Don’t overpay for temporary workers

Do you sometimes recruit new workers but are hesitant to bring them on board as a full-time regular employee?

Recently we spoke with one company that gave workers they found to their staffing agency to employ and paid the full recruited mark-up. Does your company do this too?

There is a more cost-effective way to engage these workers.

The cost of hiring an employee

We all know that hiring an employee is quite expensive. Beyond the hourly sum, or salary and bonus, you have to pay employer taxes, workers comp insurance, and other benefits. Depending on the pay rate of the employee and the cost of benefits, these extra costs could easily range from 50% – 100% or even more of the employee’s wages.

If you have a short term need or want to give the worker a test drive before bringing them on as a regular full-time employee, it makes sense to have a third party engage the worker. Many times a business contracts with one or more staffing agencies to find such temporary workers. This is a great service to use if you don’t have the in-house talent to recruit these workers.

When a business finds their own worker though, the tendency is to place the worker with the staffing agency because that is seemingly their only option. A ClearPath associate spoke with one company recently that pays a full recruited mark-up of 45% for workers they themselves identify and recruit. That’s a significant premium to pay to their staffing agency for not doing a search for the worker!

Consider an Employer of Record service

Consider engaging an Employer of Record service for such hires. The mark-up rates are more in the range of 20% to 25%, depending on the job position and pay rate. In this case, that’s a 20% to 25% savings per hour.

Creating a program to self-source your temporary workers and contracting with an Employer of Record service to pay them can produce significant cost savings for your company. Such a program could also include referrals from other employees, returning of skilled alumni and retirees, seasonal workers, and interns.

Another benefit of a mixed staffing model, or outsourcing to an Employer of Record service is that they are ultimately responsible for all tasks related to the workers employment. All human resource tasks move from your Human Resources desk to theirs, freeing you of the administrative burden of managing contract workers.

Some companies create a hiring system where they self-source the employee, engage them through an Employer of Record service, and when a full-time position opens up in their budget, they have a pool of employees to hire from with a track record of performance. Other companies convert their staffing agency recruited employees at the end of the conversion period to their Employer of Record service and save the difference in mark-up until the assignment is over or until there is a full-time position that opens up in the company.

Consider ClearPath as your Employer of Record service. We can save you 15% to 35% in engaging workers you find. Contact ClearPath to explore these cost savings.

Leave a Reply