With the economic outlook uncertain, both large and small businesses are debating about whether to increase staff as the start of the holiday season approaches. Utilizing temporary staffing agencies and hiring temps can be a cost-effective and low risk strategy for small businesses to test the waters amid economic uncertainty. See the following article from The Street for more on this.
As businesses gear up for fall and the make-or-break holiday season, they face the ultimate question: To hire or not to hire?
For many, the answer is no. Why make the investment in new employees when consumer confidence is still so shaky?
But maintaining a bare-bones work force can be risky too. If consumer spending does pick up, shelves might go unstocked and deadlines might be missed. A small business could end up stuck with a reputation for being unreliable.
For those on the fence about hiring, there is a compromise available: Make a trial run with temporary or part-time workers. If they spend most of their time standing around or surfing the Internet, there’s not enough work to keep a full-timer busy — and the financial outlay for finding out will be relatively small.
If, on the other hand, the temps stay consistently busy, it might be a signal a company is ready to expand. A temp could even go full time, saving a business the hassle of endless interviews.
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More and more companies are choosing to go the temporary route. Staffing-services company Manpower(MAN) has seen a steady increase in demand since October. “There’s a classic sequence to economic recovery,” Chief Executive Officer Jeffrey Joerres says. “The first thing that comes back is hiring in temporary workers and contractors. This time, because of the slowness of the recovery and uncertainty about the economy, that stage has lasted much longer.”
Traditionally, large and midsized companies have been much more likely than small businesses to turn to staffing agencies. That makes sense, considering the numbers: A major corporation may have hundreds of positions to fill, while a small, family-owned business may need a temp only once a year.
But with high unemployment, more and more people are considering temporary positions, and sorting through candidates has gotten harder. Today, temp agencies not only provide workers, they act as outsourced human-resources departments.
“Smaller companies are telling us they don’t have the skill or capabilities to interview 1,000 candidates for two open positions,” Joerres says. “They don’t want to take the risk of hiring the wrong person.”
A staffing agency can process and assess large numbers of job-seekers, and paying their fee may be a fair trade-off for business owners happy to skip the hassle. While an owner can ask to interview and approve the final candidates, they should keep in mind not to overstep their role. They aren’t the employer — the agency is. Discussing full-time employment or salary with a temp could lead to a lawsuit on the grounds of co-employment.
Small-business owners should also be upfront about goals from the start so the agency can sort candidates accordingly. Should the agency look for a temp for the holiday rush who will move on in January? Or is the temp stint a trial run for a possible full-time job? (Manpower has seen such “temp to perm” conversions double in the past year.)
The same considerations come into play for part-time workers. About 25% of part-time employees last year worked those hours because they couldn’t find full-time jobs, according to the U.S. Census Bureau’s Current Population Survey.
That number has doubled since 2007, but it’s still a relatively small proportion of all part-time workers. Most work limited hours because they want to. They may be mothers who want to be home when their kids get back from school; students fitting in a job between classes; or retirees looking to make some extra cash. Small businesses that hire a part-timer hoping to increase their hours when business picks up, must make sure from the get-go they’ve hired someone willing to take on a full-time schedule.
It’s a challenge to be both realistic and hopeful when it comes to hiring. Employers need to be upbeat about their business’ future but shouldn’t promise someone a job that may never come through.
“It’s fine to say, ‘We don’t plan on hiring in the next six months, but during that time, circumstances may change,’ ” Joerres says. Better to be honest and unsure than raise false hopes. And who knows? Today’s temp may become tomorrow’s Employee of the Year.
This article has been republished from The Street. You can also view this article at The Street, an investment news and analysis site.