Can a Temp-to-Hire Strategy Drive Profit Margins?

I’ve been asked this question more than once, and on each and every occasion my answer has been “Absolutely!”

HR departments across the USA have embraced the practice of maintaining a percentage of their workforce as contingent. Why? Simply put, it makes great business sense. Using contingent workers gives companies increased flexibility, lets them exercise great cost control, and enables them to pull in employees with special skills on an as-needed basis.

Unfortunately, many HR leaders fail to look beyond using temps as a simple workforce management strategy. If they did, they might realize that contingent workers leveraged in a temp-to-hire capacity could dramatically—and positively—affect the bottom-line profitability of their organizations. Once all of the elements are identified and defined, the math is pretty simple (you can see what some of it looks like here), and although companies that adopt this strategy generally don’t realize the full ROI for one or two years, the savings it brings are very significant.

Here’s a typical of example of how this works. Early in my career I led the business development efforts of a temporary staffing agency with operations in Pennsylvania, Maryland, Delaware, and New Jersey. As one of the key drivers for action in my sales process, I described to my prospects the benefits of a temp-to-hire strategy.

During my first meeting with the HR head of a company that operated a large customer-service call center, I learned that it had never used contingent staffing for anything beyond having a temporary clerical worker fill in for an employee out on vacation or medical leave. When I said, “We can staff your operation for what it costs you to do it yourself today—and in one or two years we’ll do it for even less and provide an ROI,” she gave me a very skeptical look. But she agreed to work with me, and after reviewing the company’s numbers we put together a business case for the CFO. I closed the deal, and the company realized a $130,000 ROI during the first year alone.

Whenever I started telling HR heads about the many advantages of a temp-to-hire strategy, they could hardly believe its many positives. (Increased employee retention? Check! Reduced workers’ compensation claims? Check!) But when I showed them the numbers, their eyes would light up as realization dawned and they saw the true potential of this practice.

Temp-to-hire staffing offers a great chance for you not only to help your clients boost their bottom lines, but it helps you demonstrate your added value and thus strengthen your long-term relationship with them (and, by extension, your own bottom line). Don’t miss the opportunity to pitch this winning strategy to your own clients and prospects!

 

 

 

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