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Behind the News: Using Temps to Save $ - CWS 30 February 2.3

Contingent Workforce Strategies 30

Customers of contingent labor have their differences. But most agree that using temporary workers saves money. A contingent buyer survey conducted by Staffing Industry Analysts in September 2009 shows just that. The survey indicated that 92 percent of respondents from 171 large companies (1,000 plus employees) believed that using contingents saved their corporations cash. In fact, the median savings reported was nine percent of total expense. In contrast, savings reported in 2008 were at 17 percent. The differences, however, could be related to the state of the economy and the recession.

Also interesting is that that greater the contingent share of the labor force reported by customers, the greater percent total expense savings also reported. Over the last decade, as the use of contingent labor has grown, businesses' attitudes to using temporary workers have changed. In some quarters, there is a fear that engaging temps can harm a company's reputation as an employer. On the other hand, a study by two professors in 2001 found that using temporary workers led to higher returns. (See "The Price is Right" Contingent Workforce Strategies, November/December 2008).

Different attitudes and the recession notwithstanding, it is clear that most research points to the adoption of contingent labor as being positive. Temporary workers provide companies a just-in-time solution to meet the demands of the marketplace. They can either ramp up or down and are not paying for people to stay idle.

The 2008 subprime mortgage crisis was a case in point. If financial firms during their period of prosperity maintained a larger percent of contingents, they would have been better equipped to deal with the downturn without losses in productivity or morale. The flexibility that contingents offer is unparalleled. They allow companies not just to adjust staff levels easily and cost-effectively, but to employ the right level of skills for a particular job.

Workforce planning experts advise companies to try the contingent route. Of course, companies need to figure out what percent of their workforce they want to be temporary. Once that is underway, companies will find that having a ready contingent pool reduces their search and placement costs.

At the end of the day, though, it's not just about saving money. Further it may not be always be cheaper to use temps. Staffing Industry Analysts' research in 2004 regarding whether temps cost less showed that contingents are at the very least not uniformly cheaper on a full-time basis than traditional employees. ("In Search of the Contingent Discount," November/December 2004.) Lower-skilled positions may be less expensive to staff on a contingent basis, but higher-skilled positions that are filled by contingents typically cost employers a premium.

Costs aside, the real world is complicated. But having a viable alternative -- i.e., non-traditional workers -- is an option worth considering.


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