While millions of jobs are being lost in the abysmal economy, a lower-profile trend involves companies — especially smaller ones — hiring temporary workers in response to the crisis.
Employers that are determined to keep fixed-staffing costs at a bare minimum may need to expand their work forces from time to time, as dictated by, say, short-term spikes that might reflect the demands of a particular client or customer. Some companies, being extra careful about full-time hiring that might not be worth the investment, find it appealing to first try employees out, with no obligation. For other firms, extraordinary human-capital needs may arise out of structural changes to their businesses or other special circumstances driven by the recession.
To be sure, there appears to be no overall surge in temporary staffing. At perhaps the biggest firm in that sector that places finance professionals, the publicly held Robert Half International, temporary staffing revenue was flat in 2008 at $3.6 billion, and declined 1 percent when removing the effects of currency fluctuations.
Still, that was a much better performance than Robert Half experienced for its permanent placement services, for which constant-currency revenue fell by 5 percent, according to the annual report the firm filed last week. Since its temporary placement business is much bigger, it has not been hurt too badly so far.
“I’ve heard some companies say they’re keeping 70 percent core permanent staff and 30 percent variable-cost labor,” said Paul McDonald, executive director of Robert Half Management Resources. “Some are saying it’s 60-40. One actually said 45 percent permanent and 55 percent variable.” The latter company previously maintained a 70-30 mix, he noted.
All Temps, All the Time
Patrick Nichols, CFO of Crystal Geyser Water, a privately held beverage maker with revenue in the $50 million to $100 million range, is one who prefers to take on temporary staff these days. “Virtually everyone who comes in is going to come through that route,” he told CFO.com.
Nichols, in fact, came through that route himself. After a temporary staffing agency placed him at Crystal Geyser as interim CFO last September, he transitioned to permanent finance chief at year-end. His controller and a cost accountant currently are temps, and Nichols recently converted his chief accountant from temporary to permanent status.
This arrangement gives Nichols comfort that he’s not going to end up making an unwise hire when he can least afford it. “As is typical of most companies these days, we don’t hire people until we absolutely need them,” he said. “If you bring them in through a temp agency, you get to try them out. And although the per-hour rate is higher, in the long term it’s much more cost effective.”
Companies with more modest needs to fill than CFO, controller, and chief accountant may hold similar views.
At sister companies Gainsborough Waste and Texas Outhouse, controller Donna Anderson said she too is using more temps these days, with full-time staff tightly controlled because “times are hard right now.” One of her biggest annual tasks comes at year-end, when all paper files must be reorganized and boxed. “I need someone who knows what they’re doing, who knows the difference between receivables and payables,” she said.