The Cost of Temporary Staffing vs. Full-Time Employees

It’s a decision that many companies struggle with when it comes time to hire a new employee: Should we go out and hire a full-time permanent employee or utilize a temporary worker?

Making the correct decision requires considering two essential factors—the cost of hiring and the time that’s involved. Here’s a breakdown to help you choose.

Hiring a Worker Internally Is Costly

Some managers shy away from increasing their workforce with temporary workers because they believe the fees make it too expensive. But that isn’t true. The cost of a full-time employee goes well beyond a salary. Benefits, insurance and taxes also need to be considered as part of the total compensation package, if you’re going to compare temporary and full-time accurately.

When an organization decides to use its HR staff to hire directly, the upfront costs can make the hiring process quite pricey. Consider some of these apparent expenses:

  • An impressive ad in the local newspaper can run into the thousands of dollars, while job boards can cost hundreds.
  • Processing, orientation and training are expensive.
  • Total compensation. Medical insurances, sick pay, vacations, holidays, taxes and payroll expenses are just some of the ongoing costs of a full-time worker.

There are also hidden costs of hiring most businesses don’t think about. An internal recruiter will put many hours into hiring one employee, and the time put into the following activities is paid by the company:

  • organizing recruiting materials;
  • placing ads and job postings;
  • screening applicants;
  • preparing for interviews;
  • conducting phone interviews;
  • conducting face-to-face interviews (first and second rounds);
  • selecting candidates; and
  • checking references.

What If You Don’t Get It Right?

Bad hires can be costly. Most estimates put a dollar figure of about 1 ½ to 3 ½ times the new hires’ annual salary. And don’t forget the loss of production. Even the right worker will have lower production initially, but the wrong one can cause managers and co-workers to be less productive as they spend more time assisting and correcting the mistakes of the wrong hire.

Hiring Temporary Workers Eliminates Many of These Costs

Staffing firms absorb most of the costs of the workers they place. When a business pays for a temporary worker, all of the expenses—compensation, taxes, benefits and insurance—are already included in the fees.

The costs associated with bad hires are eliminated since the staffing firm will immediately replace anyone who doesn’t work out. And, if there should be a downturn in business, there is no need to find “busy work” for a full-time employee. Conversely, if a company becomes swamped with work for the short term, temporary workers will allow you to take advantage of the upswing to increase income and profitability.

All of the recruiting costs that were paid by the company are included in the fees you pay the staffing firm, freeing up resources that can be used in other productive areas.

Businesses that are looking to be profitable are turning to staffing firms to provide them with temporary workers who can help them remain competitive by allowing them to channel their resources away from hiring and into production. Contact Select Staff today to learn more.

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