Guest Column: Temp workers are flexible, but costs need to be managed

IN its 2014 Flex Appeal report, The Recruitment and Employment Federation stated that, on any given day in the UK, recruiters place 1.1 million people in temporary work assignments. Between 2008 and 2014 the number of UK full-time employees rose by just 0.3% while the number of temporary workers increased by 20%.

It would be easy to think that temporary staffing is the domain of the HR team, but as labour is the biggest cost to any business and the usage of non-permanent staff is rising, FDs also need to scrutinise the cost and effectiveness of a burgeoning temporary workforce.

As the FD of a labour supply management specialist mainly focused on temporary staffing, I’m often in conversation with corporate and public sector heads of finance about the merits and pitfalls of using and managing a temporary workforce. What often becomes clear is that FDs understand the merits of using non-permanent resources but approaches often leave much to be desired in terms of the visibility and control they have of this potentially costly resource.

A temporary workforce requirement, if left unregulated, can lead to financial resource issues and poor staff utilisation. Despite the obvious flexibility that temporary workers add to a business alongside permanent staff, understanding what they are costing the business and how effective they are is critical.

There’s no doubt temporary staff are valuable. They typically allow a large organisation to ‘flex’ its workforce more easily, in line with changing work patterns and resourcing needs, whether they are seasonal, geographical, forced by crises, skills shortages or major contracts. Going down this route adds fluidity to the workforce, and decreases rigidity in job descriptions, working hours, salary and benefits provision. As much as your permanent staff is an essential foundation and structure for the business, it’s difficult to have a flexible workforce that can fit changing needs without some temporary provision too.

A flexible workforce has benefits in both good and difficult times. As well as simplifying expansion, keeping a proportion of your staff temporary also makes it less costly to scale down, reducing the need for redundancy processes and the associated costs and negative effects.

But, because temporary worker needs are often driven by immediate demand, it’s easy for organisations to fall into a number of traps of which FDs should be mindful. The capacity to overpay is patent. Temporary roles in competitive markets, where demand outstrips supply, allow workers and recruitment companies to command very high rates. It’s also easy, especially in complex businesses, to over-resource. We advised recently on the panic-buying mentality that can occur in organisations when there is a need for more heads. Not only can this mean buying too much; it can also lead to rate hikes.

This is what FDs should be scrutinising. The starting point is establishing some benchmarks – understanding what you’re buying, who is buying it, how much it is costing, and where are you buying it. Answering these questions allows you to build a picture of how your temporary staffing procurement works. But there is another internal benchmark required: knowing what temporary staff you need and when you need them.

Having these benchmarks in place allows an FD to ensure the business is buying the right resources, in the right quantity, at the right time and at the right price. Benchmarks enable you to move on to measuring these factors on an ongoing basis, perhaps resetting your supply relationships with the recruitment marketplace on your terms, or getting a third party to do this.

Ultimately, these metrics and measures will enable you to create a balanced score card for your temporary staff, to ensure that the correct sourcing processes and methods are being used, and your temporary staff will be a well-measured and managed business asset.

Brian Kenny is finance director of Comensura