There is a practice I have noticed is becoming increasingly
common in businesses today. When there is an entry level position open the
business will opt to search for a temp-to-hire instead of simply hiring a
person outright. I understand the rationale they have for this but I don’t fully
agree.
The first argument I have heard in defense of this is that
it allows you the opportunity to essentially test drive an employee. They will
see how well they work, see if they fit into the company culture, basically an
observation period. On the surface this makes sense, you should know these
things before committing to a person for the possible long term situation.
However, isn’t this what the interview process is for?
Depending on the structure of the company you may have multiple interviews with
different people in the company. The combination of these people should be able
to gauge how well the candidate’s personality will fit in. Also the manager themself
should have a good idea after meeting the person and grilling them in the
interview.
To know how they work and their work ethic you don’t have to
rely on their resume which hopefully is accurate but may have embellishments in
it. Ask them for references. Hopefully you get an accurate picture by talking
to these people and looking over their resume. If there are inconsistencies
between these sources then the candidate may not be the best option for your
company, move on to the next one.
Most places I have been hired, when a new employee first
arrives they are on a probation period of sorts. It may be a couple weeks,
maybe a month, maybe 90 days. This should be a sufficient amount of time to
make an accurate assessment. Furthermore,
unless you have signed a contract, you are an at will employee in most states.
This means you are employed at the free will of the employer and yourself. At
any time either party can end this arrangement for any reason or no reason at
all. There are common courtesies involved but they are not always followed. So
if the company doesn’t think it’s working out so well they have every right to
tell you to pack your things. It seems as though many companies are scared to
fire people because they are afraid of being sued. They seem to try to build a
case against someone before letting them go just in case. This isn’t a bad idea
but I do not feel it is necessary and often times just delays the inevitable.
If it’s not working you might as well cut the ties quickly and move on.
So the first point now seems void in the argument in favor
of temp-to-hire.
The second defense I have heard is that it is less
expensive. I do not work in HR so I don’t have exact figures on this. Companies
feel that using a temp agency they will get people in the door at a lower rate
than they would otherwise. These people often times are workers who could not
secure employment through their own methods. Maybe they are fresh out of
college or maybe they had been working in one place for a long while and got
suddenly laid-off. Whatever their reasoning they are using a temp agency
because they were likely unsuccessful in their search on their own. It doesn’t
imply that they are any less qualified or desirable.
Let’s say for example a company is looking for a new person
in Accounts Payable. They have the criteria they are looking for and they get
the person through a temp agency. they pay the temp $12 to $15 an hour maybe
more depending on their background. Assuming they work 40 hour weeks, over the
course of a year that person would get between $25,000 and $31,000 roughly.
Seems pretty cheap, especially if they are good at what they do. But don’t
forget the temp agency doesn’t do all this work for free.
Briefly, the way temp agencies work is they get paid by the
hiring company and then the temp agency pays the employee out of that.
In this example let’s say the hiring company gives the temp
agency $15 to $20 an hour. The employee gets the $12 to $15 out of this so the
temp agency would get $3 to $5 for every hour the employee works. Extrapolate
this over a full year and the temp agency stands to make between $6,000 and
$10,000. So the total price tag for the temp worker is $31,000 to $41,000 for a
year. Typically these temp-to-hire arrangements last between 3 and 6 months.
The temp agencies typically make between $1,000 and $5,000 but there is
obviously a great deal of variance in this. Now, the national average salary of
an entry level accounts payable worker is under $35,000 a year. This
arrangement doesn’t seem as cost effective anymore. Once you add in possible
bonuses or benefits the number may increase a few thousand roughly. It may end
up being less expensive for the hiring company to just offer $34,000 outright
and cut out the middle man.
Let’s say you do get a temp in and it will save the company
$1,000 or $2,000. The agreement is for one month. A wise temp worker will still
be looking for a permanent position and it they find one they are gone. Maybe
they don’t. the company likes the temp, the temp doesn’t like the company. If
the temp is good they will get other opportunities with other companies. If the
company hired them from the beginning instead of using a temp agency they would
already have made a commitment the company and likely wouldn’t continue their
search.
In my mind, the temp has the upper hand and this is not a
position any company wants to be in if they are hiring. It makes more sense to
me to put in the effort to find the right person for the job and not pay
someone else to do that work for you.
If the temp doesn’t fit then you are back to square one and
lost all that time you just spent hiring and training.
The third, less used argument I have heard is they use a
temp because they don’t know or they don’t think they will need someone for
more than the short term. There may be a new project that came up or an
increase in volume that needs to be covered. You think this will dissipate in a
few months so why hire someone full time and carry the unneeded salary?
First off, a company should have a small analysis done of
what their realistic staffing needs are now and what they will be in the
future. This will make for less guess work and more decision a business can act
on.
If a company really won’t need another person after two or
three months when the volume subsides then why not really cut costs? Get an
intern! If there is a college or university or even a community college nearby
then there will no doubt be young eager individuals looking for an internship.
Most will work for free. They are going to school and mom and dad or their
loans are paying for most things. They will get the experience anyway they can.
Even if they are offered just $100 or $200 a week to cover transportation and
food, the company will still save much more money than with a temp. Talk to the
career center or other people that work for the school to find a good student
to get as an intern. No, the intern is not being taking advantage of. The
arrangement is mutually beneficial. Best case scenario for the intern, the
company really does need more help and now they have found a permanent job after
graduating while the company saved a great deal of money. Worst case scenario
for the intern, they work for a few moths gain experience that they didn’t have
before and go out to look for a job like everyone else but with more experience
under their belt.
Sometimes the temp-to-hire arrangement works well. I feel it
is somewhat inefficient. A company can find the right fit for the position on
their own. Temp-to-hires don’t always save the company money. If the company
truly wants to save money there are far better ways to do this.
This is my opinion. Feel free to share yours. Share what you
have seen or if you think this is an issue.
