If you choose to ignore the intermittent variations of personnel demand and supply, it can adversely effect performance metrics such as service levels, customer satisfaction, competitive position, and/or costs of operation. Using temporary services is a proven and cost effective way to deal with such variations. Using temporaries has also become a particularly efficient tool in identifying personnel for direct hire (via a temp-to-hire approach).

Of course, using qualified, reliable agencies is very important because not doing so can often make a difficult situation worse than it would have been had no temporaries been used at all.


VARIATIONS OF PERSONNEL DEMAND AND SUPPLY
There are both planned and unplanned sources of variation in personnel demand vs supply. Planned sources include new clients, systems upgrades, seasonal variations, and large procedural changes. In such cases, it is advisable to consider staffing at some optimal level and use temporaries (and not excessive overtime) to fill the bulge in demand than it is to staff at the maximum expected level and experience inefficiencies during the troughs.

Inefficient Use of Staffing	Optimal Use of Staffing Resources

Clearly, “optimal” vs. “inefficient” must be measured in terms of costs and is addressed in COST CONSIDERATIONS below.

Unplanned sources of variations could be considered as emergency situations and can include unexpected absences of regular staff, merger/acquisition/downsizing activity where early notification is unadvisable, or an unexpected gain or loss of a client. In these situations, using temporaries often turn out to be the only practical alternative, in which case it is most advisable to have your agency(ies) pre-qualified so you can move quickly.


COST CONSIDERATIONS
If the only parameter of comparison between a temporary and a permanent employee is the hourly rate then the temporary will always look too expensive at least for the “planned” sources in variation in supply and demand. Unless all the cost factors are taken into account, it will usually appear to be most cost effective to hire at the maximum level even if it means periods of underutilized resources and/or a regular cycle of hiring and layoffs. But the analysis of cost should include:

Many find that using temporaries is the most cost effective way of dealing with the variations in demand or supply. Certainly this is true for emergency situations and usually it is true for anticipated ones. It allows an operation to maintain performance while containing costs.


TEMP-TO-HIRE
Many clients very effectively use the temp-to-hire method to staff permanent positions. It’s the “try before you buy” approach where each side of the potential employment relationship gets to experience it before making or accepting an offer.

Temp-to-hire is especially effective for staffing major projects where there is a large initial staffing need which ends up with a smaller on-going, permanent need. The approach is to offer the better performing temporaries the permanent positions.


HOW TO EVALUATE AN AGENCY
An agency’s recruiting process is all important. First, find out how are the skills of the temporaries determined? (On Target Staff, Inc., for example, uses VALIDATED skills tests to determine basic knowledge and job familiarity and develops a comprehensive skill profile.) Ask if keyboard tests are administered. Criminal background checks and educational and work history verifications are very important, especially in today’s market…make sure the agency you select does these things. And, finally, find out if your agency is employing one of the leading edge testing tools: behavioral assessments. These assessments can be used to predict work ethic and personality fit for your environment.

A comprehensive recruiting process is more expensive than a fill-in-the-blanks process and will be reflected in the hourly rate of an agency. The process is meaningless and its cost wasteful if it doesn’t have a worthwhile benefit. The way benefit can be measured is through “hit-ratio”. Hit ratio is the percentage of placed individuals that perform and are retained vs. those that do not perform and are released. A hit ratio of 90% means one of ten is released early due to poor performance…nine of ten are retained for the duration of the need. The costs of a performance-based early release are more that just the bill rate paid. The costs include the client’s efforts spent in training and accommodating the individual and, perhaps more importantly, the delay in the output expected from that individual.

Another very important factor is the insurance coverages an agency has with respect to general liability, professional liability and errors & omissions. Ask to get a certificate of insurance to make sure they are adequate to your needs.