Help In A Hurry

Dec. 21, 2004
Today's tight labor market boosts demand for blue- and white-collar temporary workers.

With unemployment hovering at about 4% nationally, and high-tech start-ups luring workers away from a wide variety of employers, it's no wonder that small to midsized manufacturing firms are struggling to attract and retain good people. For at least the last decade, countless firms caught in this dilemma have been turning to alternative staffing solutions to meet their personnel needs. Nearly every U.S. company uses temporary workers at some time, mostly to fill in for employees who are on vacation, out sick, on maternity leave, or to provide extra hands during peak times. Increasingly those temporary workers are filling technical and professional jobs. According to a study from the American Staffing Assn., Alexandria, Va., in 1998 the technical and professional sectors comprised nearly one-fourth of temporary-help payroll. The office/clerical sector, while still the largest sector at 40.5% of payroll, has steadily decreased in importance since 1991 when it represented 47.6%. Employers today "are having a terrible time with turnover and hiring enough people to staff their organizations. They're trying to get people however they can, so they're turning to temps," says David Greenberger, chair of the Management and Human Resources Dept. at Ohio State University's Fisher College of Business. Another possibility, he notes, is that they are trying to maintain a stable workforce within the company regardless of economic conditions. Companies don't want to be in the position of laying off employees, "so they will add temps in good times and won't hire additional temps in bad times." A third reason companies use temps is to try people out without the cost of recruiting, the energy of interviewing, and the risk of a discrimination lawsuit if it doesn't work out. The Society for Human Resource Management (SHRM), Alexandria, Va., found that 97% of the companies it surveyed sometimes, frequently, or always hire temps for regular positions. All the reasons for hiring temps apply at Helmac Products Corp., a Flint, Mich., manufacturer of clothing-care-related housewares, such as lint rollers. During its busy season, the workload goes up by about 20%, and temps help to manage the extra volume. CEO Nicholas McKay Jr. says that using temps allows his company to live up to a policy of not laying off employees during slow periods. "It allows us to modulate for seasons," he says. "We also use [temporary hiring] for a recruiting ground by hiring the best 20% of the temp team at the end of each season as full-time permanent employees." The downside, McKay adds, is a high rate of turnover and the learning curve and training costs associated with hiring temps. At the core, Greenberger says, is a fundamental change in the nature of work. "Organizations are moving increasingly to having a core group of workers and a significant group of temporary workers," he says. "My belief is all organizations should have a certain percentage as temps. It provides tremendous flexibility." Temps are used for everything from cleaning up the warehouse to cleaning up the bottom line. Consequently, the cost of using a temp service is difficult to pinpoint -- positions range from clerical to chief financial officers and pricing strategies vary by industry and region. Plus, many staffing agencies offer volume discounts. In general, you'll pay more for a temporary employee than your own because you're also paying the agency's fees. A 50% premium above the temp's wages is common. For a short-term project, this arrangement may be worthwhile because it saves the time and cost of recruiting, training, and then unemployment claims if you have to let people go. And the staffing company handles the taxes, workers' compensation and liability insurance, and, increasingly, benefits. At one end of the temporary-agency spectrum is Hire Point LLC, a day labor/temp service for manufacturing companies in New York's South Bronx area. The firm provides unskilled and semiskilled workers to businesses that need warehouse help or assembly line workers. "In general, the bulk of it is old-fashioned, roll-up-your-sleeves-and-get-dirty work," says Hire Point president Warren Zinn. He says Hire Point covers all the workers' comp, liability, and disability insurance. Customers have "no paperwork, no accounting, no taxes. . . . For my customers, it's a godsend." What it all comes down to, says Zinn, is that his workers let companies make the best of use of their own people. At the other end of the temp spectrum are firms that provide executives on a contract basis. These seasoned professionals can walk into companies and fill critical roles at crucial times. Use of contract executives is becoming more frequent in manufacturing, says Paul Dinte, chairman and CEO, Dinte Resources Inc., a McLean, Va., firm that does searches for both permanent and interim executives. "There are a lot of executives attracted away to technology companies with pre-IPO stock option opportunities. There are not enough senior executives around to run [manufacturing] companies." Why not just hire a consulting firm as opposed to a contract executive? Stan Richards asked himself that question when his company was faced with either reinventing itself or shutting its doors. Richards Corp., Sterling, Va., was in the defense business, making workstations for interpreting intelligence images. To shift his base of business, he bought a company that manufactures galley inserts -- coffee makers, ovens, and refrigerators -- for aircraft. The problem was that he had never sold to any client except the government. He considered a range of options, including hiring a marketing firm or a consultant to prepare a market survey and a marketing plan. "We ended up deciding that an important part of what we needed was to educate all our senior management about what this new reality was and the new game we were in," he says. "We struggled and said, 'We really need . . . expertise; we need [executives] here full-time, and we need to do it quickly.''' Dinte found an executive who had been in the galley insert field for more than 30 years. "He understood the business we were in very thoroughly," Richards says. "He was hired to prepare a market survey of the industry and a marketing plan. We were so impressed we ended up hiring him for a couple of years, which is all [the commitment] he wanted." Temporary executives don't come cheap. This level of expertise has a starting salary of $100,000 a year. "For a small company, it's so expensive, it's scary," Richards says. "But the product we used to manufacture didn't have a commercial application. It was a matter of survival." For Richards Corp., hiring a temporary executive has paid off handsomely. At its lowest point, the company was down to fewer than 30 employees. Now, "we're up to 50 and growing at 30%-plus a year." Before a company brings in a temporary executive, Richards says, it needs a clear understanding of what it wants to accomplish and the critical skills it requires. "When you're having someone in only for a short time, you want that background to be as immediately relevant as possible," he said. "That's part of what you're buying. They can't spend a lot of time getting up to speed." It's advice worth heeding, no matter what personnel needs -- temporary or full time -- you might have.

Sponsored Recommendations

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!