Addi P.

Dear Addi P.,

We are considering hiring some seasonal help. Is it cost-effective? And what should we be thinking about?

Temps in Tampa

Dear Temps,

Hiring temporary help can be a great way to fill gaps related to extended absences by individuals, to address the need to fill positions for seasonal jobs or to secure extra help for a big project. The cost-effectiveness depends partly on how you hire the temporary employees. There are several options.

Temp Agencies

You can hire through a temp agency, which involves setting up a relationship and a contract with them, if you don't already have one. The workers show up and you direct their work. The agency handles recruiting, payroll, withholdings and workers' compensation insurance. You pay the agency a fee for doing it. The cost is whatever the worker is making plus a markup, which is a percentage of what the worker earns and can be 50 to 100 percent. While that sounds expensive, it may not be when you consider that worker's compensation, payroll taxes and withholdings and any benefits are included in that markup.

There are different agencies that specialize in specific industries, focus on workers with particular skills or help place workers looking for seasonal jobs. If you like someone and want to hire them, this is usually allowed, but comes at an additional fee.

Some workers do not like to work through temp agencies because of the agency's noncompete requirements and other restrictions on who else they can work for. When you are talking to agencies, find out what restrictions there are if you want to keep your temps longer or hire them directly.

Independent Contractors

If you are looking for someone with unique skills or creative and design abilities, many of these people work as independent contractors. They enjoy the flexibility and freedom of project work.

With independent contractors, you usually give them general guidelines on what needs to be done, and they are responsible for getting the work completed. Independence is a key idea when you hire independent contractors. The more you control how and where they work, the higher the risk that they are actually employees rather than independent contractors. The penalties for misclassification can be severe; you don't want that. So, sketch out what you need and check with your legal department or an employment lawyer to make sure this is the type of job that works as an independent contract.

Also, figure out who handles the hiring and administrative parts of having independent contractors. In larger organizations, all contracts are usually handled through procurement and finance, even when those contracts involve hiring people instead of acquiring stuff.

This is one area where it's really important for finance and HR to communicate and figure out the best way to handle hiring and managing independent contractors. What data do you want to track? What budget does it come from? How do you make sure that the contractors understand and comply with company policies? Do they need training? Do you need a nondisclosure or work for hire agreement?

It's also important to consider how to make the work a good experience for the freelancer because this is a human being working with your employees, and maybe even your clients. Freelancer engagement is just as important as employee engagement. Procurement may not be in the best position or be most effective at managing your independent contractor relationships because that's not their function. If this is something you intend to often do or involves a lot of contractors, think about how the hiring and management of temporary workers will affect your existing workforce, your policies and your employer brand.

That's a lot to consider. But doing some advance thinking and coordination with HR is worth it, even if you're starting small with just a few people.

Short-Term Employees

This is probably the easiest way to go because your organization already has processes in place for finding and hiring employees. When you are dealing with a definite time frame, it's important to get expectations right for the new hires. Let them know in advance how long the job will probably last and be realistic about the chances of continued employment. Make sure to talk to your attorneys about how to manage this because you don't want to promise to pay someone for four months even if they don't work out.

Also think through how your managers and others in the department will feel about having someone they need to train who is probably not going to be around for very long. Knowing someone is a short-timer can create a situation that's stressful for everyone. It may be worth looking at overall staffing over a longer time frame to see if it makes sense to hire someone for a part-time or regular position.

Other Considerations

Don't forget the bigger financial picture. There may be tax credits available for hiring certain types of employees such as veterans, people with disabilities and people who have been unemployed for a long time. While many of these have tenure requirements, the tax credits may allow you to afford to have a regular employee instead of a temp. Temp employees may also have certain payment needs because they move around or don't have traditional banking relationships. Consider paycards and other payment alternatives.

Security is also important. What access to your systems and data do they need and should they have? If temporary employees have access to confidential information or trade secrets, will they know what they are and do you need a nondisclosure agreement? Also, consider how to track expenses and other information relating to temp workers. Does it make sense for your organization to collect and track data in the same way as employees for ease of comparison, or is this mostly a contract and cost issue for you?

Hiring temps can be a great solution to cover seasonal or short-term needs. It's important to consider both the processes and the costs. It's even more important to consider whether this is something that should be handled through finance and procurement, or HR, or both. Usually the answer is both.

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