Published On: Sat, Aug 5th, 2017

Payroll Advantages of Using Temp Workers

You are a small business owner looking to hire one or two key people. You have a couple of choices. First, you can go straight to a direct hire situation in which you advertise online, interview a number of candidates, and make your hiring choice. Your second option is to hire a temporary worker you may be able to convert to a permanent hire later on. Which choice is better?

Neither is necessarily the right choice in every situation. Like just about everything else, circumstances vary from one employer to the next. But there are definite benefits to the temp worker option. Those benefits should at least be considered before deciding on a hiring strategy.

Immediate Benefits of Temp Workers

The benefits of hiring temp workers that might be converted down the road can be divided into two categories. The first covers the immediate benefits in the short term. To fully understand these immediate benefits, consider what actually goes into hiring and onboarding.

It takes money to recruit. It takes time to go through resumes, conduct interviews, and eventually hire. Upon hiring a permanent employee, companies immediately start paying taxes, workers’ comp insurance, unemployment insurance, and any benefits due the new worker. It all adds up to a significant investment in an employee who may not necessarily work out.

Hiring a temp worker can save quite a bit of time and money in the short term. How so? BenefitMall, a Dallas company offering payroll and benefits administration services, explains that the law considers temporary workers employees of their individual agencies. If your company brings on a temp, that worker is the legal employee of the temp agency. That means the agency:

  • Handles all the recruiting, interviewing, and hiring;
  • Handles payroll processing, tax payments, and reporting; and
  • Pays for unemployment insurance, workers’ comp, etc.

The temp agency essentially absorbs all the immediate costs of bringing on a new employee. Yes, your company has to pay a fee for that temp worker based on your contract with the agency, but you will not have to invest the time and resources involved in bringing on the new hire. This ultimately saves money.

Long-Term Benefits of Temp Workers

Employers enjoy long-term benefits of going the temp route as well. For example, there is no risk of investing a lot of time and resources in an employee who does not work out. If the temp just is not a good fit, he or she can be dismissed in favor of a new worker sent by the agency.

A second benefit comes into play when temp workers are converted to permanent hires. Simply put, the onboarding process is a lot easier in temp-to-permanent hire conversions. For example, the temp agency can transmit data to the payroll department, thus eliminating errors.

Yet another benefit comes into play in terms of the time and resources put into employee training. Once a company determines that a temp worker is a good fit, there is a greater willingness to invest in training a worker who has shown him or herself to be a good fit for the company. At the same time, using temp workers makes it possible to hold off on advanced training until management is confident that an employee will work out.

Hiring temporary workers who will later be converted to permanent hires is not the best way to go for every employer in every situation. Sometimes the direct hire model is better. Even so, both options have to be considered so as to do whatever is best for the employer at that time.

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