Many Advantages and Disadvantages of Hiring Temporary Workers

Online Applicant Tracking SystemIf you are thinking of hiring temporary workers, and you are not sure if it is the right thing for your company, this article and the following series of articles should clear it up for you.

If you are not aware, 75% of the Global Workforce is temporary according to this report from International Labor Organization. According to this article, In the United States 34% of the workforce are temporary workers, with 53 million American workers working as temporary workers. According to this Deloitte survey of Global Executives, 51% of them are planning to increase the use of temporary workers.

We have been referring to only temp workers so far, they are also referred as “freelancers”, “gig” workers, contract workers, contingent workers or “on-demand” workers.

Now that we know how prevalent the use of temporary workers is, it is certainly a current trend. More and more companies are hiring temporary workers, and also, more and more workers are working as independent contractors.

Since working with temporary workers, involves hiring more workers frequently, it is better to sign up for an online applicant tracking system, which can help manage the applications, schedule interviews, manage interview notes and keep in touch with the temporary workers. Recruiteze is a perfect simple modern online applicant tracking system, that will help you manage your Recruiting simply and easily.

Why hire temporary workers?

Online Applicant Tracking SystemThe hiring of temporary workers is on the rise, especially after the last 2 big recessions, when companies had to let go of a lot of full time staff. It has turned out to be a very effective way to hire workers on demand when required to complete time bound projects.

Once the projects are complete, they may retain a few temporary workers to keep pace, and they may even convert a few of the temps into permanent employees as well.

This helps the companies keep their resource costs fixed, and allows them to expand and contract without having to layoff workers. Also allows them to get their products to market quicker. If the products or services succeed, it allows them to increase the permanent staff in a more methodical manner.

Also check out this detailed article on the HR Implications of the Freelance Economy.

  • Hire the people with the required expertise to complete the job.
  • Requires less training to get them productive.
  • No need to worry about appraisals, performance reviews and bonuses.
  • No need to provide company benefits like Healthcare, Insurance or Retirement benefits like 401K…
  • Not having to pay Employer’s share of Social Security and Medicare taxes(, which amounts to 7.65% of the Employee’s salary.
  • Not having to pay State Unemployment Insurance.
  • Not having to pay Worker’s Compensation Insurance.
  • No expense or possible legal issues due to layoff’s and firing’s.
  • Reduce Recruitment Costs. Check out this article on how much it costs to hire a new Employee?
  • Don’t worry about hiring mistakes – A bad hiring decision can result in thousands in wages, benefits and productivity,  along with affecting the team morale.

Disadvantages of Hiring Temporary Workers

  • Higher Hourly Rates – This is due to the hourly rate paid to the contract workers which will also include up-to 20% markup for the staffing agency which manages this contractor.
  • Contract Buyout Fees – If you like the temporary worker and you would like to hire them permanent, you may need to pay a fees to the staffing agency to buyout the contract, or wait till the end of the contract period.
  • Should be concerned about the quality of work. Not every temporary worker is motivated to deliver high quality of work, unlike permanent employees.
  • Team disruption if there is a lot of turnover with contractors coming and going, which may make it hard to build cohesive teams for the long term.
  • You may not own the copyright to the work from contractors. You need to be careful to write up a proper contract which assigns the rights to your company.
  • You may be liable for injuries if a contractor on the job gets injured and sues, since they are not covered by Workers Compensation Insurance.
  • Increased risk of IRS Audits – IRS would like more employees, so that they get more revenues through all the payroll and related taxes. If they see a pattern of hiring lot of contractors, they may conduct an audit of the business and practices.

Use Our Online Applicant Tracking System

Recruiteze is the most simple and modern online recruiting tool, which can manage your jobs, applications and communications efficiently. With the Recruiteze Cloud based recruiting software, you can manage your hiring process from anywhere and from any device. Try Recruiteze FREE today.

Read this related article to understand the difference between Employee and Contractor

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