Streamlining Your Agency Labour Costs: 7 Key Approaches for Success

Businesses across the UK are looking for ways to optimise their operations and improve their bottom line. For many, a significant and often unpredictable expense is agency labour. While a flexible, temporary workforce is essential for managing peaks in demand, a lack of control can lead to spiraling costs and inefficiencies. So, how can you streamline your agency labour spend and gain control without compromising on quality or business agility? Here are seven key approaches for success.

1. Conduct a Thorough Spend Analysis

You can't manage what you don't measure. The first step is to gain complete visibility of your current agency spend. Conduct a comprehensive audit to understand where your money is going. Look at factors like agency mark ups, overtime rates, and how often you're using temporary staff. This data will highlight areas of inefficiency and give you the leverage to make informed decisions.

2. Standardise Pay and Charge Rates

Inconsistent rates across different departments or locations can lead to overspending. Implement a centralised rate card system that standardises pay and charge rates for specific roles. This not only controls costs but also ensures fairness and transparency, helping to build better relationships with your agency suppliers.

3. Consolidate Your Supplier Base

Managing a large number of recruitment agencies is inefficient and dilutes your buying power. Review your current relationships and consider consolidating your supplier base. Working with a smaller, more focused group of trusted agencies allows you to negotiate better terms, secure more competitive rates, and build stronger, more strategic partnerships- a neutral vendor managed service like Datum RPO can help you with this.

4. Leverage Technology for Visibility

Outdated, manual processes for managing agency labour are a major cause of cost leakage. Invest in technology like a Vendor Management System (VMS) or workforce management software. These tools provide real time visibility into your spending, automate timesheet and invoice processing, and help you forecast future labour needs more accurately.

5. Prioritise Internal Workforce Management

Before turning to an external agency, always check your internal resources. Could existing staff be cross-trained to fill a temporary gap? Do you have an internal talent bank or 'flexi-bank' of former employees or pre-vetted contractors you can call upon first? Prioritising your internal workforce can significantly reduce your reliance on expensive external solutions.

6. Implement a Temp-to-Perm Strategy

If you have a high-performing temporary worker who is consistently fulfilling a long-term need, consider converting them to a permanent employee. While this may seem counterintuitive for a cost cutting exercise, it can lead to long-term savings by reducing recruitment fees and boosting employee retention and loyalty.

7. Focus on Compliance and Risk Mitigation

Non compliance, whether related to tax, right-to-work, or a specific industry's regulations, can lead to huge fines and reputational damage. Ensure every agency on your list adheres to the highest standards. Regularly auditing your suppliers and their processes is crucial for protecting your business from costly errors.

How Datum RPO Can Help

Streamlining agency labour costs is a complex task that requires expertise and dedicated resources. This is where Datum RPO comes in. We can provide a complete managed service for your temporary workforce. We centralise your agency management, implement a compliant rate card, and leverage technology to give you full control and visibility. By helping you build a more strategic and cost-effective approach to agency labour, we allow you to focus on your core business, knowing your workforce management is in expert hands.