Spring, 2004 Newsletter

Managing Hiring Risk During an Economic Recovery

 With a strengthening economy, many employers are preparing to add technical staff.  Although the economy as a whole is showing definite signs of improvement, uncertainty remains within many segments.  Therefore, to minimize risk, employers may wish to carefully consider their options when adding technical staff.

Direct Hiring

Traditional methods of recruiting and hiring candidates are more costly than ever, with an average cost-per-hire for exempt employees in the thousands of dollars.  Today, just one job advertisement may solicit several hundred responses, most from unqualified candidates.  Managers must spend considerable time reviewing these resumes and interviewing candidates.  This has associated costs, including less time for managers to concentrate on primary operational responsibilities. 

The direct hiring of employees can be a slow process.  Even in today’s relatively soft job market, many direct-hire technical vacancies remain open for 2-3 months. These delays may represent lost revenue opportunities for employers.  For example, technical vacancies may result in a lack of expertise to bid on or be awarded certain projects or an inability to handle rapidly increasing requirements.    

 The direct and intangible costs of making a poor hiring decision are often overlooked as risks of the direct hiring process.  Management must expend more time and effort in supervisory functions when an employee’s skills are insufficient for the job, causing team productivity to suffer.  Additionally, if the employee is terminated, the employer’s unemployment insurance (UI) tax account will be charged when the prior employee files for unemployment benefits.  This may result in higher UI taxes the following year.

Contract to Direct

Contract-to-direct hiring allows an employer to hire an individual as a contractor for a period of time, after which the employer is eligible to hire the individual as a direct employee at no cost.  Contract-to-direct arrangements minimize direct and intangible costs while finding the best candidate in the shortest period of time.  There are many advantages to this arrangement: 

·        This “try before you buy” scenario ensures a good match for the employer and the candidate

·        Professional, proven recruiters quickly locate and pre-screen the most qualified candidates for each technical opening

·        All employment expenses (including payroll taxes, workers compensation insurance, unemployment insurance, liability insurance etc.) are paid by the agency for the duration of the contract

·        Reduced turnover because candidates prove that they have the skills necessary to be successful, before ever becoming direct employees

·        If, for any reason, the employer is unable to offer direct employment, the employer may terminate the contract-to-direct arrangement without penalty or incurring any costs related to unemployment benefits.

  Contract

In a project-based or cyclical business, hiring contractors when needed to supplement a core group of direct employees may be the most cost-effective strategy.  The use of contractors provides employers the flexibility to add and reduce staff rapidly with little risk.  Contractors are technically proficient and diverse in their project experience, needing minimal, if any, ‘ramp-up time’.   Contractors work only as long as needed, and all the employment expenses, including unemployment benefits, are the agency’s responsibility. 

  Triad Engineering Corp has specialized for over 34 years in helping clients fill their technical staffing needs on a contract and contract-to-direct basis.  Triad is locally owned and operated and offers the most personalized service and experienced staff available.  Please contact us at 800-649-1514 or visit our web site www.triad-eng.com for more information.