Flexible Staffing Models Are Having a Big Impact on Northwest Employers!
Its time to put the “F Word” back in staffing!
(Don’t panic, F = Flexibility)
With the pandemic turning so many businesses upside down, chances are the staffing plans you had in place walking into 2020 were deep sixed a long time ago. With hiring plans on hold, many Northwest companies are busy finding ways to get more done with current staff. If you had to terminate or furlough employees earlier in the year, you are likely looking for ways to build back without tipping over your already trimmed budgets. As a company you’ve likely been looking for ways to cut back on fixed costs, wherever you see them, for quite some time.
If this is a good description of what is going on in your business, on your team, you’re not alone. Nor is this particular challenge unique to this particular economic downturn. Historically companies look for ways to leverage its people costs whenever revenues are volatile, whenever economies struggle.
Traditional Staffing Models
Pre 2020, most Northwest companies were enjoying the predictability of robust growth. Manufacturing had been emboldened; new tax structures had provided all companies with more dollars to invest on both infrastructure and people.
Companies were comfortable using what we call traditional staffing models, built around the notion that when companies grow they simply need to add staff. And if their growth is predictable you can add staff 1-6 months before the actual need, enjoying the luxury of adding people to provide safety nets, just so you don’t get caught short handed. In fact, hiring becomes the knee jerk reaction to all business challenges, creating companies that are over staffed and overrun with staffing redundancies.
Traditional staffing models have some serious downsides.
There is nothing like a sustained period of growth – where the need to add people and resources is never seriously questioned – to create organizational excitement. But when growth stalls, or the business changes, employees who are no longer needed or discovered to be in redundant roles, have to be laid off. The organization re-orgs, job descriptions are changed, people are placed into the wrong roles for the talents and interests, and the business stutters. In some cases, whole facilities are shuttered or products and services shelved.
The end result of these “right sizing’s” is to demoralize the people side of a business, creating a level of disruption that remains with the business for some time to follow.
Flexible Staffing is an Alternative Model…
...that manages growth, change, and the ups and downs of business cycles very differently. It relies on a mix of core and non-core workers (not always employees) right from the start, and uses temporary resources to scale the size of their company up or down in alignment with business needs. In flexible staffing models, the goal is stay permanently right sized – confining permanent commitments to a small group of core employees.
The flexible workers who supplement the core, are rarely employed directly but are obtained thru third party employers like staffing agencies, directly contracted as self employed 1099 workers, or workers who are the employees of outsourced vendors.
Flexible staffing strategies provide a way for companies to quickly adjust the people side of their business up or down, and in real time.
The kinds of staffing models that fall under the flexible staffing umbrella are many and varied.
Handling short or long term workload upticks using temporary staff instead of hiring direct, working with independent contractors or specialized consultants for high impact project assignments, creating teams of specialized talent who can float from work unit to work unit, or deciding to fully or partially outsource certain pieces of non-core work rather than grow these functions from within – are all examples of ways to get work done while off loading the costs and liabilities associated with the employee – employer role.
Flexible staffing models go hand in hand with a mindset that is comfortable with change and has an urgency to adjust.
Companies who have a mindset of flexibility earn a competitive advantage based on their ability to change quickly, to keep their resources in sync with their marketplace needs, and to improve their bottom line by aligning costs and revenues. Companies who are good at executing flexible staffing models use third party partners as “employer partners” reducing the costs associated with the employer role. They also use these partners to help them access and mobilize the right talent at the right time, which keeps their core employees engaged and motivated thru all economic cycles
The mindset of flexibility is contagious. Employees who adapt that mindset become very valuable to employers. Employers who create their staffing plans to support that mindset are very attractive to employees.
How flexible is the people side of your business?
Here’s some questions to ask yourself about how ready you are to embrace the kind of flexibility your business might need in either a short or lengthy period of economic recovery.
- How intentional are you about your staffing strategies – how you plan to grow *or shrink” the people part of your business as your marketplace changes? Now is an opportune time for your leadership team to be talking thru when, why, and how you might choose to bring on a temporary employee to fill a vacant role instead of hiring direct. Perhaps you could come up with a set of business principles you could use to decide what business scenario warrants what type of staffing solution. That’s what your larger competitors do regularly.
- Do you have a ready list of business functions or processes that would be good candidates to outsource rather than try to develop internally? If you’ve had to scale back on some non-core staff recently, now would be the time to explore alternative ways to tap into the expertise and resources you need to run your business without developing that expertise in house. If your goal is to reduce your fixed costs, there are likely opportunities you could find to get work done faster, better, easier, and even at a lower cost using a vendor, not an employee.
- What percentage of your current worker population might be categorized as flexible? While there is no magic number, if number of people doing workfor your company totals to 15% or less of your total worker population, you are not likely as flexible as your most aggressive competitors. Ratios of core to non core workers vary both by industry and by company, but it is estimated that on average anywhere from 25-45% of the total worker population is involved in some form of flexible or outsourced work arrangements.
- What flexible staffing models do you currently use? What flexible staffing models do you need to learn more about? As the number of ways you can put people to work in your organization grows, so does the importance of making good decisions about what models will work best for you. (Need help better understanding the many ways you can build flexibility into the people side of your business, give our Partner Services and Solutions team a call at 425-637-3312)
- Do you have a good handle on the rhythms of your business – the reoccurring high or low points of your workload based on time of year, month, or even week? Some employers have made a science out of staffing their companies with core employees who fit the workload requirements at their lowest level, and then using a variety of temporary worker solutions to cycle staffing resources up or down according to business requirements. Our recommendation? Never assume there isn’t an employee out there who wouldn’t be glad to have a part time work arrangement that directly overlaid your business needs. Never assume that paying overtime or asking core employees to do more is either the easiest or the best way to handle re occurring business upticks.
- Do your current “staffing” vendors offer a full range of staffing solutions , or do you need to work with several vendors who only operate in specialized areas of staffing? Your costs of managing vendors increases with the number of vendors you need to manage your business. Now would be a good time to seek out Master Services vendors who could help you reduce your vendor management costs.
- If you’re already a regular user of temporary or contract employees, what formal programs have you put in place to manage their contribution and the vendors who provide them? Have you formalized your temporary staffing program or are you just going with the flow? Have you benchmarked how much you are paying per hour for these workers compared to what pricing might be available to your competition? Now would be a good time to do a competitive analysis of your current temporary staffing program and make sure you have the staffing partners you need to help you make the shift towards more flexible staffing solutions.
- How long is it taking you to hire a core employee? What is the impact to your organization for not being able to hire faster? Are you leveraging the recruiting power of your temporary staffing agency partners who already know a lot about your business? The temp to hire auditioning model can make a huge impact on your organization’s flexibility strategy if implemented smartly. Workplace auditions are now a staffing norm, popular ways for both candidates and employers to test the waters before making the actual hiring decision. these models not only reduce your recruiting costs substantially, but also reduce the time to hire. And the good news is that in today’s marketplace, with employees eager to work, temp to hire recruiting strategies can be used with any level of employee, no longer confined to light industrial, call center or administrative staff. The temp to hire staffing model is staple for organizations committed to staffing flexibility.
- How carefully are you vetting the independent contractors that work for your company? While using ICs is often a key component of a company’s flexible staffing strategy, they can also pose significant risks for organizations who are not vetting the worker’s “independent” status carefully. With the IRS hungry for revenues, now would be a good time to make sure your IC staffing solutions are compliant with IRS regs on when an employee can be considered independent and when they need to be classified as a W2 employee. If you haven’t already explored what is called Employer of Record services, offered by most staffing agencies, you may be exposing your organization to unnecessary risks that could be easily mitigated by an employer of record service agreement.
- Are there jobs in your company with excessively high turnover, requiring you to spend more time and resources than you would like to recruit and replace? For teams of employees tasked with repetitive work such as in a call center or production environment, there are cycles in the employees’ normal curves of performance that can be managed just like any other business cycle. this is where using a flexible staffing strategy can provide huge benefit. Chances are you’ve already determined that the life cycle of these employees is not long and you’ve just become resigned to ongoing recruiting to maintain adequate staffing levels. But have you considered breaking up that life cycle into components that would lengthen the cycle? Building in a defined auditioning period? Making job change decisions at just the right time, just before the employee gets burned out on their repetitive work assignments? Do you know the right time to add new fresh employees to your team that will allow you to cycle out your high performing employees to other work when the time is right? Even in periods of high growth, flexible staffing can become the science you need to improve the productivity and morale of your team.
- When special projects come up, do you have people on staff with the time to staff those projects? This is a trick question. While being able to assign employees to projects is a great way to give them a change of scene or the opportunity to add to their skill sets, if you have too many core employees with the time available for special projects, it may be a sign that your staffing plan has lost its flexibility. Flexible work models done well allow time for core employees to oversee or even directly supervise project tasks, but if it’s been too easy to staff your project work “from within” it’s time to take another look. Using temporary employees with specialized skills or unique work experiences to work on short term (1-6 month) projects that require focused attention and defined outcomes, represents the best in staffing flexibility.
- Are you currently launching a new technology or reconfiguring how you organize your team – who does what? This is an ideal time to avoid hiring a core employee and instead use a flexible staffing option to experiment with a new work configuration before it is officially launched. . By using a temporary employee to staff a new role on your team, you have a chance to explore how the job fits with other work on the team, to refine its work content, before hiring a new core employee. If the role works out as you planned, the temporary employee can be hired. If the role needs to be tweaked before its considered complete, you haven’t put a core employee into a role they may no longer enjoy.
- How are you looking at the overall costs of people in your company? Some companies make the mistake of looking at core employee costs separate from their flexible worker costs – burying their costs of temporary staffing, for example, somewhere in administrative overhead rather than assigning it to an operating budget. We think this is a mistake keeping companies from fully realizing their total costs of getting work done. We’ve seen companies freeze hiring budgets, while giving managers carte blanc to bring on temporary employees whenever and however needed. If the goal of these staffing practices force hiring managers to embrace flexibility, I suppose these policies might work. If they get in the way of more thoughtful analysis of what staffing strategy works best under what conditions, we think its better to ask managers to defend their staffing decisions based on cost and performance, not policy. NOTE: We also think it important for companies to train their hiring managers on the true costs associated with the hire of a core employee. We’ve talked with hiring managers enough to know that these costs are always available and are of surprise to hiring managers once they do their own analysis. That an employee’s true costs can sometimes be 60% more than their direct pay is a mind boggling concept, but none the less true.
If you would be interested in learning more about flexible staffing strategies and the many ways you can use your staffing flexibility as a competitive advantage, we would be glad to help you assess the current state of your staffing flexibility compared to other Northwest businesses. We can also suggest some ideas for incorporating more flexible staffing solutions into your current staffing mix.
Traditional staffing models have their place and will continue to be embraced for some time to come. But right now is the time for employers to think outside the box. We’re here to help!
PACE Staffing Network is one of the Puget Sound’s premier staffing /recruiting agencies and has been helping Northwest employers find and hire employees based on the “right fit” for over 40 years.
A 4-time winner of the coveted “Best in Staffing” designation , PACE is ranked in the top 2% of staffing agencies nationwide based on annual surveys of customer satisfaction.
PACE services include temporary and contract staffing, temp to hire auditions, direct hire professional recruiting services, Employer of Record (payroll) services, and a large menu of candidate assessment services our clients can purchase a la carte.