Should I Hire a Staffing Agency?
Are you trying to decide whether using a staffing firm is right for your commercial construction business? Perhaps you have concerns about COVID-19 and how it will impact your hiring process. It’s a legitimate concern considering a direct-hire could mean incurring layoffs when projects don’t come to fruition. Not to mention the time and money spent hiring an employee in the first place. In commercial construction, this is even more of a concern since you never know what projects may be coming your way at any given time. But did you know that hiring contract workers can save you time and money?
The Costs of Hiring Direct Employees
First, consider the true cost of direct hiring. According to Human Resource Management, it costs, on average, $4,129 U.S. dollars to hire a new employee and 42 days to fill a position. While one leading expert says to expect to pay in the range of 1.25 to 1.4 times a person’s base salary when hiring direct.
To better understand what this means, consider someone who makes a yearly base salary of 100k or $50 an hour. Add to that health benefits, liability insurance, workers compensation, vacation and sick time, paid holidays, and onboarding – well, the costs add up. You are effectively paying 125k to 140k to hire the employee. But with a staffing firm markup, which is the fee paid on top of a base salary, that pay rate could be $70 an hour. Alternatively, if the true hiring cost is more like 1.4 percent of the hourly rate, you are looking at just under $75 an hour to hire the employee.
Understanding Recruitment Fees
Whether it’s a $70 an hour pay rate or $50 – a staffing firm is not necessarily more expensive than direct hiring because we take on the employment cost. Hence the recruitment fee. What’s more, not only do we screen candidates, but if they don’t work out within the first one to two weeks of employment, the client pays nothing. In the rare occurrence this happens, we rethink our strategy for finding another candidate. Too often, however, commercial construction companies assume recruitment costs are out of the ballpark of what they can afford. When, in reality, there can be a significant cost and time savings when hiring contract employees.
There’s also a misnomer that all staffing firms do is conduct database searches and match a person with a job. In reality, recruiters spend the bulk of their time sourcing, pre-screening, interviewing candidates, and investing in the client relationship. If you plan to perform your own cost analysis, consider how much time management spends going through resumes and screening candidates. You can receive hundreds of responses from a single ad which can take valuable time out of your schedule.
To summarize, a contract employee is usually no more expensive than direct hires. Direct hiring for project work means keeping an employee on staff all year whether you need them or not. Employees may work on proposals or “on the bench,” all while the business is still paying the employee salary and benefits. Rather than be burdened by a salary on the books, a staffing agency partnership means you only pay hourly wages when worked.
As always, hiring top talent is essential to the success of your business, and our team is here to help you find the right people with unmatched expertise.
Let’s collaborate today to fill your open positions. We are ready to source your next top performer for continued business success.