Topic 405 [work]: Do we need fleshpeddlers? #1 of 1: Michael Edward Marotta (mercury) Sun Feb 14 '99 (07:57) 187 lines Do We Need Temporary Agencies? (c) Copyright 1999 by Michael E. Marotta [In the wake of downsizings and restructings, temporary employment agencies have expanded their roles. Are their needs the same as yours?] You could build your own car, but you choose to buy one built by someone who does the job better. It is a basic truth of economics that we buy goods and services to minimize risk. It is also a basic truth that in any free transaction, both parties profit. You pay a dollar for a loaf of bread because to you, the bread is worth more than the dollar. When your company hires temporary or contract workers through an agency, you expect to profit through lower risks and increased efficiency. However, the hidden costs take a huge toll. You might be better off creating internal procedures for temporary and contract employees. Your human resources department will take on all of the same costs and risks that an agency has. Unlike an agency, your human resources department will not tack on a profit margin. The profit margin garnered by an agency can be surprisingly large. In a flurry of mergers and acquisitions, many firms went public. Driven by the stock markets, these companies now must produce quarterly earnings. In order to do well on Wall Street, those earnings must exceed expectations. Your company pays to make their company's stock go up. WHY USE TEMPS? There have always been temporary workers. In ages past, unattached workers were available for farms and crafts. Itinerant workers are a bright thread in the tapestry of American history. Telegraph operators were called "boomers" because they moved from one boom town to another, knowing that their skills would always be in demand. In our day, the computer programmer occupies a similar niche. There are two basic reasons for using contract labor: * Temporary workers meet specific, short-term needs. * Temporary workers bring esoteric skills. There are other reasons, of course, based on your company's history and policy. * Temporary workers can tried out before being hired. If your company has a probationary period, this is one way to extend it. * Temporary workers can be paid less. Comparing the billing rate for contractor to the burden rate for an employee has been the usual procedure. Contract workers earn no vacation or sick time, no profit sharing, or retirement. On the face of it, temps are cheaper. * Temps can be paid differently. Most companies have several classes of workers: hourly or salaried; full time or part time. Some might be paid weekly, others semi-monthly. Invoices to agencies are on another schedule entirely. * Contractors have different productivity cycles. People tend to work hardest just before or just after being paid. Most people are more productive two hours into the day and two hours before the end of a shift. Being on a different schedule than your other workers, a block of temps can lift production. WHY USE AGENCIES? Temporary employment agencies work hard for their money. They advertise for candidates. This includes common Help Wanteds in the local newspaper. It also includes time at trade shows and advertising in industrial magazines. Recruiters often spend their evenings calling and interviewing candidates. Agencies also screen people for you. Their interviewing processes sort candidates in ways that are good for their clients. Agencies get paid, in part, for knowing the chemistry of human social dynamics. They promise (and usually deliver) a good fit beyond the technical skills. Agencies can also screen candidates for drug use and financial problems. Agencies minimize the cost of turn-over. They have a broad talent pool to draw on. If a temporary worker leaves your company, the agency can have another one in place quickly. Production or clerical workers can be replaced in a matter of minutes. Even a senior systems analyst can be replaced in a few days. Agenies encourage accountablity and reporting. When a production department brings in a pool of temps, you know where to distribute the costs. On the other hand, the costs of all other employees are not usually posted to lower level accounts. Temporary agencies pay taxes. In the late 1970s and early 1980s, contract computer programmers developed a nasty reputation for making a lot of money and spending it all without paying income tax. In response, the IRS developed a list of "20 Questions." These were the standard by which the IRS decided whom to chase for back taxes. Most often, the client paid. The IRS looked at who managed the worker, where they worked, who provided the equipment, who set the starting and stopping hours, and so on. The IRS decided that most of these so-called contractors were really employees. As a result, temporary agencies got a big boost. Your contractor is their employee. They withhold payroll taxes. They pay workman's compensation and social security. The agencies conform to a slew of other legal requirements. WHY PAY RETAIL? When your company goes through an agency, you pay retail. If you set up internal methods for hiring temps, you save more money than you might estimate at first. Of course, your company would have all of the same costs of a contract employment agency. You would need human resource people and facilities and tools for them. You would need to maintain a process of advertising and recruiting. As with your other employees, you will have to pay into social security, workman's compensation, and unemployment insurance. However, you will not be paying the agency's profit margins. Consider also that when you accrue the costs, you can control the costs. An agency call roll its costs into the price of labor. They have less incentive to shop competitively. Whether considerating mandated disability insurance or office supplies, when you identify and measure your costs you can either lower them or get the most out the money you must pay. By hiring your own temps, your company will gain a primary value: loyalty. Workers are loyal to their paychecks. When you hire temps through an agency, you distance your company from its own employees. Make no mistake: temps are your employees. They show up and work a full day on your behalf. Yet, they are not loyal to your firm because you have not made basic commitment to them. Nothing destroys teamwork so totally as culling out members of a team because they are temps. If you hire them, they are loyal to you. RISKS AND RESPONSIBILTIES One of the hidden benefits to using agencies is that you do not have to suffer the process of letting people go. You pay someone else to fire people. Your company can avoid a lot of grief with a few simple policies, clearly stated, and agreed to in advance. You can offer whatever wages, hours, pay schedule, or benefits are suitable to the work. In fact, you can actually open the door to realistic two-way negotiation. It is typical for white collar temps, especially computer programmers to be offered a choice of salaried or hourly pay. Two workers side-by-side in their cubies can be paid differently by the same agency. The contract firm charges your company by the hour for their efforts, but pays them according to different agreements. They might have different medical coverage (or none) and different vacations (or none). You can do the same within your company. Chances are that you do this already. Most companies are a mix of hourly and salaried people. Workers in sales earn commissions and bonuses, not available to other employees. In some companies, it is the unionized workers who get profit-sharing while other companies pay it only to salaried employees. We all accept this as normal. When you hire contractors, you bring yet another element into the mix. Formally acknowledging this gives your company control over the situation. From control comes the opportunity for profit and improvement. +---------------------------------------------------------------+ | "Productive work is the process by which | | man's consciousness controls his existence." John Galt | | Michael E. Marotta | +---------------------------------------------------------------+

which are the best temp agencies in Austin, Terry?

See my response in the other topic. These aren't the best, but they are likely to find you a job. I'd have to think about the "best". Probably O'Keefe and Associates. The "best" aren't always the ones that will get you job. Try a bunch of 'em. Luck has a lot to do with it.

got it...

Okay, got a job that's over now, and no new ones currently waiting...

The low-down approach: Get a one to two page CV together and mail or fax it to any temp place within 100 miles range. Get any IT experience you have into the picture (UNIX knowledge, however basic, never hurt a-body), you got that agency stunt, you help maintain this place since years. I guess that's a start. Another approach: drop applications at any banking/finance institution around. They are looking for IT staff in banking - especially investment b., ask Mikey - all over the world. Perhaps there are chances to get a foot in as supporting IT staff on currents projects, like Y2K, even if that would be more administrative or organizational in nature. The open slots at that agency: Did you apply for them? Keep looking in that area - government jobs don't pay too hot, but benefits aren't bad, I guess. And they pay. What IT companies hang out about Austin? If need be, apply for "junior" positions that would let you grow into specialization later... Like support jobs: helpdesk work, network and PC support teams are places to gather lots of know-how by doing stuff. You can always move on from there...

Or become an entrepreneur.

Do a search on austin360.com for email addresses, eg. search for .com or @ and then email all the tech companies that have job openings.