In starting Formation’s resourcing Workspace business, I think one of the most common questions I get asked is… actually, let me rephrase, one of the most common statements that I am told is…Temporary resource is really expensive.
I think that is true, it is expensive…..if not utilised correctly. I think firms, I will talk through a few, who do use them wisely and in the right ways, get massive value for their expenditure.
So let’s start at the beginning, what do we mean by Temporary Resource? In the world of Contractors, Interims, Consultants, Temps and Advisors. The term can get a little muddled and these titles are often interchangeable. In the Workspace world terms like Contractors are confusing when you think of the Main Fit-Out Contractors. Also everyone tends to upgrade their status so having worked for the largest temp agency in the world and having delivered both Contractors and Interims to firms (there is a difference) This is my definition;
Temps often fill in for employees on holiday or firms turn to temps for seasonal help. They are often used for spikes in work on site. They are typically hourly paid and are engaged on an employed basis and receive the same benefits as a permanent employee. They are generally an extra pair of (lower-skilled)hands.
Contractors are hired for a specific project, delivering a programme of work that has a defined shelf-life. They are hired because they have a set of skills and or experience which the company doesn’t have available. They will bring that project to a successful conclusion on budget, to timescales and specification. Contractors are generally running their own limited company and will engage directly with a firm or via an agent (like Formation) for the assignment. They are typically paid a day rate.
Interims are hired more often to cover a CxO or Exec role while a company is going through a period of change (a sale, a float, disposal or similar) or when a exec leaves a firm or sometimes to mentor someone into a role. This is either paid as a pro-rata salary or on a day rate.
There is simple arithmetic you can apply to make a Contractor v Permanent calculation work in favour of Contractors but I think this is a blunt method; You can say there is no NI, Holiday and Sick pay, pension contributions, training costs, you could even add in agency fees and redundancy pay. You can probably double the basic salary to get a true cost but this isn’t the way to approach it.
Oddly I think Interims and Temps are comparatively easy to justify their cost. Contractors if not properly managed are seen as a high cost and 24 hours away from the CFO coming in on a cost-cutting exercise.
So…. Don’t try and make the cost work. Try to make the value work.
For this blog I will refer to temporary resource as Contractors ie. Skilled day rate professional resouce.
Firstly, use Contractor resource in the right way; Think why you are reaching for the quick dial to Formation? Does it fit the criteria I have listed above, if not rethink.
Secondly, use your Permanent Workforce in the right way; Your permanent team should be responsible for the day to day operations. However, companies now require a flexible group of highly skilled workers with either a technical or professional background, a demand for an ‘always-on’ resource. This should compliment your permanent workforce. The problem with permanent is that it is slow to turn off and slow to scale up. Contract resource is the opposite, so often Contractor resouce is brought in when really the answer is to better organise your permanent teams and your hiring. Permanent teams will always struggle on an unexpected need, a knee-jerk client request or a project oversight, omission or error. Contractors work beautifully here, a short-term solution until you get over the hump and then get shot of.
For short term projects or weekly fluctuations in work load, competent, skilled contractors who are able to jump in at a moment’s notice and do the job, are exactly what is required.
However, some firms retain contractors in long-term business critical functions. But, ask the MD and they would say they would rather employ a stable, permanent employee. Companies do not want contractor resource learning about the business and then leaving after six months just when they begin to understand all their IP. They would much rather keep the skills than have them walk out the door. So a contractor trades risk for better return.
Here are my tactical top 5;
1. Have an open and honest dialogue with both the Contractor and Agency (like Formation) and vice-versa on what you need.
2. Set clear deliverables, expectations and outcomes. How will the Agency and Contractor know if they are doing well?
3. Review, Review and…. Review performance with all stakeholders
4. Ensure the Agency is supporting the Contractor, ask them how they do this.
5. Have a clear departure process including knowledge transfer and exit process
And lastly, here are a couple of quick things to remember…..
When we set up Formation, we decided that we always wanted to work with our customers to understand their issues and come up with right answer. Sometimes the right solution is not something we can provide. When we are invited in to help by providing short-term help but we always wanted to leave before we were asked to. It means we work in step with our customers around their planning.
I would love to take credit for this approach but regrettably I can’t. About five years ago a customer said to me that they wanted our contract resource to really deliver. Aren’t they ? Your contractors are great but some just do the job they are asked to. I want them to improve the department that continues beyond their departure. She finished by saying I really want our operation to say we are better for the Contractors being here, not glad to see the back of them. This really struck me as the most sensible way to be. It turns the relationship from a clock-in/clock-out. It becomes more of a partnership by increasing value, insight, making processes and procedures better and, dare I say, reducing cost.
So Formation Contractors should create a halo affect after they depart.
If you think that way, then your demand of Contract resource will differ immensely AND you will get a better return from your spend. Contract resource will become an investment not a cost !