It’s good business to control staffing costs in order to get the best return on your investment. But sometimes, extra projects or customer demand necessitate extending the work hours of your regular full-time employees. When this happens, your company may face inflated overtime costs. If this is a concern, you may want to bring in temporary employees to get through your high-demand period. In doing so, you can actually save money in the long run.
Before you make any staffing decisions, it’s important to understand what your needs will be – tomorrow, next month, six months from now and next year. Take time to make a strategic plan based on those needs. Then, you can draw up a parallel budget.
The decision to hire temporary workers can have many benefits, including:
- Overtime costs for temps are absorbed by your staffing agency, as are benefits and payroll expenses. You pay a flat hourly rate for work time.
- With the right temporary employees, you will realize increased productivity sooner, due to their proven, specialized skills.
Here’s a formula to help you decide:
- Choose a single position and calculate the annual salary.
- Add to this recruitment costs, onboarding and training fees, and benefits.
- Compare the total compensation of a single employee to the annual cost of overtime this person may be working, over 40 hours a week.
- To determine the cost of hiring a temporary employee, calculate the annual cost of the new hire at the temporary services rate without the overtime costs.
- Subtract the cost of benefits and recruitment.
- Subtract the temporary employee total from the overtime employee total to get an idea of the savings.
Consider the Performance Factors
Outside of the math, there are other things to consider when deciding between paying overtime and hiring temporary employees. When full-time employees are forced to work excessive overtime, it can lead to a drop in morale, productivity and engagement, as they feel continually stressed and overwhelmed.
Left unchecked, this can cause spikes in absenteeism, turnover and even more workplace injuries. With temps, you have fresh people on board, ready to work hard and enable you to maintain productivity without risking your best people.
As you address your ongoing staffing needs, consider partnering with StaffMasters. We have access to the right temporary, temp-to-hire and direct hire employees to help achieve your company’s short- and long-term business goals. Contact us today to learn more.