Without a doubt, temporary agency and contingent workers provide essential support in a variety of areas. However, if not handled effectively and gets out of control, an overreliance on temporary labour can have a wide range of negative consequences. It might, for example, raise costs while also lowering employee morale and engagement.
One of the most important issues to consider when managing a large temporary workforce is if your employees are legally compliant. In the United Kingdom, around 81 percent of firms hire their staff through the use of recruiting agencies. According to the same survey, 59 percent of those organisations did not have a process in place to review agency performance, leaving the end client open to non-compliance risk due to their unregulated agency workers.
Terms and conditions might be difficult to keep track of when an organisation uses many vendors for temporary labour. Datum RPO has previously discovered that some agencies say their engagement is on their own terms and conditions, some report their engagement is on the terms and conditions of the end customer, and occasionally agencies report their engagement has no terms and conditions in place at all.
In most cases, the end client is solely liable for any breach of contractual terms and conditions, so when the vast majority of agency workers adhere to separate terms and conditions (if any), managing this becomes nearly impossible, potentially exposing the end client to employment tribunals, workforce conflict, and an unclear management process.
What can you do to reduce the complexity and cost of temporary labour?
Some ways for reducing the complexity and cost of temporary labour include:
When performing this, keep the following things in mind:
Can a third party help you manage the complexities and risks of temporary labour?
A managed service provider (MSP)/Neutral Vendor can assist you in managing various agency relationships and negotiating with agencies to ensure costs are competitive, avoiding the requirement for you to assess agency mark-ups on a regular basis.
A MSP can also advise on opportunities such as wage rate harmonisation and whether temporary workers should be utilised instead of permanent employees or consultants. Greater volume through the MSP pool will bring down costs when adopting an MSP model.
Set KPIs to encourage MSPs to use their own resource pool: the mark-up for candidates sourced directly should be significantly lower. Rates should fall after three to six months if margins continue to shrink as tenure grows
Get in touch! We can help.
Datum RPO can help you to manage your agency providers, ensuring that the workers they provide are legally compliant, as well as deliver significant cost savings.