Temporary Staffing; why it wont solve your problems

Sean and I have gotten employment through staffing agencies at different points in our careers. Many businesses outsource all of their hiring processes through staffing agencies and then transition temporary employees to permanent staff months or even years down the road when onboarding and training are complete. This means that pursuing work as a young welder can be tricky to do directly, and sometimes a staffing agency is a helpful option to get a foot in the door. It makes finding a job relatively quick and easy when a less experienced tradesman is looking for opportunities to learn and grow. My first welding job was an excellent position and the company I was assigned worked with several different staffing companies. Later on, when I moved to Ohio from Minnesota, I connected with staffing services again to help me find a job quickly.

Outsourcing a hiring process reduces HR demand, eliminates the need to develop vetting criteria, and puts the responsibility of promoting and recruiting open positions on the staffing services these businesses partner with. You could think of it as beginning the interview process with a business on the second interview. The first layer is handled by the staffing agency where they can filter out bad candidates and attempt to pair applicants to positions that would be complementary. Businesses can rely on the large network of tradespeople that have come into contact with staffing agencies, allowing them to cut bad hires from the team when they arise and replace them with another quickly. Once an applicant is in the system with a staffing agency, their information may be kept for years. Sean and I have each gotten calls from staffing agencies we haven’t worked for in years, attempting to connect us to a position they have open with one of their clients. This large network is compelling to many businesses and can alleviate anxiety about turnover and retention.

Businesses also use temporary labor to reduce overhead. Standard employees may be offered retirement benefits, healthcare, sick days, maternity leave, or PTO. Hiring temporary staff through agencies allows businesses to hire applicants without extending them any of these benefits. They also limit their commitment to their hired staff, allowing them to hire and fire quickly as their workload demand fluctuates throughout the year. No severance packages, and no hurdles in states where laws may limit employment contract termination. Many industries do fluctuate seasonally and staffing agencies fill an important role in helping them keep staff when they need it and reduce their costs when they don’t.

Our experiences with staffing agencies reveal commonalities between the businesses we have served. Most are large-scale production environments, impersonal, with little or no room to progress or grow, and generally don’t reward employees for their development. In exchange for these downsides, finding a job is relatively easy, pay is generally competitive for entry-level positions, and little or no responsibility is expected of you as a new tradesman. This is the deal and it’s simply what must be accepted and expected when finding a job through a staffing agency in metal fabrication.

Problems Temporary Staffing Creates

From here you can go ahead and take the rest of the article with a grain of salt and interpret it as the opinion piece that it is. Some of the problems we talk about will not be a matter of opinion, however the causes and effects may be up for interpretation and further discussion. 

1. “Wait, you’re saying employees don’t like being hired without any benefits and treated like they are disposable?”
   Say it ain’t so. Most craftsmen I know who have experience working with staffing agencies have done so as a temporary measure or moved away from this as they have gained more experience. There’s nothing wrong with glancing off the temporary hire scenario, but it generally isn’t a good long-term option for those who would like to work their way up in a business, take on new responsibilities, or earn more money according to their performance. Most will navigate away from temporary work and find longer-term positions, hired directly by the business. These are more sustainable positions for growth-oriented individuals. Tradesmen who spend too long in the temporary labor market generally earn the reputation of being less skilled and less hirable, and in many cases that appears to be true. Those with a higher skill level who value their skills will generally not remain where they are viewed as temporary. They will use it as a stepping stone perhaps, but they will move on to greener pastures before too long. In my first job, I worked for a little over a year as a temp, and several team members had been there a year or even two years longer and remained “temporary”. 

2. Labor can get costly when a middleman needs to earn their share too.
   Staffing agency rates will vary by location, industry, and according to the amount of staffing a particular business does with an agency; however, it is common to see businesses paying $40-55 per hour for this type of labor. As this trickles down from the business to the agency to the worker, it is not uncommon for the $50/hr rate to result in a temporary position that pays $15-25 hourly. Permanent staff may be earning $20-30 hourly, which means a business pays as much or even more to have access to a revolving network of temporary workers than they do to keep their senior production staff. Those costs can be significant at scale when businesses employ a dozen or even multiple dozen employees in this way. Of course, wages are not the only cost a business bears when hiring an employee. When taxes and benefits are considered, there may be a clearer delta to observe, but Sean and I have suspicions that many businesses that operate in this way do so out of necessity, not necessarily because it is a more favorable arrangement. 

3. Many businesses experience staffing difficulties and high turnover, and relying on staffing agencies to alleviate these pressures allows them to ignore the underlying issue of their business being unattractive to applicants and employees.
   Businesses can be amusingly guilty of being out of touch, even more so in legacy businesses that can recall what the going rate for their employees was in 1980. Markets change, and so do the expectations of employees. High turnover can be a symptom of many things, and unfortunately, none of them are good things. This can be an indicator that workplace culture is poor. It could be an indicator that there is no room for advancement. It might be that the working conditions are consistently bad, such as working outside in the elements. Often it’s a sign that there is poor management and mentorship of the staff. To be fair, these can all be challenging problems to resolve. In some cases, it may not be possible to resolve them completely. Some jobs need to be outdoors, and though that’s not always enjoyable, it’s the reality of the role. Just as true, not every position can lead to advancement. It just isn’t possible for a business to allow everyone to rise to the ranks and leave the roles they currently fill. “Too many chiefs, not enough Indians” is a real difficulty that businesses must navigate sometimes. In the face of these realities, all that can be done is create a culture and mentorship environment that is compelling enough to offset these negatives. Sadly, many businesses remain in willful ignorance and choose instead to throw bodies at these problems. “Kids don’t want to work these days”, “employees ask for too much”, “none of my guys are willing to work as hard as me”, “when I started they only paid $10 an hour for this, and that was good money!”, are among the things you may hear from businesses who aren’t ready to address that their company just isn’t attractive to workers. They try to fix these things with Christmas parties, company-supplied pizza, an employee of the month plaques, and other frivolous gestures that don’t get to the heart of the matter.

4. Recruiting is where the seeds of positive culture are planted, good management is where it sprouts.
   The interview process is the first opportunity to evaluate an applicant for their disposition and personality. It is a deeply important part of the recruiting process. During this short time, decisions can be made about who should be paired up with whom, what the training plan may need to look like, what the applicant’s personal goals are, how together they could reach them, and what sort of communication approach works best for them. In 20 minutes, a business can learn about their prospective new employee, and understand their wants, motivations, passions, and weaknesses that could be mentored. In 20 minutes this applicant could feel valued, heard, and accommodated.
   Now imagine putting that sacred process into someone else’s hands. Whether it is a cost-saving measure, or simply being too lazy to create and facilitate an effective hiring process, businesses are outsourcing one of the most important steps in their recruiting process. What they are left with is temporary employees who don’t feel known, valued, or invested in. The culture within the organization declined as a result, leading to further issues with retention and staffing, reinforcing the need for staffing agencies to fill open positions. Fostering culture requires active attention at every phase of employee development. Employees who are taken care of will take care of their organization.

How does this Evolve?

It’s difficult to say with certainty how this scenario will develop. Many industries rely so heavily on temporary staffing that it’s difficult to imagine it fading away entirely. More likely, we expect that businesses that are too dependent on temporary staffing will suffer, and some may even fail as a result if they are unable to root out the underlying failures in their culture and recruiting process. This is a natural balancing that happens between employers and employees depending on the trends of the market and the demand that is present. As fewer employers can fulfill the desires of employees, employees may become employers, employees will compete more vigorously to work for only the best employers, employees must adjust their expectations and take positions they feel underwhelmed by, or most likely, some combination of the three. By the time many businesses become flexible enough to address these impending problems, it will likely be too late for them to adjust course. Large organizations have the advantage of being able to withstand larger negative pressures that would likely fold a smaller business, but the size that allows them to be resilient makes it very difficult for them to be nimble and adjust course to meet the ever-changing societal demands. Some will try and succeed. Some will try and survive as a lesser business than they once were. Some will watch their businesses dissolve into nothing and they will blame the economy, the younger generation, greedy employees, politicians, and anything else they can use to displace their responsibility. 

In Conclusion

Temporary labor isn’t inherently problematic and does genuinely serve a need, both within our employer market as well as our employee market. In balance, it can be a useful outlet where all parties can benefit. As industries become increasingly dependent on temporary staffing services, declines will become more obvious at the individual company level, as well as in the industry as a whole. These declines are already visible in many organizations as the disparity between the employer and employee continues to grow. Arming our youth and young adults with tools of self-advocacy will pressure businesses to continue to modernize, serving both the workers and the ultimate goals of their organizations.