Is it Time for More Flexible Staffing Solutions?
Is it time to add more flexibility to the people side of your business?
While Northwest employers have been in a frenzy to hire core employees since early 2021, we’re starting to wonder if and when that trend might shift back to employers looking for more flexible ways of getting work done. There are lot of economic indicators suggesting that it just might be the right time for Northwest employers to think differently about their staffing needs!
What are Flexible Staffing Strategies?
Flexible staffing, as the name suggests, includes the many ways employers get work done while avoiding the responsibilities, risks, and costs associated with being an employer. It includes a variety of staffing models that allows an employer to shift at least a portion of their people costs away from fixed, long term commitments to more short term, ad hoc and variable look. Flexibility is a well established strategy to survive through a business downturn.
In pragmatic terms, flexible staffing strategies typically involve…
- An increase in the use of temporary or contract employees for a wider range of purposes. Traditional uses of interim staff to cover during employee absences and projects, have expanded to include strategies for growth, long periods of economic uncertainty, or staffing re-orgs. When employers embrace flexibility they no longer are compelled to replace an employee who resigns or is terminated, but use an interim employee to keep work flowing until it’s either the right time or the right employee to hire.
- The use of third party employers to eliminate the costs of onboarding, payroll and benefit administration.
- An increase in the use of “auditioning” as a way to hire. Larger employers who lean into flexibility tend to increase the percentage of their temporary workers, keeping them in an auditioning mode, ready to be hired when the time is right. Smaller employers use hiring auditions as a way to make sure they’re hiring the right employee.
- A preference for part time/adjustable work agreements – The number of ways an employee can be attached to an organization – flexible work schedules, work from home arrangements, job sharing, etc. grow once an employer decides to utilize flexibility as a strategy.
- A preference for outsourcing all non core work that requires specialized expertise. HR, recruiting, purchasing, accounting, and customer service are functions often turned into an outsourced vendor arrangement.
- A stronger commitment to a smaller group of core employees. One of the positive aspects of flexible staffing models is that they tend to increase the employer’s investment in their core employee group.
The Historical Roots of Flexible Staffing
Flexible staffing models are not new or even new age. Their origins go back to the 1980’s with the publication of Charles Handy’s now infamous book, Age of Unreason. Handy was one of the first to predict that successful high performance businesses would limit the size of their employed workforces, opting for a variety of temporary or contract staffing arrangements and outsourced service providers to augment the work of the core group. He referred to these “advanced” organizational models as “shamrocks” because they theoretically would consist of equal numbers of core employees, temporary or contract employees (always auditioning) and employees working for vendors with contractual performance agreements.
Handy believed that to compete, companies would need to stay agile – able to move quickly and nimbly, unencumbered by fixed commitments. He also believed that growth strategies that simply added employees as an organization grew, was dangerous – creating out of control cost structures and sub standard performance.
And Handy’s predictions weren’t that far off. For many tech companies, flexible staffing was the model du jour throughout the 90s and early 2000’s. Wall street supported that model by prioritizing performance metrics like “productivity per headcount” which motivated companies to limit their number of people they hired, relying more on temporary and contract workers to grow.
Flexible Staffing Today
While the bold predictions of the 90’s have never really come true, flexible staffing models have grown in popularity. During and after all major recessions in this century, we saw employers increase their ratio of core to non-core workers.
Historically, economic uncertainty has driven employers to prioritize staffing flexibility. Today’s world seems a bit different!
Locally, it has been periods of rapid growth that has driven the Northwest bigs – Microsoft, Amazon, Google, etc. – to rely on flexible staffing models to ease the pressure on their internal recruiting resources. The late 2020/early 2021 BUILD BACK was a time when business uncertainty drove a strong preference for employers to use temporary and contract workers to get work done. Because our business offers recruiting support for both flexible and traditional staffing models, we say the temporary side of our business boom in early 2021, while direct hire activities wobbled. Most small to medium sized employers needed to staff up quickly, but were reluctant to make hard investments to expand the size of their workforces, given so many unknowns about the future – at least during the early part of the recovery.
Today, times have changed. By as soon as late 2021, it became clear that we were in fact going to build back. Employers faced serious worker shortages as the number of people actually willing to go back to work was not enough to handle the demand. Northwest employers, particularly smaller employers, faced unprecedented competition for talent and needed to offer something “more/better” than a temporary assignment to entice the talent they needed. The temporary staffing industry has had negative growth for over 18 months walking into 2024.
The question we are asking now is which staffing model, or better stated, what mix of traditional and flexible staffing models works best in today’s work environment?
As we’ve just mentioned, in an economic environment peppered with uncertainty (yes, we’re in an election year, etc.) a company’s appetite for making fixed commitments, stalls. They pull back to hedge their bets.
We also know that when the costs and regulatory hassle of being an employer are on the rise, as they are here in Washington State, employers look for ways to curtail, even opt out of, their employer costs and responsibilities.
And when the availability of employees in the marketplace starts to improve, as it is doing now, albeit slowly, flexible staffing strategies tend to re-surface – but there has to be a good reason to do that.
Here’s our list of reasons why an employer might want to consider flexible staffing models now:
- Temporary, contract and part time employees can be flexed up or down in direct alignment with business requirements or revenue cycles. While traditional staffing models will simply adjust employee headcounts to match business needs, that model doesn’t work well in an economic environment where there are no sure bets. Additionally, a pattern of hiring, laying off and hiring again, can be destructive to a company’s brand which can come back to haunt you when times are different.
- Increasing the number of workers you have in “flexible roles, makes it easier to retain your best people. Using temporary or contract staff on an interim basis minimizes the possibility that core employees will be over worked or put at risk if a new venture doesn’t play out as planned. When business is volatile there is often undue pressure on core employees to perform at exceptionally high levels for extended periods. An occasional “temp” to pick up the pieces can be an invaluable morale builder and sends off the message – “our core group is very important to us!”
- Temporary and contract employees can provide specialized skills, experience and expertise that can’t always be developed internally. As the number and type of people available for interim assignment increases, its easy for flexible staffing models to develop. Needed skills, knowledge and work experience can be added to an organization quickly.
- Temporary and contract workers will free up your core employees to take on more challenging or complex work. Even the work of organizing a new project can provide learning opportunities for core staff ready to take that next step up. By bringing on highly skilled temporary workers new managers get to test their ability to lead without having to re create those skills on an existing team.
- A temp to hire staffing model minimizes hiring mistakes. Northwest employers have always embraced the Temp-to-Hire model for assessing a prospective employee’s performance on the job. During a tight labor market not all employees are willing to audition. We’re already seeing candidate’s take a second look at the value to them of a workplace audition.
- Outsourcing business activities that fall outside a company’s core expertise – always makes business sense – particularly when that expertise is hard to develop and sustain when its not always needed. As an example that impacts our own work is that we’re seeing many small to medium sized businesses laying off folks formerly doing HR or recruiting activities. They simply can’t afford the costs of these non core functions when they’re not sure they can keep them busy. Turning all those fixed costs into variable costs by using outside agencies only when needed, simply makes business sense.
- In the big picture, flexible staffing strategies SAVE MONEY! Can’t say it often enough but when you increase your use of temporary or contract employees you are basically turning what is typically a fixed labor cost into a variable cost. Unlike your core employees, you don’t pay your temporary employees when they are not at work. You can minimize the need for overtime, plus avoid the high costs of recruiting, training, and enrolling the employee in costly benefit programs. If you’d like to compare the costs per hour of a temporary or contract employee compared to a core employee doing the same or similar work, check out our blog on this topic here.
Some Final Thoughts and a True Confession…
To be honest we thought employers would start to return to more flexible staffing strategies in 2023. It didn’t happen. The temporary staffing industry is reported revenue and placement activity downticks throughout 2023, ranging anywhere from 10-30% depending on the segment of temporary staffing served. In our area, technology based staffing has been one of the hardest hit.
Is 2024 the right time for Northwest employers to look for more flexible staffing solutions? We’ll see.
If you’d like to read more about flexible staffing strategies we blog on this topic frequently. Here’s some links to other blogs that might be of interest…
- To check out how prepared your company is to embrace flexible staffing strategies check out this blog.
- For a side to side comparison of flexible vs traditional staffing models, this blog is a good read.
- If you’d like to learn more about the temporary contract workforce, here’s some facts that might be of interest.
Regardless of your staffing strategy – We’re Here to Help!
Because we provide both temporary/contract staff, a wide range of recruiting services for clients who want to hire direct, we are in a position to deliver the right solution – regardless of which staffing model you’re using. When it comes to flexible staffing strategies, our team has been helping organizations implement and upgrade the quality of their flexible staffing strategies for over 45 years. We’ve seen companies who do it well, creating a competitive advantage over their less nimble competitors. We’ve also seen companies successfully hang on to the more traditional direct hire staffing models. We find ways to help both types of clients.
For a discussion about the right mix of interim and core employees for your team or ideas for implementing more flexibility into your current employee population, contact us at 425-637-3312 or e mail our Partner Services and Solutions team at firstname.lastname@example.org.
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 5 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.
To learn more about how partnering with PACE will make a difference to who and how you hire, contact our Partner Services and Solutions team at 425-637-3312, e mail us at email@example.com or visit our website at www.pacestaffing.com/employers.