Wednesday, February 17, 2010


Decisions as to who should be recruited hinge on whether to seek traditional fulltime employees or use more “flexible” approaches, which might include temporaries, independent contractors, or professional employer organizations (PEOs) and “leased” employees.
A number of employers feel that the cost of keeping a full-time regular workforce has become excessive and is getting worse because of increasing government- mandated costs. But it is not just the money that is at issue. It is also the number of governmental regulations that define the employment relationship, making many employers reluctant to hire new employees. Using flexible staffing arrangements allows an employer not only to avoid some of the cost of full-time benefits such as vacation pay and pension plans, but also to recruit in a somewhat different market. Flexible staffing makes use of recruiting sources and workers who are not traditional employees. These arrangements use temporary workers, independent contractors, and employee leasing.
Employers who use temporary employees can hire their own temporary staff or use agencies supplying temporary workers. Such firms supply workers on a rate-per-day or per-week basis. Originally developed to provide clerical and office workers to employers, agencies now provide workers in many other areas. Organizations that use temporary workers do not usually provide employee benefits, thus lowering their overall labor costs. But even if they do offer some benefits, employers may see advantages in using temporary workers.
The use of temporary workers may make sense for an organization if its work
is subject to seasonal or other fluctuations. Hiring regular employees to meet peak employment needs would require that the employer find some tasks to keep employees busy during less active periods or resort to layoffs.
Some employers hire temporary workers as a way for individuals to move into
full-time, regular employment. After 90 days or some other period as a “temp,” better-performing workers may move to regular positions when they become available.
Temporary opportunities also are opening up for professional and executivelevel jobs, such as chefs, accountants, lawyers, systems analysts, nurses, and managers.
Downsizing has taken layers of management out of many firms, and companies may be hesitant to begin adding them back for projects that are temporary. Also, the same downsizing has made available “temporary executives” with experience that would not have been available in years past. Additionally, some of these individuals may have taken early retirement but want to continue working part-time.
Temporary workers can and often do accept regular staff positions after working as temps in firms. This “try before you buy” approach is potentially beneficial both to employers and employees. However, most temporary service firms bill client companies a placement charge if a temporary worker is hired full-time within a certain time period—usually 90 days.
Some firms employ independent contractors to perform specific services on a contract basis. However, those contractors must be independent as determined by a 20-item test used by the U.S. Internal Revenue Service and the U.S. Department of Labor. Independent contractors are used in a number of areas,
including building maintenace, security, and advertising/public relations. Estimates are that employers can save up to 40% by using independent contractors because benefits do not have to be provided.
PROFESSIONAL EMPLOYER ORGANIZATIONS (PEOS) AND EMPLOYEE LEASING Employee leasing is a concept that has grown rapidly in recent years. The National Association of Professional Employer Organizations estimates that over 1.6 million individuals are employed by more than 2,200 employee leasing firms. The employee leasing process is simple: An employer signs an agreement with an employee leasing company, after which the existing staff is hired by the leasing firm and leased back to the company. For a fee, a small business owner or operator turns his or her staff over to the leasing company, which then writes the paychecks, pays the taxes, prepares and implements HR policies, and keeps all the required records.
All this service comes at a cost. Leasing companies often charge between 4%
and 6% of employees’ monthly salaries. Thus, while leasing may save employers
money on benefits and HR administration, it can also increase total payroll costs.
In addition, employers may encounter some legal problems. For instance, leased workers are employees of the leasing company, but they may sue the client firm for work-related injuries if there has been negligence by the client because these injuries are not covered by workers’ compensation. One advantage for employees of leasing companies is that they may receive better benefits than they otherwise would get in many small businesses.

1 comment:

  1. Staff Leasing is one of the commonly used companies in the industry. And it can also help your business by means of minimizing operational costs and increasing productivity.
    Staff Leasing Services