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Managing a company's human resources, already a challenging task, has become more difficult with the proliferation of alternative staffing options. One alternative alone - temporary staffing - has evolved and grown into a nearly $ 40 billion industry, largely in response to corporate demand. Sophisticated employers seek tailored solutions to staffing problems, rather than simply increasing payroll when increased productivity is needed. Although most companies rely on some alternative staffing arrangements, those arrangements often develop haphazardly or on a departmental basis, rather than as part of a comprehensive staffing strategy managed and administered by HR professionals. In some companies, employees from non-HR disciplines such as purchasing, budgeting or accounting have begun to take the lead in making those arrangements.
But HR does not have to - and should not - accept a reduced role in this critical arena. Only HR professionals have the unique perspective and qualifications to evaluate a company's overall staffing needs, develop a comprehensive staffing strategy and, with senior management's approval, administer that strategy. Too often, purchasing agents or cost accountants who take on this task focus on the unit cost of employees, while giving short shrift to critical human factors such as morale, training and development, and building team spirit. But as HR professionals know, those factors translate into productivity, which in turn leads directly to profits. The need for alternative staff should not set up a turf battle between purchasing and HR. Just as HR managers typically defer to purchasing when a new telephone system is needed, purchasing should be subordinate to HR when staffing decisions are made and policies adopted.
Purchasing and cost accountants simply do not share the experience and training HR professionals have in making sure organizations have the right human resources in the right place, at the right time, to do the job most productively and cost effectively. To develop a comprehensive staffing strategy, HR professionals must thoroughly understand alternative staffing, particularly the distinctions among the various alternatives. In conventional employment, the organization directly hires, supervises, pays wages / salaries , and provides benefits to individuals. Both employer and employee typically contemplate a relationship of indefinite duration. All other staffing arrangements are considered alternative.
But the alternative category includes many different types of staffing arrangements. According to the most recent Bureau of Labor Statistics data, about one of ten U. S. employees is employed in an alternative working arrangement. In a typical corporation, conventional employees may make up about 60 percent of the workforce, with the remaining 40 percent divided among various types of alternative staffing.
The 12 most common types of staffing arrangements are as follows: In developing a comprehensive staffing strategy, H. R. 's first task is to understand the advantages and disadvantages of each type of arrangement from three key perspectives: operational, financial and legal. Armed with that knowledge, they can then match the appropriate staffing solution to their employer's specific business needs and objectives. Then, one or more agreements with appropriate staffing vendors can be negotiated and executed. Which alternative staffing solution will work best depends on many factors, including the functions to be performed, time and financial constraints, and concerns about legal risks and liability. There is no one-size-fits-all solution.
On the contrary, most organizations benefit from using several arrangements simultaneously. In any situation, the optimal staffing solution produces the correct number of qualified workers for the job in the most cost-effective manner. HR professionals must never shortchange operational requirements - getting the job done should be the paramount consideration in any staffing strategy. Even the most elegantly designed staffing strategy will fail if line managers do not continuously see results. When developing a staffing strategy, one must pay careful attention to the transition period, whether from regular to alternative staffing, or from one type of alternative staffing arrangement to another. The transition must be carefully planned and implemented in phases, with advance notice to all affected managers and employees.
Many well-designed staffing strategies have been short-circuited because of confusion and problems during this phase. Different alternative staffing options require different emphasis in planning. For example, clear communication and written explanations to managers and employees are often enough for the transition to an arrangement with a Professional Employer Organization (PEO), because employees' daily work assignments and supervision should hardly be affected. In contrast, outsourcing a function may lead to layoffs or transfers of regular employees to another company entirely, so the planning process must be considerably more detailed. Time differentials must be factored into arrangements, also. Converting to a technical contract service in lieu of independent contractors can be implemented quickly.
But converting from multiple vendors to a master vendor program may take a full year. Maintaining successful operations during that period will be vital. There is significant controversy in the staffing industry about the legality and propriety of payroll transfers of temporary employees from one staffing firm to another. One such controversy in New Jersey culminated in a 1996 jury verdict of $ 250, 000 against the master vendor, which had been sued for so-called temp-napping - taking several dozen temporary employees from the staffing firm that had originally assigned them to the client company. (2) When entering into a master vendor arrangement, HR Professionals must be sure to take into account the concerns and legal rights of outgoing staffing vendors. Once the transition period is behind you, focus on maintaining the staffing solution to meet operational needs. Be flexible, let costs concerns and operational requirements drive the staffing strategy, not vice-versa.
HR professionals who carefully assess the costs associated with each staffing option can counter inaccurate but widespread perceptions that they are not attentive to bottom-line concerns, and that HR programs are all expense items the revenue producers must work hard to pay for. Carefully managing a sophisticated alternative-staffing strategy gives HR an opportunity to prove otherwise. Each staffing option is priced differently and all have both indirect costs and direct costs. For example, using traditional temporary employees is attractive because of their relatively low hourly cost, but may increase training costs, produce more absenteeism, interrupt workflow and impair productivity. Those indirect costs must be added to the wage rate to gauge the true cost of using many short-term temporaries, rather than outsourcing the function, implementing a temp-to-lease program, or engaging independent contractors for specific projects as needed. In assessing an alternative staffing strategy's cost, the benchmark should be the difference between the cost of getting the same volume of work done at the same quality and in the same time frame by regular employees and the cost of using alternative staff.
When budget analysts complain that the company is over budget on temps, they rarely compare what it would have cost to have the same volume of work done by conventional employees. HR professionals who want to manage alternative staffing arrangements must become tough, but fair, negotiators. Alternative staffing arrangements require HR professionals to manage business relationships with independent staffing firms, many of which are larger than their clients and more sophisticated about staffing. Negotiating with a staffing firm is not strictly a price-and-terms deal that you take or walk away from. Because the staffing firm will be an integral part of your corporate culture for a long time, and will play a significant role in helping meet your business objectives, it should be viewed as a partner, not an adversary. By better understanding the business and operations of staffing firms, HR can more effectively fine-tune the negotiating strategy to obtain the lowest feasible cost.
Negotiating the best price does not mean gouging the staffing firm. If you force it to agree to a price much lower than what other clients are paying, the firm will likely place its highest qualified, most productive employees or consultants with other clients. But do not be reluctant to insist on volume discounts, rebates based on usage, and free value-added services. Many staffing firms offer comprehensive training and cross- training programs, and they are often willing to allow a client's regular employees to take advantage of their training facilities. The National Association of Temporary and Staffing Services estimates that staffing services spend more than $ 250 million annually for job-related skills training. Competitive bidding is often a useful cost-control technique, but evaluating the true cost of a professional employer organization strategy is far more complicated than evaluating the best price for something like office furniture.
When engaging the services of people, remember that reliability and productivity vary widely. Consider building on an existing good relationship with a staffing vendor, rather than simply awarding a contract to a new firm that promises the lowest hourly rate per person. You usually get what you pay for... Similarly, micromanaging a staffing firm's business methods to keep your direct costs as low as possible may produce unintended negative consequences. For example, some companies try to dictate the staffing firm's markup by stipulating the bill rate (what the client firm pays) and the pay rate (what the temporary worker is paid), but this approach eliminates the incentive for the staffing firm to be as creative as possible in finding the right person for the job at the lowest cost.
By negotiating only the bill rate, you give the staffing firm a tremendous incentive to work hard for maximum profit per person placed. Unlike purchasing departments or accountants, HR professionals must be able to do more than just negotiate the best price for an alternative staffing solution. They must be able to compare quantitatively the costs of completely different staffing arrangements, taking into account direct and indirect costs and operational concerns, while factoring in supervision and control issues as well as potential legal liability under each option. For example, once HR decides to use a PEO, such as an employee-leasing firm, the cost negotiations are fairly circumscribed. But deciding whether to go the PEO route, which PEO to use, and how that decision affects overall benefits administration and staffing clearly falls in HR's advantage.
Before entering into any alternative staffing arrangement, HR professionals must understand, and advise management of, the legal implications and potential liabilities that arise with each type of alternative staffing arrangement. There are legal implications in both the relationship with the staffing firm and the relationship with temporary employees working at the company's site. Potential liability varies enormously depending on the nature of the staffing arrangement. A developing legal doctrine, sometimes referred to as co-employment, summarizes the legal relationship, rights and obligations in some alternative staffing arrangements. In traditional temporary help models, the staffing firm and its client are likely to be viewed as co-employers, or joint employers, under most employment laws.
But the further the relationship departs from that model, the more difficult it becomes to determine whether or not a co-employment relationship exists. For example, in a true outsourcing relationship, courts may view only the staffing firm as the employer obligated to comply with the employment laws. But in some cases, the client company alone may be liable for a legally invalid staffing relationship. In 1998, a court found Microsoft Corp. had misclassified workers as independent contractors; (3) the company had to pay back taxes and penalties, and the workers were retroactively eligible to participate in certain benefits plans available to conventional employees.
Potential liability for co-employment varies significantly, depending on two principal factors: the context in which the specific claim of liability is asserted and the specific nature of the alternative staffing arrangement. HR professionals can best serve their organizations by demanding a role in the management of alternative staffing that is comparable to the part they play in managing staffing policies and practices for conventional employees. HR practitioners can demonstrate leadership in staffing - an increasingly important component of their profession - by developing a comprehensive strategy. Homicide is the second leading cause of death to workers in the United States. It accounted for 1, 071 or 16 percent of worker fatalities in 1998. Moreover, in 1997, nearly 21, 3000 workers were reported injured in non-fatal assaults in the preceding 12 months. (4) These statistics do not include threats of physical violence.
They do not include fights or assaults that involve no significant injury or which, for one reason or another, go unreported either by victim or their employer. They also include few, if any, of the thousands of claims filed each year for sexual or other discriminatory harassment. Those claims can include allegations of rape physical assault, and a wide range of threatening or aggressive behavior. Finally, customers, clients, and other outsiders also are victims of workplace violence. News headlines focus on sensational acts by "disgruntled" workers and terrorists.
These possibilities must be considered by today's employer. However, there are other causes of workplace violence. About half of the fatalities occur at convenience stores, groceries, and other small retail establishments, with robbery being the usual motive. Nearly two-thirds of non-fatal assaults take place at nursing homes, hospitals, or residential care facilities or involve other social services.
Although men account for 82 percent of the fatalities, women comprise 56 percent of the victims of non-fatal assaults. (5) Federal and State job safety laws require employers to make reasonable efforts to provide a safe workplace. This duty may include steps to reduce the risk of violence. The federal Occupational Safety and Health Administration (OSHA) is beginning to issue guidelines for health care operations, night retail establishments, and employers in general. These guidelines are designed to help employers fight violence, but they also raise the prospect of OSHA citations if the problem is ignored.
Employers also may be liable for negligence if they fail to exercise ordinary care to avoid potential violence. Violence by employees can create liability for negligent hiring, retention, supervision, or training if their conduct was reasonably foreseeable. Employers and business property owners also face potential liability for failing to address an increased risk of violence from the outside, such as threat of nighttime assaults or robberies in a high-crime area. But what is negligent hiring and retention? The legal doctrine of "Respondent Superior" (let the master rule) (6) mean that you can be held liable for the wrongful acts of your employees who were acting within the scope of their employment.
In other words, if an employee is acting on behalf of you when the wrongful act is committed, you are liable to the third party injured by the wrongful conduct. Negligent hiring is much broader in scope and therefore exposes you to a much greater degree of liability for the acts of your employees. The theory of negligent hiring holds Professional Employer Organizations and even employers / clients responsible to third parties that are injured by employees when they fail to carefully select competent and safe employees. Negligent hiring is broader than Respondent Superior because the employee does not have to be acting on the behalf of the employer when the wrongful act is committed for the company to be liable. For example, ABC Company could be held responsible to a third party who was injured by an intentional act of an employee, such as an employee who intentionally punches another.
While punching is not normally an act within the scope of employment, ABC Company could be liable for negligent hiring if they were not careful when hiring the employee. There are four elements that must...
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