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The True Cost of a Temporary Employee

By September 25, 2017August 23rd, 2021No Comments
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Sales volume can easily fluctuate on a day to day basis or during certain seasons. In order to keep up with demand, businesses often turn to hire a temporary employee as a solution. While this may be a great short-term solution, it is quite easy to overlook the hidden costs associated with hiring a temporary worker.

The benefits of a temporary employee can be summarized as a quick and easy solution to fill in the absence of a worker, assist during high demand, the flexibility of work hours, and lower pay than a permanent employee.

When the workflow decreases and there is no need for extra help around the office, temporary employees are let go, as there was no commitment to keep them for any longer duration than what the company needed.

While this may sound ideal for many, looking beyond the surface of hiring a temporary employee reveals a number of different “hidden” costs which add up.

A Temporary Employee Provides Additional Help at an Additional Cost

Recruiting costs not only reflect how much money is needed to hire a temporary employee, but also how much money is lost because of the need for additional staff.

Within the search for a temporary worker is the time spent on reading resumes, contacting potential employees, and conducting interviews to find the right employee for the job. The longer the search can mean the more money a business loses in revenue, and with resources already limited this may be more costly than beneficial.

In-house recruiting can become a hassle. Many companies turn to staffing agencies to offload this process to companies who already have a pool of resources. The cost here is with how much the typical fee is for using an employment agency to hire a worker. This can range anywhere between 12-50% of the employee’s hourly rate based on the company’s needs of the temporary employee. Additional fees for hiring a temp agency can be high because your company is covering all of the administrative work such as recruitment search, skill testing, reference verification, payroll, disciplining, and firing the employee.

According to Training magazine, in the 2014 Training Industry Report it states in 2012-2014 companies spent an average of 40 hours training new employees at about $1000 per learner. For businesses that hire seasonal employees, this cost can easily add up within a year.
With all of these additional costs, it questions whether the process of hiring temporary employees is actually beneficial.

Is What You Pay For What You Really Need?

Along with the extra costs of hiring temporary employees, the next biggest concern is whether there is an increase in productivity and revenue. With temporary employees comes the impact they make on the company as a whole.

Do You Know How Much a Temporary Employee Costs Your Business?

Your company may hire and train many temporary employees during peaks, but is this the most efficient process?

Since temporary employees are signed onto a job knowing that their job security is volatile, it may affect their level of productivity and reliability. Often times these temporary employees are paid less than their counterparts who have the same amount of experience, which can be heavily demoralizing. This makes temporary employees more likely to leave a job for one that pays more, or one that carries more benefits which bring on the same issue of needing another temp to fill that gap.

Julie Kantor of the Huffington Post explains that there are higher turnover costs than you would think in addition to training and recruiting costs. Productivity within a company may vary when hiring and firing temporary employees. With the fluctuation of new faces entering and leaving the company, it may affect staff members who have been employed at the business for a long time. A new employee can take up to two years to reach the productivity level of an existing employee. There may be lower engagement, less satisfaction, and even an impact on morale within the company.

After weighing in on both cost and productivity, it brings into question as to when a business will break even for hiring temporary employees during the peak seasons. Companies can easily exceed projected costs and in turn decrease revenue from high turnover and low quality of work.

Benefits of Outsourcing a Process to ARDEM

Outsourcing the management process with a fluctuating volume can bring benefits such as reduced cost, increased productivity, and flexibility.

With a vast pool of employees with specialized skills, we can help bring the best team for any job, adding flexibility to the seasonal peaks. Team members are trained alongside additional employees in order to assure reliability should a team member be sick, or if there is a high volume for processing.

We work with your company and understand your current SLAs in order to provide the best solution for your business needs. Partnering with ARDEM means that your company will always have a reliable team ready to handle projects without the hassle, headache, and cost of recruiting and management.

Contact ARDEM today for more information.

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