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Three tips for temporary worker compensation

There’s a lot of talk right now and there probably will be for some time about compensation, or employee pay rates, in these post-recession years. Complicating the conversation for many companies is the question about compensation for temporary or contract workers.

It’s a fact that at many companies temporary workers account for a significant percentage of the staff. These can be in all areas, technical, production and even sales. Most of these contractors work alongside regular employees and contribute valuable skills to projects and the company overall.

But the challenge for many companies is understanding and managing rates for temporary workers. The ability to do this successfully can impact retention (will they stay for the entire project?) and quality (are they the right skill level for the position?)

The benefits of temporary labor are real. The company saves money by paying a flat hourly fee for the contract worker without having to pay directly for recruiting resources, employment taxes, benefits and other labor-related expenses. However, unless the rates are managed, the benefits may be reduced.

Here are a few tips related to temporary worker compensation:

Partner with Your Staffing Provider – One of the keys to getting the most value is to ensure that you are not overpaying for a particular skill. You should have open and transparent communication with your staffing provider on your needs and requirements for any given position. Clear job descriptions with clear skills, experience and work environment specifics are essential for finding the right candidate at a reasonable and competitive hourly rate.

Understand Skill Supply and Demand – Many companies assume that temporary labor is cheaper just by the nature of it not being permanent or not the same as a direct employee. While there are savings, as noted above, there are many skills that are in demand both on a direct and a temporary basis. You are competing with other companies for that skill and if the skill is “in demand”, you may have to pay more as the market changes.  Understand which skills are in demand and work with you staffing provider to keep tabs on trends.

Ensure Proper Screening and Quality Interviews Are Done – The key to receiving maximum benefit from the use of contracted labor is to ensure you have the right fit for the position. This will help ensure they stay for the entire project, their skills are adequate to get the job done, and ultimately that you are paying the right rate for the skills you want. A good screening program and interview process will help with this. In addition, don’t forget about on-boarding. A good experience gets them off to a good start and helps to get them engaged from Day one.

Ultimately, the maximum value from contract labor occurs when you have the right fit for the position. If the contract worker delivers the skills you need when you need them, you will save money.

As proof, recently Staffing Industry Analysts confirmed that companies using temporary labor saved an average of 13 percent over using internal resources or hiring direct employees. In addition, Aberdeen says that companies using a managed staffing provider (MSP) to manage their contingent labor spend save 36 percent more than companies that don’t. That means more than the average 13 percent.

With companies using more temporary labor than ever, even with some challenges getting compensation right, these savings sound pretty good. Find a good professional staffing services provider and follow some of these tips and you could be saving even more.

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