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Six Top Tips for Saving Money on Agency Labour

26 March 2020

The benefits of managing agency labour spend effectively includes cost-savings, legislative compliance and a more engaged supply chain. Despite this, management of agency spend is not always prioritised.

The facts are, that it can be difficult to get right - particularly if you operate in multiple locations with many different suppliers.

We have compiled six ways to help you better manage agency labour - and save money.

1. Keep track of margins and pay rates

 It’s unnecessary for agency margins to begin to spiral out of control because they are not being managed properly. The solution is to standardise pay rates and have agreed margins in place for all suppliers.

If there is no visibility of worker pay rates - there can be a host of problems including lack of pay parity, budget overspend and conflict within the business. By gaining control over pay rates and margins and managing employer’s national insurance, holiday pay and other deductions - you could save 6-12% of your total spend.

Work towards pay rate harmonisation by identifying the pay and charge rates that are in place within your business.  Once you have established this, you can work towards a formal set of agreed terms and conditions, with fixed pay and charge rates for particular roles.

2. Evaluate agency performance

Contract and temporary workers make up 5% of the total workforce in the UK - and the UK has the biggest temporary workforce in Europe with 81% of companies enlisting recruitment agencies to help them hire temporary workers.

However, 59% of these companies do not have a process to evaluate agency performance and due diligence.

Evaluating agency performance, whilst considered time consuming, could protect your company from unwanted exposure to legal risks. Whilst your agency should have the legislation finalised their end, our research shows that 27% of agencies fail to issue a professional contract.

By evaluating agency performance you can ensure you are compliant with a host of legislation such as:

  • Agency Worker Regulations
  • National Minimum Wage
  • False Self-Employment
  • The Modern Slavery Act
  • Rights to Work
  • And more…

Enlisting an agency does not give you a free pass to neglect legislation. Neglecting legislation comes with serious consequence - particularly as the government has announced that they will resume the ‘naming and shaming’ of employers who fail to pay national minimum wage – and impose a penalty.

This substantial penalty could cost you 200% of owed arrears – a maximum of £20,000 per worker. The penalty will only be reduced by 50% if the unpaid wages and the penalty are paid within 14 days.

And for those employers knowingly employing illegal workers, or are found guilty of not carrying out the correct right to work checks – you could be sent to jail for 5 years and pay a civil penalty of up to £20,000 for each illegal worker.

 3. Improve the worker experience 

 Your temporary workers are walking, talking advocates for your brand.

If these workers endured a poorly structured enrollment and engagement process they could end up doing more harm than good.

If your enrollment process fails your temporary worker, you failed your brand. You could be putting under-trained, unenthusiastic temporary workers out there in your business and relying on their workmanship to stand up to your companies’ standards.

Your brand and how it’s perceived by the people around it, is an essential component of your sales funnel - and it is critical your temporary workers understand and have invested into your brand values and attitudes.

4. Look after your hiring managers

If you are working with large temporary workforces, hiring managers can become daunted and frustrated by poor quality workers being supplied and having to deal with any subsequent churn.

All workers supplied should to go through a vetting process - and many of them may be inappropriate for the job listed. It is time consuming for the hiring manager who has more valuable and pressing work to be getting on with.

Staff retention is important and financially beneficial to any business. Do what you can to make sure long-standing members of staff are not getting burned out.

5. Manage your supply chains

If you are using a number of different agency providers to fulfill recruitment needs, how can you ensure you are getting the most from your supply chain at all times?

Managing your supply chains means that you can benchmark one supplier against another. Measure and monitor indicators of engagement and commitment to your business by checking and comparing suppliers on various comparable data like documentation, legal compliance, response time, cost comparisons and more.

Like any workplace relationship, you need to nurture relationships with your suppliers to ensure you get the very best out of them.

6. Consider implementing technology to help you

 There are a number of technology systems available that can help you manage your suppliers, provide online timesheets, consolidated invoicing, management information and help you to control your spend.

It's important not to rely too much on technology, it's easier if you see it as the glue that holds things together, rather than being the entire solution. The human element is also important, so don't forget, whatever system you implement, there needs to be someone who will take ownership for it and drive the benefits of using it.

Our experts will transform your recruitment process – maximising profit, minimising stress and helping you to become more effective, efficient and organised.

If you’re ready to save money on agency labour, speak to one of our experts at Datum RPO on 0330 0415255 Jarrod.Mollison@datumrpo.com

Let's talk


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