Using Recruiters Services To Control Costs

10 Cost Advantages of using a Placement Agency for Hiring

Companies usually have two major categories of costs. Fixed costs and variable costs. Although, when it comes to cost-cutting, most companies start by trying to control the variable costs. One of the major components within the fixed and variable costs of any corporation is the employee remuneration. Although laying-off employees reduce the cost, companies end up losing their employees which start impacting performance. Effective staffing, on the other hand, helps maximize profitability. It helps convert fixed costs into variable costs and also helps minimize the variable costs. Below are 10 reasons why you should utilize the services of a placement agency and how that helps in controlling costs.

1. Use a Placement Agency to Convert Fixed Costs to Variable Cost

If your company has labor costs as one of the biggest items on your profit & loss statement, then this should be your primary focus when it comes to reducing the majority of the cost. Before you hire a placement agency to aid your company to reduce costs, you need to design a planned staffing model for your organization. This planned staffing model should be designed in such a way that it will aid conversion of your fixed cost elements into your variable costs gradually and without impacting your company’s performance. Your planned staffing model should help you identify and implement core staff levels necessary for maintaining normal operations. For managing peak production demands, you can then use the services of a placement agency to get temporary workforce as needed. This kind of model is most effective in handling industrial labor costs and for companies who have a seasonal demand for their goods or services.

2. A Planned Staffing Model to Eliminate Overtime

Overtime is not only a more expensive way to get work done, studies show that productivity of staff who do regular overtime reduces. Using temporary personnel as against overtime can not only reduce your labor costs by up to 20% it will also help maintain higher productivity levels.

3. Use Temporary Employees to Reduce Benefits Expenses

Permanent employee benefits can cost 20 – 25% higher than payroll expenses. your staffing model should be built around the minimum use of permanent employees and use temporary or payrolled employees as much as possible. Hire interns, project professionals and other short-term employees through a staffing firm or a professional employment service company. Also, use of temporary employees as against independent contractors will help reduce your employment risks.

4. Use Temporary Employees to Reduce Training Costs

Use a staffing model that helps you employ skilled temporary employees. Skilled temporary employees need little or no training at all. Training is expensive! it not only involves the hard dollar costs associated with training programs, there are also soft costs of productivity and poor quality as a result of employing novice employees. Device a well-planned staffing model and work closely with your staffing partner to gain access to candidates who are: well-trained, experienced and come with a set of skills needed for the job. You can devise an orientation program for such employees (in coordination with your staffing firm) to enhance the productivity of such hires.

5. Use a Placement Agency to Shift Your Administrative Burdens

While you are using permanent staffs, your organization has to administer both payroll and benefits for them. As compared, for temporary staff, this burden is shifted to the staffing firm. When you use the services of a placement agency to employ temporary staff, automatically, the administrative burdens are shifted to the staffing firm and you as an employer are relieved from both pay-rolling and benefits.

6. Use a Staffing Partner to Prevent Unemployment Claims

While hiring short-term direct employees, handling unemployment claims can be difficult and will affect your bottom line. However, when you use the services of a staffing partner to employ temporary employees since the temporary employees work for the staffing agency, the burden of handling such unemployment claims is on the staffing agency and not your company. Thus, such unemployment claims do not affect your company’s ratings or bottom line.

7. Outsourcing Placement Helps Reduce the Risk of Hiring Mistakes

A wrong hire can cost your company three to six times the employee’s annual salary! On the other hand, professional staffing firms use rigorous screening & interviewing procedures (including background checks) for all kinds of employees be them temporary or direct hires. This greatly increases your chance of getting the right candidates to join your organization. Placement forms most often provide executives who possess the skills, experience and personality traits necessary to thrive in your working environment. You may also use a placement firm’s temp-to-hire services to get direct placement while completely eliminating the risk associated with hiring mistakes.

8. Added HR Capabilities by using a Staffing Firm

As against using your key employees for tasks like screening, skills testing, interviewing, reference checking, background checking etc., which they may not be usually doing and may even get side-tracked, use the services of a staffing agency’s HR. Using the staffing firm can help free your key employees to concentrate on other important activities. This will also help greatly reduce the time taken to hire.

9. Use Temporary Hiring to Cut Costs

Many times, capacity constraints become a significant reason for higher costs. Capacity constraints may impact both: the throughput of the plant and, the productivity of executives. One should try to eliminate the bottlenecks. In order to eliminate bottlenecks, companies should consider hiring temporary staff. Hiring administrative support helps free important employees focus on core duties. Ensure you adopt a staffing plan that helps aid inclusion of additional labor to relieve process constraints and thus, improve productivity. Thus, by adding the right people, your work gets done more effectively and efficiently, while the administrative overheads and headaches are kept at the least.

10. Planned Staffing helps Avert Burnout Costs

Instead of trying to push current staff to produce more with fewer resources, try to take the pressure off by using temporary employees. Extreme pressure on employees can result in problems related to quality, productivity, absenteeism etc. The inclusion of temporary workforce will help take the pressure off your employees and avoid burnout, reduce defects and the costs of defects, eliminate productivity losses and greatly reduce the turnover expenses.