Priority Personnel Blog

You’ve just won a three-month contract with a major new client – congratulations!  Now, you need to figure out how to get the extra work done. 

Should you pay your current employees overtime, or bring in temporary help?  Consider the following sample cost analysis.  It is based on an annual salary of $40,000 ($20.51/hr.), vs. time-and-one-half overtime, for one employee:

Cost Analysis

Although this is just a sample exercise for illustration purposes, it clearly demonstrates the economic rationale for using temporary employees.  When you need additional productive hours on a temporary basis, staffing services can lower costs, reduce burnout and improve the productivity of your direct staff.

Priority Personnel - Central Texas’ Staffing Economics Experts

Need help assessing the cost of a staffing strategy?  Contact Priority Personnel.  Our experts will work with you to determine the most productive and cost-effective way to get your work done.

Cost Analysis Assumptions

* Temporary staffing rates vary by market, but the relationship (ratio) between pay rates remains the same.

** Fringe benefits include:  holiday pay, sick leave, vacation pay, personal days, insurance, F.I.C.A., S.U.I., F.U.T.A., worker’s compensation, etc., based on a national average of 31%.

*** Based on U.S. Chamber of Commerce national average statistic of 12%, which includes firms that pay no benefits.  For small firms with moderate benefits programs, this cost is typically 40-45% of payroll, and for larger firms with extensive benefits programs, the cost can be up to 100% or more of payroll.

Most of us today are conditioned to look for the best possible price.  In most cases, this makes good economic sense.  But when it comes to staffing services, the company offering the lowest prices isn’t necessarily going to deliver the best value.

Here are a few good reasons why shopping around for the lowest-priced temporary employees might not be the wisest use of your staffing dollars:

• To offer you the lowest price, a staffing service may be forced to cut back on the quality and amount of service they provide.  They may not be able to afford the same depth of recruiting and screening.  As a result, they may have more difficulty finding the right candidates for your specific needs.
• Because of simple supply and demand, the staffing agencies that offer better wages to their temporary employees will most likely get the more talented, skilled, reliable and experienced applicants.  Any staffing firm can find a “warm body” to fill your position.  But finding a quality employee that truly fits your organization may be too crucial to risk – especially for what may boil down to a few cents per hour.
• Not getting the right person for the job can have very costly ramifications.  For example, a temporary employee who is less than qualified for the position can cause the following unforeseen expenses:
  - additional time (money) up front to adequately orient and train the temporary
  - increased supervision for a less qualified temporary
  - mistakes and reworks – the time, money and materials involved in re-doing the work of a less qualified temporary
  - poor productivity – the amount of work a sub-par employee fails to complete (compared to a qualified individual)

The bottom line is, many things in business aren’t worth risking.  The quality of your human capital is definitely one of them.

Priority Personnel:  the Best Staffing Value for Central Texas Employers
When it comes to the quality of Priority Personnel’s candidates, you get what you pay for – skilled, reliable, hard-working and experienced people who truly fit your needs.  Rest assured, we will always deliver the best value for your staffing dollar.