To use a temp agency or not to use a temp agency, that is the question.
As with the purchase of any product or service (i.e. temporary agencies) for your company – every situation is different. But there are also many similarities with companies, and we will make some generalizations about your business and your business needs.
- You need more customers
- You need more efficiency
- You need to keep excellent books and records
- You need more innovative product development
- You need a consistent and evolving marketing plan
- You need detailed and focused management
So for your business to hum along and grow in a normal economic environment you need great people that will do the work to get more customers, cut costs, do the accounting, create new products etc… The challenge of course is how to attract these great people to your business.
I know what you are thinking: “I already have an HR department and they are doing a terrific job at recruiting top talent. And besides that, I am already paying them to do so. Why would I pay extra to a temp agency when the same can be done in-house at zero cost”?
For the company that has never used temp agencies in the past, the number one reservation they typically have about using temp agencies is the fee structure. Here is how it goes:
You decide that you want to hire a warehouse worker for shipping and receiving and would like to pay this person $10.00 per hour. You call any one of a million temp agencies out there and they will gladly provide on for you tomorrow. You fee for this $10.00 person will be about $15.00 per hour out the door. You say; “this is crazy, why pay $15.00 with a temp agency when I can pay $10.00 without one”? So you put an ad in the paper or on-line and do it yourself.
Here is what this company is not taking into consideration: The cost of the ad, the cost of the time for interviewing and sifting through 300 resumes, the cost of the background checks and drug testing, the cost of federal, state and local taxes, the cost of workman’s comp insurance and then the biggest potential fee of all; the tremendous cost of a bad “new hire.”
All of a sudden that $10.00 per hour person just cost you $13.00 plus the opportunity of much, much more in terms of the liability that using temp agencies would have alleviated.
Temp agencies assume all of those costs and most importantly the liability for those employees, and give you and your company the ability to “try them before you buy them”. In other words, the scenario of the perfect hire that you made (that turns out to be a part-time check forger) can be remedied with one quick call to your temp agency – with no forms to fill out or fees to pay.
This is the best way to use temp agencies, to use them in concert along with your current HR department to find people to try out. Then hire them at the end of a three month trial. Temp to perm will be more of the norm in the future and in my opinion the benefits outweigh the costs in most situations.
In research done over many years in most western countries, when companies are asked why they use temp agencies it always seems to be the liability issue that rises to the top. The reduction of liability is the greatest benefit to using temp agencies. This is the reason why about 90% of the companies in the US use temp agencies as part of their workforce solution.