Indirect affects of a downturn on your temporary agency workforce

In times of uncertainty many businesses rely heavily on flexible workers, taking into consideration how they can fluctuate with the market. Often what companies don’t consider are the indirect affects on that temporary agency workforce they rely on so heavily.

What would happen if the agency providing a significant amount of your temporary agency labour were to become a victim of the recession and cease to trade? Or if your agency staff were offered full-time positions or, a more favourable temp role?

Companies must have plans in place to deal with such issues, should they arise; however they often come in second to the plans for issues that have a direct impact on the business.

de Poel works with each of it’s clients to create a preferred agency panel, meaning there is a variety of suppliers available who can respond quickly to needs. We audit them regularly to ensure they are compliant and to forecast any issues that may arise – so, less nasty surprises.

Reliance on a temporary agency workforce is by no means a bad thing; in fact it has no doubt contributed to many companies riding out the recession. Unfortunately though it is often managed poorly, and companies are unaware of how much they’re actually spending – we’ve known estimates to be out by millions! Gaining control of your agency costs is vital to make the case for a flexible workforce, and to ensure you are getting the best value for money.

Has the prospect of a 14 year temp sent recruitment off the rails?

The high speed rail link has seemingly got the go ahead – so does this mean the dawn of the 14 year temporary agency worker, or the beginning of the end for long term contracts?

As ridiculous as it sounds, a temporary agency worker being employed for the estimated time it would take to complete the project is not as daft as you would first imagine. There have been instances of individuals being with companies for 2/3 years plus and still being deemed as temporary as far as their contractual obligations are concerned.

So if that period hasn’t raised too many eyebrows then why should taking it to the next level be such a hell raising experience?

The advent of the Agency Workers Regulations is one reason that springs to mind, and whilst the 14 years ever so slightly exceeds the 12 week threshold that temporary agency workers have to pass in order to accrue the same rights as their permanent counterparts, it seems unusual that theoretically a person could spend over 25% of their working life on one job, and still be classed as a ‘temp’ amongst colleagues who could work for the same business for only 10% of that time…..

The option of terminating employment prior to the 12 week threshold doesn’t really seem applicable with such a long project, and whilst the companies that win the construction contracts may decide to omit temporary workers in the initial phase, the flexibility of a temporary agency workforce in a climate impossible to predict will surely mean they become an integral cog in a gigantic operation.

Suffice to stay, there are some lucrative contracts on offer for the temporary agency workers that take on these potentially mammoth assignments and with the time period being so long for what is a projects set to revolutionise the nation’s transport links, the Agency Workers Regulations should not impact as much as they would for smaller, ad-hoc assignments.

Recruitment agency management is also set to be a major headache, with agencies taking on 14 year temps. A lot of things change in 14 years, let’s just hope the reliance on a flexible workforce isn’t one of them.

Gaining Control of your Agency Costs

Obtaining control of every spend category is essential for 2012, temporary agency labour is now exception, Gaining control also includes two main processes: implementing control and maintaining control

The main way for an organisation to implement control of spend is to improve internal reporting functions. This creates opportunities to oversee, approve and authorise weekly, monthly and yearly expenditure, in turn providing chances for better budgeting at both a national and regional level in the future. Introducing reporting systems to ascertain a clear picture of the amount and cost of supply in the past also allows companies to predict and forecast for the years ahead.

In today’s era of technology there is no excuse to be operating a paper-based system. The best system for gaining control over temporary agency labour spend is a timesheet and invoice-processing system.

• Ensure you choose a software system which is web-based, to remove the need for software installation and create easy training opportunities.
• Check the web-based software is compatible with your back office system and the appropriate support is available.

There are several software packages which you can use to replace the inaccurate, time-consuming and uncontrollable format of paper-based invoices and timesheets, but the most popular and cost-effective system on the market is de Poel’s own system e-tips®,which is unique, web-based, compatible with internal systems and available exclusively to de Poel clients.

 Implementing control is not enough on its own. Control needs to be maintained by continually monitoring spend and supply, as well as any savings made. Whilst constant examination of spend and supply allows you to keep tabs depots and agency suppliers, reducing indirect costs associated with poor performance, monitoring savings creates opportunities to further savings, as you can see which practices are working well. Timesheet and invoice-processing systems are again, the best way to do this.

Optimising spend within the temporary agency labour category

Setting a standard and optimum matrix of pay and charge rates is key to managing your temporary agency workforce spend, throughout 2012. Arguably the most important phase as you seek to leverage your expenditure, it allows you to balance and regulate worker and agency payments in the absence of an official Government ombudsman.

The key point to remember is that spend management through rate optimisation and standardisation, is specific to the recruitment industry. With a total of more than 17,000 agency suppliers in the UK, all operating under varying, verbally-agreed, informal terms of business creating a fragmented and unscrupulous marketplace, rate optimisation and standardisation is unavoidable as a means of managing spend.

Indeed, it seems that rate inconsistency is the chief factor in rendering the relationship between agencies and their clients so unhealthy.. As a result, recruitment campaigners have been calling time for employers to have more power to set prices according to their finances, especially in light of the recession, which put strain on recruitment budgets.

There are two main aspects to rate optimisation: finding the optimum, job-specific pay rate and finding the optimum agency margin.

To start with, it is important to realise that establishing the “optimum” rate for a job does not mean selecting the best or average payment. Rather, it requires finding a balance between a market-driven agency pay rate and a competitive pay rate that will attract high-quality staff. Thus, the best way to find the optimum pay is to carry out a full analysis of your industry. Look at the job in question, what you would normally pay that candidate if they weren’t supplied through an agency. Be aware the geographical variations.

Then consider the median pay across those who get the job via an agency. Take into account the current jobs market and economy and analyse employment and unemployment statistics within your industry to gain an insight into candidate availability at that specific time – vital in setting the optimum rates for all job types since the higher the number of available candidates, the less the pay rate is going to need to be.

The next step is to optimise agency margin.