Workforce Planning: Temporary Labor Fundamentals

Some Businesses Have Fluctuating Needs
The term “temporary labor” generally refers to those workers who accommodate the fluctuating needs of your business. For instance, you may need workers only during peak times of the year or for one-time-only project needs.  When regular employees are out for lengthy periods of time—such as when an employee is on a leave of absence—temporary labor is useful. In many cases, businesses use temporary labor to cover for vacationing employees; even if only for a few weeks or days.   

A temporary labor force is distinguishable from the regular full-time employees of your business.  Sometimes companies use the term “temporary labor” to distinguish these individuals from regular employees who are eligible to receive benefits. Temporary labor workers are less likely to receive benefits such as vacations, health insurance or a retirement plan.  These benefits are generally reserved for employees who have longevity in the organization. 

Examples of Industries That Use Temporary Labor

• Construction—due to the seasonal nature of this industry, it is difficult to build or repair structures during rainy or winter seasons. This industry has its greatest workforce needs during summers or when the weather permits.  Other related industries are affected as well, such as those who supply building materials, and companies that manufacture doors, windows, cabinets, etc. 
• Agriculture—another seasonal industry that is dependent on weather and seasonal limitations. During peak demand periods, such as harvest time, temporary labor assistance may be required.
• Service or Office Market—companies often need temporary labor when technical expertise is required to achieve project goals, such as the installation of new software or a new information system. You may need a computer programmer on a temporary basis—someone with a specialized skill or knowledge of a particular programming language to get your system up and running.  

Temporary employees are also needed during peak periods of financial activity, such as year-end closing for the accounting department. A company may hire temporary employees for bookkeeping or data entry; and to process final transactions when it’s time to close the books and prepare financial reports. 

Temporary staffing is a common practice when filling positions that are vacant for brief periods of time, as previously mentioned. Those positions are generally support staff positions, such as receptionist, clerical assistant and other types of routine office work. These positions do not require a long training period; and the temporary employee can acquire the knowledge and the skills to perform the job with only a few hours of instructions. 

• Retail – stores generally bring on temporary labor in anticipation of heavy sales activity during holidays, special sales events, periodic inventory tracking, or store opening set-up. 

Advantages of Hiring Temporary Labor

1. Minimize hiring costs.  As mentioned, benefit costs are normally avoided.
2. Minimize recruiting costs. The recruiting process involves advertising, background screening, testing and other expensive services. 
3. Avoid or minimize training time and costs. Agencies usually handle any training or screening steps.
4. Provides opportunity to evaluate whether or not a regular full-time employee is necessary to fill a role.  You may need to assess if someone providing these services on an ongoing basis will increase revenues or enhance your business.
5. Provides further opportunity to evaluate certain individuals as candidates for regular full-time employment. Does this individual fit in well, do they have good work habits, good customer service skills, etc.

Working With Temporary Labor Suppliers

If your business utilizes temporary labor on a regular basis, it is helpful to develop a relationship with your supplier or suppliers, more commonly called “temp agencies.”   Some temp agencies specialize in screening employees for a particular type of work such as factory labor, technical/engineering staffing, medical staffing or office support. 

By developing a relationship with a vendor, you will enjoy a smoother process because they will grow to understand:

1. your business operations;
2. the proficiency levels required of the temporary employees; and
3. your screening requirements

In addition, you can make arrangements with the temp agency to conduct a pre-hiring orientation; especially if you need a large group of temporary workers all at the same time. You also will be in a better negotiating position. Temp agencies may be inclined to reduce their rates if they can expect future business with you.

If you decide that you want to hire the temporary employee into your regular workforce, temp agencies generally will charge a fee for that transfer.  However, if the employee has been assigned to your business for a considerable length of time, the temp agency may waive this fee. This fee is generally calculated at one percent per thousand of the employee’s annual pay.  Some agencies allow a trial period during which they will not charge you—during the employee’s first 4-8 hours—if you decide that the employee is not a match for you.

As a final note: For other related information such as safety and health concerns, responsibilities or obligations, small business owners should seek counsel from an attorney.  OSHA also has information specifically developed for small businesses on their Web site.

Some businesses, particularly those in certain industries, need workers during peak times of the year or for one-time-only project needs.