In today’s business setting, it is but common to see employees hired through staffing agencies while others are given contract-based jobs. These are just two of the forms of flexible staffing. This has become a common practice in industries and continues to be popular with employers and employees.
Although long-term employment still exists and many companies still benefit from this operational planning, the rising costs of hiring, health benefits and worker’s compensation insurance, demands from consumers and the need for financial flexibility, business owners and employees are now adopting employment strategies to fill in vacancies and catch up with the work load.
A flexible staffing arrangement comes in many forms and does not have definite meaning. In 2013, it has become a multi-billion dollar industry with profits of staffing industries reaching $122 billion. Moreover, temporary or contractual employees have surpassed the number of regular and long-term employees with temp or short-term employment at 248,000 while full-time jobs at 236,000. Let’s explore flexible staffing and discover its different scenarios and benefits.
These are employees hired by companies but are not directly under the management or are outsourced by business owners. These companies have different clients with a variety of employment demands. Normally, these employees are sent to work a one client at a time. And although work is performed at the site of the client, these employees are managed and supervised by the company and not the client.
Project-based Company Workers
Some business owners hire employees on a project basis, depending on the nature of their business. Employees often hired in this scenario can be writers, health workers, construction workers, manufacturing employees and the like. Some companies still offer benefits full-time employees enjoy like 13th month pays, vacation leaves, sick leaves, health insurance and other benefits but all these will end when projects are completed. Moreover, the employment contract includes a clause stipulating that these companies have the right to terminate employment for other reasons such as downsizing or re-structuring. Employment duration can last from months to years and contracts are renewed after a certain period of time.
Some companies opt to lease some or all of its employees from staffing agencies or leasing companies on both temporary and permanent basis. Although these employees work for client companies, they are paid by the staffing agencies or leasing companies. A leasing company is also known as professional employer organization (PEO) and is the official employer. In this staffing arrangement, the business owner or management has control over the performance of employees and the administrative level while the leasing company is responsible for employment taxes and reporting wages.
In this set-up, employees are provided by a staffing agency to its clients in order to fill in positions or vacancies for a definite period of time. A temporary employee is hired for short-term employment and usually lasts for less than a year. In tight labor markets, employers hire agency temporaries because they can reduce overhead expenses and avoid wage increases since the hiring agencies are the ones negotiating salaries with their temp workers.
Direct Hire Temporaries
These are workers hired and paid on a hourly basis to fill in vacancies and temporary hourly work requirement of organizations and companies such as educational institutions. Direct hiring means that the company looking to hire temporary employees will sign a contract with the candidate without using temporary staffing agencies. An employee hired as a direct hire temporary is considered as self-employed, thus there is no tax compensation withheld nor will there be benefits.
These types of employees are under the management and are employees of a corporation or company. Their employment is indefinite, that is, they can remain part of the company for years. However, they will only perform their jobs on an on-call basis and when their services are needed. These are instances when they have to fill in for absent employees or provide man power skills for increased workload. Some of these employees are hospital employees and educators.
These are also known as freelance workers who are legally self-employed and who work for different clients at a time. This set-up gives independent contractors flexibility in working hours and the freedom of a location independent type of job.
Benefits and Setbacks of Flexible Staffing
Experts say that more and more companies are relying on flexible staffing nowadays for several reasons. Firms have adopted staffing strategies not only to reduce workload but also expenses when it comes to overhead expenses and salaries. These strategies also open opportunities to business owners to divide their workers and give higher compensation to selected groups. Some companies, on the other hand, hire temporary workers with specialized knowledge and skills and others use this strategy to screen potential candidates for permanent positions. On the part of the employees, benefits include flexibility in work schedule and at times, location-independent jobs.
When it comes to the disadvantages flexible staffing, there are several items in the list. Workers who are employed on a temporary basis such as direct hire temporaries and temp workers often do not get paid as much as full-time and long-term employees do. As for benefits given to regular employees, these are not often enjoyed by workers in flexible staffing arrangements. These employees are unlikely to be given health insurance and retirement benefits or pension.
When it comes to job security, most workers employed temporarily do not have the assurance that they will still be employed the next day. Even regular part-time employees and on-call workers have the tendency to look for other employers and are prone to being unemployed, both of which lessen job security. On the part of employers, a setback of flexible staffing is the expense incurred in training a newly hired temporary worker. Despite the skills already acquired by a temporary employee, he or she still needs to be familiar with the kind of job he or she will be assigned to.
Flexible staffing can work for and against companies and individuals. To make this strategy work, building a business relationship with the staffing agency and knowing the benefits and setbacks of using this hiring method are important.