Chapter Corner

The Scalable Workforce

Posted in: Features, March 2013

Growth during a recession isn't usually a top priority for contractors - it is survival. When the recession abated in 2009, contractors were eager to invest in their business through organic growth or by expansion into new geographies, but they were cautious about adding employees to their payroll. Enterprising contractors used specialty staffing firms to allow for low-risk expansion as a way to deal with the peaks and valleys in construction cycles.

Insights_GroupPpl.gifChanges within the contingent workforce can be a bellwether for the economy as a whole. At the beginning of a recession, firms will typically lay off temporary workers before laying off their own workers. Similarly, when the economy is recovering from a recession, employers tend to hire temporary workers first.

Many electrical contractors have come to love the advantages of flexible, qualified contingent staffing. In fact, many that brought on temporary workers during the end of the Great Recession of 2007–2009 have kept more of those temporary workers on their teams. Contractors can use contingent labor to deal with the day-to-day ups and downs of the business cycle – not just to test the stability of the economy’s recovery. As a result, temporary employment is one of the few sectors of the labor market that is growing.

What do these contractors see? They see a way to keep doing business, even when business throws them a curveball.

For example, you can quickly ramp up production when demand starts to turn around, increasing capacity without increasing fixed costs. On the other side of the equation, temporary labor will not be on your books during slow times. You pay for what you use, in essence. The knowledge that you have the flexibility to add staff on short notice really helps contractors that want to position themselves as nimble and responsive to their customers.

As your company's workflow returns to normal production, you will know which proven temporary workers you may wish to hire full time. Temporary workers can be evaluated on how they integrate with your company culture, how well they learn job responsibilities, and how they deliver value to your company. When unable to hire permanent workers, some customers look to specialty staffing firms for short-term hiring needs. Their risk to unemployment insurance and Workers’ Compensation costs are mitigated as the staffing firms screen, verify, hire, and supervise new temporary workers.

You can boost the effectiveness of your core staff by allowing temporary employees to handle lower-skilled or administrative duties. Readily available temporary labor can free your staff to focus on what they do best – so they can be their best. Contractors will ask specialty staffing firms to bring in lower wage temporary laborers for clean-up duties. Otherwise, their high-paid electricians would perform that manual labor – taking the electricians away from where they can add the most value.

Peak demand can leave your business under-staffed. Using temporary workers can eliminate bottle-necks and will help you keep your commitments to your customers.

Also, if you have established a relationship with a temporary staffing firm with a large geographic footprint, you have a powerful partner that can help you expand into new markets. Out of necessity, many electrical contractors look to expand in new markets to grow their businesses. If this description fits you, wouldn't it be great to know that you have qualified labor at your command?

Finally, you can use temporary labor to eliminate overtime and prevent worker burnout. Overtime can often be very stressful on your workforce, leading to burnout and lowered productivity. Higher turnover is costly. By using contingent labor, you can reduce or eliminate the need for overtime.

The case is strong for hiring contingent labor. So if you think temporary workers may make sense for your company, what do you do now?

You could hire temporary workers on your own. This route presents some difficulties, though. Do you understand and want the costs of hiring your own temporary workers: advertising, interviewing, qualifying, verifying, training, and compensating? Consider that if you bring temporary workers in and out as your production levels ebb and flow, the costs rise even faster.

Does your company’s core human resources expertise include a current understanding of the rules and practices of hiring temporary workers? Classifying workers correctly – for example, "contract" vs. "permanent" – is very important to avoid costly back taxes, interest, and penalties for misclassified employees.

A third route would be to utilize a temporary staffing firm. Most staffing firms absorb the costs associated with recruiting, screening, hiring, disciplining, and terminating temporary employees.

The $100 billion temporary staffing industry consists of more than 20,000 companies, most of which are small businesses. The question becomes which temporary staffing company should you use?

Look for a company that:

  1. Understands your business and speaks your language. You want a company of staffing experts who understand your business needs and requirements and can work with you to find the right solution;
  2. Wants to be a business partner with you – to help you use temporary labor to grow your business and solve your business needs;
  3. Has a greater geographic footprint than you do so they can help you penetrate new markets; and
  4. Has a reputation you can trust.

A contingent workforce is a scalable workforce. It allows you to grow without the risk of hiring too fast, or having to turn back staffing levels due to the peaks and valleys natural to construction cycles. When exploring this avenue, consider your options carefully and partner with the right people to meet your current and future business needs.

Patty Musolf is President of IEC National Platinum Industry Partner CLP, a staffing company providing skilled trades people to a broad range of contractors. Musolf began her career in temporary staffing in 1990 with Olsten Staffing Services, where she was later appointed general manager. She joined CLP in 2004 and served as a division vice president for CLP’s Northeast, Southeast, Texas, and Florida regions. CLP is part of TrueBlue, Inc., a leading provider of blue-collar staffing.