Staff leasing as an anti-crisis solution

Issue 13, May 2009.

This article is geared towards exploring options available to businesses today in their efforts to optimize business operations and take advantage of cost-saving services in regards to personnel expenses which typically comprise the most considerable part of any operational budget, and will focus on staff leasing services.

By definition, staff leasing is a service which can be paraphrased as the “rental” of personnel on a “open-ended” (no fixed term) or “closed- ended” (fixed term) basis from a staff leasing provider. In staff leasing arrangements the employees are external to the company. They can work on-site or off-site, typically report to the manager of the staffing company administratively but not functionally, and in the event of a contract cancellation or expiry, leased specialists continue to work for the service provider. They can be moved to another place of work or onto another project. Why  is staff leasing becoming an increasingly attractive option for companies in a cashstrapped economic world? The answer is multi-layered, but the main argument lies in the fact that when companies are looking to cut costs, the last thing they are willing to do is hire more permanent workers who will require a full compensation package, including benefits and administrative support. It simply doesn’t make economic sense for companies to hire permanent workers if they can use another cost effective and flexible solution offered by staff leasing.

Short term solutions in a tight market

So what makes staff leasing an effective solution for companies and why is it attractive in today’s economic market? The biggest benefit to employers who choose to use a staff leasing company is the fact that companies can unload their accounting and payroll departments. Taxes, employee benefits and bookkeeping functions are taken on by the staffing service provider. This means that fewer resources are required on behalf of the company in the areas of human resources and payroll administration. Another advantage for the employer in staff leasing lies in the company  being saved the hassle and frustration of conducting countless interviews with potential candidates until a qualified candidate is found. Good staffing companies have a roster of specialists that they interview to find the perfect match for the employer - both in terms of hard attributes (skills, experience, knowledge) and soft attributes (corporate cultural fit). The company requiring leased staff is only provided with the cream of the crop to choose from and this saves potential employers invaluable time. Employee leasing also saves companies money in a time when the bottom line is paramount. When staff leasing is pursued, the employer does not have to pay for benefits, incur administrative costs as these aspects of the employment relationship are handled through staff leasing provider. Also, the cost of working with staff leasing providers is typically cheaper than hiring accounting and human resources personnel.
Clients also benefit from the flexibility that staff leasing provides. Companies can opt to take on people for the long run or for a short period of time without having to increase the company’s headcount. For example, a company can lease extra personnel during a seasonal peak period, or to simply cover vacations or maternity leave, without having to worry about the legal aspects of the relationship. This is especially important today as companies look for personnel for specific projects or tasks. A company looking to launch a promotion campaign using proven specialists,  or looking to hire marketing specialists or an IT specialist, can achieve its aims with the help of a staff leasing provider, with this no strings attached service. Becoming an employee of a staff leasing company also has its benefits. For one thing, the staff leasing provider may be able to find a job for the employee faster than traditional job searching methods, especially in today’s labour market where jobs are scarce. The employee also only has to prepare one resume, fill in one application, and often only needs to attend one interview. This is in contrast to the traditional job searching process that requires countless interviews, applications, and resumes and many dead ends.
It is an opportunity for candidates to weather the storm during this economic crisis, by means of spreading their risk. Leased staff can also be presented with several opportunities to sift through, choosing those which will best add value to their overall experience and reinforce their CVs. They might also be presented with opportunities  to work in companies or positions that might have been unavailable to them in a permanent employment arrangement. On the other hand, potential candidates for staff leasing positions must also understand that they must come to the staff leasing agency with something to offer- something that can be sold to customers. It goes without saying that candidates must be able to perform a task with minimal time for adaptation, trial or error. Having said this, the underlying message is that with every crisis comes opportunity, for both employers and employees. Exploring them might open doors that were closed earlier and this is the key to surviving and coming out stronger in today’s environment.