times.
Before the person even begins on day one, they are usually trained for their position, given employee guides, introduced to the company culture, and so on.
When you work with a temp agency, you are forgoing most, if not all of this process.
Most companies who think they are saving money on recruitment with the temp-to-hire solution are, in reality, bleeding red ink.
Let’s do the math. Your company needs to hire 100 people to work in your warehouse. So you get a temporary agency to send you 100 temporary workers, all of whom will have the potential to be hired if their work is good. You pay the temp $15 an hour in wages, while the temp agency reaps $5 per hour in fees. So, in 90 days, you will pay $960,000 in gross wages. Of that, $240,000 will be temp fees.
Now, using the American Staffing Association averages as a guide, let’s say that results in 35 percent of the employees being good enough to hire, and a number slightly less than that, say, around 25 percent, actually accept the position. You now have to keep doing this process, quarter after quarter, and you will never quite hit your hiring quotas. Every quarter that passes costs your company $240,000 in fees alone.
What if instead of paying $250K in fees, you took half that amount — $125,000 — and applied it to advertising for, interviewing, vetting and hiring the right candidates instead?
Employees who have to work with managing and training a revolving door of co-workers are being put under a lot of stress. And one well-trained, loyal employee can usually produce about 1.5 times what a new trainee can. And the loss of friction between the rest of the staff means that everyone gains productivity.
Area employers, I urge you not to overuse temporary agencies. Use them only when the situation truly warrants it: When you truly only need employees for 90 days or less to meet a seasonal demand.
If you do have permanent positions that come open through growth or attrition, then don’t shortcut the recruiting process by simply hiring your temp. Advertise the position, and make that temporary employee go through the full interview and vetting process.
Your company will be all the better for it.