Expenses. They are what every business needs to manage, and sometimes cut, in order to be successful and efficient. There are dozens, if not more, ways businesses look to manage and limit their expenses. However, there is one crucial way to reduce expenses that most business owners and managers seem to miss. This method can be summarized into two simple words: Staffing agencies.
As talked about in one of our most recent blog posts “The Myths of Working With a Staffing Agency,” the common perception is that sourcing your hiring needs to a staffing agency costs you more money. As laid out in the title of that blog, that belief is simply mythical. In fact, working with a staffing agency will SAVE your business money in the long run.
Any business owner will tell you that hiring great talent is not cheap. If you want great talent, it isn’t going to typically come free, but you can make this process cheaper by taking advantage of the financial benefits provided through a staffing agency. There are several ways that staffing agencies provide financial benefits to a client, and today we are going to segment these benefits into four groups.
Remove Initial Hiring Costs
What is the first step to take when looking to hire a new employee for your business? The answer should be to advertise your open position. Typically, in the year 2019, the first place you’ll head is the internet. The internet has become such a powerful tool for recruiting workers that it has become almost a necessity. Studies show that websites like Indeed, Glassdoor, CareerBuilder and Google for Jobs are the #1 place employees are going to find a new job opportunity. While these websites can bring thousands of job hunters to your job posting, they certainly aren’t free, especially if you need to purchase additional Google Ads, or even Facebook Ads to promote your openings. When you work with a staffing agency, they will use their own resources to advertise and promote a job position for you, rather than your business incurring that responsibility and cost.
Reduce the Risk of Turnover Costs
According to studies, employee turnover can cost the business anywhere between 16%-20% of that employee’s wage. That means someone making $40,000 a year could cost your company an additional $6,000 or more. Being that turnover can be financially detrimental to an employer, it is crucial that you hire the right people, the first time. With a decision that could be so risky, it only makes sense to turn to a professional in the staffing industry.
Staffing agencies provide that professional edge for their clients when selecting the right candidates. Not only that, but several staffing agencies make placements known as ‘temp-to-hire’. This style of staffing allows for businesses to ‘try out’ potential permanent candidates before making a full commitment to them. In doing so, the financial risk tied to employee turnover gets diminished.
Reduce HR Costs
It may sound contradicting, but another huge way staffing agencies help their clients save money is by decreasing their wage costs. Recruiters are in the business of finding jobs, but they are also in the business of helping clients become more financially efficient. One way of doing this is by removing the need for extensive HR costs if any. A blog post by HireRabbit titled, “6 Key Hiring Metrics Every Company Should Closely Monitor” suggests that a company must consider and monitor the time spent by their hiring managers and ‘what’s the equivalent monetary value of their time.’ Turning to a staffing agency to meet your hiring needs also means turning away from your spendings on HR wages and any resources they would need to hire the right talent.
Improve Efficiency With Temps
Although they are not the only position types that staffing agencies place, ‘temp’ hires are renowned in the staffing industry. This is not without reason. Not only do these temp positions allow a company to ‘try out’ a candidate before commitment, they also allow for a business to become more financially efficient.
To understand how this works, consider the difference between fixed and variable costs. For the sake of longevity, a temporary employee can be considered a variable labor cost. While you may employ a temp for a year, six months or one week, you are employing them when you need them. This is crucial because it means your business is producing at a higher level because of that employee.
By hiring a permanent employee, you commit to paying that individual over the extent of their contract, or you endure those turnover costs talked about earlier. Maybe you commit to a two-year contract and after six months your producing needs drop, all of a sudden you are over-staffed and scrambling to find something for your employees to do. That salary is now a fixed cost to your business, however, it has no impact on the level at which your business is now producing. In short, this has made your company financially inefficient.
It is clear to see that staffing agencies provide more value to their clients than simply filling an open position fast. Staffing agencies provide an underappreciated level of financial benefits to the businesses with which they partner. Being able to save clients advertising expenses, turnover costs, HR costs and help avoid inefficiency with temp-placements, partnerships with staffing agencies not only are nice to have, but they are also necessary for your business.