Posted & filed under Career Review, Contingent Workforce, Intraplacement, Planning.

IntroductionContingent staffing, outsourcing, behavioral hiring. All have become commonly used buzz-words among human resource and staffing industry professionals. While the terms refer to different activities, their intent is the same: gain competitive advantage by implementing new tactics and strategies in the hiring and use of labor. If you are familiar with the current trends in staffing, that’s great. If your organization is benefiting from their implementation, that’s even better. If you are interested in learning more about current strategies and tactics in staffing, read on. This article outlines several popular staffing trends and provides an introduction to their use.

Contingent Work Force

Call it downsizing, rightsizing or a layoff. Companies are constantly trimming their staffs to eliminate waste and focus on their strengths. These cuts have led to the development of the contingent work force – the people who are called in on a short-term or project basis. While using temporary help is certainly not a new concept, incorporating staffing as a part of an organization’s competitive strategy is.

Companies are turning to contingent workers for a variety of needs. The idea driving this trend is simple: bring in people to meet the demand for labor or expertise only when those people are needed. Companies executing this strategy are able to reduce fixed expenses by maintaining a smaller direct (or permanent) staff. When work loads increase, they are able to bring in top quality temporary workers using a human version of a just-in-time inventory system. As an added benefit, the cost of a contingent worker is often lower than that of a full-time employees due to the elimination of benefit expenses.

Today’s contingent work force crosses all lines of business and areas of functional responsibility. While temporary help used to be thought of as clerical support, the term has now come to encompass industrial, engineering, information technology and professional positions. In many parts of the country, the fastest-growing category of temporary workers are interim executives – from marketing and financial experts right up through CEOs. The following are the major staffing trends associated with the contingent work force.

Supplemental Help Fill-in for short-term demand such as a vacation or special projects. Using supplemental help allows existing staff to focus on more pressing business. It frees them from time-consuming tasks that disturb work flow and do not add much value.
Variable Capacity Staffing Strategic use of temporaries to accommodate workloads which are known to vary in seasons or other cycles. This results in consistency between the amount of work to be done and the available number of employees, keeping direct employees working at peak effectiveness. In some instances, employers have actually developed a shared work force that rotates from one business to another to accommodate each company’s unique seasonal needs.
Vendor-on-Premises The temporary help supplier provides an on-site coordinator for temporary employees at a client company. Typically, these arrangements are made by large volume staffing users to simplify coordination and increase both productivity and quality across a variety of departments or functions.
Facilities Staffing The temporary help supplier assumes responsibility for staffing certain jobs or departments with disproportionately high turnover, driven by routine or mundane work. Employees are “rotated” into and out of these positions based upon productivity. As a result, performance and quality increase, while the employer’s liability and headaches are reduced.

Hiring Options

The demand for good people is certainly not something new. Business executives commonly complain about the difficulty in finding and hiring producers. To handle this difficulty, many people are taking new approaches to making the hiring decision. An overview of two major tactics being used by hiring authorities follows.

Behavioral Hiring

Have you ever selected a job candidate based almost solely on that person’s past work experience? Have you ever ignored a nagging doubt about a job prospect’s attitude or personality, hired and later regretted your decision?

According to Ed Ryan, President of MPR Consulting, companies put too much emphasis on education and experience while neglecting two attributes he says earmark a successful candidate: behavioral traits and chemistry.

When filling a position, managers often prepare a description detailing the duties of the job. Unfortunately most people stop here. Missing is a description of the types of behaviors necessary to successfully execute these duties – a behavioral traits profile. To develop a behavioral traits profile for an available job, you must identify the company’s top performers in that position. Ask yourself: “What makes these people so good?” The answers will help you uncover the behavioral traits necessary to succeed in this position.

Once a profile of the ideal job candidate has been prepared (and all the traits necessary for success have been identified), the hiring process can begin. Following a behavioral hiring methodology, every candidate must be put through a structured interview. The standard interview questions are designed to determine if a candidate possesses the desired personality traits. Those individuals having the right attitude and behaviors then undergo a review of skills and experience.

The next time you have a need to hire you may wish to consider the importance of behavioral traits and chemistry as well as experience in your hiring process. If you are not sure how to implement behavioral hiring, contact a staffing service or industrial psychologist who is.

A partial list of traits:

Intensity Very high stamina, endurance and a high level of work orientation.
Values A solid ethical system, refuses to cut corners or over-promise.
Risk Avoidance Acts responsibly, avoids breaking rules.
Stress Tolerance Manages stress well.
Focus of Control Level of responsibility a person takes for his job and his actions.
Independence Ability to work well with minimal supervision.
Optimism Positive outlook on situations, ability to learn from mistakes and move on.
Leadership Skilled at directing and leading others.

Temp-to-Direct Hire

Temp-to-perm enables companies to test an employee on-the-job before committing to direct employment. This trend has become popular because it alleviates some of an employer’s fears of making an incorrect hiring decision.

This strategy is an excellent way to lower the risk associated with the hiring decision. On the downside, however, many of the best applicants for a given job opening may be currently employed. These people are rarely willing to leave their current job for a temporary position even when the opportunity for permanent employment exists.

Professional Employment Organizations (PEOs)

Employee Leasing

Employee leasing is a service provided by a PEO or Professional Employer Organization. According to the National Association of Professional Employer Organizations, a PEO is a company that provides “integrated business services which more cost effectively manage critical human resource responsibilities and employer risks for its clients.” More simply put, a PEO firm takes over the responsibility for a significant portion of the employer’s functions for the workers assigned to their clients. The PEO firm contractually assumes the employer rights, responsibilities and risks. Included in those rights and responsibilities are the payroll processing, tax withholding, worker’s compensation insurance, employer’s share of social security tax, unemployment tax and benefits provision and administration for the leased employees.

Payrolling

Payrolling is a service offered by most temporary staffing services. Unlike leasing, which is a relatively new industry, payrolling has been around for a long time. In many respects, employee payrolling is like employee leasing. The mechanics are almost identical – a current employee is placed on the payroll of another firm. The payrolling firm is responsible for the payroll processing and administration including creating the paycheck, handling the statutories and governmental reporting, and supplying unemployment compensation. One major difference between payrolling and leasing is that most payrolled workers do not receive medical benefits.

What most often differentiates payrolling from employee leasing is the scope of the agreement. Payrolling is frequently a project-based service used for temporary and other short- to medium-term personnel requirements. Leasing, in contrast, is designed to be used as a permanent solution to payroll and benefit administration needs. The question facing employers is: Why use either service?

A number of forces in the marketplace cause companies of all sizes to look at alternative staffing arrangements such as employee leasing and payrolling. One such force is the increasing regulatory burden of being an employer. Government reporting, compliance and administration are consuming an ever-increasing share of businesses’ time and resources. At the same time, these organizations are being forced to “do more with less” due to increasing global competition and decreasing product life cycles.

Is employee leasing or employee payrolling right for you? It depends on what your company is trying to accomplish. Both services increase productivity and reduce risk.

Payrolling and employee leasing eliminate the paperwork, reporting and administrative burden of human resource management. For many small to medium-sized companies, these services provide key managers the freedom to focus on those activities which are most critical to the success of their businesses.

Employee leasing or payrolling may provide your firm with solutions to the headaches of personnel selection and administration.

Outsourcing

Outsourcing has become a popular cost-effective method to manage non-essential functions while maintaining focus on the company’s core competencies. What is outsourcing? Simply put, outsourcing is having an outside company take over some function of your business. Some business functions have always been outsourced. Accountants, attorneys and consultants are essentially providing outsourced services. The difference now is that companies are taking a hard look at their business, and determining which functions are most critical to their success. All the non-critical activities are then turned over to an outside provider (or providers) who can perform the function either at lower cost or with greater productivity.

Many market forces continue to drive the need for outsourcing:

  1. Accelerating technology has provided new product and systems capability. Taking advantage of this phenomenon, however, requires ever-increasing levels of understanding and expertise.
  2. Heightened customer expectations in areas of quality, service and price performance have required increased attention to detail.
  3. Declining product and service life cycles and an increasing need for customization has produced a myriad of added headaches for business.
  4. Globalization has created new challenges as well as new markets and new economic rules.

In short, competition and a changing marketplace are squeezing business from all sides. Companies must spend more time concentrating on the specific products or services they represent. They must reduce costs, reduce head count, flatten the organization, and redirect and focus management to increase profitability.

Outsourcing offers one way to reduce management involvement by eliminating specific administrative activities. The outsourcing partnership between company and service provider can:

  1. Reduce the cost and hassle of labor-intensive activities. For example, telemarketing may be an important part of a company’s marketing strategy; however, it is a type of work that is plagued by high turnover. Rather than suffer the expense, aggravation and morale problems that can result from frequent turnover, this function could be successfully outsourced to a company that specializes in recruiting and training. The service provider should be better equipped to deal with the turnover and will take away the administrative burden of the HR functions.
  2. Lead to improved performance in areas impacted by improved technology. A service provider like EDS in information technology or MCI in telecommunications has state-of-the-art expertise in the hardware and software needed to enhance a company’s technological operations. For many small to mid-sized companies, technology investments can be cost prohibitive. Through outsourcing, the costs of technology are shared with the other users of the service provider. Even for larger companies, the service provider’s expertise with the technology helps assure greater efficiency.
  3. Add extra value through a risk-sharing relationship. For instance, outsourcing a mail room off-site might allow the service provider to run multiple shifts using existing equipment. By selling mail room services to other firms in need, the outsourcing provider can turn this support function into a profit center. The risk and the reward may be shared through a partnership or strategic alliance between the outsourcer and the service provider.

To determine if outsourcing is a viable alternative for your company, you must create a well-defined plan. Conduct an internal assessment to define your firm’s core functions. In doing so, you may discover non-core functions which are appropriate for outsourcing.

If you discover areas to be outsourced, the next step is to determine what service providers offer the expertise you require. In selecting a service provider, you are choosing a partner for your company. Be very selective! Find a partner with experience, traits and chemistry that blend well with your company. Interview and reference check all candidates to insure that the provider can do the jobs and will provide the level of service you want.


This article was meant to provide a brief overview of strategic trends in the staffing industry. If you have any questions about how a contingent work force, behavioral hiring, outsourcing, or employee leasing and/or payrolling may help, please contact us.

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