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Hiring staff – flexibility is the key

When I began my career in the recruitment industry the first piece of training I received was to understand that companies don’t necessarily make money when they are using temps but when they aren’t using them.

That probably doesn’t make sense so I’ll give you an example. In the early 1990′s I visited the local site of a large corporate construction company who specialised in big projects. On the day I visited there were over 25 construction staff playing cricket in the yard in their overalls and boots at 11.30am. When I asked the manager what was the occasion he told me that there wasn’t any, but that their next project wasn’t due to start for two more weeks. Even if the average pay rate in 1991 was only $13 an hour that equates to more than $30,000 in wage costs with no return while the workers waited for that project.

A few months later when the last recession hit that company almost went broke and made very significant staff cuts and redundancies in order to stay in business. As the economy improved and the company became busy again it was obvious that they had changed their staffing strategy and the result was less full time staff and a greater use of temporary staff. The company figured that it made sense to spend a little more per hour and have the flexibility of being able to manage their daily workforce than to be faced with a large payroll liability when the work dried up again.

Today that large national organisation is a prominent user of agency temporary staff and has grown to several times its early 1990′s size and become truly a great New Zealand company.

Let’s assume that the analysts are correct when they say that the recession is here for a year and that unemployment will rise to more than 7%. It’s often said that staff are a company’s greatest asset but in the coming environment those staff can also become a liability if businesses are to survive the next year or two.
A more appropriate sentiment is that “a company’s greatest asset is its good staff”.

Over the last few years of skills shortages there is no doubt that many businesses have hired people that maybe they wouldn’t have considered previously. The fact is that desperate times called for desperate measures and sometimes the need for “anyone” outweighed the desire for quality.

The next 12 months can now be used as a time to re-assess the quality.

I can hear the outrage already, but consider where you want your business to be when the economy improves. I believe it is the time to choose who you want working for you when things improve and train and up-skill them as much as you can afford now.

There has never been a better time to train staff with the government providing more opportunity than ever while many organisations will now have the time and resources to train that they simply haven’t had over the last 5 years.

Conversely if you have some people who you believe are not adding value to your company now and that you would prefer not to be relying on when business improves then it is time to consider their contribution to your company at this time.

If you determine that it’s time to let those staff go the savings on your payroll may also help as it did with the large company in my earlier example. In the meantime any peaks in work or growth can be covered by good quality temporary staff and as most agencies have a buy out option on the temps a smart employer grows their permanent pool by taking on the top temps.

Do the maths on what those unneeded permanent staff are costing you and weigh it against the cost of taking on a temp here and there (even at a premium rate) over a year.

This entry was posted on March, 2009 and is filed under Articles.